Retirement Planning

Is It a Good Time to Sell and Downsize Your Home?

interior of a house - sell & downsize your home today

Many people blame the baby boomers for the housing shortage in the real estate market. According to stats, baby boomers hold the biggest share of real estate wealth in the U.S. And they do not sell their homes as they grow older.

Recently I have learned that there is approximately $8 trillion worth of home equity locked up in older people’s homes.

Housing experts agree that the baby boomers’ generation is healthier than the previous generations. That is why they do not need to move in with their kids or to a nursing home. Also, they do not want to move because they want to age in place. Most of them like their neighborhoods and their friends.

But with skyrocketing home prices, some people think that now is a good time to sell and downsize your home before the real estate market starts cooling off.

Downsizing can be the right path for many baby boomers who want to cash out their biggest asset and live out their golden years with more money in the bank.

Everyone likes the idea of making a profit by selling a big house and buying a small one. But be careful with this decision because today’s market might present some challenges.

High home prices, low inventory

For a long time, downsizing has been associated with empty nesters living in a big house with no kids.

A popular retirement planning approach is to sell a big house you raised your kids in and then go and buy a smaller less expensive house. The best part of this approach is that you can use all your home equity you accumulated over the years to pay for your life in retirement.

But in recent years, the concept of a smaller house has captured our society. Downsizing has become more attractive for many financial reasons.

Less space means less money, less maintenance, and less hassle overall. And the smaller space the easier it is to furnish and decorate. Also, you can spend the saved money on something more important such as travel, hobbies, and time with the family.

After all, a smaller space has more value not only for your wallet but for your lifestyle.

However, with inflated home prices downsizing is not as affordable or profitable as it was before. If you think about cashing in on your home’s equity and downsizing to something smaller and cheaper, you might meet some challenges.

If you decide to sell now, you will be selling at the top of the market with high home prices and low inventory. But on the flip side, you are going to spend more money for your next purchase even something smaller.

When downsizing you will be looking at the smaller homes with modest square footage. Keep in mind that there are a lot of buyers competing for this kind of purchase. Smaller homes, condos, and townhouses became very popular lately and that often leads to steep bidding wars.

In many cases that smaller home you want to buy may end up being more expensive than you have originally planned.

When you sell and downsize your home do not forget about other expenses such as real estate agent fees, attorney fees, real estate, and capital gain taxes.

Prepare to pay 5 to 6 percent of the purchase price to cover realtor agent fees, which are typically paid by the seller. Add to that an extra 2 to 4 percent of the price to cover attorney fees, transfer taxes, and other expenses called ‘closing costs’.

So, if you sell your home for $750,000, you could end up paying $37,500 in realtor fees and $15,000 minimum in closing costs. Total of $52,500 just to sell your house.

Capital gains tax is another costly part of selling your home. Per IRS rules you do not need to pay capital gains taxes on the sale of your home if the profit is less than $250,000 (for an individual) or less than $500,000 (for a couple). But if your sales proceeds are higher than these numbers you will owe to IRS as much as a 20 percent capital gains tax on the profits.

If you live in a state where homes have appreciated in value significantly over the years, it might cost you a lot in capital gains taxes. For example, after selling your home for $750,000, you will pay to IRS $50,000 capital gains tax on a $250,000 profit.

High mortgage rates

Mortgage rates have increased more than 2.5 percent since the beginning of this year. And if you are planning to finance your new home it will be significantly more expensive than it was a few months ago.

According to Freddie Mac, today’s average mortgage rate is 5.78 percent on a 30-year loan. By comparison, in 2021 a 30-year fixed rate mortgage was only 2.93 percent.

If you have a mortgage on your current home with a low-interest rate and looking to downsize and borrow money for your next home, keep in mind that the rate you can get will be much higher than your existing one.

Unless you want to pay cash for your new home, downsizing might not be worth it financially if you want to apply for a new mortgage.

If you are retired and live on a fixed income, downsizing will give you some significant savings down the road. But you have to compare it with how much interest you will pay over the time of the loan.

With the average interest rate of 5.78 percent on a 30-year loan, you will pay around $443,000 in interest costs on a $400,000 home.

Also, qualifying for a mortgage might be a problem if you are not working. Keep in mind that most of the mortgages are issued and approved based on your income and not on your assets. If you are not working, it will be harder to get financing because you cannot show the constant stream of your income.

Moving cost is growing

We all know that moving is stressful. Sorting through your belongings, packing, and cleaning can be overwhelming. And with high inflation and high gas prices, your moving costs will be expensive.

According to the latest report from the Bureau of Labor Statistics, the annual inflation rate in May 2022 was 8.6 percent. It is the highest level since 1981 as measured by the consumer price index.

