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Must Read Advice for Retiring on a Fixed Income

by Bill Ness on 27 Comments

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Having an extra cushion for the unexpected will give you peace of mind in the retirement road ahead.

Having an extra cushion for the unexpected will give you peace of mind on the retirement road ahead.

While the idea of retiring can be exciting, it also comes with some common concerns. No longer having a job means relying on a fixed income from the savings plans and tools you put in place during your career.

When you’ve carefully planned for retirement and are right on track, it’s still understandable to have some fears about switching to a fixed income. If you find yourself retiring earlier than expected due to layoffs or a medical necessity, retirement can be even more frightening. Fortunately, there are tools which can help you generate income and navigate retirement spending.

It takes some careful planning to make sure you won’t outlive your savings, and the first step to living on a fixed income is creating a reasonable budget. Consider all of your expenses and weigh them against your expected income. You must be honest with your planning and be sure you don’t overlook little items which can add up quickly. It often helps to meet with a financial planner or use home finance software to track your spending.

When creating your budget, it’s always a good idea to pad in money for emergencies. You never know when you might get sick, have a car accident or need a root canal. Falling into debt over emergencies can add extra fees, and you never want to be in a position where you have to choose between groceries and paying for a new crown. Having an extra cushion for the unexpected will give you peace of mind. And, if an emergency does come up, be sure to rebuild your emergency fund as soon as possible.

It’s also important to use long-term thinking when planning your budget. The value of your money can change through inflation. You want to keep the bulk of your savings in a vehicle which will allow it to grow at a rate that is faster than inflation. A good financial planner can help you understand which investment options will let your savings grow without inviting too much risk for your stage of retirement.

Although retirement may mean the end of working, there are other ways of adding to your income. Many retirees find that their best option is to bring in more income through annuities or a reverse mortgage. Various types of annuities allow you to save on a tax-deferred basis while you are working and then receive payouts on a fixed, monthly schedule. Reverse mortgages allow homeowners with sufficient equity to essentially take a loan against their property which will not have to be repaid as long as they live in the home.

When it comes to living on a fixed income, knowledge is your most important tool. Research your options and work with a financial planner to create your retirement plan. There is no single right answer which will work for everyone, but careful research will help you create the plan which will work best for you.

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  1. First and foremost you want to consider chosing a state to live in that has hisotrically respected and honored the needs of it’s retired and retiring seniors. Florida has always been that State. Take a close look at the property tax laws, history and structure related to seniors to better understand why Florida should be tops on the list of places to retire for anyone on a limited fixed income.

    1. Mike, I have friends in Florida so have a good idea of what goes on there. I do not consider it anywhere near a state I’d want to live in. Their taxes and hidden charges are, from what my friends tell me, outrageous — and so are the insurance rates for home and car. I thought about moving there, but it has nothing to offer me except huge HOA fees, oppressive heat, humidity, bugs, crime, and traffic. No thanks. Bored as I am sometimes, I think that’s better than a hassle any day. Look before you leap — into Florida or anywhere else. If it’s peace and quiet you’re after, come to western Colorado — very low taxes, insurance, and the homes can be had for a song in this market. I live in a little neighborhood with no HOA, but new homes with a gorgeous view. You won’t find that in Florida, cause there ARE no views there. I’m staying put, as there’s nothing better out there for what I want and am willing to pay — or can afford.

      1. Hi I know this is an old post from 2011 but I am disabled and living on a fixed income I like to live in Colorado do you still think I could find something there that I can afford?

  2. Not to be argumentative Mike, but there are dozens of sites that do top ten lists for retiree lists and nowhere did i find Florida as that state that stands above all others. In some cases, Florida didn’t even made the top ten, in others it did. There are so many factors that need be evaluated, it almost becomes more subjective.

    Taxes obviously are important, as is hospitilization. Typically states with heavy senior populations have, tend to elect politicians trying to cater to that constituency base. That helps deal with part of the cost of living.

    Perhaps of more importance is the amenity package in the community you live in. Living in a great location where you can’t afford to do anything is of little value. My only point is, shop around, there are great values to be found for retirees willing to do their homework.

  3. Marianna,
    My husband and I are in our late 50’s and considering retiring soon. We are from the STL area. We were considering Florida but don’t like the high HOA’s etc. either. What cities (towns) are you talking about in western Colorado? I’d like to check it out. We are both active. I’m sure the views are gorgous and would be great place to ride our Harleys.

