5 Ways to Retire on a Small Income

You don’t need to earn more money to set yourself up for a comfortable retirement.

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We all want to be happy and comfortable in our golden years. To get there we focus on saving money every month, investing for the long term, and figuring out when we should retire.

A huge step in the right direction is to be financially free by the time we leave the workforce, and one of the quickest ways to get there is to make more money. However, asking for a raise or finding a more lucrative job are not strategies everyone can pursue. Luckily, there are many ways to prepare for a secure retirement without a large income. Here are five ways to improve your chances of having a comfortable retirement.

[See The 10 Best Places to Retire in 2012.]

Focus on income. One of the main reasons we fear retirement is because of the lack of steady income. Most people in their working years attempt to increase their net worth, ignoring how that lump sum can be translated into a stream of income for the future. As a result, they have to deal with the emotional impact of always seeing their nest egg decrease as they withdraw from their savings in retirement. Instead, focus on setting up income streams for retirement.

Cut spending. One of the most efficient ways of reaching your retirement goals is to cut your expenses. When you are able to reduce how much you spend, you can not only save that extra money, but also learn that you need less to live a comfortable life. If you end up saving too much for retirement you can always inflate your lifestyle later.

[See Why Banks Increasing Fees Isn’t Bad News.]

Hang out with frugal people. No one wants to be called cheap. But what's deemed cheap in some social circles is admired in others. If you enjoy living frugally, then you will find it even more enjoyable meeting others who share your passion.

Learn to enjoy your hobby and not the buying process. Many people spend quite a bit of money on their hobbies, and they blame their passion for the increase in spending. Yet, I'm sure there are ways to enjoy the same hobby without buying all that stuff. Do you really need a different camera lens for every situation to enjoy photography? Is it a necessity to have the latest equipment to enjoy a sport? Learn to enjoy the hobby rather than the impulse spending. You might actually discover a whole new perspective towards your hobby.

[See 5 Reasons You Shouldn’t Contribute to a 401(k).]

Find a company you enjoy working at. Let's face it. Most people want to retire early. Yet, no one ever quits their job if they love what they are doing. Some people will tell you to find a job in an area that you are passionate about, but the company has to have the right culture too. It doesn't matter how much you love the line of work if your boss is always being unreasonable. Find a company where you love the people and culture, and you will naturally be more passionate about what you do. When you enjoy your work, you can work well past traditional retirement age and still be happy.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.