While everyone’s retirement needs are likely to be different, the reality is that enough will probably never be enough, and people delay saving for a better retirement for many reasons, such as:
They believe that they might not reach retirement. They assume things will work out and that their pensions or superannuation will cover their needs. They generally believe that there’s plenty of time to save for retirement later.
Saving for a better retirement
In reality there isn’t a best time to start saving for retirement. Earlier is better, but now is good. You need to either find a way to make more money, or find a way to come up with a regular amount of money and put it into a savings account or other investment each month if you really want a better retirement. And while you are busy working hard to save money … don’t forget about your health and well being too. Here are 13 practical tips for a better retirement.
1. Keep a record of your monthly spend
Understanding what you spend each month—and where that money actually goes—means that you can can decide what’s essential versus what’s not entirely necessary, and then figure out ways to save money. There’s no better way of understanding how much money you need to live than by keeping track of what you spend. To start with:
Write down all your monthly debits and standing orders going out of your bank account. Keep all your receipts in an envelope or a kitchen drawer and tally them up at the end of the month.
2. Start a budget sheet
Take a sheet of paper and draw up three columns:
From the results in Number 1 above, write down all the expenses that you’ve recorded in the first column. In a second column write down ways you could reduce or eliminate that expense (if the expense is not essential). In a third column write down the potential monthly saving.
3. Downsize your house or reevaluate your house payments
If your children have left home, the family dog has died, and the pet rabbits are no more, then is it really necessary to live in a large house on a big block? Considerable savings can be made by moving to a smaller house, including electricity costs, water costs, insurance fees, rates, and the big one … your house mortgage or bond payments. Write down your current costs and speak to a financial advisor or realtor to get an idea of what you could save by downsizing. If you don’t want to downsize, then consider your house payments, and see if you can create a plan to eliminate your monthly mortgage or bond payments before you retire.
4. Cut down on entertainment expenses
Entertainment is necessary, but do you need to eat out several times a week or go to the movies when you could hire a DVD?
If you eat out twice a week, could you eat out once a week or have a Chinese or Indian takeaway instead? Better still, resolve to have a date night, and learn to cook a new or healthy meal at home. Likewise, cut down on incidentals such as the number of coffees you buy each week. Perhaps give up the magazine subscription and borrow magazines from the library instead. Rent DVDs rather than going to the cinema.
Take a few minutes and write down what you could save over a year—you might be surprised. Once you get started, you’ll find lots of inventive ways to cut down entertainment costs, and you probably won’t feel you’re missing out at all.
5. Keep fit
Exercising regularly and eating healthy meals are like an insurance policy to a better retirement. Without good health, retirement will not be nearly as enjoyable. Get into the habit of the following:
Take a daily walk or join a running club. Take up a sport. Quit buying food from the central aisles of the supermarket (the mixes and packets and foodstuffs with added calories and additives) and stick to the outside aisles where you’ll generally find all the fresh produce.
6. Turn a hobby into a part-time business.
There are two ways to work towards having a better retirement: save more or spend less! If you can’t spend less, then why not think about ways you could potentially earn a little more and turn a hobby or skill into a part-time business? Consider the following:
Are you crafty? Perhaps you could make arts and crafts, jams, or cakes to sell at weekend markets. If you’re a handyman perhaps you could help your neighbors and friends with their home maintenance jobs. Do you have any useful freelance skills—such as graphic design talent, web design expertize, or copy writing flair that you could charge for at an hourly rate? Perhaps find a fun part-time job—if you like gardening look for part-time work in a nursery or garden center.
7. Upgrade appliances
If you run heating or cooling units, washing machines, and dish washers and they are nearing the end of their life span, then consider upgrading them before you retire and while you still have finance options available and a salary coming in to pay them off. Take stock of all your appliances and decide which need replacing, then sell your old ones to create a little cash to put towards the new ones.
8. Sell the fancy toys
Own a boat that just sits in the garage these days? What about the canoe? Do you still need three bikes now that the children have left home? Sell your lifestyle toys that you don’t use anymore, bank the cash, and use it on funding a better retirement.
9. Redefine your car requirements
If you are married and your children have left home, perhaps you have two cars, but actually don’t need both anymore. Not only would you be cutting your carbon footprint by running just one vehicle, you’d also be making huge savings. Follow these steps:
Open the conversation about how and why you need two cars. Find out how you could both compromise if you had only one car. If it’s possible, then sell the second car and watch the savings accumulate in your bank account.
10. Take cheaper holidays
We’re bombarded by advertising about how we should be living the good life, and this may include travel, which as we get older becomes easier again once our family responsibilities become less. But do you really need to go on a fancy cruise if you are still fit and healthy? If you want to save money for a better retirement then consider the following options:
How about hosteling in Europe, perhaps? It costs a fraction of the price of five-star hotels. Take a biking holiday instead of lying by the pool of an expensive resort and drinking cocktails. Your mind and body will probably thank you for it as well. Book holidays out of season, or at least outside of school holidays. Self-cater instead of booking into expensive resorts. Hiking is free. Think about a walking holiday rather than clocking up the miles in a hire car.
11. Reevaluate your insurance policies every few years
Don’t be complacent and accept rising insurance premiums merely because you’ve been with a company for X number of years. Check out other deals, phone around, and see what packages are available for bundling car, house, and contents policies, for instance. Get recommendations from friends and advisors. Doing some insurance housekeeping every few years may well save you hundreds of dollars in the long run.
12. Compare bank services, banking fees, and mortgage providers
Banks make money from us, make no mistake. Just how much of your hard-earned savings they extract is up to you because banking fees and services differ from bank to bank and are apt to change. Shop around until you find an exact match for your banking needs, then shop around some more until you find the bank offering the lowest fees. Rinse and repeat for your mortgage provider—sometimes it might save you money to switch a mortgage mid-term to a company offering a better deal, but speak to a financial advisor before you do unless you fully understand the cancellation and refinancing fees.
13. Understand your investments and asset allocation
Assets consist of equities, fixed income, and cash. An investment strategy will probably aim to balance risk and reward according to your short-, mid- and long-term goals, and your tolerance for risk. If you have investments, get clear on what they are, and how much they yield each year. Make sure your assets are well allocated and consider age-old sound advice, which suggests not to put all your eggs in one basket. Decide, if possible, to cut down on assets that cost you money (such as cars and boats) and invest more in those that accumulate capital or cash. Ask yourself if your assets are still working hard for you and if they are still beneficial. And, if necessary, speak to an accountant or financial advisor to assist you make investment decisions for your future and for a better retirement. When you have done this, then file any share certificates, bank statements, rental income records, and anything else from which you earn money in easily accessible files, either in a cabinet or on your computer for easy future reference (don’t forget to have a hard drive backup). Keep fit and well, good luck with your saving, and here’s to a better retirement!
