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Financial New Years Resolutions for Baby Boomers

a piece of paper _new year resolutions for baby boomers

Happy 2021! In the spirit of the New Year, I have put together a list of financial New Year’s resolutions for baby boomers.

These financial goals are especially important for people who are planning to retire within the next 10 years. I personally think that the beginning of the year is a great time to start something new and work towards a goal.

Here is the list of financial New Year’s resolutions for baby boomers:

1. Determine how much of the nest egg you will need.

When you are near retirement, it is important to know how much of the nest egg you will need to live comfortably for the rest of your life. How do you figure it out? You have options.

The typical advice is you should aim to replace 70 to 80 percent of your annual pre-retirement income. For example, if you earn $70,000 per year before retirement, you should expect to live off $49,000 to $56,000 per year.

Also, you can use an online retirement calculator. Take a few minutes to enter initial information and then see the numbers, and where you stand today.

Vanguard – Retirement Nest Egg Calculator

Or you can use your current expenses and determine how it will change when you retire.

The best advice is to create an estimated retirement budget based on your current and future expenses. You might have a general idea of what you spend now. But you will be better prepared financially for retirement if you have a clear picture of your expenses now and how that might change in the future.

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2. Get a clear picture of your retirement income.

When you are working, you probably have a single employer and a single source of income – your salary. In retirement, everyone has different sources of income.

As a retiree, you receive income from multiple sources: Social Security, pension, part-time job, or rentals (if you have any).

Another source of income will come from your nest egg – investments and retirement savings:

Tax-deferred accounts – 401(k), IRA
Tax-free – Roth IRA, Roth 401(k)
Taxable investment accounts
Taxable bank checking and savings accounts

Getting a clear picture of your retirement income will help to make sure you have enough money to cover all your living expenses.

To make your assets last through the next 20 or 30 years, use the rule of thumb to withdraw 4 percent of your portfolio annually.

For example, if you have $500,000 in retirement funds, you can spend roughly $20,000 ($500,000 x 0.04) per year when you retire. Add this number to your Social Security, pension, and other savings, and calculate if it is enough to support the retirement of your dreams.

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3. Set a target retirement date.

woman and man walking on the beach - financial new year goals for baby boomers

Another important financial goal for baby boomers who are near retirement is to set a target retirement date. We all need to plan for the day when we are ready to retire or can no longer work.

Based on your target retirement date, retirement income, and what you want to spend in retirement, you can determine if you have enough money saved for your golden years. If it is not enough for a comfortable retirement, move the date, and save more into your retirement funds.

Related Article:

7 Financial Mistakes to Avoid in Retirement

4. Update your budget.

What is your budget? How much you want to save and how much to spend in 2021?

Sticking to your budget can help to know where your money is going. If you want to save more money for your upcoming retirement, begin eliminating some expenses that may not be important to you anymore.

When you retire, you do not need a lot of things that you did when you were working. The costs of commute, take-out lunches, and business clothes will go down. But you will start spending more money on travel, hobbies, and activities.

Balancing income with your spending plan will help you to save more money for retirement.

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5. Maximize your retirement savings.

Whenever possible, increase your retirement contributions up to the maximum allowed in retirement plans such as 401(k), IRA, and Roth IRA.

When you are a few years away from retirement, being short on retirement savings can be problematic. The best option is to start reducing expenses in your budget, so you can put more money into your retirement savings.

The 2021 contribution limits are:

$19,500 for 401(k) retirement plans. And if you are age 50 or older, the catch-up contribution is an additional $6,500. So, you can save a total of $26,000.
$6,000 combined contribution for traditional IRA and Roth IRA. And the catch-up contribution for people age 50 or older is $1,000. So, you can save up to $7,000 with your pre-tax money (IRA) and after-tax money (Roth IRA).

Related Article:

Why Do You Need to Max Out Your 401(k)?

6. Get out of debt before retirement.

Paying off debt, no matter how much you owe, is a key to a stress-free retirement. Getting into retirement with any kind of debt will put a burden on your lifestyle.

The best advice for baby boomers is to pay off all your debts before you retire including a mortgage.

When you are working, you have years of earned income to pay a mortgage, credit cards, student, or any other kind of loan. But once you retire, you will be living on a fixed income.

And when you start living on a fixed income, it is hard to pay off debt if you need to pull big chunks of money from your savings. Although, big withdrawals from retirement funds could push you into a higher tax bracket.

Being debt-free gives you more freedom and money left in your pocket to enjoy your golden years than struggling to pay the mortgage or other debts.

To pay off all debt including a mortgage might not be realistic for everyone. However, the less debt you have, the better you are prepared financially for retirement.

Related Article:

How to Pay Off Debt Before You Retire

7. Rebalance your portfolio.

list of 2021 goals - financial goals for baby boomers

The 2020 year has been a volatile year for financial markets. It can be tempting to stay away from stocks to reduce the risk of losing money in your retirement funds.

But stocks provide growth, and investing for growth is important at this stage of your life. If you retire at 65 and spend 20 years in retirement, you need to have enough growth to make your money last that long.

