Are you concerned about being able to pay for a secure and happy retirement? The good news is that there are many costs that retirees typically don't face, such as commuting to their job, buying a business wardrobe or saving for their children's college tuition. Many other expenses will stay the same.
The California Society of CPAs (www.calcpa.org) advises that you can make some smart choices in order to live well on a fixed retirement budget.
Time to Save More
Many people dream of retirement because it promises fewer time commitments and unstructured days. They may not have considered all of the associated cost benefits, however.
With more time on their hands, retirees can spend more time shopping for bargains on everyday items such as food or big-ticket purchases like appliances, electronics or cars. They can also cut down on restaurant and takeout charges by spending their evenings cooking. If your home-cooking can cut out some of the fats and calories of many restaurant or takeout meals, you may also find your medical costs dropping.
Those with travel plans can take advantage of lower midweek airfares or offseason hotel bargains unavailable to people who work weekdays or who have to consider children's school schedules.
Finally, remember all those to-do lists you made up over the years? Retirement allows you the time to make needed repairs or renovations and save on paying someone else to do them. Your greater flexibility, in other words, can help you keep more money in your pocket.
Living on a fixed income may place limitations on your spending, but it can also open new possibilities. If you don't already live near family or good friends, consider moving closer so that you can spend time with them rather than spending money on travel and entertainment.
Your life skills will be highly valuable to a wide variety of charitable organizations, so research your choices and see where you can make a difference. You may find that your most enjoyable experiences are free for the taking.
Think Cozy . . .
Retirement offers many options for making significant cuts in your housing costs. The first step for many people is downsizing from a home where space is no longer needed for children or extensive entertainment-especially if you plan to travel.
If you decide to move, spend some time researching real estate and state taxes in new locations so that you can cut those costs, as well as your mortgage bill. You should also consider "accessibility issues" in your next move, like the number of stairs you will need to climb. Such concerns can be a real problem as you age.
. . . And Convenient
Given the high gas prices in recent years, retirement relocation may also offer the chance to unload one or all of your cars and drop your auto loan or lease fees, in addition to fuel, repair and maintenance costs, from your monthly budget.
Consider moving to an area with good public transportation that has a bustling downtown with the stores you need so that you can live without a car. It may make it easier to stay active in retirement while holding down your costs.
The CPA profession's 360 Degrees of Financial Literacy program offers information and tools that you can use to understand and tackle a number of financial challenges, including those associated with retirement. The site's retirement pension planning calculator, for example, can help you understand whether you're saving enough to finance the retirement of your dreams.
In addition, the CPA profession's Total Tax Insights Calculator gives you a clearer picture of the types of taxes you pay-including many you may not even know exist-and their estimated amounts to help you plan for the future and consider making changes to your lifestyle. If you're not, planning ahead can allow you the chance to make needed changes in your savings and spending so that your nest egg is sufficient later.
Your CPA Can Help
CPAs work with many individual clients facing financial concerns much like your own. Be sure to turn to your local CPA for help with all your financial questions.