    1. Ann,
      I have lived in the Grand Junction area and Montrose. Prices and taxes are low right now, especially in Montrose where I presently live. I am single, but have retired-couple neighbors on both sides who love it here. For a single person, there is little to do in Montrose. I ski at Powderhorn 93 miles away — Telluride is 65, but the latter is too expensive. My neighbors on my east side are from Seattle, in their 50’s and avid cyclists — they think this area is great.
      I am in the process of staging my house to sell in the early spring — I hope. I am considering Prescott Valley, AZ — also great for house prices and property taxes. I am going to hate to give up my gorgeous San Juan ,mountain view, but I can’t sit here forever just admiring the mountains out my windows. Lots of folks, including me, like Grand Junction, too. It is kinda warm in the summer, but very dry, and the winters are mild. There is much more shopping there, easy interstate access, closer to skiing, good medical, a nice college. You have to come and look around just like I am doing with my prospective new places. It’s a process. Good luck to you whatever you decide.

  4. I agree with Marianna and Bill regarding Florida as a retirement choice. NO city is perfect, of course, but retirees should try to find a place that has more positives than negatives and for me, also, there are too many negatives about Florida. Marianna, not sure where you live in western Colorado but that can be in an area near the Utah border (like Grand Junction) that does not get alot of heavy snow and bitter cold or in a snowier area in the Rockies that gets both. Weather is a BIG factor to consider!! So many other factors to consider, also, when moving to a new city for retirement and the best advice is DO YOUR HOMEWORK and check out the area carefully (especially in the winter!) before making a choice and moving to your new city.

  5. Victor, check out the note I just wrote to Ann about Grand Junction, etc. I loved the weather when I lived there. Here in Montrose, it’s still mild to me, as I used to live in the Midwest and also Denver, but we get more snow than Grand Junction — and it is colder here in the winter — but still no big deal. Delta, a town 20 miles north of Montrose, could be another choice. They have a great fitness center there, but not as pretty as Montrose as far as scenery goes — and not that much shopping if that is important to you and/or your better half if you have one. Another pretty town is Cedaredge, but not much going on there except nice places to live. Cedaredge is about 12 miles northeast of Delta and within easy driving of the Grand Mesa — which is the world’s largest flattop mountain and just a gorgeous place.
    Again, I am wanting to leave here because I am single, but most couples who live in this area love it. It was my dream to live here all the years I worked, but after getting here in 2000, I have become steadily disenchanted with it because of my station in life. It’s time to make a change.

    1. I checked out your comments to Ann and I am familiar with Grand Junction since I have visited friends there. It is a nice city but not too scenic. It sure does NOT get the bitter cold and heavy snows that the cities in the Rockies get.

      Sounds like you have been content in Montrose but ready to make a move. Good luck with that!

      I am very fond of Durango for a visit since it offers so much for the tourist and I especially LOVED the free downtown shuttle bus service!

      Not sure if my friends in Grand Junction will agree with your comments that the Colorado natives do not like newcomers too much. I will have to ask them that. Too bad you have felt that way while living in the state.

      1. Victor: You’re right — Grand Junction is not pretty, and all that rock around there like the Book Cliffs gets tiresome to look at the longer you’re there.

        I’m content in Montrose ONLY because of the low taxes and scenery. It has nothing to offer a single retired person socially — none at all, especially for ones in their 60’s, which is still relatively young. And a good percentage of the natives here do not know or care about anything that goes on beyond the city limit sign. I am very sorry I moved here, so I have created my own world in my home — tv, internet, books, my dogs, gardening, and, yes, looking at the gorgeous scenery. I’ve never been isolated like I am now.

        Durango was my first “love”. They have a lot of good things there, but it is very expensive now — I can’t afford a decent house there. For what I’d want, I’d have to pay about $350K-$400K. I’d move there if I could.

        I didn’t mean that ALL the natives do not like newcomers, but this has been the reputation of the state for a long time. They started hating the Texans, now it’s the Californians. I am neither of those, but I do not feel welcome here – in general. They seem to think the state belongs to them and them only. I believe it belongs to all Americans, just like the other 49. We have no boundaries, do we?

        I just saw your post today (Dec 1) or would have responded sooner.

        Enjoy your travels.

  6. active single senior looking for retirement in a state that offers activities, continuing education classes, close knit community, not high hoa, taxes, other fees. Would any city/town in Az be considered? Any one who has comments I would love to hear.
    Fla is out as I live in Va – humidity too high, bugs, hidden fees, etc.
    Not sure where in western Colorado – ??

    1. Sam, check out Prescott Valley, AZ — low home prices right now, low taxes, no bugs, mild climate, no humidity, Prescott’s Yavapai College with a branch in Prescott Valley. Some areas have no HOA – like Lynx Lake and Unit 20 — ones I know of. I think Prescott Valley is a better fit for retired singles than western Colorado, which is great if you have a mate, but I have lived here almost 12 years and have no friends my age to hike with or do other recreational activities with. In general, Colorado natives are not that friendly to newcomers — there are exceptions, of course, but I’m just clue-ing you in to some of the local attitudes.