Take the opportunity to review your asset allocation and make sure your portfolio is diversified and invested for growth. You should have a mix of stocks, bonds, mutual funds, and other assets that fits your retirement goals.

You need to remember that a well-balanced portfolio will help you to weather market downturns. Also, it will potentially generate a retirement income to cover your living expenses.

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8. Think about the future medical cost.

Health care is expensive. Unfortunately, many baby boomers forget to include it in their financial plan. Medicare will cover most of your routine health-care costs if you retire at age 65 or older. Unfortunately, it does not pay for all medical bills, and it does not pay for long-term care at all.

Underestimating health care expenses or how to pay for long-term care can be a big financial mistake. Think about your future medical cost and find ways to protect your retirement savings.

Consider buying long-term care insurance which can help to pay for home health aides in your late years. If you buy long-term care insurance now, your premiums will be lower than if you wait several years.

It is recommended by many financial gurus to open a health savings account (HSA).

The money you can contribute to HSA is tax-deductible or pre-tax. And any increase in the value of your account is free from federal taxes. But it has to be used for qualified medical expenses otherwise you will be paying income tax and penalties on your contributions.

The 2021 HSA contribution limits are:

$3,600 for individual coverage
$7,200 for family coverage

You can put money into HSA every year until you enroll in Medicare benefits. After that, you are no longer allowed to contribute. However, money that you do not spend will be accumulating in this tax-free account until you need it in retirement.

Related Article:

5 Ways HSAs can Fortify Your Retirement

9. Plan where you will live.

Where you will live in retirement could have a big impact on your living expenses. Consider this option – sell your big house in an expensive location and move to a smaller house or condo in a low-tax state. In this case, your living expenses will be reduced, and you might have some extra income to pay for things you love to do in retirement.

You may also consider staying in your town but moving to a smaller home or condo. That will be more financially manageable while living on a fixed income.

But if you are planning to move to a big city you should be financially prepared to spend more money because retiring in a booming metropolis can be pricey.

Related Articles:

Final Thoughts

I know many people do not bother with New Year’s resolutions. But I find them to be very motivating. New Year’s financial resolutions are a great way to take steps to move towards your new goals.

What is your New Year’s resolution? Do you have any financial goals?

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The 2020 Year-End Review and New Year Goals

by Maggie Leave a Comment

Another year flew by, and I am glad it is almost behind us. 2020 was a difficult year for most of us and the whole world.

As the new year approaches, I like to look back at all things that happened in the last year. I get to see what I did, and what I did not do. I like to take count of the goals I accomplished. And If I failed to follow through on all my goals, I know I have another chance to make them happen in the new year.

I am not a big fan of New Year’s Resolutions, but since starting the blog, I like to reflect on my previous year and see what I would like to accomplish next.

So, I am happy to present my 2020 year-end in review.

My 2020 Year in Review:

Financial goals review:

1. Credit cards and banking

I want us to be debt-free as we are getting closer to retirement. In the past few years, Roman and I have accumulated $5,400 in medical debt. We transferred this money to 2 credit cards with 0 percent interest and finished paying off our debt in September. With this strategy, we would not dip into our savings.

We funnel all our regular purchases onto a couple of different rewards credit cards to earn points on our everyday spending.

Our go-to card is a PayPal credit card with 2 percent cash back on everything. Our secondary card is the American Express Blue credit card which we use at supermarkets with 3 percent cash back.

However, we also opened the Citi Dividend Platinum to take advantage of the 3-month promotion that gave 5 percent cash back at supermarkets.

Finally, we use the Bank of America credit card to pay for gas with 3 percent cash back. All these credit cards require no membership fee.

We have a combined no-fee checking account at Winchester Savings Bank which we use for bill payments, our mortgage, and money transfers.

We have 3 savings accounts. One savings account is a combined account at Winchester Savings Bank. The interest rate is very low, so we do not stash our savings there.

Capital One 360 is our primary savings account, which has no monthly fees and offers decent returns. We use the American Express High Yield Savings account for our emergency and travel funds.

2. Retirement accounts

I have several retirement accounts – 401(k), Roth 401(k), IRA, and Roth IRA. Each month I contribute roughly 12 percent of my salary to 401(k) and Roth 401(k), and my employer matches 3 percent. My strategy is to increase the contributions by 1 percent each year.

Unfortunately, that did not happen in 2020 because it was a difficult year and I was concerned about keeping my job, as we all saw so many people around us losing their employment. Luckily, my company managed through this year and worked hard to keep everyone employed. They even distributed bonuses to reward people for their efforts throughout the difficult year.

When COVID-19 entered our lives and the stock market fell drastically, I had a few sleepless nights as all our retirement and investment portfolios plummeted. We lost roughly 10 percent of our investments.

Luckily, it was a short-lived market downturn, and in April we already saw positive signs of market recovery. We are actually now in a better spot than before. Even though we lost a lot of money at the beginning of 2020, we gained it back through the year. Overall, our retirement and investment portfolios 2020 return was 9 percent.

I was planning to add $3,500 to my Roth IRA account in April, but again it did not happen because of the ‘gloom and doom’ news around us.

