Adjusting to a fixed income

Timing, they say, is everything. Except when it comes to retirement.

There is no perfect age to retire because there are so many factors unique to each situation.

What is common for most retirees is a few lifestyle changes and adjustments – the biggest of which may be transitioning to more of a defined fixed income.

Confined to a dollar limit each month can be challenging, especially after decades of relatively unharnessed spending habits.

A few tips when transitioning to a fixed income:

• Create a budget. Place your primary monthly expenses at the top of the list.
• Pay necessities first. Things like a mortgage/rent, food, prescriptions, utilities should take priority.
• Shop wisely. Take advantage of senior discounts, coupons, etc.
• Don’t be afraid to downsize. A smaller vehicle, condo living, etc., may help reduce costs for fuel and utilities.
• Have an emergency fund for unexpected expenses like major home or vehicle maintenance or medical procedures.

Retirement living isn’t meant to sound restrictive. In fact, it’s quite flexible. You can always adjust your lifestyle to best fit your situation – you can save more, work longer or spend less.

Of course, working longer will likely improve your finances. Not only will it give you more time to pad your savings, but it'll also allow you to boost the payout rates on government benefits.

Another helpful tool is having a ballpark estimate of your monthly expenses before you retire. That way, you can adjust your spending habits, if necessary, and gain a better understanding of what money you’ll have to work with once you're in retirement. Be sure to consider things like utilities, groceries, dining out, miscellaneous shopping and travel. Then look at what will change when you retire. Work-related expenses will disappear in lieu of more recreational activities. Ultimately, it's up to you to decide what is most important.