Cutting or reducing expenses in retirement can be tricky. You can save money on less dining out, business clothes, and commuting. But you will still have monthly expenses related to food, housing, and transportation along with all the other services you rely on.
However, you can still find ways to live comfortably after retirement. It just takes extra advance planning. Here are some tips to help you reduce or cut those retirement expenses.
How to Cut Lifestyle Costs During Retirement:
1. Trim your lifestyle and spending.
Before you trim your lifestyle and spending you need to know where your money is going. It is impossible to save without knowing what your expenses are each month. Many people are surprised to learn how much little things will add up.
For example, spending $4 – $5 for take-out coffee each day can quickly become an expensive luxury at the end of the month. The best advice is to add all expenses and see where you can trim, especially if there is a shortage each month.
Also, take a look at your purchases over the past few months and see if you can eliminate some spending habits. It might be a gym membership or yoga classes you do not go to anymore. Or maybe you can start cooking more meals at home instead of going out to eat often or ordering take-out every other day. Do not forget to keep a diary to track your spending.
2. Reduce restaurant spending.
One of the easiest expenses to cut if you want to save more is restaurant meals. Eating out is always more expensive than cooking at home. If you still want to eat at restaurants, try to reduce it to one or two visits per month. You can also opt for appetizers or split an entrée with your dining companion to save money when you are eating out.
Another option is to skip drinks and desserts at the restaurant and then treat yourself to a nightcap drink and dessert at home. It will help significantly to stretch your budget.
3. Party early.
You can save around 35% on food and 20% on drinks by eating out during a happy hour rather than peak dinner hours or later. You can check your neighborhood places to find out when they host happy hour.
Additionally, check the Happable.com website to get details on happy hour deals at local chain restaurants.
4. Prioritize entertainment needs.
Life should be fun, and entertainment is nice to have but it is not a necessity. If you are bored and looking for free or low-cost entertainment options, explore events like local art fairs, movies, or free concerts in the community park.
Taking yoga classes or reading books from the library can also be helpful if you do not want to spend a lot of money on your hobbies.
5. Get discounts on entertainment.
If you want to save on entertainment costs, I recommend taking advantage of free days at museums, entertainment centers, national parks, etc.
Another good idea is to monitor discount ticket apps and websites. Several digital businesses offer concerts, comedy clubs, theater, and other cultural events tickets at big discounts.
They include Groupon, Goldstar, and Today Tix.
Also, your local community might offer free concerts and other in-person or virtual events.
6. Enjoy community events.
Getting out and having new experiences can be expensive if you live on a fixed income. But you can find free or low-cost events in your community. Check listings at local libraries, churches, or community centers, or websites like Eventbrite.
Community events can be an economical way to keep grandkids engaged and spend time together with the family. Don’t forget to pack snacks and water to minimize the amount of money you spend on food or turn it into a family picnic.
7. Vacation for less.
Experiencing new homes away from home doesn’t have to be expensive. Check out destinations within the driving range of your town. You might be able to find an entirely different climate and change of scenery just an hour away. Also, explore options like home-sharing services to save money on hotels when traveling.
Plan your travels on Wednesdays and Thursdays. Most hotels, resorts, and inns offer lower rates on weekdays rather than weekends. So, you can plan your trips by going midweek and save money. Some resorts even offer better prices on Sunday through Thursday packages.
Book hotels last minute if you can. If you are planning a road trip and you are flexible about where to stay, book your hotel two weeks in advance rather than four months out. You can save up to 13% by being flexible on your schedule.
8. Travel off-season.
If you are planning to spend your retirement years traveling the world or the US, book your vacations off-season to save money on traveling. You can save a lot of money by booking flights and reservations outside of peak travel times – for most places that is summer.
In addition to traveling during the off-season, think about other ways to find big travel savings in retirement. Consider subscribing to a discount flight finder website to receive lists of the best flight deals to your destinations. Make your travel plans well in advance so you can track flights for at least a few months to find the best deals.
It is a smart idea to use a designated travel credit card for your everyday spending. Redeeming points and miles for flights and accommodations can mean big money savings for your retirement budget.
How to Handle Your Money During Retirement:
9. Understand how much you are spending.
Look at your spending over the last 3 months using your banking statements. If you use cash occasionally, write down what you think you spent on some of your purchases. Start keeping a spending diary, spreadsheet, or notebook so you get an accurate view of your expenses.
10. Budget for now and the future.
Saving is always important, even after you have retired. Create a retirement budget and allocate some funds for savings. Try to build a solid emergency fund that could cover at least 3 months of your expenses in your savings. So, you would need to sell your stocks or bonds in a rush to cover an unexpected bill.
11. Set up a retirement budget.
Setting up a retirement budget will help you limit your expenses and ensure that you have enough income to work with other major steps. If you are worried about running out of money in retirement, consider reaching out to a financial planner.
A financial planner will help you make sure that you are spending the optimal amount of money for your financial situation. Even though financial planning comes at a cost, it can be a huge relief to get professional support for managing your money in retirement.
12. Create 50/30/20 budget.
One smart way to manage your retirement money is to follow a budget which means setting priorities for your spending. You can create a 50/30/20 budget for your money management.
This approach means that you will spend 50% of your after-tax money on your needs (essential), 30% on your wants, and 20% on savings and any debt payments.
Your 50% essentials should include:
- Housing
- Transportation
- Utilities
- Groceries
- Insurance
30% of your income for your wants:
- Gifts
- Charity
- Entertainment
- Travel
- Hobbies
13. Think about housing costs.
Usually, housing is the single largest expense in most households. So, look at your monthly housing expenses and think about how you can downsize or lower the costs to save money.