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3. Emergency fund and other savings

We were able to increase our savings despite all the chaos and uncertainty we experienced in the first half of 2020. It was easy to cut unnecessary expenses and find more ways to save money with both of us working from home since the middle of March.

Working from home helped us to save a lot of money on gas, parking, lunches, business clothes, dining out, etc. I am happy to report that we managed to meet our goal and increased our emergency fund up to $30,000. From now on, we want to use this money only for emergencies.

In 2019, we opened a separate savings account and called it “travel”. Roman and I like to travel and often pay for our travels with emergency fund money. I wanted that practice to stop and find other ways to pay for our travels.

In 2020, we made some adjustments to our budget and were able to save $3,000 in our “travel” fund.

4. Home mortgage

We bought our house in 2002 and did various big and small renovation projects that increased the value of our house. Right now, we are trying to stay away from any additional upgrades or renovations and just focus on paying off the mortgage.

In 2020, we brought our mortgage balance down from $241,000 to $230,000.

Blogging goals review:

2020 was a year when I challenged myself and pushed harder to improve my blogging skills.

I did not know about all the additional work that would be required when I launched the Save, Invest & Retire Blog in 2019. The blogosphere changed so dramatically over the years. According to the stats, there are 500 million blogs in the world today. That is a lot of competition to deal with for a new blogger.

In 2020, I became more knowledgeable about the blogging world and set up new goals for blog content, email marketing, traffic building, and a social media strategy to grow Save, Invest & Retire.

Not everything worked out the way I wanted it but setting up the goals and working towards them helped me to stay motivated.

Travel goals review:

2020 started well enough with plans to travel to Greece in May and Lithuania in September. But then… well everyone’s life changed.

We had to cancel both of our trips. We were lucky to get refunds on both of our trips, including Lufthansa airline tickets, hotels, and a full refund on the canceled Greek Islands cruise.

Related Post: My 2019 in Review

Final Thoughts on My Year-End Goals

Reviewing my 2020 goals was a painful exercise. I did achieve a good portion of my goals but not all of them. I think it is important to remind ourselves that missing a few goals is perfectly human and there is always the opportunity to try harder in the following year.

I will continue to try my best and improve on my successes from 2020 in 2021.

My New Year 2021 Goals:

top of mountains - new year financial goals

While 2020 was full of unexpected challenges, I am grateful I can still focus on my 2021 goals. First time I published my goals on this blog was in 2019.

I believe that sharing my goals on the blog is a great way to hold myself accountable. It helps me stay the course when life unavoidably gets in the way.

Financial goals:

1. Contribute to retirement accounts

In 2021, we will continue investing in our retirement savings.

I will continue contributing to my traditional 401(k) and after-tax Roth 401(k) so I will have another $15,000 stashed in my retirement accounts. Right now, I am saving 23 percent of my salary for retirement.

The ultimate goal is to max it out to $26,000. Unfortunately, this may be a difficult goal to reach in the upcoming year, but I will keep it as a goal to keep myself motivated.

The 2021 combined contribution limit for traditional IRA and after-tax Roth IRA is $7,000 for individuals age 50 and older. We plan to contribute $3,500 each to our Roth IRA accounts.

2. Increase savings

We have increased our savings significantly in 2020. We paid off our daughter’s student loan (2018), a car loan (2017), last construction loan (2015), and medical debt (2020).

Currently, we have no desire to buy a new vehicle, renovate our home, or make any large purchases that would require us to take on any new debt. No new debt means we will be able to save more money in 2021.

3. Pay off debt

Unfortunately, we had to take on a new loan to replace our broken boiler. The cost of replacing an old boiler, new water heater, and required new chimney lining was $13,800. We were able to secure a 0 percent interest rate 7 years loan with the Mass Save program.

The goal is to pay off the loan in 4.5 years.

4. Continue to pay off our home mortgage

We are slowly paying off our 3.5 percent interest mortgage. Last year we were able to reduce the balance to $230,000. As we are getting closer to retirement, I want to have our home free and clear of any debt.

In 2021 we are planning to refinance our mortgage to a lower interest rate, so we can speed up the process of reducing our debt.

Blogging goals:

Content

Continue with retirement planning content for new posts.
Add a new page with content on health and wellness.
Collaborate with other bloggers for guest posts.
Keep creating and publishing new posts every 2 weeks. I need to get at least 3 new posts ahead on Save, Invest & Retire, so I will have enough time to edit and add graphics before publishing them.
Start a content calendar.

E-mail marketing

Create a landing page to promote the resource library.
Update an old opt-in and make it work with the Mailchimp platform better to collect new subscribers.

Digital product

Create a new resource library with at least 5 printables for retirement planning and retirement budget.
Start working on an e-book.

Social Media

Stay active on Pinterest and Facebook.
Use Pinterest to drive traffic to my blog.
Learn how to automate social media.

Travel goals:

Like everyone, we had a few trips planned for 2020 but had to postpone our international travels hoping it will be safer to travel in 2021.

Currently, we do not have any concrete travel plans. We hope for normal life to resume with the approval of the COVID-19 vaccines. While clinical trials show the vaccines are effective at preventing illness, it is not clear if they prevent the spread of the virus.

