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

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.

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.

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.)

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.

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.)

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