In today’s world everything involved in a move will cost you more – movers, truck rentals, supplies, storage, etc. In addition to downsizing your home, you will need to downsize and replace your furniture – replacing a big sofa and club chairs with a smaller couch, a king-size bed with a queen-size bed, or a big dining table with a smaller kitchen-size set.

Do you still want to sell and downsize in today’s market?

There are still many financial reasons to sell and downsize in today’s market. And if you are getting closer to retirement, downsizing can come with lots of benefits.

If you are ready to sell on the top of the market and do not want to wait for the interest rates to settle because you will be paying cash for your next purchase, then go for it. Even with the high-interest rates but low inventory, sellers are still demanding a premium for their homes.

For example, you carry a $100,000 mortgage. If you want to sell your home for $600,000, then downsize to a $350,000 smaller home or condo, you might walk away with a nice profit.

Also, you can buy your next smaller home with cash, without having to take out a mortgage.

You still have to carefully evaluate the market where you buy your smaller home. Look at home prices, the number of listings, competition, and how long most houses sit on the market.

Downsizing your home can help you save a lot of money on housing costs. Today, rising property taxes are a result of higher home values. If you downsize from a $600,000 home to a $350,000 home in the same neighborhood, you will pay fewer taxes overall.

With a smaller home, you will also spend less money on maintenance and repairs, heating and cooling, home improvement, and decorations.

Other alternatives to downsizing

If you do not want to sell in today’s market, there are other alternatives to downsizing if you want to wait for interest rates to settle, and housing inventory to increase in the next few years.

Once you are retired, you can rent your home and move to a rental. It will allow you to avoid the high home prices and high mortgage rates today’s market comes with.

Also, if you need extra cash but do not want to sell your home, you can apply for home equity loans, HELOCs, or consider a reverse mortgage.

There are still many people who would prefer to stay in their homes and retire in place. They want to remain in their neighborhood for life. In this case, homeownership might provide several options to fund your retirement without the risk of stock market investments.

One of the options is a reverse mortgage.

If your home has gained a lot in value, it makes sense to calculate the numbers first to see if it might be cheaper to stay put and take out a reverse mortgage.

Your home will continue to appreciate in value. And by staying put you will avoid paying capital gains tax completely. With taking out a reverse mortgage, you will be able to get the cash out to pay for your living expenses in retirement.

‘A reverse mortgage is a loan available to homeowners, 62 years or older that allows them to convert part of the equity in their homes in cash’.

In simple words, as an older homeowner, you will be allowed to borrow money against the value of your current home.

What are your thoughts on selling your home in today’s market? Share your ideas with us in the comments below.

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7 Essential Steps for a Mid-Year Financial Checkup

by Maggie Leave a Comment

It has been a turbulent year with the ongoing covid-19 crisis, a war in Ukraine, high inflation, and a volatile stock market.

If your finances are in a different place than they were at the beginning of the year, you are not alone. Also, if you are getting closer to retirement, you need to make sure your finances stay on track.

These 7 essential steps for a mid-year financial checkup will help you adjust your spending, increase your retirement savings, evaluate your debt and investments, gather important documents, and prepare your finances for the following months.

Step 1. Review your current budget and monthly spending.

Take some time to review your budget and monthly spending.

Have you been sticking to your planned budget, or you are overspending in some categories? Your life may have changed since the beginning of the year, and the mid-year checkup is a perfect time to adjust your budget accordingly.

How to start?

Look at your credit card and bank statements, see what expenses could be avoided, and plan to cut them by the end of this year.

Make sure to account for major life changes or upcoming big expenses that may change your financial needs such as retirement, a job change, relocation to another state, or purchasing a vacation home.

Keep in mind, that balancing your income with your spending is the key to saving more money.

By adjusting your budget, you will avoid falling into the overspending trap. Nobody likes to do budgeting. But a budget is an important part of your financial well-being. Therefore, take the necessary steps to stay on top of your finances for the rest of the year.

Step 2. Evaluate your retirement savings.

Savings is the lifeline to financial security. And yet, many people do not put enough time into managing their savings.

Financial experts recommend saving 10 to 15 percent of your income. However, it is so easy to miss this target. After you have adjusted your monthly budget, check your monthly and annual savings rate.

The first step is to look at how your retirement savings has stacked up. Have you maximized your retirement plan contributions? If your income has gone up during the past 6 months, have you increased your retirement contributions?

If you have not this year, make it a goal to increase your contributions to retirement plans such as 401(k), IRA, and Roth IRA next year.

The important thing to remember is that retirement plan contributions allow you to save a lot of money on current taxes and not miss any employer contributions.

When you are a few years away from retirement, being short on retirement savings can be a problem. A mid-year checkup helps you reassess your monthly expenses so you can make necessary adjustments to your spending.

