Cost of living crunch: Tips to help make retirement affordable

Retirement is your time to finally kick back, enjoy life, and get around to those hobbies you've been putting off for decades. However, with the cost of living climbing faster than a professional rock climber, stretching your retirement savings can feel like an extreme sport.

From housing and health care to food and transportation, the bills keep rolling in. So, what happens if you don't have a budget in place? Well, let's just say that financial stress isn't exactly the kind of adrenalin rush anybody wants.

With a few simple strategies, you can make your money work harder for you so you can keep your golden years golden.

The cost of living in retirement

Many retirees expect their expenses to shrink once they say goodbye to the 9 – 5 grind, but reality often has other plans. Expenses like mortgage and car payments, grocery bills, and living expenses don't disappear overnight.

According to Statistics Canada's Survey of Household Spending, the average monthly spending for retirees depends on location, lifestyle, and health care needs. Meanwhile, their Consumer Price Index for Seniors shows that your fellow older Canadians tend to spend more on health and personal care while cutting back on transportation costs and entertainment.

Understanding these ongoing retirement costs is a great first step towards crafting a budget for your monthly expenses that keeps you comfortable. Knowing where your money is going means you can decide where to tighten the purse strings and where to let loose a little.

Budget basics for retirees

Budgeting is key to financial peace of mind at any stage of life. A good budget can help you save money, avoid financial stress, and still enjoy the finer things in life. Here's where to start when creating a budget:

1. Calculate your income

Think of your retirement income as your monthly paycheque – just without the morning commute. Factor in pensions, government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS), investments, and any other sources of income so you can have a clear financial picture.

2. Identify your expenses

Break your expenses into two categories: fixed and variable expenses. The former consists of things like housing expenses, insurance, and debt payments, and the latter consists of food costs, entertainment and travel. Tracking your spending habits over time can help you identify areas where you might be able to cut back.

3. Set spending limits

Once you know your overall expenses, set a realistic spending limit. You don't have to give up everything you love, but knowing where your monthly budget is going (especially when it comes to your discretionary spending) means fewer surprises.

4. Build an emergency fund

Unexpected costs happen – whether it's a leaky roof or an impromptu babysitting gig for your grandchild that results in a broken lamp. Having some extra cash set aside can help prevent these surprises from throwing your budget off balance.

5. Adjust your budget regularly

Life changes, and so should your budget. Reviewing it on a regular basis ensures your financial goals stay on track – whether that means adjusting for new annual expenses or finding ways to boost your savings.

How retirees can find the best value goods and services

You don't have to be a seasoned bargain hunter to know how to get the most bang for your buck. With 45% of our fellow Canadians reporting that rising prices are making it hard for them to cover daily expenses, here are some ways you could help keep costs down without sacrificing your quality of life:

• Shop smart: Why pay full price when you don't have to? Many stores offer senior discounts, loyalty programs, and price comparisons to help you stretch your dollar further.
• Reduce housing expenses: Are home maintenance costs eating into your budget? Consider downsizing, renting out part of your home, or moving to a more affordable area.
• Cut transportation costs: If you don't drive as much anymore, try switching to public transit or carpooling. Have a second vehicle? Selling it is another way to free up some extra cash as well.
• Be mindful of food expenses: Groceries aren't getting any cheaper, so meal planning, bulk buying, and using coupons can help keep your costs down.
• Find affordable health care options: Health care expenses can be one of the biggest costs in retirement, but government programs, insurance plans, and prescription discounts can help lighten the load.

Retirement finance: When to seek financial advice

Many retirees manage their finances just fine on their own, but sometimes, a little expert advice can make all the difference. A financial advisor can help you navigate key decisions and ensure your savings work for you. Consider seeking professional guidance if it can help you navigate key decisions and ensure your savings work for you. Consider seeking professional guidance if:

• You're unsure how much income you need to cover expenses.
• You're wondering how to invest or withdraw from your savings wisely.
• You're experiencing financial stress and need guidance on debt payments and budgeting.
• You're looking to optimize your tax situation and make your money last longer.

Where to find help when the cost of living crunches

If your budget is feeling a little tight, there are plenty of resources available to help retirees, like you, stay financially secure:

• Government benefits: Pension plans and income support programs are designed to help older folk cover their expenses.
• Community assistance programs: Non-profits and local organizations offer financial aid, food banks, and discounted services.
• Senior discounts: A little savings here and there add up, so look out for certain retailers, restaurants, and entertainment venues that offer discounts for older adults.
• Financial education resources: Websites like the Government of Canada’s Financial Consumer Agency and CARP (Canadian Association of Retired Persons) offer helpful financial planning advice tailored to retirees.

Managing your money in retirement doesn't have to be overwhelming. By creating a solid budget, cutting costs, building smart spending habits, and seeking financial advice when needed, you can enjoy your golden years without constantly stressing over finances. However, even with careful planning, unexpected expenses can arise, and preparing for them is just as important as managing your day-to-day finances.

This is where final expenses insurance comes in. Instead of leaving your family scrambling to cover unexpected costs, you can put a plan in place that takes care of everything and helps protect them when the time comes. Get a free quote today and see how FiftyUp's Final Expenses Insurance can provide peace of mind for you and your family.