5 Good Financial Habits for Retirees
The face of retirement has been changing recently. More people are retiring later, and some are making the choice to never retire or to wait as long as possible to do so. Many people are working part time in new jobs or cutting their hours at their career jobs in order to keep working and to keep making money. For some people, retiring completely is boring, but for others, it is a welcome relief.
However, all Americans at retirement age have one thing in common: They want to have enough money to live comfortably. Retirees who make smart money decisions have a chance to live comfortably and be financially secure, and certain habits help make comfortable living possible. Here are five habits that are important to establish, whether you are semi-retired or completely retired. These habits will help you be financially secure and enjoy your later years.
1. Prioritize your health
This may not seem like the most obvious tip for maintaining your finances, but taking care of your health is one of the best ways you can keep afloat of medical costs. Medical expenses can ruin any budget, and sometimes, they can plummet you into a huge amount of debt. Make it your priority to take care of your health. Some health issues are unavoidable, but many health issues can be avoided or at least pushed off by taking care of your health.
One of the biggest risks to your health that you will face is the fact that people older than 50 experience so many changes – including the loss of family or friends, and children moving away — but while feeling loss is natural, you can stay healthy by including healthy relationships and hobbies into your daily routine.
Also, be sure to go to regular medical appointments and get necessary check-ups, eat a healthy diet, and continue to exercise. Staying healthy can directly affect your finances, so it is an important habit to practice.
2. Be open to earning extra income
Once you retire, you will face a loss of income. If you enjoyed your full-time job and you have a good relationship with your boss, you may be able to work out a way to keep working part time. If not, consider getting a different part-time job. Many jobs are ideal for retirees, including consulting jobs, which can allow you to continue making money and doing something you enjoy, while working less hours. Government jobs also often have temporary jobs, which can be a great way to earn extra income for a vacation or holiday.
You also might find that you can turn a hobby into a business or part-time job: consider coaching a sport, or, if you have a talent that you never got to utilize at your job, make it a source of income (start a photography business, bake cakes for local parties, etc.) Even if you planned to retire fully, you might find that your retirement savings are not stretching as far as you expected, or you might just want to work because you enjoy it.
3. Spend wisely
While you probably planned ahead of time how much you would need once you retired, your actual retirement spending might be different than you expected. Be careful to stick to a budget, and make smart spending decisions. It can be easy to overspend during retirement because you may have a lot of money saved.
However, remember that your savings will have to last for a while, and that you can’t predict exactly how much you will need or how long you will need it. If you never updated your budget after you retired, do that now. Or, if you are preparing for retirement, fill out a retirement expenses worksheet. While you will probably have more free time once you retire, you still need to be careful not to overspend.
4. Find affordable hobbies
More free time unfortunately means more chances to spend money, and while you should certainly celebrate your retirement (or semi-retirement), you still need to make smart financial decisions. One of the best ways you can be financially secure is to find affordable hobbies that won’t cost you very much money or derail your retirement funds. According to the Bureau of Labor Statistics, as of 2012, individuals age 55 and older spent an average of 3.4 hours per day working (and doing related activities), two hours doing household activities, and 5.3 hours doing leisure activities.
The amount of hours completing work declined as individuals aged, while household activities and leisure and sports increased (those age 75 and older spent 7.5 hours per day on leisure/sports). According to this data, much of the time that those age 55 and older spent was on leisure and sports, so if you are able to find affordable ways to spend your time — reading, going outside, spending time with friends — you should be able to maintain a more affordable lifestyle.
5. Avoid financial pitfalls
This fifth financial habit is more about what you should avoid than what you should do. If you can avoid financial pitfalls, you will have a better chance of maintaining financial security. So if you had any poor financial habits before you retired, make it a point to end them now. Live within your means, and if you used to overspend consistently, pay even more careful attention to your budget now. Meet with a financial adviser if you need someone to keep you accountable.
Avoid lending money to family members whenever possible, unless you can truly afford to give that money up if they never pay you back. Pay off any credit card debt as soon as possible, and avoid using your credit cards unless you use them for points (and you can pay them off quickly). Lastly, don’t spend money just because you have it; weigh each financial decision carefully before you spend your money.
These financial habits will help you start your retirement off right and maintain financial stability, as long as you can follow them. You may have to face unexpected expenses, but if you are regularly smart about your money, you will be in a better financial place when you have to face them.