If you have set up your savings rate at the beginning of the year, you will have another 6 months to make up for the lost savings.

How to evaluate your retirement savings?

Make an inventory of all your retirement accounts.

If you are getting closer to retirement, it is important to make an inventory of all your retirement accounts balances and contributions. It helps to see how much you have saved and how much you can withdraw from your retirement savings.

First, make a list of every retirement account you have. The retirement accounts should include 401(k) or 403(b), IRA, Roth IRA, or Roth 401(k). Then add account balance and current contribution.

Second, review how much you contribute to your current retirement savings plan. Have you maxed out your retirement savings for this year?

The 2022 contribution limits are:

$20,500 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 $27,000.
$6,000 combined contribution for traditional IRA and Roth IRA. And the catch-up contribution for people aged 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).

Even if you cannot max it out, see if you can increase your contributions even by 1 percent. Another option is to start reducing expenses in your budget, so you can put more money into your retirement savings.

Basics of Retirement Accounts

Step 3. Assess Your Debt.

The middle of the year is a great time to sit down and check your progress on paying down your debt.

A good piece of advice is to divide your total debt by your income. That ratio should get smaller over time as you reduce your debt. According to financial experts, your debt-to-income ratio should be zero by age 65.

Look at your mortgage, credit cards, car loans, or personal loans and make a list (if you don’t have one) of every single outstanding debt.

woman counting on calculator - a mid-year financial checkup

There are two strategic and popular methods to get out of debt faster.

The Avalanche method helps to reduce the debt that carries the highest interest rate. The Snowball method helps to get rid of debt with the lowest balance first, and then move on to the next lowest one.

If you are only 5 to 7 years before retirement, you should consider paying off all your debt before you retire including a mortgage. Getting into retirement with any kind of debt will put a significant burden on your lifestyle.

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

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.

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.

Step 4. Look at your investments and rebalance your portfolio.

Things change all the time in the finance world, and it was no different in the last 6 months when the stock market was shifting.

We all noticed that it has been a volatile time for financial markets. If you have been afraid to look at your statements, it is time. A mid-year is a perfect time to look at your portfolio and review where your investments are.

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. If the current market caused a shift in your portfolio, it needs to be corrected to maintain the diversification you originally planned.

If you do not automatically rebalance your portfolio, recent losses or gains may have pushed your asset allocation out of balance. Even though your portfolio has done well, you want to make sure you stay within your percentage goals.

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.

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

How to Set Up Your Retirement Portfolio

Step 5. Check your emergency fund.

A solid emergency fund is helpful when financial troubles come your way. Most financial planners recommend having 3 to 6 months’ worth of living expenses to be tucked away.

The past two years of a global pandemic and current high inflation were hard on most of us. But these past years have shown how important it is to keep some money in a safe account, so you can cover your bills if your income stops.

It is a good idea to keep your emergency fund in a money-market account or other accessible account, so you know the money is right there if you need it.

Also, if you have depleted your emergency fund, make it a goal to re-build the fund in the next 6 months. One of the best things you can do in the remaining time of this year is to make sure you have an emergency fund.

Step 6. Check your estate planning documents.

Another essential part of a mid-year financial checkup is the status of your estate planning documents.

You should have the 4 essential estate planning documents: a will, a revocable living trust, a general durable power of attorney, and a health care proxy. If you do not have these documents, I recommend making an appointment with an estate planning attorney.

If you already have these documents, keep them up to date and make sure you have suitable executors, trustees, and guardians in place.

Also, make sure that the list of your beneficiaries is up to date as well.

If you have welcomed a grandchild to the family do not forget to add his/her name to the list. Additionally, if there has been a change in the family such as a marriage, divorce, or death, make sure to update your beneficiary list.

Step 7. Update your goals.

I encourage you to look at all your financial and retirement goals and see where you are.

Your goals might not be achievable if your life situation has changed. For example, if you plan to retire at 65, but you are short on retirement savings, you might have to continue working for a few more years.

Major life changes such as marriage, divorce or death, relocation, adjusting to new living arrangements, loss of job, etc. can have an enormous financial impact. A mid-year review can help you adapt your financial goals to reflect these changes.

Take some time to review your goals and determine if you are taking the necessary steps to achieve them. And if you ignored them for the first 6 months, now is the time to create a plan for the rest of the year.

You can create a new budget, reduce your expenses, increase your contributions, start reducing your debt, and a lot more.

Final thoughts

A mid-year financial checkup is a great strategy to help you stay on track with your financial well-being. It is easy to fall into bad spending habits, get off track with your budget, forget about your investments and ignore your financial goals.

But with a mid-year checkup, you can get a fresh start and set new goals. You still have plenty of time before the end of the year to reflect on your priorities and what you want out of life.

What is on your mid-year financial to-do checklist?

