Time to Review Your Retirement Budget
10/01/2024
Guest Post byJack Wallace, Director at Yrefy
The Fall is a great time to review your retirement budget. Here's what to look for.
Review income and expenses
The first step is to review and analyze your retirement budget including your current income and expenses. Review your income and expenses line by line. Compare your YTD 2024 income and expenses to your income and expenses for 2023. Chances are, given the inflation and high-interest rate environment we have experienced for the last two years, you may need to make some more lifestyle adjustments for the remainder of 2024 and beyond which you would much rather figure out sooner rather than later. (Note: Given the recent 50 basis point reduction in interest rates on September 18, 2024, by the Federal Reserve Bank, and an indication that there are more interest rate reductions to continue, you also may have to adjust your income assumptions downward if you have money market accounts or bank CD’s coming due.)
Essential vs. non-essential expenses
Next you need to review what you consider essential versus non-essential expenses, aka needs versus wants! How much of your monthly spending is discretionary as compared to necessary expenses? How much could you save making more meals at home? Could you cut back on your entertainment expenses and look for more, free, and/or senior discount things to do around town? Budgeting for your housing repairs, health care (particularly medications), transportation and food are the priority expenses not to mention essential, so be sure you’ve allocated enough for your essentials before budgeting for discretionary expenses.
Take advantage of discounts
Whether you’re a member of AARP or the Association of Mature American Citizens, take advantage of senior discounts whenever and wherever you can. It is a fantastic way to save money and still do the things you like. You’ve earned it! Get the senior rate when traveling, look for pharmacies offering prescription card discounts and check out discounts offered to seniors at local retailers, restaurants and entertainment venues.
Consolidate your debts
As of June 2024, 50 percent of credit card holders don’t pay off their credit cards monthly and carry balances from month to month. Given the high-interest rate environment of the last two years, many people are barely able to make the minimum monthly payment. If you have a lot of credit card debt and other loans that you’re struggling to make payments on, consolidate the credit card debt into one credit card with the lowest interest rate possible (pay attention to the fine print for those teaser rates), so you can factor in paying down this debt each month. This can give you peace of mind, and eventually keep more of your money in your pocket. Try setting aside extra money each month to pay down more debt than the minimum that is due so you can get the mountain of debt down as quickly as possible.
Pay off big debts
If you have high floating rates or fixed rates of interest on your auto loan, credit cards, private student loans, or mortgage, shop around and see if you can get a lower interest rate, particularly given the recent action by the Federal Reserve. Make sure you are paying by ACH since most banks will reduce your interest rate 25 basis points or more for doing so. Paying this way may also increase your credit score since you will not have any delinquent payments. You should see an increase in your credit score which could put you in a better credit score category that will get you a lower interest rate.
If you still have Federal student loan debt that you are repaying for your education or for your children or grandchildren, go to www.studentaid.gov to see what Income-Driven Repayment Plan works best for you to lower your monthly payment.
Good luck!
With over 40 years’ experience in corporate, education and housing finance, Jack Wallace has and continues to collaborate with clients and the financial community to develop debt and equity funding sources for new and existing asset classes and businesses. Jack currently serves as a Director of Governmental Affairs for Yrefy, a Phoenix based private student loan refinance company.
Image by Rilson S. Avelar from Pixabay
HappilyRewired.com is a Wearever Top 20 Senior Blog and a Top 75 Baby Boomer Blog