December 19, 2019
Minimalism is the hot new trend among Millenials and the decluttering community around the world. Its focus is cutting down the clutter and living a materially leaner life.
But what does it have to do with retirement? Today we discuss.
We accumulate a lot of things as we go through life. From old family heirlooms, the furniture you bought for your first house, to the things your kids left behind when they grew up and flew the coop.
But it’s not just physical items that we accumulate. Given how easy it is these days to get credit, we acquire a lot of liabilities or expenses as well.
Sage advice was to buy the biggest house you can and to buy a car on lease and get a new one every few years. A few of us followed that advice and also tacked on additional consumer debt through online shopping and Black Friday deals.
Unfortunately, these additional obligations might prove problematic as we enter retirement.
For most of us, retirement means ceasing active work or at least doing less of it. Therefore a pay cut is to be expected.
The more finance savvy retirees can expect a bit of income from their investments in the form of appreciation and dividends. If you’re reading this article on our site then you’re probably in this group.
But overall, retirement probably means less income than our active working years.
Entering retirement might not be a smooth transition when you have a ton of liabilities with ongoing monthly or yearly costs.
Handling a lot of regular payments might be tougher, especially with healthcare expenses increasing as you age. So what can you do?
Before you enter retirement, it’s a good idea to check your finances to see if everything is in order as part of your overall retirement plan. Having the same expenses with a smaller income might become problematic if you don’t attack it before it happens.
There are two ways to attack your cost of living: income and expenses.
This is a big maybe for most retirees. Most of us don’t really retire to do more active work.
An option for this though is to funnel more of your existing income into passive investments. Investment vehicles like DiversyFund’s Growth REIT don’t require you to do much of anything except putting your money in.
This is a much easier way to tackle your living costs in retirement, especially if you tacked on a lot of the liabilities we talked about earlier.
Cutting down your outgoings by reducing monthly payments, debts, and maintenance costs is a fantastic way to do this because of a couple of things. Let’s face it, we can all use a little consumerism diet. You probably don’t need the latest car, the biggest house, or the flashiest phone.
And here’s where minimalism comes in.
Minimalism is a movement towards living better with less.
“Minimalism is a tool to rid yourself of life’s excess in favor of focusing on what’s important—so you can find happiness, fulfillment, and freedom.”
~ The Minimalists – What is Minimalism?
Minimalism is a valuable tool for anyone trying to live a simpler life. But what are the benefits for someone that’s retired or close to retirement?
“The more things you own, the more things own you.”
~ Chuck Palahniuk, Author of Fight Club
Amassing a large number of possessions, like a big house and fancy car, has been the American dream for a long time, but it’s not for everyone, especially if you have other intangible priorities during retirement.
People are shifting their interest more towards living a free and simple life and be more connected to the things that really matter. And who knows, you might be too.