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How to Organize Your Time in Retirement

by Maggie Leave a Comment

woman reading a book on a grass - organize your time in retirement

For many people, retirement is a chance to finally do things they have always wanted to do but had to postpone before they have the freedom of retirement. You might have a vision of the ultimate retirement lifestyle of getting up at any time, no alarm clock, no morning rush, and no daily schedules, just relax and enjoy your day.

But with no direction or discipline, you will soon find out that your days and weeks will pass without doing what is meaningful. The next thing you know a few months have passed and you have no idea where the time went and what you did with your time.

A successful retirement lifestyle should consist of a mix of activities that provide physical activity, mental stimulation, and socializing with others.

If you add to this mix the household chores such as cooking, shopping, cleaning, laundry, and house maintenance your retirement life might look overloaded again. That is why you will need some form of a time management system to arrange these activities and find time for it all.

Here are a few important tips to help you organize your time in retirement.

Make a Schedule

Sit back, relax, and do nothing all day is still a dream of many future retirees.

Just remember that if you sit around watching TV or surfing the internet for a few months, your health and fitness level will deteriorate quickly.

This is why starting retirement with no plan or schedule could hurt you in a long run. There is no better way to plan for retirement than to have a good understanding of how you will spend your days and weeks.

Time management in retirement does not mean blocking every minute of your day. It is more about establishing goals and priorities and then making sure that you accomplish what you set out to do.

First, organize your activities and household chores on a daily or weekly basis.
Second, use an online calendar or a planner to keep track of your activities and tasks. Many people will have a list of things (a bucket list) they want to accomplish once they stop working. It is a good idea to spread them out over some time, rather than trying to conquer everything at once.
Lastly, make a list and set reasonable and manageable goals of when you want to have items completed. It might be helpful to divide them into categories such as this week, this month, and this year.

Find your rhythm

It can be hard to structure days in your early days of retirement. After decades of working and having your days structured from morning to evening, it is easy to get overwhelmed with so much free time on your hands.

To establish your rhythm, start your day with purpose and write down two or three things you want to get done that day.

Here is an example of a few activities to keep on your calendar:

Cleaning the house
Preparing a meal
Working in a garden
Meeting up with friends
Writing in your journal
Reading a book
Going to the gym/ taking yoga class/ working out

1. Establish your morning routine.

Your morning routine looked the same for the last 40+ years – you would wake up, do some personal hygiene, get dressed, have breakfast (or not) and go to work. Once you are retired, you need to reinvent that part of the day.

There is so much proof behind why your morning routine is important.

man preparing coffee on a table - organize your time in retirement

Your morning routine sets the tone for the day. A good routine gets you on track from the moment you wake up and puts you in the right frame of mind. If you get following a healthy routine every morning you will get a lot of optimistic energy moving around you.

Morning routine examples:

Wake up
Breathing exercise
Have a healthy breakfast
Enjoy a gourmet cup of coffee or tea
Listen to a good music
Read a book
Write your thoughts in a journal.

2. Makes your evenings purposeful.

Evenings could be the most difficult part of the day.

People usually start feeling tired from their daily chores and responsibilities. That is why it is important to make your evenings purposeful. With no discipline or direction, you will discover that you spend most of your evenings on a couch watching Netflix.

You should simply write down a few things you are going to do every evening. For example, if you like to read or write, you can schedule a daily reading or writing in your journal time from 7 to 8 pm every day. I like to cook, so I can schedule preparing a meal from 6 to 7 pm every day.

There are so many other options:

Work in a garden
Water your flowers
Take a daily evening walk after dinner
Meet with a friend
Listen to a podcast
Sit outside to watch a sunset

It is also okay to do nothing and watch TV. But you are better off spending your evenings outdoors than indoors because it will give you more energy and motivation for new things.

3. Combine structured activities with free time.

If the idea of maintaining a daily schedule does not appeal to you, you can establish a less time-based approach.

Start your mornings by writing down two or three things you want to get done that day. Then, once you have done those two or three chores, you can spend the rest of the day doing whatever you want.

You will probably end up with a mix of structured activities, free time to spend however you like, and to-do lists.

4. Limit your time watching TV.

Just do your best to limit time mindlessly watching TV or browsing the internet.

Decide how much time you will allow to do passive activities and do your best to stick to it. For example, you might allow yourself only 30-minutes every morning and every evening to check emails, Facebook, Instagram, Twitter, and any other social media channels.

Tips for a Smooth Transition to Retirement

Add something new to your life

Retirement is the ultimate time of getting out of your comfort zone and trying something new.

Most of us spend our lives dedicated to duty – building a career, raising a family, and taking care of grandchildren or parents. And unfortunately, we often put our dreams on a shelf.

But retirement is a perfect time to explore something new.

