Finances can be challenging to manage especially as you get older. According to the National Council on Aging, over 15 million Americans 65 years and older are economically insecure. With no more income from a job during retirement, handling certain financial burdens can be difficult. Whether you have minor or significant money-related complications, these obstacles can be stressful. However, there are ways to effectively relieve these feelings and get your finances back on track. Celebrate National Financial Literacy Month by using these tips to manage financial stress and anxiety.
Determine Your Financial Goals
As you get older, it’s tempting to splurge on large purchases and activities during retirement. While you should definitely celebrate this milestone in your life, it’s also important to determine your financial goals during this time so you spend your money wisely. What do you want to achieve during retirement? This could be retiring in another state, purchasing a second home, traveling across the country, and more – the options are endless!
Once you’ve determined your goals, create a plan to meet them and review your budget to see if you have enough money to cover the cost. For instance, if one of your goals is to purchase a retirement home, getting a pre-approval for a mortgage can help you understand what you can realistically afford to spend, which will prevent you from going over your budget. Researching financial requirements and planning ahead will help keep your spending on track and relieve any stress and anxiety from not being able to achieve what you had in mind. You’ll have peace of mind knowing your money is focused on meaningful objectives instead of mindless purchases.
Create an Adjusted Budget
Transitioning into retirement is a big adjustment to your lifestyle and finances. Without the responsibilities of work, you have endless free time to relax and do whatever you want. While this freedom is well-deserved, it also might prompt you to spend more money on travel, dining out, and other celebratory activities, which can ultimately lead to financial stress if you can’t afford it. That doesn’t mean you can’t have fun in retirement, but you should create an adjusted budget to account for your new earnings during your golden years.
To start, calculate your expected income and expenses during retirement including social security payments and other money you saved from your 401(k) or other programs. Make sure to include and prepare your taxes for the transition to retirement as well. While you may save on the cost to commute to work and parking fees, most of your other expenses will likely remain the same, if not increase as you search for new hobbies to fill your free time. Once you know how much you can comfortably afford to live on each month, you can start to slowly add in the cost of trips and other fun excursions. Having a budget to live on will help you stay on track with your spending and understand how much extra money you have to spend on additional activities.
Keeping your finances organized will help you relieve any stress and anxiety that may come from living beyond your means.
Pay Off Debt
Debt can be a major cause of stress for anyone, but this can be even more difficult to manage as you get older. Having debt as a senior can be a huge burden to face and may cause you financial anxiety. This may even prevent you from retiring as you might not be able to save enough money to support yourself. Especially if you have a car loan, mortgage, or credit card debt, it’s important to pay back this money as soon as possible. This will relieve any personal stress and worry about these payments falling on your spouse or relatives should something happen to you.
Paying outstanding debt will also allow you to use your money more effectively so you can retire if you haven’t already, or simply relax and enjoy your golden years. If you’re not sure where to start, try to pay off high-interest debt first to save on costly interest payments. Look at your budget and see if there are any expenses you can cut back on such as unused services or costs on dining out. You can dedicate the money you save toward debt repayment, and if that isn’t enough you can consider getting a part-time job for additional income. If you have an overwhelming amount of money to pay back, you can also consider debt consolidation which merges multiple bills into one payment. This option can lower the interest rate on your loans and can help you repay your debt more quickly.
Managing your finances can be difficult as you get older, especially if you have debt or any other burdens. However, that doesn’t mean you have to go through this hardship alone. If you’re struggling, it’s completely acceptable, and encouraged, to seek help. Whether it be venting and getting advice from family or friends or consulting a professional, getting assistance from others can help you relieve financial stress and anxiety. There are many resources available to help you effectively take care of your finances, so make sure to take advantage of them!