7 ways to make the most of your retirement budget
How to make your retirement income go further and make sure you can afford retirement on your terms.
Nov. 28, 2022
4-minute read
Retirement can be a time to relax and enjoy the fruits of all the work you've put in throughout your career, but increasingly, people are concerned about how they will make their savings last. Whether you're getting close to retirement or are already there, taking control of your finances is an important step in making sure you can enjoy your own unique retirement.
With inflation in the headlines, now is a good time to make sure you have your budget dialed in and your spending in check, and that you’re making the most of all your potential sources of income. Here are seven strategies to start today that can help stretch your retirement budget.
1. Be clear about your cash flow
Inflation is pushing up the cost of a lot of everyday items, from housing and clothing to food and gas. While the rate of increase may slow down in the future, prices may not drop significantly or quickly. That means you may need to review your budget to make sure it takes these higher prices into account. Remember to include all your monthly expenses and sources of income, so that you can see whether they balance out.
Expenses will include items like:
- Housing
- Transportation
- Medical and dental expenses
- Paying off loans
- Utilities
- Groceries and dining out
- Hobbies, travel, gifts
- Taxes
Sources of income can include:
- CPP benefits
- Company pension
- RRSP
- Annuities or investment income
- Savings
- Earnings from part-time work
To get a better handle on your income and expenses and to help you plan, check out our retirement budget calculator.
2. Get your investment strategy right
The rising interest rates we've been seeing can affect your investments and savings accounts, so it's a good idea to keep an eye on the impact they’re having. That way, you’ll know if there’s any fine-tuning you should be doing to your nest egg. Higher rates may make bond holdings more attractive, while equities may see relatively lower performance.
Talking to an advisor is a great way to understand if there are any changes you can make to optimize your investments and savings.
3. Reassess your housing situation
Housing is often one of the biggest expenses in any budget, so finding a way to reduce what you spend here can make a significant difference. Consider if it may be time to right-size to something that suits your changing needs. If you have significant equity in your home and you’re able to make a profit from selling and right-sizing, you’ll have more money on hand for other retirement expenses. Also think about location, whether it's moving to a less expensive neighbourhood or a less expensive city.
It's also worth thinking about whether your home could be used to earn an income by creating a rental suite, either as a short-term or long-term rental.
4. Be mindful about budget creep
Everyday expenses like groceries, utilities, dining out and transportation make up another big chunk of spending and are seeing a spike due to inflation. Take the time to look for ways to reduce them.
- Make an effort to shop mindfully and compare prices across your favourite stores. There are mobile apps that compile all the local flyers and let you search for deals on the specific items you’re looking for.
- Shop around to make sure you get the lowest possible cost for insurance, phone and internet services. Often a call to your provider — or their competitor — can score you a better deal than you have now.
- Reduce the number of times you dine out per month.
5. Take a hard look at big-ticket expenses
Larger purchases can quickly put a big hole in your budget. To help maintain your savings balance and investment equity, consider ways to cut out or shrink some of these expenses. Here are some examples you can put into practice.
- If you usually take two big trips a year, maybe you can scale it back to one.
- Planning to replace your fridge or get a new laptop? See if you can get another year out of the one you've got.
- Buying second-hand can be another great way to keep costs down. Online marketplaces make it easy to find almost anything at a significant discount, rather than buying new.
6. Get creative with boosting your income
According to Statistics Canada, 12% of employed Canadians are 60 years or older1. The gig economy is a huge opportunity for pre-retirees and retired folks looking for casual work to supplement their income. Here are a few ideas you may want to explore to make a little extra cash each month.
- With rideshare services like Uber and Lyft, you can sign up and set your own hours.
- Whether it’s a part-time job with the skills and experience you built up or something new, see if there's an opportunity to earn some extra income.
- There may be a chance to earn income from something you always wanted to do that brings you purpose.
- Market research companies will pay you to participate in surveys or focus groups.
- By starting a business in retirement, you can utilize your skills and talents or pursue a hobby that you’re passionate about.
7. Sell what you don't need
You've probably built up a lot of possessions over the years, and as you move into retirement, it's a good time to take stock and think about what you need and what you can look at selling. You can list just about anything online and quickly find a buyer, whether it's a lawnmower, your old hockey card collection or whatever you find of value in your basement or storage locker.
Every dollar in the plus column helps, and turning your unneeded items into cash is a step in the right direction.
Being thoughtful about your budget, trying to find the best deals for big ticket purchases and getting creative with your income sources can all help make the most of your savings in retirement. Reach out to your advisor if you have any questions about developing or revisiting your retirement plan.
1 Statistics Canada Opens in a new window.
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