Facing Low Income Retirement?

Low income retirement is a reality for more and more of us. Pension plans that you started years ago which you thought would enable you to carry on your current lifestyle, are now worth considerably less.

Sadly too many of us put off saving for retirement until its too late. We have dreams of taking early retirement along with nightmares of not having enough money to survive on. The current world wide recession does not help either!

This site is full of ideas to supplement your income, some that you can put into action immediately and others that will take a little longer to set up, such as your own website, but that will pay handsomely further down the line by providing you with passive income.

Early retirement planning

You can do this exercise on paper or on the computer. First list all your day to day living expenses...

• food
• electricity
• gas
• telephone
• water
• clothing
• toiletries etc.

Put a rough cost down beside each. Then factor in any outstanding arrangements such as...

• your mortgage if you are still paying it
• credit card bills
• loans or other long term debts
• insurance policies
• TV licence
• car expenses and maintenance

Some of the things you have been used to spending money on will no longer be necessary once you leave work...

For example you may no longer need a cell phone, or expensive suits. You will no longer need to eat out at lunchtime, or pay train fares to commute. If you have a partner, do you both still need a car? Maybe you could make do with one vehicle between you, now?

Your final calculations will probably result in a figure approximately 65 to 70 per cent less than you have been spending before retirement. You can then cut this figure further by some good old fashioned economizing.

Simple Cost Cutting

Cutting costs can be as simple as switching over to generic food brands, taking advantage of 2 for 1 offers at the grocery store, and walking to the corner shop for your morning paper rather than driving there.

Growing your own vegetables gives you fresh food for the table, as well as saving you money. You could also sell any surplus to friends or neighbours.

Other ways to save include hanging your washing outside to dry during the summer months, instead of using the tumble dryer. To save even more on your utility bills, check out the price comparison websites to see if another company is offering a lower tariff. Also ensure your home is properly insulated, to prevent the loss of heat.

Prepare a budget and stick to it

To prepare your budget use a simple spreadsheet.

List the expenses in the first column and the months in a row across the top. Under each month split the column into two and label one "Planned" and the other "Actual". Then you can enter the amount you expect to spend on each item in your list under the planned column for each month.

Some expenses will be seasonal - your heating costs will be less during the summer and you may not cook as much for example. But you may go on more day trips after all your time is yours now and you are allowed to enjoy it!

Then as you go through the month enter the expenditure in the relevant rows. If you want to get fancy, you could set up formulas in the bottom row, to total the columns so that you can see how much is left and whether you need to make some adjustments.

As long as your basic requirements are met, you can then use any additional income for enjoying yourself. And of course there is nothing to stop you earning extra money while doing so.