[VIDEO] 2 Ways to Trim Your Spending in Retirement
Saving money before and during retirement so their standard of living doesn’t suffer is important for many retirees. Unfortunately, many Americans aren’t saving nearly enough and are falling short of setting aside adequate funds to support their retirement needs. According to the Economic Policy Institute, the average retirement savings for people ages 56-61 is only $163,577.[i] Meanwhile, Fidelity estimates that retirees can spend nearly $275,000 on health care expenses in retirement.[ii] And what’s really scary, the National Institute for Retirement Security estimates that America has a $14 trillion gap in retirement savings.[iii]
If you’re retired and finding that balancing your savings and spending is an ongoing challenge, follow these tips for ways to trim your expenses and save more.
First – Cut Your ‘Time-Saving’ Costs
When you’re employed and busy managing your career and family, spending money on time-saving items—like professional house cleaning or monthly food-subscription services—can be very helpful. Once you retire, however, you typically have more time on your hands. You may be paying for items that are no longer necessary. You can save money each month by trimming or eliminating any time-saving resources you don’t need to support your retirement lifestyle.[iv]
Here are some actions to take:
1. Sit down and list all the monthly, quarterly, and annual subscriptions and services you have and identify which ones aren’t absolutely necessary.
2. Consider taking over household chores you pay someone else to manage.
3. Assess how much you spend on eating out, and switch to eating in for some of those meals.
Trim your expenses in retirement – Reduce Your Health-Care Costs
Retirees typically spend a large amount on health care, often siphoning income that could be used for other expenses. Unless you have the money to pay these bills, they have the potential to leave you in a financial bind. Did you know you can help reduce some of your medical costs by learning to shop around?[v] For example, changes like getting an MRI at a radiologist instead of a hospital can make a difference in your medical bills, as the radiologist is typically less expensive.[vi]
Here are some actions to take:
1. Get competitive quotes from hospitals and other medical professionals.
2. Check prescription costs at different pharmacies and online, and consider buying generic.
3. Revisit your insurance plans to help identify if you’re receiving the best value.
Every retiree’s
financial life, and needs, are different. So knowing a true breakdown of your
daily, monthly, and yearly costs that make up your budget is critical for
finding ways to save. By taking time to analyze your monthly budget and
outflows, and trying to reduce or eliminate the unnecessary expenses, you may
have more money on hand for other lifestyle needs.
If you wish to download a free sample of a
monthly expense worksheet, please visit braviasfinancial.com/worksheet.
[i] https://www.thebalance.com/average-retirement-savings-by-age-4155888
[ii] https://www.cnbc.com/2017/08/24/average-couple-will-spend-275000-on-health-care-in-retirement.html
[iii] https://www.forbes.com/sites/andrewbiggs/2016/07/21/how-much-retirement/#1c4486b94d28
[iv] http://money.usnews.com/money/retirement/slideshows/10-costs-you-can-eliminate-in-retirement?slide=6
[v] http://www.investopedia.com/articles/personal-finance/091615/7-ways-reduce-healthcare-costs-retirement.asp
[vi] http://www.investopedia.com/articles/personal-finance/091615/7-ways-reduce-healthcare-costs-retirement.asp