      1. Marianna, I checked out the Prescott area this year for possible relocation. Prescott is nice and fairly scenic but I felt too much of a “closed-in feeling” which concerned me. Many of the newer homes there have HOA fees, too, which can be high. If you like older homes and want to live close to the downtown area, you will be pleasantly surprised. However, the newer homes are further away from that area. If you like rocks with your home, then the north side is what you want to look at since this part of the city is more rocky and barren and not too attactive. The southern part of the town is alot more scenic with trees but you take a chance living close to these trees in case of fires which have hit the area before.

        I did NOT care for Prescott Valley and Chino Valley for many reasons but mainly, they seemed too isolated for me. PV does have alot more amenities than CV, though.

        Living in this part of Arizona has alot nicer overall climate than the Phoenix area and less snow and cold than Flagstaff. However, winters are alot colder and snowier than Phoenix.

        You DO feel isolated living in this part of the state as you have to travel to Phoenix for your major airport needs which is about a 2.5-hour drive, though there is a shuttle from Prescott to Phoenix at a nominal fee. And if you want to travel to Interstates 40 and 17, you have to drive, too, as they are not close by. This can be especially tough in the winter if a storm hits.

        Hope this info helps you, Marianna, and good luck on your next move!! I sure hope you find happiness wherever you move to.

  7. I’ve said this before Sam, so i will try and be brief. Sun City Az is one of the best values for the money. Our rec fees for 7 rec centers and 8 golf courses are $432 per property (2 poeple) per year. The taxes on our 2700 sq ft home are $1000 and our HOA fees are $15 a year (voluntary membership, mandatory compliance on a handful of CC&R’s). You owe it to youself to check Sun City out and then you have a bseline to work from.

    1. Bill, I believe you about Sun City, AZ — I’ve heard good things about it. However, the heat in that part of AZ is a huge factor for many people. One has to ask if they would be comfortable with oppressive heat about 5 months a year where one cannot have a window open during the night instead of listening to the A/C unit humming all night long while your utility money evaporates. I was “on track” to move to the Phoenix area until friends who know me well reminded me how much I despise heat and A/C. This is a geography/weather issue, not anything against you, Bill, as you did not create the desert and its conditions.

  8. Sam, where do you live in VA? My husband and I have just visited Williamsburg and found it to be lovely. I understand that there is a large retiree population there due to the low property taxes. We are now researching the area for possible retirement.

  9. After reading the comments about where NOT to leave I am now discouraged. My husband and I are interested in purchasing a condo/coach home/townhome either in the Ft. Myers area or Naples, FL. We don’t plan to move there permantently but want a place to go in the winter (live in the midwest) and a place for our grandchildren to enjoy. Should we forget Florida and restart our search?

    1. Violette, My husband and I were considering that area, too. The places we were looking at were Village Walk in Bonita Springs and a place in Ft. Myers called Pelican Preserves. Check it out. Both look nice. Lower HOA’s but still high. I’m still not sure I want to be locked in to the HOA’s. They will do nothing but go up.

  10. You are spot on about the heat Marianna; our summers are to die from (though some of us learn to die for them). We lived in Minnesota and quickly adapted to the hot weather rather than the cold.

    As you might expect, lots of folks living in the Phoenix area leave for another residence, head off to cool spots like Logan Utah or RV their way around northern parts of the country. Personally i find the less traveled roads, less crowded super markets and near empty pools to be a joy. Of course by the end of August i eagerly await old friends returning from Canada because they always seem to bring the cooler temperatures with them. Nice.

  11. My husband and I have lived in Fla for 23yrs and we have seen the property taxes, home insurance go higher. We own our home but have heard from friends that live in communities that there HOA’s are getting to high. If you want recreation and activies the best thing is to belong to a community. The residents here are basically all into themselves. We have tried joining different organizations but many are very tight knit do don’t accept “outsiders”. Yes, the summers are hot and humid, but then we came from NY and the summers were the same. We miss the winter, snow, ice or freezing weather. If you are willing to keep paying higher and higher premiums on your insurance and property taxes, here is the place. (Cape Coral-Ft. Myers area.) The good thing is there is great medical. There are origanizations for seniors(who do not work) during the day, but forget the night and weekends, you are on your own.

