Financial Changes in Retirement

No matter what your income level, we all go through life stages that have a direct impact on the way money is handled. The pendulum swings from the single life with fewer obligations, through the mid-years with household and family expenses competing for every dollar, until you reach the ‘golden’ years of retirement. Talk to anyone who has reached the stage when the kids are grown and gone and their nest egg is secured for comfortable living; they’ll tell you that wise money management continues to be a top priority in retirement.

Decreasing Expenses

While many of the everyday expenses of retired living are comparable to those of earlier years, one of the financial benefits of reaching this milestone is the elimination of major living expenses, like a mortgage or college tuition. You may also enjoy a lower income tax bracket and no longer having to pay into social security. Work-related expenses and saving for retirement will no longer be budget items either.
Rising Costs of Retirement Living

There will inevitably be increased costs when you retire, the largest being healthcare. Older individuals often require more frequent and advanced medical care for age-related illnesses. Most people will pay more for health insurance premiums and out-of-pocket health care needs, especially those who haven’t reached the age of 65 when Medicare goes into effect. Once enrolled in the federal health system, many people purchase supplemental insurance as a way of safeguarding against health issues that could devastate what they’ve saved for their retirement years.

Another area that may see a spending increase is in your leisure activities. Entertainment and hobbies can take up a greater portion of a retiree’s budget because of more free time. More than three-quarters of pre-retirement employees hope to travel when they reach retirement.

Credit Cards in Retirement

Seniors who maintain a healthy credit history and an excellent credit score will benefit from the best interest rates, better terms and have the opportunity to leverage lucrative credit card reward and sign-up bonuses to earn free travel, cash back and other reward perks. A particular hazard to seniors who use credit cards lies in accumulating debt at high interest rates that can quickly eat away at fixed incomes, making it even more difficult to get out from under it. That’s why responsible management of credit cards is so important. Here are some things to consider when using credit cards in retirement.

• Keep the number of cards you use to one or two.
More active accounts than that make it easier to charge things you may not otherwise and the potential for confusion in making on-time payments is greater. Examine your budget and make adjustments to all your spending habits so they align with your retirement income.

• Do your homework when looking for a new card by comparing credit card offers. While credit card offers may be flooding your mailbox, it’s easier to compare rates, fees, rewards and perks side-by-side online. And don’t get hooked into accepting expensive protection service on the spot. Read the terms and details, if it is a policy that will be of benefit, you can call back to sign up.

• Leverage credit card rewards and sign-up bonuses. One of the hopes for many retirees is to travel more. While others hope to keep up with the latest technology and pastimes now that they have time to enjoy them.

The important challenge to leveraging credit card rewards is to pay the balance each and every month while you accumulate rewards. Never use a credit card just to accumulate rewards unless you are prepared to make full payment when the billing statement arrives. If you find you’ve racked up more debt than you can comfortably manage, never tap into your savings, IRA or other investment accounts. Seek the advice of a financial expert who specializes in retirement for help in establishing a better way to manage your money, so that you can ease out of debt without compromising your retirement investments.

About The Author: Noreen Ruth is a freelance writer who has provided hundreds of articles on multiple websites and financial blogs. Her articles educate consumers on debt relief services, loans, instant approval credit cards and other financial topics. For additional information on comparing top credit card offers, visit