When Retirement Leaves You Underfunded

People look forward to retirement, a time when life is enjoyable. Well....maybe. For some of us retirement is a time of readjustment and learning to live on only 25 to 30 percent of the income available while working. Few have enough money to fulfill their retirement dreams. The rest of us, learn to live on much less unless we continue to work.

Planning for Retirement

Information available from Social Security:

• Retirement Calculators

• Retirement Planning

• Saving for Retirement

These tools are abundant and helpful, although reality is planning to enter into retirement debt free and then planning to live on less. Could you live on 25% or 30% of your current income for 12 months? If not, then paying off debt is the number one priority.

Financial Changes in Retirement

• Savings and retirement accounts were depleted over time due to a long-term illness. Thinking the government would cover medical costs was a myth. Medicare does not cover some expenses at all. Purchasing supplemental insurance can cost $500 a month for two people, an expense that most forget about. Medical expenses have risen and will continue to rise.

• Helping the grown children financially is out of the question. There were other methods of helping, like offering to assist with the grandchildren. Practical gifts for birthdays and holidays such as clothing and sports equipment are valuable items to any household raising children.

• Dining out has been limited to special occasions. Rather than two or three times a week, now it is occasionally per month. Meals are cheaper and healthier when prepared at home.

• Conserving energy in the home has become a top priority. Adjusting thermostats for efficiency, limiting hot water usage, and 'air-drying' clothing has made the biggest difference in utility costs.

• Grocery prices are soaring! Meal planning and preparation at home has become essential. Efficient uses of food items and serving portions have saved on groceries. Always make a list!

• Extras, such as the second car, satellite television, or a phone line, might need to be eliminated for a substantial savings to monthly expenses.

• Leaving no debt for the children to contend with is a priority. Assets are clear of debt. All expenses prior to the need (including burial policies) are paid, or there are other methods to cover the expenses.

Abraham Lincoln said, "Most people are as happy as they make up their minds to be". Underfunding is a shock in the beginning, but after adjusting, retirement is wonderful! I thoroughly enjoy the simple life and frugality is becoming first nature. You might be surprised how little income it takes, and be happy, if you choose.

Sources:

Smart Money
Life After Retirement
Personal Experience

More from this contributor:
Seven Unconventional Tips for Spending Less Money
Depression Era Tip for Saving Money
Money Management Lessons from My Depression-Era Parents