Retiring on a fixed income can seem daunting, but with some planning and commitment to a frugal lifestyle, it’s possible to retire comfortably on $2,000 a month. This takes discipline but ultimately will allow you to have more freedom and happiness in your golden years without money worries.
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“Retiring on $2,000 per month is very possible,” said Gary Knode, president at Safe Harbor Financial. “In my practice, I’ve seen it work. The key is reducing expenses and eliminating any market risk that could impact your savings if there were a major market downturn.”
He continued, “Unnecessary expenses eat into your monthly income and can derail your retirement. It doesn’t matter if your monthly income is $2,000 or $20,000, too many unnecessary expenses are a major reason retirees have difficulty in retirement.”
Trimming unnecessary costs and establishing a safe, stable savings strategy are essential for making $2,000 per month work in retirement. Here are some guidelines for sticking to a $2,000 monthly budget.
Create a Budget
To commit to such a limited budget, you’ll need to monitor your spending closely. By tracking every expense in a budget, you’ll be able to identify your spending habits and places where costs can be reduced.
“A budget is super helpful,” Knode said. “Write it down on paper so you can see exactly how much you’re spending. It can be a bit surprising when you see it in black and white. Once you’ve written it down, start evaluating what needs to be cut and what can stay. You’ll be surprised how much you don’t miss some of those things!”
Getting your expenses down on paper or in a spreadsheet will make it easier to spot where cuts can be made. From there, you can adjust your spending to align with your $2,000 monthly budget.
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About Market Risk
When living on a fixed income in retirement, it’s more important than ever to protect your retirement funds from potential market losses.
“You should think about ways to reduce your exposure to market risk with any money that is in an investment account of any kind — 401(k), IRA, TSP, brokerage account, etc.,” Knode said. “If the market has a major downturn and you lose money, it will be that much more of a strain on your retirement.”
If you’re living on a limited income, a market downturn could be devastating. Invest in funds that are less vulnerable to market fluctuations. When you have less exposure, you’ll be better able to weather any storms.