The “eighty-percent” rule is a widely quoted rule of thumb for estimating your retirement costs.…
Many people are finding, to their dismay, that they don’t have as much saved for retirement as they think they’ll need. The prospect of running short of money in your old age isn’t a pretty one. The good news, however, as we stated in a previous post, is that many retirees are finding they aren’t spending as much as they thought they would, but are still enjoying a satisfying retired life. Chances are, this may be you as well.
Most retirees find their expenses decrease after retirement. After all, you no longer have those costs associated with work, such as commuting, attire, and regular meals out. You may be driving less, which brings your auto insurance rates down. And, you’re no longer saving for retirement, since you’re in the withdrawal phase now. But this might not be
Create a budget. In order to really cut costs, you’ll need to do some planning. The first suggestion is to create a personal or family budget to track income and spending. Many people are reluctant to really do this, but it’s the best way to see where your money is going.
Reduce unnecessary expenses. Many people find they have discr
etionary expenditures that can be trimmed or even eliminated, without leaving you feeling deprived. One way to cut costs is to pay with cash as much as possible. People who pay with cash typically spend significantly less than those who pay with credit cards. Handing over the bills, and later having to go to the bank to get more cash out, tends to make you more careful about how your money is spent, compared to just swiping a card.
Another idea is to try the $10 x 10 system. Many people have discr
etionary expenses in a variety of areas, such as food, travel, entertainment, and cell phone usage. Rather than trying to make deep cuts in a few areas, spreading the reductions around can be effective. Trim just $10 from each of ten different spending categories, and you’ve saved $100.
Take full advantage of discounts. As a retiree, your time is lik
ely more flexible than before. You can take advantage of off-peak discounts in travel, dining, and entertainment. You’ll want to look around and take full advantage of airline and restaurant discounts. For example, travel to Europe is expensive in the summer, but can be as much as 50% less in the fall and winter. Travel to Ireland in late September instead of June, and the roads and tourist attractions are much less crowded. By visiting in off-peak times you’ll experience fewer crowds, be more relaxed, and may find the locals are more accommodating. Many restaurants also have lower prices during off-peak times.
Also be sure to take advantage of retiree and group discounts. If you’re a member of AARP, over age 60, or a military or law enforcement retiree, for example, many restaurants and hotels will offer discounts. It never hurts to ask. Also check discount sites like Groupon for discount prices. Many establishments and companies offer discounts through their websites, social media, or online memberships.
Cut costs in your house. Keeping your home maintained can pay off in lower repair bills. Make sure toilets aren’t leaking, window trim is properly sealed, and your dryer vents and air conditioning intakes aren’t clogged. Consider having an energy audit to see if there are any leaks, which can lead to higher air conditioning and heating bills. You can even look into downsizing to a smaller home, or moving to a lower cost neighborhood or state.
Also be sure to shop around for the lowest cost in home and car repairs. Obtain several estimates before committing to one company. Sites like Yelp and Angie’s List can give you leads to reliable and quality services. Check a company’s reputation with the local Better Business Bureau. Often it’s worthwhile to pay a little more for quality service.