Final Thoughts

2021 will be another year when Roman and I will be trying to achieve all the goals we set up for ourselves. We will focus on accelerating our financial goals so it will bring us closer to the day we can retire.

What goals or changes you will be making in 2021? Share your thoughts in comments.

Holiday Bucket List to Get into the Christmas Spirit

by Maggie Leave a Comment

Kids standing the Christmas tree - holiday bucket list

December is here, and to get into the festive Christmas Spirit I always have my holiday bucket list ready:

Decorate a Christmas Tree

Decorating a Christmas tree is one of my favorite traditions and number one on the holiday bucket list. We do not cut the tree, but we go to the local farm, select, and buy the tree there. Ah, the sweet smell of the fresh Christmas tree!

Then, we turn on some holiday music and begin to decorate. I have lots of ornaments that were collected over the years. So, now I have a good mix of different kinds of ornaments – elegant and expensive, plastic and cheap, old glass bulbs, and ornaments from our international travels.

Finally, our tree is decorated. It is special to me that many ornaments tell a story and bring out many good memories of our family holidays.

Make your own Christmas decorations

Christmas decorations on the table-holiday bucket list

To make your own Christmas ornament is a great idea for a holiday bucket list. We all like to be creative. And Christmas is the best time to put your own touch on your Christmas tree by crafting decorations together as a family.

31 Easy DIY Christmas Decorations

Another great idea is to make a festive garland to wrap around the tree or spread it on the fireplace mantel. Over the years, I made a few Christmas garlands to decorate our home using holiday supplies from Michael’s art store. There are many great ideas on how to make a garland from Country Living magazine:

48 Christmas Garland Decorating Ideas for the Holidays

Holiday baking

Baking holiday cookies is a favorite Christmas tradition for many families. It is a fun holiday activity and an amazing idea to do something together as a family. It feels that Christmas is not complete without baking and eating all kind of goodies.

Every family has a list of their own favorite cookies and bake them every year. In our family, we like to bake scones instead of cookies. Last year my daughter and I baked cheddar and chive scones, and we loved it.

This Christmas, we are planning to bake them again using the same recipe:

Cheddar and Chive Savory Scone Recipe

Also, I like to make a dozen cinnamon buns and keep them in the freezer. During Christmas week I would bake them for breakfast. There is nothing better than the aroma of cinnamon buns fresh out of the oven.

Send Christmas Cards

Christmas cottage - sending holiday cards - holiday bucket list

Nothing spreads cheer and joy faster than Christmas cards. We all love this time of the year, and opening a holiday card is part of the fun. Sending Christmas cards to family and friends is always on my holiday bucket list.

Recently, I have learned that the first ‘Merry Christmas’ greeting was used in a letter sent in 1534. Since then, people have been sending Christmas greetings to each other for hundreds of years.

I do not make my own holiday cards and usually shop for them at the store. But I like to write something personal instead of just signing my name under the statement inside the card.

If you want to add an extra personal touch to your cards, learn how to make your own Christmas cards:

Homemade Christmas Cards Ideas

Watch Christmas movies

Holiday movies are personal, and it depends on how you grew up. Every family has a list of their favorite movies they watch every year. Watching Christmas movies is always on my bucket list.

Occasionally, I will watch Hallmark movies even they are silly and predictable. But they are set during winter with lots of festive décors, so it gets you into the Christmas spirit.

Our family has a list of our favorite holiday movies we like to watch together every year:

White Christmas
Home Alone
National Lampoon’s Christmas Vacation
The Holiday
The Family Stone
Love Actually
Surviving Christmas
While You Were Sleeping

Listen to Christmas music

frosted window with Merry Christmas sign - get into the Christmas Spirit

Music makes me happy. Listening and singing along with my favorite holiday songs put me into the Christmas spirit. I have created a Christmas playlist with my favorite Christmas songs:

White Christmas
O Holy Night
Jingle Bells
Let It Snow
I’ll Be Home for Christmas

Also, I like to stream holiday music. Spotify has one of the best selections of Christmas music. You can find hundreds of streaming Christmas songs that you can listen to as long as you want.

If you do not know how to use Spotify for free, here is a quick guide:

Download and install the free Spotify application using versions for computer and/ or iPhone.
Create an account
Sign in and start listening

Christmas gift exchange with the family

Getting together with the family for the Christmas holidays is exciting but buying presents for them is tough.

We do not have a big family. Roman and I exchange ideas on what to buy for each other or one big gift for both of us.

Our daughter Ksenia usually send us a funny email letter with the list of gifts she wants to get from Santa. We do not have little kids but opening presents on Christmas morning is one of my favorite parts of the holidays.

29 Christmas Gift Exchange Ideas

Spend an evening wrapping presents

Wrapping Christmas presents is one of my favorite holiday activities. Usually, I start wrapping presents just a couple of days before Christmas. I take out wrapping supplies, turn on the music, and start covering all presents in pretty paper.

I like to use two or three types of wrapping paper and then add festive ribbons and holiday bags. Then, my husband Roman comes to help and we spend a few hours arranging the presents under the tree.

