Can you live a COMFORTABLE life on a fixed income? YES!
Retirement comes with many lifestyle adjustments and changes, from health care and housing needs to post-career plans. Living on a fixed income in your golden years can impact most of the decisions you make when adapting to those lifestyle changes.
Most people live on fixed incomes, and we’re here to tell you that it’s not the end of the world—although it may seem like it. Yes, sometimes you may experience some financial distress, but with wise decision-making and proper management, you can live a comfortable life on a fixed income.
Let us look at some ways to improve your budgeting so you can rely on your fixed income to meet your spending needs. If you think you’re in financial difficulty and need some advice, keep reading to see how you can get back on track!
1. Create a budget
A budget is simply a developed plan for dealing with your expenses using your anticipated income for a set period. Personal budgets can help increase savings and decrease debt, which eventually will help you live a comfortable life on a fixed income.
Budgeting is becoming pretty popular these days. According to a recent study, 41% of Americans surveyed are using a personal budget for their financial planning needs.
Many different types of budget plans can help you manage your money, from reverse budgeting to zero-based budgeting to the half-payment budget method. It’s important to choose one that works best for you and your needs.
Start by listing all your fixed expenses, like utilities and rent. Then, note your variable expenses, such as food, groceries, and entertainment. Compare your income to your expenses. If you’re spending more money than you earn, it’s time to make some changes.
Keep reading to find the changes that can help you live a comfortable life on a fixed income!
2. Track your expenses
Tracking your expenses is one strategy that can help you live a comfortable life on a fixed income. When you rely solely on a fixed income in retirement, whether it’s from one or multiple income sources, you know exactly the amount of money you’re bringing in regularly.
That’s why it’s essential to track your expenses and know where your money is going. When you’re close to starting your retirement chapter in your life, spend at least several months tracking all of the stuff you’re spending your money on.
To make things easier, you can put these expenses into categories, including grocery shopping, clothing, going to a restaurant or ordering takeout, health care costs, insurance, rent or mortgage payments, transportation, and more.
When you track your expenses, make sure to list every purchase you make. You should even record expenses that seem minor, such as getting a pastry or coffee from your favorite coffee shop once in a while. You may think these are innocent purchases, but that amount can add up over a longer period.
Here’s a budget planner that can help you track your expenses!
3. Manage the cost of living expenses
Next on our list of ways to live a comfortable life on a fixed income is managing your cost of living expenses. While you’re in the process of creating a personal budget and tracking your expenses, you may discover the need to rethink your current lifestyle in order to better manage your living expenses.
According to a recent survey, “covering and/or getting by basic living expenses” is the top cited financial priority for seniors. The study also showed that, of the retirees surveyed, 37% cited health care expenses, 21% cited paying off mortgages, and 20% cited continuing to save for retirement years as their financial priorities.
So, if you’re looking for ways to live a comfortable life on a fixed income, what are some tips concerning the daily or monthly expenses?
If you’re an empty-nester or someone who feels like the current house they are living in is too big, an idea would be to consider downsizing. This can help reduce monthly housing costs, such as mortgage, rent, property taxes, utilities, or homeowner’s insurance.
For transportation expenses, instead of spending a lot of money on a brand-new car straight off the lot and having another significant monthly bill payment on your shoulders, consider buying a well-maintained used vehicle, paying off an existing vehicle, or looking at communities that provide walkability or easy access to public transportation for your essential needs.
4. Pay off debt
Debt can eat into your income and make it more difficult to meet your financial goals. The less debt you have, the more of your fixed income you can keep.
Not only will paying off debt help you live a comfortable life on a fixed income, but it will also bring you a sense of peace. According to the Transamerica Center for Retirement Studies report, 25% of seniors surveyed said paying off credit card debt was a financial priority for them.
So, if you’re dreaming of being able to live a comfortable life on a fixed income, you should focus on paying off your debt. This will help lower interest rates on your monthly bills.
One strategy would be to pay for your daily needs with cash. But, if this option isn’t feasible for you, another strategy would be to pay for items with a debit card.
Keep reading to discover other tips on how to live a comfortable life on a fixed income!
5. Don’t stick with a single source of income
Retirement doesn’t mean people completely stop working. Many early retirees don’t want to abruptly leave the professional field they’ve been working in for many years and still find ways to be employed and generate a side income to help supplement their fixed income.
Relying on a single source of income can make you financially vulnerable, especially if you want to live a comfortable life on a fixed income. Consider finding additional ways to earn money, such as freelancing, a part-time job, or even selling things you no longer need.
Retired teachers, for instance, may choose to substitute teach in their local school districts. Another option would be to become a consultant in your field as well as set up a small side business based on a personal interest or hobby.
6. Start early and reassess
While retirement is a considerable adjustment, there are ways to make the process easier so you can live a comfortable life on a fixed income. It’s very important to start preparing early so you have as much time as possible to save money for your golden years.
You should also diversify your retirement portfolio. You can search for strategies that provide asset protection, growth potential, or a guaranteed stream of lifetime income.
Once you’re in your golden years, keep track of your finances and create a budget for your daily, monthly, and annual needs. With a little planning and creativity, you can help reach all of your financial goals and live a comfortable life on a fixed income.
Bottom line
While it may seem like it, living on a fixed income isn’t the end of the world. It’s not easy to do that, either. We hope these ideas will help you make the most of your income. Remember that every small step taken is a step closer to your financial freedom. Give them a try! Good luck!
If you liked our article on ways to live a comfortable life on a fixed income, you may also want to read Are You on a Low Income? 9 Ways to Save Money!
