Adjusting from having your employment income to living off of your retirement funds can mean having to make significant changes to your spending habits. However, with careful planning, you can prepare for this shift in funding source availability and cut back on unnecessary costs. One way to ensure that you have the funds you need is by taking steps to reduce your expenses through downsizing during retirement.
Create a Budget
Ideally, before retiring, you will be able to sit down and create a realistic budget which reflects your anticipated expenditures and expenses after you stop working. Once you have identified how much income you will need to support your lifestyle, you can evaluate how well your retirement funds will support these requirements and make the necessary adjustments as necessary.
Identify Unneeded Expenses
Take a good look at your expenses and identify those which may be unwarranted. For instance, you may be paying for a gym membership which you don’t use or need because you have a less expensive alternative or you may have an extra vehicle which you are not driving and which you can stop paying additional money to insure. Ridding yourself of even small expenses can add up over time and mean having more money at your disposal during retirement.
Selling Your Home
On a larger scale, if you are a homeowner, you may be living in a house which was a suitable size when you had children in the home but is now more than you need. You may want to consider selling your house and moving into something smaller which costs less to maintain. If you have equity, you could put your profit into your retirement savings or emergency funds.
Determine the Time to Downsize
You will need to carefully assess the conditions when you decide to begin significant downsizing efforts. For instance, if you are selling your home and intend to move to another community, you will need to look at the strength of the real estate market where you are selling and buying. If you decide that you want to make this move early in your retirement, you will need to have a plan in place for how to manage your savings in a manner which supports your retirement goals.
Downsizing during retirement can be a wise decision. However, it is essential to look at your circumstances with an experienced attorney who can help you accurately assess your assets and create a plan which supports your retirement objectives. Our office can provide advice regarding planning for your retirement. Please contact us online or by phone if we may be of assistance.