Reducing expenses in retirement

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Once you’re retired, you’re on your own, financially speaking. Without a paycheck, one main source of income is gone and you’re dependent on your savings to cover your living and discretionary expenses. Of course, there’s Social Security, and there are many desirable places in the U.S. where it’s possible to live comfortably on Social Security alone. If you’re one of the lucky few to have a steady pension, congratulations – many retirees nowadays don’t. In any case, most people are looking for ways to reduce expenses after retirement. Here are some ideas, which may or may not be appropriate for your situation but are worth considering.

Downsize your home

With the kids out of the house, the extra bedrooms may seem empty. Many empty-nesters feel the large home is no longer worth the cost and work and look to downsize. Moving to a smaller home, or even a less expensive neighborhood, can save on property taxes as well as insurance, maintenance and upkeep costs. There’s no longer any need to live in a good school district or close to work. Relocating further away from town, or even to a state with lower taxes and expenses, will require moving costs but might be worth it.

Clean out your stuff

Along with downsizing your home, you can consider downsizing your clutter. Many of the items you needed earlier might not be needed anymore. Extra television sets, bicycles, and even cars might be candidates for downsizing. You’ll likely no longer need work attire such as business suits. You could sell unneeded items or claim a tax deduction if you donate them. With fewer cars, you could save on gas, maintenance, and auto insurance costs. Many retirees get rid of all of their cars when they move to a retirement community or a walkable town.

Along with your physical stuff, you might look at other expenses you can eliminate or scale down. Insurance is one common area. You might no longer need disability insurance since you’re no longer working, and with your kids no longer financially dependent on you, life insurance might not be needed. And since you’re no longer commuting daily to work, your vehicle mileage may decrease, so you might be entitled to savings on your auto insurance.

Taking advantage of senior discounts

Retail stores and businesses routinely give discounts to seniors. Many state and local governments offer discounts on property taxes and other fees for seniors. National parks and many state parks give discounts to senior visitors. Also, with a flexible schedule, you have more freedom to take advantage of off-peak discounts. You don’t necessarily have to travel during the summer or holidays, or dine out after 5 pm. Many popular tourist destinations offer steep discounts for travel during less popular, but still attractive, times of year. Many restaurants, airlines, and hotels also give significant price breaks for off-peak customers. Visit seniordiscounts.com to look up discounts in your area.

Maximize Social Security benefits

If you can delay taking Social Security retirement benefits until age 70, your total benefits can be as much as $250,000 higher than if you take them at age 62, which most people do. Of course, the decision of when to take benefits is highly personal and you decide what’s best for your situation. The Social Security laws provide for other strategies that may apply to you as well. By not taking advantage of these benefits you’re just leaving money behind.

Minimize Medicare costs

Contrary to what some believe, Medicare doesn’t cover all medical costs in retirement. There are premiums, copayments, and deductibles. These out-of-pocket expenses have no annual limits. You’ll likely want to make sure you have a way to cover these out-of-pocket expenses, such as Medicare supplements.