Angela Mae

Thu, May 22, 2025, 4:05 AM6 min read

For many people, retirement means living on a fixed income and cutting costs to reduce expenditure. And while these are both sound strategies to help stretch the dollar, sometimes the better option is to spend a little instead.

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If you have a little extra money, say $5,000, you might want to allocate it toward things that boost your future financial security and personal happiness. This could be low-risk investments or it could be checking off something on your bucket list.

Whatever the case, here are some of the best ways to spend $5,000 each year in retirement.

Retirement doesn’t have to mean an end to investing. Whether you want to continue building wealth for your heirs or you just like the idea of seeing your money grow — both are perfectly valid — you might want to invest in low-cost index funds. They don’t require much time or energy, so you can still enjoy a leisurely retirement lifestyle while watching your money grow.

Low-cost index funds yield an average annual return of 7%, according to Brent Chandler, the founder and CEO of FormFree. Say you invest $5,000 every year for 20 years — from age 65 to 85. You’d have around $224,000 in index funds which would be a hefty chunk of cash for your loved ones.

Jay Zigmont, a certified financial planner (CFP) and the founder of Childfree Wealth, encourages retirees with an extra $5,000 after expenses to enjoy the money, give it away or do both.

“You need to find a balance between saving and enjoying your life,” he continued. “If your needs and goals are met, any extra money is discretionary.”

Zigmont specifically recommends making a list of what you enjoy doing and/or who you would like to help. Of course, you can also put that money toward accomplishing things on your bucket list. But even if you don’t have a bucket list, you should still be able to treat yourself and enjoy your hard-earned money during your retirement.

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A revocable living trust (RLT) lets you decide how you want your assets to be managed both while you’re still alive and once you’re gone. The FDIC will insure your RLT up to $250,000 (or up to $1,250,000 if you have five accounts with five eligible beneficiaries or fewer). This means your money’s safe until it’s time to pass it on.

According to Marty Burbank, an expert in estate planning and elder law at OC Elder Law, an RLT “not only secures your assets but also streamlines the inheritance process for your heirs, avoiding the often lengthy and costly probate process. Setting this up can initially seem complex, but it provides significant peace of mind regarding the handling of [your] assets after passing.”