Sometimes we like to spread them out instead of piling high. If we have large size presents, we try to put them in the back and smaller presents such as socks or scarfs in front. In the end, a gift-wrapping night becomes a fun holiday activity and family tradition.

Drive around and look at the Christmas lights

We like to drive around with Christmas music playing and look at some of the light displays around our neighborhood. We have our favorite place where every house is decorated from top to bottom, and the whole street looks magical.

One year we drove to Boston to look at the Holiday Tree and Christmas lights around Boston Common. At night when the tree is lit, the Common looks like a winter wonderland of lights and decorations.

Go to see a musical or ballet

Christmas cartoon with a tree and a girl

My favorite part is to go and watch a musical or ballet with the family during the holidays.

Tchaikovsky’s ballet Nutcracker ballet became a Christmas classic and annual tradition. Many families were planning to see it. Unfortunately, the Christmas holidays will look a lot different this season due to the coronavirus pandemic.

The theaters in Boston will stay empty. But families can get into the holiday spirit by streaming life shows from many Boston-area performance groups.

Have a game night

Family game night is always on my holiday bucket list because it is a lot of fun. Sometimes we invite our neighbors for party games, but mostly it is only our family game night.

Monopoly is one of my favorite games, and we get extremely competitive. We like to play cards as well. This year we are planning to have a Christmas-themed game night, and a Christmas Bingo game is on the menu.

Host a Christmas party

During the holidays I like to invite friends over and host a big and festive party. However, Christmas will look different this year due to the Covid-19 pandemic.

Instead of inviting friends to our home, we will have a virtual Christmas potluck dinner on Zoom. If you do not feel safe to invite friends to your home, discover great virtual Christmas party ideas:

Virtual Christmas Party Ideas

More winter fun activities to add to your holiday bucket list:

Go ice skating
Visit your local Christmas market
Go cross-country skiing
Make some hot cocoa and have lots of fun toppings
Host a Secret Santa party with your friends
Make a DIY ugly Christmas sweaters
Host an ugly Christmas sweater party
Donate to a Christmas toy drive
Go on a winter hike with snowshoes
Sing Christmas carols with your family
Take a Christmas portrait with your family
Cook dinner together and light festive candles

We all love to celebrate the holidays. And a holiday bucket list is a great way to look forward to fun winter activities and spending time with your family.

How do you like to celebrate winter holidays? Do you create a bucket list every year? I would love to hear about your ideas and family traditions. Please share your experience in the comments below.

Holiday Spending and How to Control It

by Maggie 4 Comments

Christmas houses-how to control holiday spending

The holiday season is here. There are so many fun things to spend money on like gifts, decorations, parties, travel, etc.

The stores are decorated with Christmas trees and twinkling lights. TV commercials tell us about the “great deals”. Families and friends are making plans for holiday parties and activities.

With all the pre-holiday noise around us, it gets hard to remember how to control our holiday spending.

Follow these simple steps to avoid overspending, stick to your holiday budget, and keep more money in your bank account:

Create a holiday budget and stick to it.

No one wants to hear the word “budget” when it comes to preparing for the holiday season. But if you do not want to drain your bank account, this is exactly what you need to do.

Before you make a list of all the things you want to buy for the holidays, you need to create a realistic budget. A holiday budget will be helpful to know your limits, so you would not be dreading a moment when the piles of credit card bills will come due in January.

Decide how much you can afford to spend on things like:

Gifts
Holiday cards
Decorations
Holiday meals
Entertainment
Activities
Travel
Donations

And do not forget to budget for additional costs of holidays such as gift wraps, wrapping supplies, stamps, packing materials, and shipping. It all adds to the price of your gifts.

Make a shopping list.

holiday gifts - ho to control holiday spending

Do not go to the store without a shopping list because it is so easy to get caught up in the moment and overspend.

Before going to the store, make a list of your family members, friends, and neighbors and assign a gift budget to each name. Also, you can add to your shopping list a few gift ideas for each person.

I like to use a small notebook for my shopping list with names, gift ideas, and the total amount of money I can spend. With all details listed in my notebook, I enjoy my shopping without worries of getting into new debt during the holidays.

It is a smart idea to start shopping early because you will have more time to shop around and very often get the best price. Moreover, you will have time to compare prices at different websites and retail stores. That gives you more options on what to buy and helps to save money.

Last-minute holiday shopping is stressful and often comes with the risk of paying much higher prices.

Limit your gift list.

Do you have a list of all people you give presents to every year? Do you buy gifts for family members, friends, co-workers, neighbors? Be honest and ask yourself if you really need to exchange gifts with all of them?

If you have a big family, it will be hard to limit your gift list. But if you still buying gifts for relatives you ever hardly see, consider dropping them off your list and just send the holiday cards instead of presents.

Consider a DIY alternative and buy fewer gifts.

glass mugs with chocolate-homemade gifts for holidays

Another way to control your holiday spending is to buy fewer gifts. Change your shopping habits to fit your holiday budget.

With fewer store-bought gifts, you can get creative and make one DIY gift for everyone on your list. It can be homemade cookies or holiday sweets in a glass jar, a framed family photo, or a special ornament.

