5 Ways to Reduce Your Post-Retirement Cost of Living
Retirement should be relaxing, filled with more time for new and existing hobbies, time with family, and even a chance to travel. Unfortunately, fears about retirement scare many people. Thankfully, careful planning can help you protect yourself against retirement fears, especially if you consider how much you might need and how you will prepare for long-term care and healthcare costs.
In addition to careful planning, you will want to determine if you can save money on your regular expenses once you retire. Finding ways to save money on everyday spending can earn you a lot of money and reduce your daily stress, as well. Although many people try to save a specific percentage of their pre-retirement income, there is really no magic percentage that will be the right amount for every person. You are better off saving as much as possible and trying to cut costs on regular expenses. Here are five ways you can do that.
1. Stick to a budget
You will see this tip time and time again in various personal finance articles because it is always a good idea. Hopefully you have been utilizing a budget regularly for years, whether you are retired now or not, but if not, start with a budget template. Although many people claim that you will spend less when you retire, it can be tempting and easy to spend money that you don’t have in the name of having fun or relaxing.
If you have more free time to do things you love, then you can easily get into the habit of spending a little money here and a little money there — and it all adds up. Even though keeping track of all your expenses and maintaining a budget is about as fun as cleaning the bathroom, it is important. If you stick to your budget, you won’t spend too much. In addition, once you retire, your costs might change, so you might be able to allot more to fun activities. The important thing is that you stick to your budget: doing so will keep you accountable and will save you money on your regular daily or monthly spending.
2. Find an affordable hobby
Retirement brings more time for favorite hobbies like golf, and you shouldn’t deprive yourself of activities that are important to you. However, you will save money if you use your new free time to find some affordable or free hobbies, as well. Join a walking group, take up knitting or crocheting, read more, go outside more, scrapbook more, and just spend more time with friends. Also, check out community calendars for fun and free activities nearby.
You also might have the time you always wished you had to volunteer for a nonprofit that you care about.
In addition, you may find that you have more time and energy to help others you already know through bringing meals, watching their kids, or even just lending a listening ear. Finding new hobbies or spending more time doing things you love that are not expensive will help you save money on your regular expenses because your time will be filled with meaningful and affordable activities, instead of your money regularly going to expensive activities that are meant to entertain you.
3. Cut your bills dramatically
If you really want to save money during retirement, you may have to cut some items from your budget, and you may even need to make some big changes. While a cleaning service might have been necessary when you were working full time, you may find that you can save a few hundred dollars each month by cleaning yourself. You also might find that your house is too big once your kids move out.
Downsizing will save you money, and it will also save time because you won’t need to care for as big of a home. Downsizing can also save money on costly repairs. Many retirees find that they actually prefer to rent instead of own once they retire, and moving out of an expensive neighborhood close to your work might be possible for the first time.
Just cutting small expenses will help, too. You may be able to eliminate lunches on the go once you stop working full time. You also will probably save on gas and on work clothing. Look carefully at your budget and determine what you can afford to live without.
4. Allow your kids to grow up
If you have an empty nest, allow your kids to be the adults they should be. This doesn’t mean you can’t still purchase gifts on their birthdays or for special occasions, or help when they face an emergency, but you do need to change your priorities. If you paid for your child’s cell phone bill throughout their time at college, as well as their insurance, you shouldn’t have to pay for those things once they have a job. You also shouldn’t be paying for any other regular expenses. Allowing your kids to grow up and take responsibility for their own bills will teach them to be adults, and it will free up more money for you.
If you don’t have kids, you might still have someone that you are supporting, and you might need to lower or eliminate that support. If you have a sick or elderly relative, you probably do want to help them as much as possible. However, if you have a sibling who comes to you every few months for money and has never learned how to manage his or her own money well, it may be time to cut that person off.
5. Make a move
There are many areas that tout their retirement friendliness or affordability, and you can consider moving to one of those places. Unfortunately, even if you move to a different state with lower property taxes, you might make up for it in property or sales taxes. Each state and city has its own expenses. However, there are places where you can retire and live comfortably on a smaller budget than many other areas. According to AARP The Magazine, Florida has many affordable and desirable locations. Pocatello, Idaho; Bangor, Maine; Greenville, South Carolina; and Grand Rapids, Michigan, are also on the list, among others.
If you choose to move, you should consider more than just which cities or states a list suggests are cheap. If you visit family regularly, you may find that you save money by moving closer to them. In addition, if you move somewhere that you can easily walk or take a bus to different stores or events, you might be able to get rid of your car altogether. Lastly, while saving money by living somewhere more affordable is a great idea, make sure that you like the place you are planning to live. Otherwise, you might be spending a lot of money on entertainment or travel.
There are many other ways you can save money on your everyday, post-retirement expenses. Take advantage of senior citizen discounts, remember to make your required retirement withdrawals, re-evaluate your insurance, delay your Social Security payments if possible, and consider other ways you might save, as well.