Go back to school. There are so many educational classes, both in-person and online that can help you grow your mind, meet new people, and stay relevant to the modern world.

Public universities often offer special tuition discounts for seniors. If you are not interested in getting a degree, try taking classes at a local community college. Choose a subject that you have always wanted to learn more about.

But if you want to gain more knowledge for free and from the comfort of your home, I recommend listening to podcasts on a topic you want to learn more about or even watching something on YouTube.

Engage yourself in new culture and language. Traveling is one of the most popular ways to do this. It can teach you the new and insightful things and open windows to diverse experiences.

Spend time on your hobbies and interests. Fill up your time with what makes you happy. Think of the activities you would do all day long and use your time in retirement to enjoy those activities.

4 balls of yarn - find new hobbies in retirement

If you do not have any hobbies or interests you are passionate about, try picking a new one from the list below.

Here is a list of interests and hobbies to help you think about new possibilities for retirement:

Design and remodeling
Entertaining
Cooking/ baking
Decorating and DIY projects
Organizing
Painting/ reading
Playing musical instruments
Singing/ acting
Pet care/ animals
Teaching/ mentoring
Traveling/ learning a new language
Sports/ fitness
Babysitting
Gardening
Learning new technology

Related Posts:

Learn how to slow down

It is important to establish a healthy balance between work and relaxation.

Once you stop working you do not need to follow your working schedule and pack your days with tasks to the brim. Being constantly busy does not mean achieving any sense of fulfillment. You do not have to be busy every minute of the day. Stop putting pressure on yourself and learn how to slow down.

I know that for some of us it is hard to relax. You might not need to set a schedule for everyday tasks. Instead, just finish a few chores when you are ready and take the rest of the day off. Be flexible and allow yourself to move activities and tasks from today’s list to tomorrow or next week. In the end, it will all get done.

The main thing to remember is that you can be more productive and energetic when you are physically and mentally fresh. So set aside enough time in your schedule for rest.

Get sufficient sleep at night.
Take breaks between tasks, especially when you are doing physical work.
When working in front of your computer, take 5 to 10 minutes breaks to stretch and move around.
Set a timer on your phone or computer to alert you when you have been online longer than a specific time. Then, shut it down.

How do you organize your time in retirement? Share your ideas in the comments below.

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How to Retire Well on a Small Budget

by Maggie 4 Comments

an older couple in woods-retire well on a small budget

The truth is a lot of retirees will be living on a small budget. According to U.S. Census Bureau data, the median average retirement income in 2021 for retirees 65 and older is $47,357.

And the average retirement savings for people aged 55 to 64 is $375,000. For most people, these savings will decrease when they start spending them in retirement.

With not that much money in your pocket, retirement is getting more difficult than ever with the growth of inflation and just about everything getting more expensive.

Living well on a small budget in retirement can be challenging, but it is possible. There are a few things you can do to make it work.

Pay attention to your spending.

When you have to live on a small budget in retirement it is important to know where your money is going. Not many of us like to spend time tracking our expenses. But you cannot afford to slip money away on something that is not important while living on a tight budget. Every dollar should be accounted for.

Here are the biggest expenses in retirement – housing, transportation, food, and healthcare.

Take a careful look at your expenses and see how you tend to spend money each month. Divide all your expenses between fixed and variable and see where you can cut back.

Fixed expenses such as mortgage/ rent, utility bills, and car insurance are set and hard to change. However, variable expenses such as clothing, dining out, travel, and entertainment are easy to reduce.

How to Cut Expenses Before You Retire

There are many budgeting apps that make tracking your spending easier than it used to be.

Best Budgeting Apps

Reduce your housing costs.

Keeping a roof over your head is always one of your biggest budget items. But how much money you can spend on housing is critical when you have to live on a limited budget.

Luckily, we have many options to choose from:

Downsize to a smaller home or condo
Move to a cheaper location
Rent an apartment
Relocate to 55+ community
Age in Place

First, think about where to live in retirement and the monthly costs of that place including rent or mortgage, taxes, maintenance, and repairs.

Second, decide how close you want to live to your family and friends and what your other priorities such as climate, rural or urban areas, and proximity to medical facilities.

Third, if you choose to age in your home, figure out the cost of renovation for retiring in place and how much help you will need for maintaining that big house when you are older.

Choose your place to live in retirement carefully because it is your biggest budget expense.

5 Common Mistakes to Avoid When Choosing a Place for Retirement

Reduce your transportation costs.

Cars are expensive. You do not need to spend a lot of money on your car to have a happy retirement.

Typically, most retirees spend less time on the road driving than the average driver. According to stats, people over age 65 spent an average of $7,062 annually or $588.50 per month on transportation.

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.

