Even those of us who love our jobs look forward to the day we can log off for good and sail safely into retirement. But, as baby boomers are proving, a secure, comfortable retirement is no easy feat.
Only 40% of baby boomers aged 61 to 65 are on track to retire, according to a report by Vanguard. And many who are already retired are barely making ends meet.
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To survive retirement, many boomers are adopting new frugal habits. Financial experts weighed in on those that are most effective.
Also see five things frugal retirees are doing wrong that cost them thousands.
Buying Used and Refurbished Items
Buying used or refurbished goods may not be as desirable as buying something brand new, but who cares about desirability when you’re broke (or trying not to be) in retirement? Many boomers are opening their minds to refurbished or used electronics, appliances and furniture.
“This is a new attitude shift as it is being seen less as ‘making do’ and more as a financially savvy decision,” said Paul Gillooly, financial advisor and director at Dot Dot Loans. “Overall this spending behavior is great. There are quality products available that substantively reduce spending over many, many purchases. The only caution is that people still ought to consider the warranty and whether they end up saving energy with their new purchase.”
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Embracing AI
Boomers are honing their tech skills and tapping into artificial intelligence (AI) to perfect frugal living in retirement.
“No more sitting down with a notebook and pen to record your expenses,” said Kevin Marshall, CPA at Amortization Calculator. “Boomers can easily download free apps … and connect to their bank accounts, upload receipts, and see where their money is going.”
Micro-Optimization of Hidden Expenses
Micro-optimization of hidden expenses sounds complicated, but it’s actually a pretty simple process and an easy financial win. Essentially, it means boomer retirees are scouring their budgets for spending that may not seem like a lot but really adds up, as well as eliminating expenses for things they no longer need.
“Most people have no idea what they actually spend on subscriptions every month,” said Alex Langan, chief investment officer and financial advisor at Langan Financial Group LLC. “Research puts the real number at more than double what people estimate, and a significant chunk of that is for services people forgot they’re even paying for. Add insurance policies that haven’t been reviewed in years, investment fees that are quietly higher than they need to be and a Medicare supplement plan that no longer fits, and you can often free up real money every month without changing how you actually live.”