With the COVID-19 pandemic causing much fluctuation in the market, many retirees fear an extended downturn will have a nerve-racking effect on their portfolio and retirement accounts’ valuation. Here are some ideas retirees can implement to reduce costs and get through the market downturn.
1. Eliminate Unnecessary Costs
Take a look at your current living expenses and make sure they match your monthly retirement income. Track all spending and think through every purchase. Your goal should be to identify areas where you can cut down on expenses. For instance, you can do without a cable subscription if you don’t watch cable or replace it with cheaper alternatives like Netflix.
2. Adjust the Thermostat
Energy bills take a massive chunk of our monthly expenses. To save money, you must make conscious efforts to adjust your thermostat to conserve energy usage. You can even buy a smart thermostat so that you can control your energy usage anywhere you are.
3. Save on Health Care
If you’re worried about needing medical attention during the pandemic and the resulting bills, you should review your current health policy. Check to see if what’s covered through Medicare supplements is the coverage you need. If you aren’t sure about what’s covered with Medicare, consider meeting with a Medicare expert to review your options.
4. Cancel Your Gym Membership
With gyms closed in most states in the country, you don’t need to pay for a gym membership or even invest in expensive exercise equipment. Many communities offer free or low-cost exercise sessions for seniors. If those are also closed, then consider taking walks, hiking, or biking.
5. Negotiate with Lenders
If you have an unpaid mortgage, you pay monthly, and you’re having a hard time paying, call your lender and ask for assistance. See if the lender allows you to pay only the loan interest until your portfolio recovers before you start paying off the principal amount. This should, however, only be a short-term fix. Plan to pay off your mortgage as soon as you can.
If you owe on credit cards, you can ask the credit card company to offer you a lower monthly repayment amount. Alternatively, you can switch your debts to another credit card with lower interest rates.
6. Put Projects on Hold
While you can’t postpone essential fixes like a leaky roof or broken sink, consider postponing any major project that will cost a significant amount of money. For instance, if you plan to redo your bathroom or kitchen, refresh your landscaping, or put in a new patio, it’s advisable to wait until the market recovers before taking such a large withdrawal from your retirement account.
Also, ensure that you ask for a senior discount when shopping or paying for a service. Most companies offer discounts for seniors but may not advertise it – so you need to ask!
7. Check Investment Fees
It’s essential to always check the amount you’re spending to have your retirement account managed. Most funds have an annual fee of 1% or more. While this may look small, it can convert into hundreds or thousands of dollars. If you feel what you are paying for investment fees are high, look for other options with lower management fees.
One way to save some living is to relocate. Not just relocating to another house, you can relocate to another state. Moving to another state with a low cost of living means you’ll spend less.
9. Spend Time with Family Members
Instead of buying gifts for your children and grandkids, setting out a special day and taking them out to the park will help you create memories. This is more impactful, particularly in a market downturn than material items.