If you have been a two-car family for years, it is time to downsize to one car so you can spend less money on insurance, gas, maintenance, and taxes. And if it is time to replace your old car, do not buy a new car. Consider buying something that is about 2 or 3 years old so you can pay less.

Most vehicles lose about half of their value by the time they are five years old. So, if you decide to buy a used car, a three-year-old car will cost you less in upfront expenses and maintenance.

In case you are planning to move from the suburbs to the city, you should sell all your cars and take advantage of public transportation. In this scenario, you do not need to worry about the costs of your vehicles at all. Buses, subways, and other public transportation can cost you around $526.80 per year with a senior discount. Just buy a monthly public transportation pass and enjoy car-free retirement.

Reduce your food costs.

Food is going to be your third biggest expense in retirement after housing and transportation.

On average most retirees spend around 20 percent of their income on food. According to stats, in the last 5years households run by people 65 or older spent $6,207 annually or $517.23 monthly on food. Those aged 65 to 74 spent on food $6,864 per year, and people over 75 spent $5,274. These food expenses include groceries, alcohol, and dining out.

Food costs will vary depending on your diet and habits. For example, people who prefer to buy organic produce will likely spend more money than people who do not.

If you are retiring on a small budget, you need to be creative with your food and how you eat.

Learn to cook

Eating at home more frequently will cost less than eating out. The reality is that the food you cook yourself is the cheapest food you eat. When you retire and have plenty of time there is no more excuse such as “I do not have time to cook”. After all, learning how to cook can become your new hobby.

person holding sliced veggies - retire well on a small budget

Plan meals in advance

I noticed that frequent trips for a few extra grocery items often lead to a higher food bill at the end of each month. That is why planning your meals in advance before you go grocery shopping is important.

For example, use a Monday morning to decide what dishes you want to cook at home during the coming week and additional snacks you will want to have in your pantry. After making a list, you can go grocery shopping just once for the whole week.

With current prices skyrocketing and inflation on a rise, it is getting tougher to find new ways to save on grocery shopping.

However, there are always ways to shop smart:

Shop seasonal food. Seasonal food is cheaper since there are no traveling and storage expenses involved. Purchasing seasonal produce is always cheaper than buying that same fruit or vegetable during its off-season. In addition to that, produce is fresher and tastes better in season, and is often perfectly ripe. So, take advantage of the low prices at harvest time.
Shop generic brands. The huge benefit of buying generic brands instead of name brands is saving money. Typically, generic brands are cheaper than name brands. The packaging may not be as colorful as a name-brand product, but often there is little to no difference between both products.
Shop the perimeters. Fresh foods are healthier than processed foods. In a typical grocery store layout, fresh foods such as fruits and vegetables, meat and fish, milk, eggs, and cheese are on the outside perimeter. But processed foods are typically stored in the center aisles.

Many foods in the center aisles contain preservatives that make them last longer on the shelf. If foods do not have any added preservatives, then it needs to be refrigerated to keep them fresh.

Try to avoid buying pre-cooked meals or processed foods to maintain a healthy diet and cut the costs of your groceries.

Learn to eat out for less

Cooking only for one or two seems unrewarding. However, if you are living on a tight budget, you should avoid eating out frequently. It is not that you should never eat out. But if you are retired and worried about inflation and rising food prices, reducing the number of times you go to the restaurant can help to reduce the cost of it.

There are still many ways to have the restaurant experience on a small budget:

Have your meal at home and then go for coffee and dessert.
Instead of eating out dinner, go to the same restaurant for lunch. Many restaurants have the same menu for lunch and dinner, but they mark up their prices for dinner.
Instead of eating out once a week, start eating out only once a month.
If you still want to go to an expensive restaurant, avoid ordering appetizers, alcohol, and dessert to save money on the highest price increase items.
Be selective, look for coupons or Groupons, and only go to places offering deals and discounts.
Go to happy hours at restaurants, where wine and hard liquor are less expensive, and the bar food can serve as dinner.

Check out this website for Restaurant Deals and Specials

Sign up for Groupon to receive coupons and discounts

Take care of health to reduce medical costs.

We all know that medical care is expensive, and the cost of healthcare is rising every year. According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2022 may need approximately $315, 000 saved (after tax) to cover healthcare costs in retirement.

Many health issues are age-related. Our body gets weaker as we age.

There are still many retirees who spend days lying on a couch watching TV and snacking. Some people gain weight when they stop working because they are not active and eat more because they are bored. Being overweight and lack of exercise put retirees at great risk of many chronic diseases such as diabetes, stroke, and cancer.

That is why regular medical check-ups are a must.

You should visit your doctor regularly and do not skip any recommended health screenings and tests. Keep an eye on your blood pressure and cholesterol level to avoid a heart attack or stroke.

If you want to eat healthy, follow a 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.

