By Vincent Barbera, CFP®, MSFS
So, you’ve finally made it to retirement with a decent nest egg to live off of (hooray!). But how do you make it last for the next 20-30 years?
The truth is, you’ll probably need to make some adjustments—the size of which will vary based on your specific circumstances. If you live modestly and have built a vast retirement fund, you may not notice much of a difference. But if you’re a big spender with a small nest egg, be prepared for some dramatic changes.
No matter the situation you find yourself in, here are four key tips for making the transition to a fixed income as smooth as possible.
1. Track Your Finances
Your first (and most important) step is to figure out exactly how much you’re currently spending each month. This will be your starting point. If you skip this step, you won’t have anything concrete from which to base your decisions and measure progress.
Next, take your monthly expenses and compare them to your fixed income. (It seems obvious, but you’d be surprised how many people skip this step.)
If the numbers don’t work out, you have two choices—adjust your lifestyle to accommodate your fixed income, or find ways to increase your fixed income (e.g., finding a part-time job or starting a side hustle).
2. Stay Busy With Cheap Activities
Even if the numbers do work out, finding part-time work (or at least a cheap, time-consuming hobby) isn’t such a bad idea. As you can imagine, when people leave their full-time jobs and suddenly have loads of time on their hands, they tend to spend more money than usual.
By keeping yourself busy—whether that be working, volunteering, or a low-cost hobby (keyword: low-cost)—you’ll be less likely to overspend.
3. Develop A “Limited Supply” Mindset
Now, I’m not saying you need to deny yourself pleasure in retirement, but there needs to be a shift in the way you think about spending.
Before retirement, you could justify purchases by telling yourself you’d work hard to recuperate the money. But now, once you spend it, it’s gone. You have a limited supply. This should be a constant consideration when making purchases.
4. Make The Most Of What You Have
Everything we’ve discussed so far relates to you and your daily habits. Aside from these, the best thing you can do to adjust to living on a fixed income is to maximize that income via your investment decisions.
Where We Come In
At Newbridge Wealth Management, we’ll help you create a custom financial plan that maximizes what you already have so that you can live your best possible retirement.
Vincent R. Barbera, CFP®, MSFS is a managing partner and co-founder of Newbridge Wealth Management, a private financial counseling firm located in Berwyn, Pennsylvania. Believing in a patient, disciplined approach to investment management that delivers value and peace of mind, he utilizes a process-driven approach to financial planning that provides comfort and clarity to his clients’ long-term goals. Along with a bachelor’s degree in psychology and business, he has a master’s degree in business and financial planning and Certified Financial Planner™ designation. Learn more by connecting with Vincent on LinkedIn, or send him questions at firstname.lastname@example.org.