    1. Thank you, Josie. This further confirms where I do NOT want to live if I want to stay within my means for the next 20 or so years (whatever my life span will be).
      Yes, you had humid summers in NY, but I grew up in NJ and do not think those summers can compare to the torrid summers in FL. I spent 2 weeks in Ft. Myers in August of ’89 when my Dad had his heart attack. It was totally oppressive to me. I don’t see how one can get used to that. It’s too bad, cause I would have enjoyed the waterways and beaches in Florida, but it’s not meant to be. Good health and happiness to you.

  12. I would like to hear from people that have relocated to Delaware. We live in NJ for the last 42 yrs. I have looked at homes in Kent County, 55+ communities, Being on a fixed income I need low taxes and low HOA. Any comments would be appreciated..

    1. We are also looking for 55+active communities in Delaware. We have gone to several like Noble’ Pond. The draw back there was they only had propane gas. We have been to others some we find that the larger the community the more the HOF are. We are looking to buy a rancher with everything on one floor. We also would like most things covered under your HOF. If you would happen to know of anyone thats lives in such a community please reply.

  13. To everyone discussing the pros and cons of FL retirement, I am very torn because my Mother just decided to move from quaint Thomasville, NC to Ocala, FL. She is buying in a 55 plus community called Top of the World. I am 51 and soon to be single so she is trying very hard to get me away from MD and there with her in FL. I can not live somewhere that get so hot and humid you can barely walk your dog. Though there are homes as low as 30,000 and HOA is approx 400.00 taxes around the same. Compared to where I live in MD taxes are less there but paying 400.00 a month for golf courses I will never use doesn’t appeal to me. I wish I could find a place with a little bit of each good feature without living more than a day’s drive from MD and my family. Any suggestions would be great, it’s scary being alone at my age.

  14. I live in Md. and am looking at 55+active communties in Delaware. We have gone to several like Noble’s Pond. The draw back there is they only have propane gas.

    Some of the HOF are low but then the bigger the community is the larger the fee.
    We are still looking in Delaware for a 55+ active retirement community with low home owner fees and a nice club house. We are also interested in a ranch home
    with everything on one floor with 3 bedrooms. If anyone could be of help please
    let us know.

    If anyone has lived in Delaware and knows about active 55+ communties please reply.

  15. I think the folks that say the hot summers in FL are repressive are correct, set up a plan to be in VA, or MD, or PA, or DE during the summer in FL. Most of us do not realize the price of energy in the Northern states are price prohibitive for fixed income and FL is wonderful for savings on energy. I choose to stay in FL full time as I stay at the pool or in a A/C building like our clubhouse or the malls or the like buildings during the day,in summer. I rather enjoy that too i meet so many interesting people doing that. The trade off is the travel expenses, to go north in summer, and the physical energy to do the trip North, for a summer in the North. I stay put and save the money. From November to June Florida is more temperate and saves fixed income citizens more energy dollars then other places, yes the humidity is bad in summer. Everything is a trade off for something or another. Please understand choices sometimes are needed and some good and some bad make the best economic sense, well unless you all are able to aford what you want and not what you say is economic, and there is a difference. Some of us, myself included, can aford what we want, but choose to be more economic instead, and do what is economically sound, and take some good and some bad to conduct ourselves that way. I do not promote the high golf course HOF, and I golf three times a week, sometimes more. I just pay the grounds fees at a golf course, as it is less expensive then living in a community with a golf course ( $60.00 a month for grounds fees at a course -vs- additional $200.00 plus (just to support the golf course monthly) HOF to live in a community that has a golf course in FL). The entire conversation hear about needs and comparison to reality is the truth. What is needed is some mind though actually, and it sounded like spoiled Americans to me, in the preceeding verbage from others here. We talk without really thinking, or at least that is how i see the previous input to this conversation. It screams that we are spoiled and not in a position to truly evaluate the real economics of the situation. I guess it is to be expected as we all have bucks and no where to spend it but complain about how to spend it as we grow older. I just looked at a blog where a younger retired women just 62 is trying to retire on $2,100.00 monthly, in Beliez, of all places. She is doing that becasue she is in a low retirement income position. What a need for a realy application for a mind review of a situation. In Belieze if your in a financial bad way, for some unknown reason, she will be nothing. Really nothing. I see that as a dead end to retirement, that occures after all the toys, vacations, divorces, extra furniture, and new cars, and no propensity for savings during working years. Now the same mind set is working. MOVE TO BELIEZE TO ESCAPE HER OWN FAILINGS IN LIFE AND CALL IT AN ECONOMIC DECISSION. What a distance we Americans need to go to come to reality. Spoiled rotten seniors. Applly a true mind review to your conversation about FL. YOu will really see how much or a gem FL really is.

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