Once you’re no longer working, you’ll have time to enjoy plenty of leisure activities in retirement. You can expect your budget to change during this time, as health care costs increase or you take on new hobbies. Luckily there are also some expenses you will no longer need to cover in retirement, which will give you a chance to lower spending in certain categories.
Look for ways to eliminate these expenses in retirement.
— Mortgage.
— Commuting costs.
— A second car.
— Professional clothing.
— Time-saving costs.
— Office costs.
— Paying full price.
— Peak travel costs.
— Unnecessary spending.
— A high tax rate.
[READ: Costs to Include in Your Retirement Budget.]
Mortgage
Paying off your mortgage eliminates one of your biggest monthly bills. You no longer need to make interest payments to a lender or worry about late fees. While you will still have to pay for insurance and property taxes and continue to maintain your home, these costs are likely to be a fraction of what you were paying for your mortgage.
In addition, “retirement is a great opportunity to reevaluate how much house you need,” says Jordan Mangaliman, CEO of Goldline Financial Services in Fullerton, California. You might opt to sell your place and downsize, which could yield sale proceeds and free up funds.
Commuting Costs
You may have had to drive or take a train to the office every day during your working years. But now that you’re in retirement, you can expect to pay less for transportation.
Expenses related to car maintenance and insurance could drop too. “Increasing your deductible can lower your monthly premiums, and bundling services can also offer some savings,” says Andrea Woroch, a consumer finance and budgeting expert in Bakersfield, California. “Shopping around and switching providers is another way to find a better deal and save without sacrificing.”
A Second Car
If you’re married, you may have needed multiple cars when both spouses were working. In retirement, you might decide you can manage with fewer vehicles. “This opens up a great opportunity to sell one or more vehicles you don’t really need,” Mangaliman says. If there is public transportation available, you could make use of it to further lower your auto use.
[READ: How to Cut Costs in Retirement]
Professional Clothing
During your career, you may have budgeted for uniforms or styling services. Formal wear and dry cleaning could have been regular expenses too. Now that you’re spending more time at home, you might opt for casual clothing. To save even more on clothing costs, browse thrift stores to find used items that are comfortable and in good condition.
Time-Saving Costs
You might have ordered dinner regularly while working. Or perhaps you hired help to clean the house house or maintain the yard to free up your time. You can now save money by taking on tasks like cooking, cleaning and landscaping. If you take on a home improvement project, you might be able to do much of the work on your own. The extra activity could be helpful for your health and well-being too.
Office Costs
During your working years, you may have spent money on dining out, grabbing coffee or attending happy hours with co-workers. Or you might have chipped in regularly for gatherings, office pools and coworker gifts. In retirement, you can eliminate expenses related to the workplace and enjoy being at home.
Paying Full Price
Once you’re 50 or older, you may qualify for senior discounts. Some start at other ages or 65, so ask before making a purchase to see what’s available. You could get discounts on travel, hotels, car rentals and entertainment. You could also be eligible for deals at retail stores and supermarkets. Carry your ID in case proof of age is needed, and check for additional ways to cut costs.
“Apps can also help you save on groceries,” Woroch says. “Download the grocery store app to discover other in-store deals that you clip through your phone for instant savings at check out.”
[Read: Best Discount Shopping Apps.]
Peak Travel Costs
During your working years, you likely fit travel into long weekends and around holidays. Airlines and hotels know this and set prices accordingly. As a retiree, you’ll be free to choose your dates. “Traveling during the off-season can save thousands of dollars,” Mangaliman says. If you have a flexible schedule, you could take advantage of last-minute offers to explore the world.
Unnecessary Spending
Take the time to review your investment portfolio and evaluate your investment costs. Make a note of the expense ratio of each fund and check if lower fees are available. Take some time to learn or ask about the rules around penalty-free retirement account withdrawals.
To save even more, eliminate or cut down on splurges in retirement. “Any new purchase should be thought of carefully to analyze the impact,” says Eric Mangold, founder of Argosy Wealth Management in the New York City metro area. If you choose to forgo the purchase, your savings could last longer.
A High Tax Rate
As your income changes, you may shift to a lower tax bracket in retirement. You might be eligible for tax breaks that apply to those who are at least 65 years old. Some jurisdictions also have property tax breaks for older homeowners. Take steps to further reduce your taxes by carefully timing retirement account withdrawals. You could avoid income tax on IRA required minimum distributions by making a qualified charitable distribution.
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Expenses You Can Eliminate in Retirement originally appeared on usnews.com
Update 06/28/23: This story was published at an earlier date and has been updated with new information.
