Whether you’re already in retirement, or planning to make the lifestyle shift, deciding how to budget for the years ahead depends on how you hope to spend your time.
For many people still impacted by the effect rising interest rates are having on their mortgage, tightening the purse strings looks like being a reality for a little longer.
But for others who own their own home, and perhaps even an investment property or two, access to funds is less of a problem.
No matter which category you fit into, the best way to consider your retirement budget – and how to make it last – is about focusing on what really matters most.
By stripping away some of the things in life that aren’t as important now, you can look forward to a more relaxed lifestyle away from fulltime work. And you can enjoy your retirement in style, without it costing you a fortune.
See retirement as a new beginning
Many retirees think of stopping work as the end of their productive, active life.
But by seeing retirement as a new beginning, you’re already taking steps towards a more positive approach. One that is about celebrating what’s about to happen in your life, rather than mourning what you might be saying goodbye to.
Identify what matters most
Good health is important – and it’s an investment in your future.
To help you live the retirement you hope for in the third age phase, doing what you can to stay mentally and physically fit and healthy will help you shorten that fourth stage of retirement living that sometimes comes with unwelcome fragility and disease.
Daily brain challenges and strong social connections that get you out of the house and into the world around you with friends and family are all incredibly beneficial – and don’t need to cost a fortune.
Find something you’re good at
You might have always had a passion or talent for something. If that’s you, then retirement can be a golden age to explore that more, and get even better.
Still looking? It doesn’t have to be about playing Rachmaninoff, or speaking fluent conversational Dutch. You might decide you want to improve your tennis serve, get better at baking, or teach yourself all about companion planting and make your garden thrive.
If what matters to you is doing something meaningful, then you might think about devoting some of your spare hours in your new-look retirement week as a volunteer for a not-for-profit organisation or a charity close to your heart.
Or, if you have family, allocating time to spend with your grandchildren may be what matters most of all. When it comes to finding the budget to make that happen, it’s important to remember that visiting the playground, taking a walk in the park or on the beach, and hugs are all absolutely free.
Explore the culmination of life
In his book The Happiness Curve: Why Life Becomes Better After 50, author Jonathan Rauch concluded that during the ageing process we are largely moving away from individual competition and ambition towards good social relations and care for others.
Psychologist Erik Erikson described the psychological evolution that takes place over the decades as “generativity” – something he defines as an ability (that develops with age) to exceed personal interests and care for both younger and older generations.
But, of course, self-care in retirement is pivotal too. Because if not then, when?
There’s more to retirement budgeting than money
Research shows that by controlling seven big investment decisions – smoking, drinking, body weight, exercise, emotional resilience, education, and relationships – your approach to budgeting for your retirement can focus on keeping your health and wellbeing accounts as full as possible.
Key takeaways
- Your retirement years can last for decades if you’re prepared. And that means both physically and financially.
- Retirement is an evolution. Think of it as more than an event. It’s a process.
- Retirement can include a succession of different phases that require different spending priorities and budgeting demands.
- By breaking your retirement years into four main phases (pre-retirement aged around 50-62, the beginning when you’re typically between 62-70, the middle retirement years of 70-80, and late retirement from 80+), you can hone in on what you really need, and how to plan for it.
- As your interests and abilities change with the passing of time, the money you’ll need to spend on your lifestyle will change too.
- Focusing on what matters most can guide you towards creating a simplified, realistic retirement budget.
Read more: Retirement Affordability Index
What matters most to you in retirement? Have you made decisions to cut back on some areas to make sure you can budget for what you love best? Share your experiences in the comments section below.