Living on a fixed income during retirement can be challenging, making it crucial to find ways to cut expenses and save money. While it may seem difficult, especially if you are already living frugally, making adjustments can help ensure your financial stability and peace of mind.
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Cutting out certain expenses can lead to substantial savings each year. By eliminating these nine costs, you could potentially save over $29,000 annually, depending on your location. Here is a breakdown of some expenses to reconsider during your retirement years:
Storage Unit Rental
Annual Savings: Approximately $2,160
Do you have belongings stored in a storage unit? Consider emptying the unit and selling the items inside to save on rental fees. Tanya Peterson, a consumer finance expert, suggests questioning the necessity of the unit if its contents are not actively used. Selling these items could also generate additional income.
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Personal Vices
Annual Savings: Varies, with potential savings of $1,200+
Identify and reduce expenses related to personal vices, such as alcohol, smoking, specialty coffee drinks, or luxury chocolates. Cutting back on these indulgences can result in significant savings over time.
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Streaming Services and Cable
Annual Savings: Approximately $1,200
Consolidate or cancel excessive streaming subscriptions or underutilized cable packages to save money. Erika Kullberg, a personal finance expert, recommends evaluating your entertainment expenses to identify potential cost-cutting opportunities.
Dining Out
Annual Savings: Approximately $2,400
Reduce dining out expenses by reserving restaurant visits for special occasions or occasional treats. Peterson advises against making weekly dining out a habit, as the costs can quickly add up, especially when ordering extras like appetizers and drinks.
Life Insurance Policy
Annual Savings: Varies, but potential savings of $2,000 to $3,000
Review your life insurance needs after retirement to determine if the coverage is still necessary. If the policy is no longer essential, reallocating these premium payments can free up funds for other financial priorities.
“Once you no longer have dependents to support, assess if redirecting those payments to another source and adjusting the budget may be appropriate,” stated Peterson. As a retired Boomer, here are three debts you should prioritize paying off before retirement:
1. Basic Living Expenses:
Savings per year: ranges from $2,000 to $3,000
Consider downsizing to a more affordable area or a smaller home to significantly reduce living expenses. Moving to a nearby suburb or a smaller residence can yield substantial profits from selling your current home.
2. Your Car:
Savings per year: varies from $12,000+
Reducing from a two-car household to one, utilizing public transportation, or walking/biking for errands can lead to savings on gas, maintenance, and insurance costs for retirees.
3. Car Insurance:
Savings per year: up to $2,008
Reducing mileage due to changed driving habits can result in lower auto insurance costs. Adjusting from driving 12,000+ miles annually to 6,000 or less can significantly decrease monthly insurance expenses.
4. Travel:
Savings per year: around $3,982
Cutting back on travel or opting for trips less frequently can lead to substantial savings. If travel is essential to your retirement, seek ways to reduce costs such as traveling during off-peak times or finding discounted travel packages.
By eliminating these expenses, retirees can potentially save nearly $30,000 annually.
