Most people think retirement planning is about saving, investments, and the timing of retirement account withdrawals and Social Security benefits. Ensuring you have sufficient income is definitely one of the most important aspects of retirement planning. But so is controlling your expenses. One way you can do that is by downsizing your current lifestyle. Here is how controlling costs can help you prepare for retirement and still enjoy a nice standard of living.
[Visit the U.S. News Retirement site for more planning ideas and advice.]
Eliminate debt and reduce interest rates. One of the biggest ways you can downsize your costs and increase cash flow is to reduce the amount of money you send creditors each month. You can do this by eliminating debt, reducing the amount of interest you pay, or a combination of both. Instead of sending a big portion of your income to a creditor, you can make that money work for you. If you have high interest loans, try to consolidate them or reduce the interest rate. Consider refinancing at record low mortgage rates or transferring high interest credit card debt to a 0 percent balance transfer credit card. This should help you to eliminate debt more quickly if you also stop adding new debt and continue paying more than the minimum balance. Try to eliminate as much debt as possible before you retire.
Smaller home, smaller bills. Most people consider their home to be their biggest investment, but it may also be their biggest liability. Large homes come with higher mortgage payments, maintenance costs, property taxes, utilities, and other expenses. Reducing the size of your home reduces the amount of money and effort it takes to maintain the property. Consider a home with a smaller lot, fewer steps, and more energy efficient features. You may also want to consider moving into a town home or a community that includes landscaping.
[See Why You Shouldn't Tap Retirement Accounts Early.]
Eliminate or reduce unnecessary expenses. Reducing your expenses will allow your income to go further. Take a hard look at how you are spending your money and make sure you are getting value for what you use. Many people find they can eliminate or replace cable television, cell phones, magazines, and other subscription services. There are many ways to get these services at reduced costs or free. Take a look at your local library, free alternatives to cable TV, prepaid cell phones, and other technologies.
Rethink transportation. Reevaluate how many vehicles you need and whether they are the right size. You may be able to sell a car or downgrade to a smaller, more efficient vehicle that saves you money on maintenance, fuel, and auto insurance.
Eliminate clutter. Spend an afternoon going through your closets, attic, basement, and garage and eliminate items you never use and may not ever use again. You will be surprised how much you can eliminate if you are dedicated to decluttering. Consider having a yard sale and use the proceeds to pay down debt, bolster savings, or for something fun. Whatever doesn't sell can be donated to charity for tax breaks, which can yield a nice tax savings.
[See The 100 Best Mutual Funds for the Long Term.]
Downsizing equals freedom. Many people look at the idea of downsizing as taking away the fun things in their life. But I believe the opposite is true. Downsizing is a great way to eliminate clutter, reduce costs, and simplify life. This will give you more time to enjoy the life you want to live now and in retirement.
Ryan Guina is a U.S. military veteran, writer, and professional in the corporate world. He blogs at Cash Money Life and The Military Wallet.
WASHINGTON (Reuters) – The outlook for the U.S. economy would have to deteriorate "appreciably" to spur fresh support from the Federal Reserve, minutes of the central bank's last policy meeting released on Tuesday said.
"The committee would need to consider steps it could take to provide additional policy stimulus if the outlook were to weaken appreciably further," the minutes of the Fed's August 10 policy session said.
At that meeting, officials agreed to reinvest maturing mortgage-related securities in longer-term U.S. government debt to hold the Fed's balance steady at about $2 trillion and keep in place supports for the stumbling economic recovery.
While the minutes showed the current preference was to buy Treasury debt, officials left the door open to other options.
"While reinvesting in Treasury securities was seen as preferable given current market conditions, reinvesting in MBS (mortgage-backed securities) might become desirable if conditions were to change," the minutes said.
The Fed stopped buying MBS and mortgage-agency debt at the end of March after it had accumulated about $1.4 trillion worth. It also bought $300 billion in longer-term Treasury securities as part of a program to spur recovery.
The buying spree came after the U.S. central bank had chopped benchmark borrowing costs to near zero in December 2008, leading policy-makers to cast about for additional ways to stimulate the economy.
Financial markets were little changed after the release of the minutes, with the dollar holding earlier declines against the Japanese yen and the euro, and with prices for U.S. Treasury easing slightly.
(Reporting by Mark Felsenthal and Glenn Somerville)
RESULTS: Carrefour SA says its three-year turnaround plan is "profoundly changing" the French retailer, which returned to a profit of euro82 million ($104 million) in the first half from a year-ago loss.
BACKDROP: Since CEO Lars Olofsson took over last year, Carrefour has sought to gain market share in France, which accounts for 40 percent of sales, by slashing prices, promoting the brand, introducing a discount range and accelerating the conversion of stores to the Carrefour banner.
WHAT'S AHEAD: Carrefour is targeting expansion in growing markets such as Brazil and China. This year, it plans 1250 store openings, including 143 in China and 374 in Turkey.