Retirement may put you in a lower tax bracket and open up new tax-saving opportunities as you plan your withdrawals and charitable giving.
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. Fortunately, 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
Mortgage
Paying off your mortgage eliminates one of your largest 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.
Many older adults opt to sell their home and downsize, which could yield sale proceeds and free up funds. “Retirement is a great opportunity to reevaluate how much house you need,” said Jordan Mangaliman, CEO of Goldline Financial Services in Fullerton, California, in an email.
[Read: Is It Possible to Live on Social Security Alone in 2025?]
Commuting Costs
You may have had a daily commute or drive to the office 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,” said Andrea Woroch, a consumer finance and budgeting expert in Bakersfield, California, in an email. “Shopping around and switching (insurance) 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 said. If public transportation is available, you can use it to further reduce your reliance on cars.
Professional Clothing
During your career, you may have budgeted for uniforms or styling services. Formal wear and dry cleaning could also be regular expenses. 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 or maintain the yard to free up your time. You can now save money by taking on tasks such as cooking, cleaning and gardening. 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 also be beneficial for your health and well-being.
[READ: How Much Should You Spend on Aging in Place Renovations? Retirees Weigh In]
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 co-worker 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 purchasing 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 said. “Download the grocery store app to discover other in-store deals that you clip through your phone for instant savings at checkout.”
Peak Travel Costs
During your working years, you likely fit travel into long weekends and around holidays. Airlines and hotels are aware of this and adjust their prices accordingly. As a retiree, you’re free to choose your dates. “Traveling during the off-season can save thousands of dollars,” Mangaliman said. If you have a flexible schedule, you could take advantage of last-minute offers to explore the world.
[Read: Retirement Challenges in 2025: Market Volatility, Inflation and Social Security]
Unnecessary Spending
Take the time to review your investment portfolio and evaluate your overall costs. Make a note of each fund’s expense ratio, which measures the annual cost to own a fund, and check if lower fees are available. Consider penalty-free retirement account withdrawals and the rules that apply to them.
To save even more, consider eliminating or reducing splurges in retirement. “Any new purchase should be thought of carefully to analyze the impact,” said Eric Mangold, founder of Argosy Wealth Management in Westfield, New Jersey, in an email. 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 withdrawals from your retirement accounts. You could avoid income tax on IRA required minimum distributions by making a qualified charitable distribution.
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10 Expenses You Can Eliminate in Retirement originally appeared on usnews.com
Update 04/24/25: This story was published at an earlier date and has been updated with new information.