Here is the list of free or affordable holiday gifts for family and friends:

Homemade treats – put a dozen of home baked cookies in a cute tin or mason jar with a ribbon.
Homemade bath gift set – fill a box with bath salts, soap, candles, matches, and chocolate.
Christmas tea box – fill a box or a canvas bag with your loved one’s favorite tea bags and a cute ornament or card.
Holiday plant box – fill a box with the cute succulents.
Hot cocoa party gift – fill the Christmas-themed mugs with hot chocolate and marshmallow bags.
Christmas potpourri – fill a small glass jar with candy canes, greenery, cinnamon (it will smell like Christmas), and decorate with a festive ribbon.
Ready-to-bake cookies gift – prepare a cute sack filled with a dry mixture of ready-to-bake cookies.
Make a colorful printout of the 10-minute meditation or relaxation guide and wrap it with a ribbon or ornament.
Frame a memorable family photo.
Offer to put actual photographs in a photo album and catalog them.

After all, homemade gifts are a great alternative to store-bought gifts. Most people understand the current state of the country and economy and would be grateful for whatever gift you get them.

Other alternatives to holiday spending – Sacred Santa gift exchange, holiday e-cards, holiday potluck party, etc.

Shop online.

laptop - shopping online during the holidays

Shopping online became so convenient in recent years. The number of people shopping online instead of going to retail stores is growing every year.

Most of us prefer to shop online in the comfort of our homes and avoid the stress of fighting traffic on the roads, and then circle the lot looking for a parking space.

Also, the online shopping brings a lot of advantages if you want to control your holiday spending. The biggest advantage is how easy it makes for you to compare prices.

Check out these deal-oriented websites:

Retail Me Not

e Deal Info

Deal Hunting

You can automatically check prices all over the Web by using the browser extension Honey. Also, this browser will help you find and apply coupon codes to save money.

Honey

Moreover, you can earn cash back on your online shopping by signing up for a website like Rakuten.

Rakuten

Pay with cash and leave the credit card at home.

It is so easy to get caught up in the moment during holiday shopping. You are in a store, you put everything you like in a shopping cart, and it is overflowing.

It will be so convenient to pay with your credit card. But do not use your credit card unless you are sure you can afford to pay your bill off at the end of the month.

Once you figure out your holiday budget, take that money out of the bank account and stop shopping when the money is gone. Paying with cash can help to limit your spending.

It is smart to pay with cash and leave your credit card at home. Which means you will pay only for what you can afford. Ask yourself if you really need everything you put in that shopping cart?

Be selective on holiday gift deals.

Do not fall for all those holiday gift deals. Many of these big deals you find during big sales on Black Friday and Cyber Monday are not actually deals at all. I personally do not like to get into this holiday deal bonanza and prefer to start shopping early.

Recently, I have read that ‘Black Friday is a better time to buy newer, big-ticket items. And Cyber Monday is a better day to shop for tech deals and smaller gifts’

Even we see thousands of deals during the holiday season, it does not mean they are all worth shopping for. Be selective. Create a list of things you are hoping to purchase and make sure to do your research on what you will be buying.

To save money, check and compare prices online before setting foot in a store. The goal should be to buy the best product at the best price.

Resist temptation and know when to stop.

It is so easy to go overboard with holiday shopping. While visiting a mall it is hard to resist temptation and do not buy something “extra”. It could be a little present for yourself, new towels for the bathroom, new luggage set for future travels or nice lunch with your daughter.

If you buy too many “extras” you can blow your holiday budget fast without having any idea where your money went. I found it easier to set a budget for my holiday “extras” so I can enjoy spending the money within that limit.

Once you have bought everything on your shopping list, it is time to go home. I know it is not that easy to resist the temptation to stop at other places and see “what they have on sale”.

But no matter how good the discounts are, you should not be buying things that are not on your list.

Enjoy your holidays.

You do not need to spend a lot of money to be happy. The joy of hosting fancy Christmas dinners, giving expensive gifts, and throwing big parties will soon be replaced with the stress that comes later when you have to pay for it all.

Planning, dealing with a budget, and controlling holiday spending can be frustrating for many people. But what makes holidays memorable is not the money you spend but the time you spend with your family and friends.

Time is often harder to give than anything else. Spending time with your loved ones can be as simple as baking holiday cookies, decorating a Christmas tree, lighting candles, or just watching a movie together.

How do you control your holiday spending? Do you make a holiday budget? Do you prefer to shop online instead of driving to the mall?

15 Ways to Live on Less in Retirement

by Maggie 2 Comments

older couple walking - live well on less money in retirement

Do you know how much money you need to live on in retirement? Have you been honest with yourself?

Everyone wants to have a happy retirement without the worry of not having saved enough or spending your savings too quickly.

Before you retire, look at your current expenses and see how much you will need when you leave the 9-to-5 world. Be honest about your retirement savings and calculate if it is enough to support you for the next 20 or 30 years.

Fortunately, a happy retirement does not always come with spending a lot of money. It only takes several steps to reduce retirement expenses so you can live well on less money.

Explore 15 ways to live on less in retirement:

1. Stop saving for retirement.

Once you retire, you no longer must save for retirement. If you have been saving 10 or 20 percent of your paycheck for decades, you no longer have to do that.