Whether you are approaching retirement or already retired, consider these strategies for reducing your housing costs:
- Pay off your mortgage. If you have the ability to pay off your mortgage in full, go for it. Doing so can eliminate the biggest expense in your retirement budget.
- Downsize to a smaller place. Some retirees choose to downsize their big homes by moving to a smaller house, condo, or townhouse. This can be an especially good option if you have a lot of home equity, or your mortgage is paid off. In this case, selling would allow you to buy a new smaller home in cash and pocket the difference. Downsizing to a smaller home can also help you cut back on utilities costs, taxes, home insurance, maintenance, and yard care.
14. Reduce your debt.
When living in retirement on a fixed income, you will not have more money tomorrow to pay off the debt that you accumulated today. Debt payments can be a huge burden on your retirement budget. Also, debt is stressful because it can accumulate quickly when it builds interest.
If you are carrying any high-interest rate debt in the form of credit card balances and personal loans, make a plan to repay it ASAP.
High-interest debt is always a burden on your long-term budget because the longer you spend paying it off the more you sacrifice on interest charges. That is especially true when you are living on a fixed income. Reducing your debt faster is a big opportunity to save money in the long run.
15. Sell a car.
For most retirees, the transportation expenses are the second biggest spending category. According to stats, the transportation costs are 16% of retirement costs. That is even more than healthcare costs, which is 13.4% on average.
If you still have two vehicles, consider selling one. You may no longer need two cars for your household when you are not commuting every day to work. If you still have to drive around, to the events or appointments, you may be able to coordinate with your spouse or partner to get by with just one car.
Downsizing to one car can help you save on car loan payments, gas, car insurance, and maintenance costs. Additionally, if you live in an area with good public transportation and many walkable streets, you may be able to get around without a car.
16. Reduce insurance premiums.
Another way to cut your retirement expenses is to reduce insurance premiums. You can ask your home insurance company for a senior discount. Many home insurance companies provide discounts for retirees because they spend more time at home which reduces the risk of fire, flood, or robbery.
Also, you can tell your car insurance company that you will no longer be driving to work. The more you drive, the more chances for you to get into an accident. Daily commuting is a big risk factor because car collisions typically happen during periods of heavy traffic. When you retire, contact your car insurance company, and ask them if you qualify for a low-mileage discount.
17. Prep for grocery shopping.
A little work before you go to the grocery store can go a long way toward saving money on food. Check your pantry first and make a shopping list to avoid an impulse to buy something you do not need.
Use coupons, and senior discount days and join loyalty programs to maximize your savings as you shop. In exchange for sharing your phone number or email address, your local store’s loyalty program might offer additional discounts.
If you shop for groceries at a large store like Target or Walmart, you can often find additional savings by downloading the store’s app on your phone. Apps like Flipp help you sort through sales flyers and coupons from local stores when you enter your ZIP code.
Many credit cards offer cashback today. Search the internet for cards that offer the most cash back for groceries. You might find a card that will give you 3 or 5 percent back on food purchases.
Websites like CardRates and NerdWallet let you compare your card with others.
18. Restrict online shopping.
One way to avoid overspending is to restrict online shopping. The temptation to spend is everywhere we look, especially on our screens. You can make it more difficult to shop online by shopping online only with purpose.
To prevent buying things you do not need, avoid aimlessly browsing your favorite websites or online sales like Black Friday, Cyber Monday, or Super Saturday sales.
Another way to restrict online shopping is to give yourself a cooling-off period between the time an item catches your eye and the time you actually make the purchase. Consider putting the item in your online shopping cart and then walking away until you have had more time to think it over.
19. Lower medical care costs.
We all know that medical costs can add up in retirement. Many retirees are worried about rising healthcare costs and unexpected medical expenses.
One of the best ways to save money is by doing your best to stay healthy. You can improve your overall health by building exercise and healthy eating routines. It is important to remember that preventive care is a big money saver. You should go and see your doctor regularly for preventive health care measures.
If you are a smoker, you should consider quitting smoking. It will help you greatly reduce the risk of certain health problems which eventually can help you save on health care expenses.
20. Do It Yourself.
When you are retired, you are usually rich in time. That means you can now tackle household maintenance items on your own instead of hiring someone else to do it. In addition to cost savings, you will keep yourself busy doing physical tasks to live longer and be healthier.
Another way to save money and go with the ‘do-it-yourself’ route is to get creative with gifts. During the holidays you can save money with affordable gifts like baking cookies or preparing someone’s dinner. You can also treat someone with the gift of your time by taking them to a local (free) museum, art gallery, or a community event.
21. Seek out bargains and discounts.
Using senior discounts is another way to live on less money and still enjoy your retirement. Seek out bargains, use coupons and deals websites to take advantage of senior citizens’ discounts. The money you save adds up over time.
Retirees can usually save on restaurants, travel groceries, and much more by simply shopping on specific days or verifying their age when checking out.
You can ask for a senior discount at many places:
- gym membership
- local museums and concerts
- state parks and beaches
- golf courses
- restaurants
- local stores and supermarkets
Read More: The Complete List of Senior Discounts
Related posts you might want to read:
- 15 ways to Live on Less Money in Retirement
- 8 Budget Categories You’ll Spend More in Retirement
- 5 Biggest Retirement Expenses and How to Reduce Them
- Should I Pay Off a Mortgage Before Retirement?
- How to Prepare a Retirement Budget in 5 Simple Steps
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