A retirement income means a relatively stable one, generally, but without a lot of leeway for sudden surges in spending. Here are the top ways to use your retirement dollars to enjoy your well-deserved lifestyle and get the most bang for your retirement buck. (To help you choose the right investments for your retirement, check out Top 10 Investments For Baby Boomers.)

TUTORIAL: Retirement Planning

Travel
You finally have the time to travel the world and see all those places you've dreamed about, but where do you start? And is it worth the expense? Travel is a great way to use your extra money because you gain new experiences and create memories, both of which will last you much longer than that cheap trinket you might be tempted to bring home with you. OK, you can leave some room in the travel budget for cheap trinkets. After all, there are the grandkids to think about. To really make travel worth the money you put into it, keep these tips in mind:

  • When feasible, visit popular places (well-known beaches, tourist attractions and landmarks) in off-season or off-peak times. You'll save money because you'll pay less than you would during the high-tourist season, which allows you to see more and do more for less money. You'll also avoid crowds and long lines by traveling during off-peak times, which makes your experience all the better.
  • Combine traveling with a passion or hobby. You might go on a wine-tasting journey, a culinary tour or a cycling adventure. Whatever your passion or hobby is, you can pursue it with travel which makes your trip all the more meaningful.
  • Consider family trips or holidays. If your grown children are willing to pitch in, you can often get a great deal on group accommodations and everyone saves money while creating memories together in a new place.

Education
Those books you've been wanting to read and skills you've been wanting to develop are still there, and retirement is a great time to educate yourself on the things that interest you. Educational costs can range from very low (a new book) to much higher (a college class, advanced instruction with a personal tutor). However, the joy and challenge of learning new things adds richness and depth to your life. Like travel, education provides more than a new trinket or toy would. It provides experiences, broadens your mental outlook and helps you to grow as a person.

Adventure
Remember the tired old folks on the porch swing? Those were your grandparents. It's a new time for retirees, and it can be full of adventure. So, how do you bring adventure into your life on a budget? Start by looking close before you look far.

Adventure comes in many packages. You may not be ready to parachute over the Himalayas, but how about a hot air balloon ride over your own state? Para sailing, kayaking, hiking, horseback riding, camping and scuba diving can all be low-impact and often experienced locally. The cost for this type of local adventure is lower than traveling around the world to take it on, and you can decide how much you like it, if you want to repeat the experience and if you want to take it to the next level before you invest a huge chunk of money into it. (To help you determine where to start your retirement adventure, see Debunking The "Best" Retirement Destinations.)

Collecting
The fastest way to spend your extra money is by buying a bunch of stuff. While stuff is nice (who doesn't want a European espresso maker, a new set of luggage and a few extra watches?), it often ends up becoming a big expense that doesn't provide much value over the long-run. The espresso maker breaks, the luggage gets worn out and you never wear the watches. The money's still gone. Instead of buying stuff just to buy, focus on collecting items that matter to you, for whatever reason.

Perhaps you've been a collector for a long time and now you have the time to pursue your interest. Or collecting may be new to you, so the thrill of the find will be all the more exciting. Collecting gives you more value for your dollar because you're not just spending randomly on whatever shiny new object happens to grab your fancy. Instead, you're investigating, pursuing, hunting down a piece that will be perfect and adding to a collection that can easily become a treasure to pass down to the next generation.

Investing
Depending on the amount of excess funds you have available, investing in the stock market or in real estate can be a lucrative and interesting hobby as a retiree. You can also find other ways to invest that may fit more with your interests. Perhaps you could join in the micro loan movement and help third-world entrepreneurs get a start. You could also become a venture capitalist or angel investor and support new small business start-ups.

What you've got to remember with your retirement dollars - and your retirement time - is that you have options. Just because your brother or your neighbor or your best friend decided to take a cruise, you don't have to. Decide what sounds best to you. Examine what you already enjoy spending your time and resources on, and think about how you can take that to the next level.

When you invest in your own interests and passions, you're guaranteed to get more out of it, and increase your enjoyment of life at the same time.

The Bottom Line
How you spend your retirement, both in terms of time and dollars, is mostly a matter of what is important to you. What do you value? Take the time to consider your options, and make a list of your highest priorities. Then spend your money where it counts, and you'll get the highest value for yourself. (To help you start taking funds out of your retirement plan, read Strategies For Withdrawing Retirement Income.)

Related Articles
  1. Investing

    Five Things to Consider Now for Your 401(k)

    If you can’t stand still, when it comes to checking your 401 (k) balance, focus on these 5 steps to help channel your worries in a more productive manner.
  2. Retirement

    The World's Most Luxurious Retirement Destinations

    If money is no object (or if you would just like to dream), these five spots are the crème de la crème.
  3. Professionals

    How to Protect Elderly Clients from Predators

    Advisors dealing with older clients face a specific set of difficulties. Here's how to help protect them.
  4. Professionals

    Social Security 'Start, Stop, Start' Explained

    The start, stop, start Social Security strategy is complicated. Here's what retirees considering it need to consider.
  5. Retirement

    Strategies for a Worry-Free Retirement

    Worried about retirement? Here are several strategies to greatly reduce the chance your nest egg will end up depleted.
  6. Professionals

    Your 401(k): How to Handle Market Volatility

    An in-depth look at how manage to 401(k) assets during times of market volatility.
  7. Professionals

    Don't Let Your Portfolio Be Trump'd by Illiquidity

    A look at Donald Trump's statement of finances and the biggest lesson every investor can learn.
  8. Professionals

    Top Social Security Issues for Divorced Women

    What female divorcees need to know about the twists and turns of figuring out Social Security benefits.
  9. Retirement

    Maxing Out Your 401(k) Is Profitable: Here's Why

    It's shocking, but most American workers (73%) have no 401(k) retirement funds. Start saving now to anchor your retirement.
  10. Retirement

    How to Choose the Best Long-Term Care Insurance

    Here's how to find and select a policy that provides the best coverage for you.
RELATED TERMS
  1. Dynamic Updating

    A method of determining how much to withdraw from retirement ...
  2. Possibility Of Failure (POF) Rates

    The likelihood that a retiree will run out of money prematurely ...
  3. Safe Withdrawal Rate (SWR) Method

    A method to determine how much retirees can withdraw from their ...
  4. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  5. Mandatory Distribution

    The amount an individual must withdraw from certain types of ...
  6. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
RELATED FAQS
  1. Are spousal Social Security benefits taxable?

    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
  2. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  3. Are spousal Social Security benefits retroactive?

    Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation ... Read Full Answer >>
  4. Is the Social Security administration part of the executive branch?

    The U.S. Social Security Administration, or SSA, is an independent government agency under the purview of the executive branch. ... Read Full Answer >>
  5. What are the best ways to use your 401(k) without a penalty?

    The best way to use your 401(k) retirement savings account is to take normal distributions after you reach retirement age. ... Read Full Answer >>
  6. How are Social Security benefits calculated for divorced spouse?

    The maximum Social Security retirement benefit payable to a divorced spouse is 50% of the amount that would be paid to the ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!