You do not need to save thousands of dollars to your 401(k) or IRA retirement accounts each year anymore. This chunk of money can be eliminated from your budget. It is time to start spending your savings.

2. Save money on commute.

Once you retire, you do not need to commute to work every morning. This means saving money on car parking, maintenance, and gas.

Every year we spend over $6,000 on commute including parking, maintenance, fuel for 2 cars, and T-passes for the subway to get to Boston. When our commute is over, we can save a lot of money every year.

3. Do not buy expensive clothes.

When you stop working and spend many hours at home or in your garden, there is no need for ‘a dress to impress’. Say goodbye to your business clothes and wear something comfortable for your new daily activities.

I know that I will save some serious money when I stop buying expensive clothes, shoes, and accessories for work. My new outfits will be something simple and comfortable and what I want to wear. The best part is that I will spend less on clothes and more money on fun stuff, travel, and activities.

4. Downsize to a smaller home.

Homeownership is one of the most expensive categories on the retirement budget. That is why downsizing to a smaller home is a smart way to lower your monthly living expenses.

Moving to a smaller home will help to reduce utility bills, cost of maintenance, repairs, and cleaning. If your current home is paid off, you can use available home equity to buy a smaller home without taking on another mortgage. Moreover, moving to a smaller home will save you more money in the long run.

If you do not plan on downsizing, consider other housing alternatives to reduce monthly expenses:

Rent out a room in your home.
Rent out your garage.
Take a roommate and split the mortgage payment.
Make money with Airbnb and rent out extra rooms in your home.

5. Relocate to a low-income or no-income-tax state.

Moving out of a high-income tax state in retirement is one of the best ways to stretch your retirement funds. But you still have to ask yourself if it worth it. Probably it does not make any sense to move If you do not pay a lot of state income tax today and do not expect to pay more when you retire.

Living in a high-income tax state like Massachusetts, we paid a maximum of $6,200 over the years. I am not sure if it worth it for us to sell our home, hire movers, find a new place to start a new life somewhere else only to reduce a tax bill.

However, if we paid $20,000 or more in state income tax and expect to pay the same amount in retirement, I would plan on moving to a low-income or no-income-tax state.

Article: Perils of Moving to a No-Tax State

6. Reduce insurance premiums.

home office - live on less money in retirement

Before you retire, you should plan how to live on less money. One of the ways to cut your retirement expenses is to reduce insurance premiums. You can ask your home insurance company for a senior discount.

Many home insurance companies provide discounts for retirees because they spend more time at home which reduces the risk of fire, flood, or robbery.

Another way to reduce your insurance premiums is to tell your car insurance company that you will no longer be driving to work. The more you drive, there are more chances for you to get into an accident.

Daily commuting is a big risk factor because car collisions typically happen during periods of heavy traffic. When you retire, contact your car insurance company, and ask them if you qualify for a low-mileage discount.

7. Downsize your vehicles.

We own 2 cars, and last year we spent $4,950 a year (or $412 a month) on license fees, insurance, maintenance, repairs, and gas. We even had spent more money when our cars were financed with loans.

Owning 2 or 3 cars is often required when you live in the suburbs and work in the city or have kids. But when you retire, you do not need to have 2 or 3 cars. It stops making so much sense and hurts your budget.

To live on less money in retirement, you should downsize to one car or no car at all if you want to move to the city and use public transportation.

8. Reduce your bills.

There are many ways to reduce your retirement expenses. One of the most popular ways is to get rid of cable and cancel your landline phone service.

I have to admit we still have a landline phone, and it costs $30 a month or $360 a year. When we retire and start living on a fixed income, it will be a lot of money to pay for something we do not use often anymore.

I know that we should cancel our landline and use only cell phones. In the modern era of texting, Facebook messaging, and emails, people do not call each other as they used to do.

We have cable TV, and our last year bill was topping at $75 a month or $900 a year. I struggled with the question: “Should I get rid of cable?”

Honestly, we do not watch hundreds of channels on TV, and I do not like to be interrupted with commercials every 10 minutes. Internet streaming service like Netflix and Amazon Prime costs much less and offers more entertainment.

So far, we did not get rid of cable but changed from Verizon Fios TV 300+ channels to Verizon Fios TV plan with fewer channels for a price of $55 a month or $660 a year.

If you plan to live on less money in retirement, you should not overpay for things you do not use often.

9. Find free activities or use senior discounts.

As a retiree, you can find many great things to entertain yourself for less money. There are many free local summer concerts, fall festivals, events at libraries, or social activities at a senior center.

Many museums offer free days or evenings for visitors. When you do not have to work, it is much easier to visit museums on a weekday with a smaller crowd.

Using senior discounts is another way to live on less money and still enjoy your retirement. You can ask for a senior discount at many places:

gym membership
local museums and concerts
state parks and beaches
golf courses
restaurants
local stores and supermarkets

Article from AARP: 10 Places to Ask for Senior Discounts

10. Find travel deals and travel off-season.

flowers-lake-mountains - travel off-season

Traveling is the number one goal on the retirement bucket list for many baby boomers. But traveling is expensive. It includes hotels, air tickets, restaurant meals, rental cars, entertainment, tours, and more. But If you want to travel on less money, and still fulfill your retirement dream, look for travel deals or travel off-season.