Another way to keep your medical expenses down is to stay active and fit. 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 your local park.

How to Stay Fit for a Healthy Retirement

Travel and entertainment on a small budget.

One of the most exciting parts of retirement is enjoying your new lifestyle.

Portugal coast - travel on a small budget in retirement

For many retirees, travel is a big part of that lifestyle. However, traveling is expensive. It includes hotels, air tickets, restaurant meals, rental cars, entertainment, tours, and more. According to stats, the average retiree spends $11,077 per year on travel.

Travel off-season. If you want to travel on a small budget, 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.

Find cheap accommodations. Instead of paying a lot of money for the hotels, look at websites like Airbnb, VRBO, or Vacation Rentals to see what they have to offer at your destination.

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-priced flights are the first flights in the morning. Fly on the cheapest days of the week – Tuesday, Wednesday, and Saturday.

Look for senior discounts. 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. Also, you can ask for a senior discount at 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 are concerned 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.

Find free activities. 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.

Retirement Travel Tips for Planning a Vacation

Final Thoughts

It is good to remember that money and wealth are important, but it is not everything. Happiness is not about being able to purchase a fancy car, a big house, or indulge yourself in luxury vacations. It is small and simple things such as family, friends, and having a purpose in life that make us happy.

How do retirees manage to live on a small budget? Share your ideas in the comments below.

If you enjoyed reading, share this post so that others can find it, too!

How to Keep Yourself Fit for a Healthy Retirement

by Maggie Leave a Comment

man and woman in kitchen cooking-keep yourself fit for a healthy retirement

All the advances in medicine and technology have created a dramatic increase in life expectancy. People are living longer than ever, including much more years in retirement. We all hope for a happy and healthy retirement, but unfortunately, getting older comes with concerns over health.

Making an active effort to stay healthy will not only allow you to live longer but will increase your chances of having a more fulfilling and energetic retirement doing the things you love.

So how do you keep yourself fit for a healthy retirement? The best advice is to start planning for it today.

In this article, I will look at the problems related to physical, mental, and emotional health and find ways to improve each.

Find time for physical activity

Whether you are planning to retire in a few years or already retired, get moving.

We all know that exercising is important. Studies have consistently confirmed that regular exercise reduces your risk of heart disease, diabetes, stroke, and even slows down the development of dementia. So, if you want to have a healthy and active retirement, then find time for regular exercise.

Many experts argue over how much exercising is healthy. But everyone agrees that some moderate exercise is better than none. Whether it is aerobics, lifting weights and doing sit-ups, or practicing yoga and gardening, we should all get engaged in some moderate physical activity.

The important part is to find the activity you like so you will keep doing it regularly.

Do not wait until you retire or do not wait until your health starts to decline. Choose something you would enjoy and make it part of your daily routine.

Many books and YouTube videos can help you to do a workout from the comforts of your home.

15 Best Quick and Easy At-Home Workout Moves

Here is my favorite home workout on YouTube. It only takes me 30 minutes to follow the workout playlist any time I want.

Family Fitness – 30 Minutes Body Workout

If you prefer to exercise with other people, you can join a gym or take group fitness classes. But if you do not want to spend extra money on expensive personal trainers or gym membership, walking, running, or cycling outdoor will be 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 your car at home and walk or bike to the local store, bank, or post office. Gardening or decluttering are also easy ways to keep you active and fit.

Have a healthy diet

As you age you are more likely to have problems with health linked to nutrition. That is why a healthy diet is more important than ever.

Eating healthy is similar to exercising every day. And it works better if you plan for it. Plan your meals so you will not end up snacking up on ice cream before dinner because you are hungry.

If you want to eat a healthy diet avoid too many saturated fats in meat and dairy. Healthy people usually restrict the amount of sugar and salt in their diets, and they drink lots of water and tea.

According to various studies, a diet rich in fruits and vegetables is linked to a reduced risk of obesity, diabetes, and cancer. So instead of eating fast food, you should choose to eat fresh food. For people over age 65, it is recommended to have five or more servings of fruits and vegetables every day.

For me, the Mediterranean diet works as a great inspiration. People in the Mediterranean region live longer because they follow a healthy diet rich in whole grains, vegetables, fruits, and low-fat dairy products. Their diet is low on animal products, and they prefer to cook fresh fish.

You need to make sure that you are always working on how to improve your diet by choosing foods that are good for you and cutting down on packaged food. Do not forget to shop smart and always read food labels to avoid foods high in cholesterol and saturated fat.

veggies and fish - healthy diet for retirement

I try to eat healthy every day and plan all our meals. I like to have a healthy breakfast – orange juice, oatmeal, fruit, and green tea. I try to eat less at dinner because I watch my calories and do not want to gain extra weight. I prefer to eat meat or fish during lunch. And I serve all our meals with at least one green vegetable or salad.

