Financial Planner Richard Pearson-Wood offers tips on making your money go further in retirement.
The Festive Season is upon us, and whether you are crunching the numbers in preparation for retirement or already retired and just preparing to spoil the family, there are plenty of ways to ‘trim the fat’ from your expenditure.
“But I can’t afford to retire” I hear you say, but before jumping to this conclusion, have you actually done a detailed, true and honest budget? 'Honest' is the key word here, as it may require you to admit to your partner what you really spend on certain things!
Having drawn up your budget, you can then consider any changes that retirement might bring. For example, commuting costs might disappear but your heating bill could go up as you spend more time at home. We can then compare this figure with your anticipated net income in retirement. A deficit does not necessarily mean that you cannot afford to retire; it might just mean that you need to consider the following:
1. Where Can You Cut Back?
We all know how quickly the little things can add up. Takeaways and elaborate coffees might not be significant costs while you are working, but in retirement are they really a necessity? There are a good number of apps which will enable you to monitor and categorise your expenditure such as Yolt and Emma. It could be quite revealing to see exactly how much of your spending falls into the ‘non-essential’ categories!
2. Do You Need to Shake Up Your Banking Habits?
Still have credit card debt or bank loans? Taking a closer look at the interest rates on these could save you money - credit card and store card debt in particular is very expensive and can attract interest rates of over 40% p.a. This can mean that a large portion of your monthly payments will consist of interest, making it harder to repay the capital debt.
Paying off expensive debt should be a priority, and preferably before retirement. If that’s not possible then consider taking advantage of current low interest rates to restructure your debt and reduce your monthly payments. The Money Advice Service is a good place to start when considering your options, and credit score services like Equifax or ClearScore could give you an indicator of your likelihood of being accepted for new finance. You can shop around for better deals using a comparison website such as uSwitch or Compare the Market (to name a couple).
3. Are You Overpaying on Your Bills?
Those who switch, save. Utility bills, car insurance, and phone and broadband contracts are some of the most competitive areas of our living expenses and as such, there are numerous comparison sites that you can use to search for the best deals. Do not assume that your renewal price will automatically be competitive - it almost certainly won’t! Don’t forget - those over the age of 60 can also receive a Winter Fuel Payment to help make your energy bills more affordable.
The advent of discounted supermarkets like Aldi and Lidl has also revolutionised the competitive food market – it could be time to re-evaluate where you do your weekly food shop. Beware of the BOGOF deal though - if you do not need an extra one and as a result throw it away, there is no benefit!
4. Are You Taking Advantage of Discounts?
Now that you are retired, you might not need to commute anymore but you can still benefit from travel discounts. Anyone over the age of 60 is eligible for a Senior Railcard, giving you a third off of train fares across the country. Alternatively, using sites like Raileasy or Red Spotted Hanky can knock up to 80% off your train tickets, so if you don’t travel by train frequently enough to justify a railcard, make sure that when you do, you look online for discounts.
National Trust and English Heritage provide age-specific discounts, giving you the opportunity to explore the beautiful countryside and historic sites of Britain. If the great outdoors isn’t for you but you still want to keep active, over 60s can receive discounted swimming and gym membership at most leisure centres, and council-run centres might also run free exercise classes. Remember to check online for free day or week passes on the Hussle website.
Your local council will also run lots of workshops, lectures, and classes for you to try. Check out other lifelong learning centres too, such as the University of the Third Age - many of their courses are free for over 60s.
5. Could You Be Hunting for More Bargains?
In working life, we are often prepared to pay a bit more for convenience, but retirement could leave you with time to shop around. TK Maxx often has designer brands at cheaper prices if you are prepared to sift through the rails.
When shopping online, you will probably have noticed that there is always a box at checkout for a discount voucher, but where would you get one? Well now you can let an app do the searching for you - deal finder sites such as Honey and Pouch automatically find the latest offers and vouchers. There is also camelcamelcamel, a free Amazon price-tracker site that will let you know when a deal is available.
Evidently, some shrewd cutbacks and a bit of savvy deal hunting can go a long way to making your lifestyle more affordable. Knowing that your money is under control will leave you to enjoy your well-earned retirement; you might be so stress-free that you find yourself having to prove your age to claim all those concessions!
Richard Pearson-Wood BSc(Hons) DipPFS
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