Planning for retirement (Stage 2)
Thrift and Frugal Living
Very few of us are lucky enough to retain the same level of income once we retire.
Whilst the cost of working could be offset against the reduced income there is often a noticeable difference. For example, my income was reduced by 2/3rds!
This would have been an enormous shock to the system if I had not been aware nor spent two years planning for this change.
Despite the changes in income it is very likely that reductions in some outgoings had already occurred over the final working years such as mortgages finally ‘paid off’, childcare and childrearing no longer a major outgoing (no books on childrearing really present how much that ‘little bundle of joy’ will cost – and go on costing).
The Bank of Mum and Dad will, no doubt, also be coming to an end of its major purchases – University costs, weddings, assistance with house deposits etc hopefully becoming a thing of the past.
What I am attempting to present here is that the need for a large income is reduced, that with planning and a few alterations there can still be sufficient income to maintain your lifestyle and enjoy the future.
Following my parents’ retirement my mother once stated, ‘you have the greatest income when you least need it’. I think she was pointing out that with no dependants and no mortgage any financial outgoings were more constant and therefore manageable.
There are various ways to both manage an active retirement on a reduced income and to increase access to funds.
The most obvious that comes to mind is down-sizing the house, yet it can also be the most difficult.
Although I know that many people move home during their lifetime many others, like myself, stay put and build out. As a consequence, there can be an emotional attachment that is difficult to sever.
Plus – children sometimes do not/cannot leave for a variety of reasons so down-sizing to free financial capital and reduce household bills may not be an option.
As my children are still young adults and only one has reached the stage of having a permanent home of her own moving to a smaller house is not an option for us, besides when all 3 arrive along with partners and friends I daydream of ‘elastic walls’. And – do they ever remove their ‘stuff’!
I digress, back on topic now.
Down-sizing, financial investments, savings plans, and pensions could all provide a ‘safety net’ but what of the general ‘day-to-day’ cost of living and ways of reducing casual spending.
Some ways to reduce casual spending occur naturally and were only a result of working. Who know it cost so much to have a job? I had read of the cost of items such as the coffee purchased at train stations and the lunchtime salad/sandwich as you run from one meeting to another but once no longer working I noticed many other things I no longer needed. Smart work clothes, parking fees and petrol are examples. I would fill my petrol tank at least weekly just to travel to the workplace. Now, even though I do a similar number of personal miles, I only need to buy petrol approx. every 2 ½ weeks.
So, whilst some outgoings are reduced naturally, I still thought it would be useful to look around the internet and gather some ideas. Not surprisingly there are many sites relating to Thrift/Frugal Living/Savings advice. Many are similar in what they advise, perhaps with little new information although reading them can act as a catalyst to action – switch off that light, share that car journey etc.
Many that I read are written for those with families, especially those with young children, rather than retirees. Although useful for those with grandchildren I guess.
I have listed examples below of those I thought useful and easy to read. Many suggestions demonstrated will not be new, just sometimes reading a collection of ideas encourages you to apply suggestions to your own personal situations. Possibly even sharing thoughts and joining in the conversation on the website comments page.
Another that I found useful is http://www.frugalwoods.com This is a Website/Blog written by a young mother in the USA. Now, you may think that it will have little connection with retirement planning, yet I found it very useful to view some of her categories relating to Thrift, financial planning etc. Her and her husband decided to abandon the city life and move to the country. This took some planning and re-thinking of how they used their income, how to sustain life on a reduced income and how to generate an income by identifying opportunity and utilising transferable skills. Her writing style is friendly and easy to read and often her family-based articles are entertaining (especially when read at my stage of life, brings back memories of toddler training and enhances the joy of being able to read her blog whilst enjoying a peaceful cup of coffee. Which I think is life’s own reward ?) I only ‘follow’ two website/Blogs – and this is one of them.
In general, the common and easy suggestions to follow to reduce spending were:
Electric and Gas Tariffs – check for better deals.
Mobile phone tariffs – check again when contracts are coming to an end. Often identifying a cheaper tariff and showing it to your current supplier results in the company matching it to retain your custom. If not move your contract or consider ‘pay as you go’.
Rail travel – Obtain a Senior Rail Card (save approx. 30% – it will soon pay for itself), book in advance where possible. Check if travelling with specific rail companies is cheaper. This may mean you need to plan your journey more attentively but can result in a substantial saving. For example – using TransPennine Express between Darlington and York can result in approx. 50% less cost than travelling on other services. The journey is slightly longer and the trains less frequent but if that is of no matter than I think the money saved is better in my pocket than the train company’s.
Cinema – Midday showings on week days are often cheaper
Restaurants – Lunch is often a cheaper option than dinner in many eateries
‘Yellow Label’ Food Shopping – the foods are usually only reduced as the Sell By date is imminent, my son introduced me to these and I would recommend looking when you are in the supermarket as once purchased the item can be frozen for using later or used on the day you shopped. Look out for seasonal vegetables etc – another common suggestion for reducing the food bill.
Menu Planning – this is an activity I have implemented for decades. My initial reasoning was around organisation of wholesome meals despite working full time with young children, being able to make all meals from scratch was important from both a nutritious stance as well as providing an environment in which the children learnt, sub-consciously, about food and cooking. Whilst helping with the ‘chopping and stirring’ it is surprising how teenagers communicate, and I then learnt about their day etc. The benefit to this is that having a shopping list of only the ingredients required means you only buy what you need – well, if you stick to the list that is.
Gym Membership – Use it or cancel it. If you find that, once no longer working, your attendances are usually week days between 9 – 5 your gym may offer a ‘Off Peak’ membership at a reduced cost – worth thinking about.
Petrol – Plan your trips so that you reduce your mileage and usage of the car. I try to avoid using the car for journeys that I can walk to in less than 30 minutes and when travelling further afield I try to complete several tasks on the day rather than have multiple journeys over the week, each for a single purpose.
Am sure there is nothing new in this although hopefully it has re-awaken some thoughts