5 Ways to Prepare Your Money for Retirement

By Jane Brown

After 30 or 40 years of working full-time, you might be ready to hang up your work boots and retire. Retirement can be the beginning of a whole new chapter in your life. For the first time, you’re able to do what you want without a job or employer hanging over your head.

But while retirement gives you new found freedom, your retirement income might be considerably less than your regular income. This can trigger a major lifestyle adjustment, especially if your new income isn’t enough to keep up with your present expenses.

If retirement is in the near future, it’s important to get a handle on your personal finances now. Ideally, you want to retire with as few expenses as possible. This involves cutting back and making personal sacrifices. It can be difficult, especially if you’re used to buying what you want when you want. But there are ways to make the transition a bit easier.

Here are five tips to prepare your personal finances for retirement.

1. Pay off your house

Your mortgage is probably your largest monthly expense. And unfortunately, if your retirement income is only a third or half of what you were earning, a mortgage payment hanging over your head can be stressful and burdensome.

If you’re retiring in the next few years, now’s the time to get serious about paying off your house. Paying off the house early might seem impossible, but if you start making bi-weekly payments or increasing monthly payments, this can reduce how much you owe the bank in interest, thus reducing your principal balance faster.

Then again, retirement might be right around the corner. If you still have a mortgage loan, yet a lot of home equity, you can also look into downsizing. Run the numbers to see how much you can realistically walk away with if you were to sell the house. Depending on where you live, you might be able to sell, and then use the equity to pay cash for a smaller, cheaper place, thus eliminating the burden of a mortgage payment.

2. Pay off your credit card debt

It’s a sad reality, but too much credit card debt causes some people to delay retiring. If retiring slashes your income, the last thing you need is thousands of dollars of credit card debt. Your minimum payments might be hundreds every month, and if you continue to charge, your balance will only grow.

Credit card debt can be the difference between retiring early and working longer than you want. To prepare your finances, stop using credit and only use cash. Also, come up with a plan to pay off existing balances.

Negotiating your interest rates and paying more than the minimum is an excellent start. Also, you can start liquidating personal belongings you no longer need and use the proceeds to pay down balances. If you have more whole life insurance than you need, talk to a financial planner about borrowing cash from this policy. You don’t have to repay this money, but a loan will reduce the value of the policy, and reduce how much your beneficiaries receive.

3. Get rid of a car

If you and your spouse are both retiring and you spend the majority of your days together, see if you can get by on just one vehicle. Getting rid of a car payment can save you hundreds a month, plus you’ll pay a cheaper auto insurance premium and you’ll lower the amount you spend on gasoline and car maintenance. If it doesn’t work, you can always add a second car, or buy a used car with cash and avoid an auto loan payment.

4. Lower utility costs

Even if you’re able to get rid of your mortgage payment, you still have other household expenses like utilities. Gas and electric bills can cut deep into your budget, but you can shop around and compare rates offered by other utility providers in your area (if available) and save. In many cases, you have the power to choose the electricity company you want as your provider, says Amigo Energy in Texas, a retail electricity provider for both residential and commercial customers.

5. Use your senior discount

If you like shopping, going to the movies and dining out, don’t be afraid to use your senior discount. This discount can be as much as 10% to 20% off, depending on the restaurant or retailer. It’s a practical and cost-effective way to enjoy a little entertainment and recreation on a fixed income.

Retirement can be one of the best times of your life. Finally, you have the freedom and flexibility to do what you love. Your income might drop in retirement, but this doesn’t have to slow you down.


When the Folks Come to Visit

Now that we are getting situated in our new place my wife and I thought it was time to invite the parents down for a few nights. We have been working on the yard to clean up, clear out and replant where appropriate and are feeling good about our progress. The inside is pretty well under control and livable although we are doing our darndest to get started on a kitchen remodel. We know what we want but are having a heck of a time getting on the calendar of the very busy local contractors. In the meantime the current accommodations work fine.

Mom and dad are each 83. They are in pretty good shape and still feel comfortable enough to make the three hour drive to visit. By comfortable I mean between the two of them they safely navigated the long trip although it did take a bit out of them. I get it – I don’t like to drive for three hours and I am 27 years younger. Plus to get here they must leave the slower more sane pace of their smaller town and battle through the Bay Area with its ever intimidating and mind dulling traffic. But they made it and in pretty good time too.

Prior to their arrival we did what we could to make sure their room was as comfortable as possible. Bright bedside lamps were put in place to assist in evening reading, they had their own bathroom, extra blankets were laid out which proved unnecessary as their Holding handsarrival coincided with a tropical storm driven heat wave, and a generous amount of night lights were disbursed to illuminate their way after dark. All in all not a bad place to hang for a few days.

It is always great to see the folks and they are genuinely happy to spend time with us. When we get together we talk, laugh, eat good food and of course drink good wine. However I am beginning to think they are happier to spend time with their daughter-in-law than their son. Not that they don’t love me but Beatrice is just so darn lovable that she steals the spotlight. No problem there as she has the same effect upon me.

As we catch up it never ceases to amaze us the length and depth of what they remember. When sharing a story of the past the details are specific and thorough. They relate everything from the day and weather to what they had for dinner and who they had it with. Avid travelers throughout Europe when my dad was stationed in Frankfurt they remember the names of every obscure town and village visited including how to correctly pronounce the names. It is always fun taking a walk down memory lane which sometimes feels like a geography lesson.

It is no surprise the folks have slowed down a bit. Dad has some issues with his balance and so our walks are limited. Where ten years ago he would have happily made the one mile walk to the local wine tasting rooms this time we drove. Mom does not always catch exactly what we are saying even though she swears her hearing aids are working. To her credit she is not afraid to ask again rather than be left out of discussions. Both are incredibly sharp mentally – a blessing for sure. The physical side of aging is something we all will face at some point, no exceptions.

Mom and dad headed back home after two nights with us. That long three hour drive was waiting but they were in good spirits. They truly loved our place and the time we shared. We agreed that Beatrice and I would be happy to drive down to pick them up should their driving no longer be an option. As they headed down the road we were pleased with the success of the past nights and even a little sad to see them go.

Spending time with the parents makes me feel good. They are wonderful, interesting, funny and rarely dull. And of course they are mom and dad. I sometimes feel a little morose when I see how they are slowing and realize that I will one day be in that same boat. I remember not so long ago when they were perpetually on the go with seemingly endless energy. But then I look again and realize that if I am fortunate enough to be driving myself three hours to visit my kids when I am 83, I will be pretty lucky.

Getting older is not or the meek. But spending time with those you love is a wonderful fortifier.

Mom and dad, it was great having you and we are looking forward to your next visit.