In retirement, it is much easier to save money on travel because you have the freedom to travel when the best deals are available. Start with looking at cheap accommodations. Instead of paying for the hotels, look at websites like Airbnb, VRBO, or Vacation Rentals to see what they have to offer at your destination.

Airbnb

VRBO (Vacation rentals by owner)

Vacation Rentals (Home to Go)

Check airline prices and find the cheapest flights. Sign up for free price alerts. Be flexible on dates and be flexible with your travel destination. Fly out early because the lowest price flights are the first flights in the morning. Fly on the cheapest days of the week – Tuesday, Wednesday, and Saturday.

Look for senior discounts to museums, concerts, parks, and other tourist attractions. With available discounts and deals, you can save a lot of money and travel for less.

If you like to travel but concern about spending too much money, do not travel far. Drive a few hundred miles rather than fly to your destination. You will save money on air tickets, airport food, overpriced hotels, rental cars or taxi, currency exchange, and other charges.

11. Cook at home and cut down on eating out.

Eating out often might be expensive when you start living on a fixed retirement budget. One of the ways to save money is to cook more meals at home.

I like to cook, but I can see how it might be boring to eat at home all the time when you are retired. You easily get caught in a routine of the same dishes – pasta and meatballs, fish and rice, or chicken noodle soup.

To save money and still have fun, plan on eating out at lunch rather than at dinner. Many restaurants have a cheaper lunch menu. Instead of eating out once a week, start eating out only once a month.

If you want to dine out in an expensive restaurant, avoid ordering appetizers, alcohol, and dessert to save money on the highest price increase items.

To cut your spending on dining out, take advantage of deals and discounts. If you receive a 10 percent senior discount on a $120 meal, it will reduce your annual cost of dining from $1,440 to $1,296. So, you can keep $144 in your pocket and still have fun eating out on a reduced bill.

Ask about senior discounts before ordering the meal. Special savings like senior discounts are not always advertised or offered by the restaurant employees because of age sensitivity.

To save more money sign up for Groupon to receive coupons or discounts. And check out the AARP website for restaurant discount deals.

Article: AARP Restaurant Dining Discounts.

Groupon website

Also, consider a rewards credit card for your everyday spending – like getting cash back. If you do not have any debt, you could easily use a credit card to earn cashback on your groceries and even travels.

The key to making the most out of credit card options available today is using them for purchases you can afford to pay off and paying your bill in full every month.

Best Cash Back Credit Cards of 2020

12. Stay healthy and fit.

To keep your medical expenses down, stay healthy and fit. The cost of healthcare is rising every year. So, it is important to stay healthy in retirement. Start with developing good habits in your new life. Create an exercise routine and follow it thoroughly.

You do not need to spend extra money on expensive personal trainers or gym membership. Walking, running, or cycling outdoor is more than enough to stay in good physical shape for years. Explore your local walking and jogging trails. Those 30 minutes a day you need to spend walking can be done in a local park or greenway path.

Leave the car at home and walk or bike to the local store, bank, or post office. Gardening or decluttering are easy ways to keep you active and fit.

Follow a healthy diet rich in whole grains, vegetables, fruits, and low-fat dairy products. Additionally, do not forget to shop smart and always read food labels to avoid foods high in cholesterol and saturated fat.

13. Keep track of retirement expenses.

It is important to stick with your budget and keep track of your retirement expenses. You may need to adjust your spending habits and make it fit within your budget.

Always remember how hard it was to save for retirement. Do not fall into the consumption trap and find new ways to spend less on your purchases.

For example, try to limit spending at your favorite stores by setting up a fixed amount or just bring cash. If you do not have enough cash to pay for your purchase, do not allow yourself to pay for it with a credit card.

Another way to control impulse spending is to shop online. Compare prices, read reviews, and do not buy more stuff just because it seems cheaper. Setting up a budget for different occasions like a holiday budget or a vacation budget will help to keep track of your expenses.

14. Pay off debt before you retire.

If you want to live well on less in retirement, consider paying off any high-interest debt such as a credit card before you stop working.

It can be difficult to pay off debt while living on a fixed retirement income. These monthly payments may become one of your largest retirement expenses. Getting rid of debt before retirement will help you to live with less stress and fewer liabilities.

15. Set up systematic withdrawals from retirement funds.

Once you leave the 9-to-5 world, do not give yourself limitless access to your retirement funds. You do not want to go through them fast.

To avoid unlimited spending, you should use the ‘4 percent withdrawal rule’ for systematic withdrawals from your retirement funds. You can call it ‘my retirement paycheck’.

Set it up as a direct deposit coming from your retirement savings – 401(k), IRA, Roth IRA – into your checking account once a month. This process will help to control your spending. Otherwise, you might start treating your retirement funds as a big pot of cash.

Have you saved enough money for retirement? Do you know for how long will your money last? Have you thought about retiring on less money and the ways to do it? Share your thoughts in the comments below.