6 Tips for Retiring on a Small Budget
People are constantly having to work longer, so it only makes sense that we’d look for ways to retire earlier ourselves. Some countries don’t allow full retirement until well in your 60s or even 70s, but don’t we all want some time to actually enjoy our retirement? It’s often assumed that you need to have big financial reserves in order to retire early, but that’s not always entirely true.
Let’s take a look at some ways where you can retire without needing that big budget:
Know Your Numbers
If you want to retire on a small budget, the biggest factor is going to be knowing what that budget is and making that budget work. Split your expenses between fixed and reducible ones so you can leave certain things out whenever life hits you with an unexpected cost. If you know how much you need to live each month, you know what your retirement budget needs to be. Ideally, you won’t have a mortgage anymore which means this number could end up a lot lower than you assume.
Keep an Emergency Fund
Once your day-to-day expenses are covered, keep an emergency fund in case your car breaks down or something else happens. This needs to be separate from your much tighter budget account and needs to stay there until you need it. What you should be aiming for is a number that allows you to bridge at least a few months of your regular budget. You don’t need to save up on an entire year to bridge, odds of that happening are so slim that it would restrict your lifestyle too much for the small benefit it offers. If you can bridge four months, you’re golden.
Save on Food
Most people eat too much. Most food packaging is far too big and the portions in them are already borderline massive. The biggest struggle won’t be eating only 100 grams of meat on a daily basis, it’ll be finding a package that small. Think ahead during your week so you can make one big grocery trip and shop more efficiently without needing to throw half the stuff away or overeat yourself. Also, try looking at whatever products are currently priced somewhat cheaper. If you’re getting a two plus one for your detergent, you’d better go and grab three of those. If it doesn’t go bad, just buy a lot of it whenever it’s discounted.
Think About Your Living Space
It’s always going to be cheaper to live near a suburban area. Cities themselves are going to be too expensive to get a house in, but the countryside might increase your dependence on other costs like a car. If you can get rid of needing to own a car, buy gas, buy insurance, … you can easily save a few thousand dollars per year. If you’re looking for good healthcare, maybe go to a smaller college town. Since those will be mostly aimed at students, there’ll also be plenty of ways to get some cheap entertainment in.
Buy and Sell Second Hand
Since you’re retired, your main source of income is going to be getting rid of all the stuff you don’t use anymore. It’ll save up on space, which allows you to live in a smaller and cheaper house, and it’ll bring in some extra cash where there otherwise would be none. Buying secondhand is another good way to save up on money. Just make sure people sell stuff because they’ve had it replaced by something better, which will often mean that you’re buying something that’s still in perfect working order at a huge discount. We’ve all gotten rid of things that were still totally fine before, right?
Traveling might be one of those things that seem impossible once you’re living on a small budget, but that just means you’re looking at it wrong. Instead of renting a house to stay in, try looking for people that are on vacation themselves and are looking for someone to house sit for them. Housesitting will allow you to save up on the most expensive part of any trip – the accommodations. Who knows, you might even be allowed to use their car or bike and be able to explore the local area that way. And at least you know the house will be in complete working order and have everything you need; people actually live there!