And the main thing, I try to go easy on sugar (chocolate and ice cream are my weakness!) and drink plenty of water with lemon.

Learn new things

Keeping yourself fit in retirement is not only related to physical activity. In general, being fit means a combination of different factors including physical fitness and mental health. Staying sharp mentally is as crucial as staying physically fit.

When you are engaged in physical activities you focus on your muscle strength training. The same kind of training should go for brain activity. To stay mentally fit you need to challenge your brain with various exercises.

One of the best ways to keep your mind young and active is by learning new things.

Here is a list of ideas:

Learn how to play a musical instrument
Start (or join) a book club
Learn how to paint
Take a pottery class
Learn how to be a photographer
Take a cooking or baking class
Write a poem
Write and publish an e-book
Learn new digital skills – open an Instagram or Twitter account.

I believe that keeping our minds sharp is an important part of prolonging the time we can enjoy in retirement.

Monitor your health

Many health issues are age-related.

Our body gets weaker as we age. Many people will experience aging issues such as heart disease, arthritis, diabetes, dementia, osteoporosis, and more. That is why regular medical check-ups are a must.

You should visit your doctor regularly and do not skip any recommended health screenings and tests. If you are a woman, you need regular tests for breast and cervical cancers. If you are a man, your doctor should help you decide about a prostate cancer test.

Keep an eye on your blood pressure and cholesterol level to avoid a heart attack or stroke.

Maintain an active social life

People who have plenty of friends and enjoy a close relationship with their families, typically live longer than people who are lonely.

When you retire, you do not just leave your job, you enter a new stage in life.

Leaving the workforce will reduce your social interaction with colleagues. Friends and neighbors might retire and move away. Death can take a spouse or close friend. Those are all sad life events because loneliness is linked to poor health and early death.

We all know that having a strong social support system helps us deal with stress.

It is important to stay involved and engaged in life, so you do not feel lonely. Being engaged in a community gives people a sense of purpose, security, and connection. It is important to have a reason to get up every morning, go out, and do things.

Find new purpose in life

If you are ready to leave the working world, think about how you will spend the 40 + hours a week you spent previously at your job.

The reality is that you may feel ready to retire, but on the other hand, you may feel nervous and doubtful.

What are you going to do with all that free time? One of the best things you can do is create a plan for your retirement.

You need to decide what will be important in your new life and how are you going to spend your days and weeks. The minute you say goodbye to coworkers you need to know what is next for you.

It is not a secret that when you feel like your life has a purpose and meaning, you will experience less stress. And with less stress comes fewer negative health effects.

Having a purpose in life makes people stay more physically active and more willing to take care of themselves.

Finding Your Purpose in Life in Retirement

Find hobbies to fill your days

I think everyone had some interests in life before they were forced to put them on a shelf during their working years. We spend our lives doing things that we have to do – career, kids, family. But retirement gives us a new opportunity to start over again.

Many retirees struggle to feel useful after they stop working which can negatively affect their health. Instead of being depressed and unhappy, refocus your energy on learning something new and more interesting than your previous job.

I believe that desire to travel the world is a big factor for people wanted to retire. Travel is important at any time in life. But travel in retirement gives you a new opportunity to explore the world, learn a new language, and use your social and communication skills.

Another big factor is a desire to complete a bucket list. Creating a bucket list is a helpful tool to set up your retirement goals or have a list of things you want to complete at least once in your life.

15 Ideas on What to Do in Retirement

Work on your relationships

Retirement can be a challenging time for relationships. When you stop working you will leave most of your friends at work behind. Sadly, many will disappear from your everyday life the day you leave.

two women on a bench - friendship in retirement

Growing older could be lonely unless you have support, love, and even friendship from your family.

Do you have a good relationship with your spouse if you are married? Do you stay connected to your children and their families? Do you spend enough time with your grandchildren?

There are many things to do together as a family. Go to the game or concert with your kids and grandkids. Consider a family vacation together. Spend all holidays and other celebration times together.

Do you stay connected with other parts of your family like your brothers or sisters? What effort do you make to stay in touch with them?

Unfortunately, many of us spend more time on Facebook, Instagram, or Twitter to stay informed and connected with former classmates or colleagues because they post often rather than spend time with people who are important to us.

I recently read that one of the greatest regrets of people who are getting closer to the end of their lives is that they didn’t spend enough time with their loved ones.

Life is short! Make sure that you spend enough time with the most important people in your life.

Takeaway

Taking care of yourself and making your physical, mental, and emotional health a top priority in retirement is the best gift you can give to yourself and those you love.

How do you keep yourself fit and healthy? Share your ideas in the comments below.

If you enjoyed reading, share this post so that others can find it, too!