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A traditional, passive retirement is fine for some, but many retirees are looking to start exciting new chapters in their lives when they stop working.
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As Fidelity noted, new retirees should plan to spend between 55% and 80% of what they earned while working each year in retirement, and increase that by about 6% if they’re considering a mode. active lifestyle or expensive expenses.
“Every family’s retirement situation is different,” said Beau Zhao, director of financial solutions at Fidelity. “The time until retirement, spending habits, travel plans, health issues and unexpected costs can all vary significantly. This is why it is important to adjust the spending guidelines according to your own needs and desires.
Unless you’ve been ultra-successful in build a nest egg, saving and budgeting don’t stop at retirement. To live your ideal life in retirement, you’ll still need to check your bank balance and cut spending along the way. Here is five easy expenses you can cut to maximize your retirement savings.
1. Transportation
Spending money on transportation is likely to decrease when you stop working. Selling one or more vehicles you don’t need can be a financial boon in retirement and will save you a lot on gas, insurance and maintenance.
Depending on your level of social activity and the transportation options you have, switching to a reliable, cheaper option should be a cost-saving goal. There may be no point in keeping a car.
Senior citizen discounts are everywhere, so it makes sense to use a senior citizen transit pass to get around town. Depending on how often you commute, Uber or Lyft may suffice without you having to incur the cost of regular vehicle expenses.
2. Housing
Similar to giving up or reducing driving in retirement, leaving the family home is something that many find hard to come to terms with in their twilight years. While one is a matter of security and pride, the other is an emotionally stressful decision – but a wise personal financial decision.
Whether it’s downsizing square footage, getting mortgage free, or moving to a less expensive area, lower housing costs can have a big impact on retirement savings.
3. Medical and insurance services
A harsh financial reality of aging is the inevitable cost of health care and insurance that comes with it. Retirement is a time to break free from many constraints, and this can include payment plans for any services one needs. As US News & World Report claims, many people stick with health and insurance policies they’ve had for years out of convenience.
Suppliers make a lot of money on people who just pay for what they once did, for the rest of their lives. At all times, you have to consider what you pay for and what you need. If you find that you are spending too much on health care, determine what which Medicare plan or a private policy works best for you.
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According to Jordan Sowhangar, Wealth Management Advisor at Girard, re-evaluating life, home and auto insurance policies and looking for discounts can save you thousands of dollars a year.
As for life insurance, Sowhangar told US News & World Report that retirees with grown children and/or no mortgages should consider whether a policy is necessary. “Maybe it makes sense to stop paying premiums, maybe reduce the death policy and save on premiums,” he suggested.
4. Dine out
Eating is a necessity, but it shouldn’t break your budget. Dining out is a luxury expense and a comfortable habit that many develop in retirement. Speaking to Business Insider, retiree Nicole Carter couldn’t get over how much she was spending on food outside the home while saving for retirement.
“When I looked at my finances and realized I had spent $2,100 eating out, I had to check in,” she said.
Decades of daily cooking may have lost its appeal for some, but for others retirement is a time to learn and hone cooking skills while saving money having fun and spending more time trying new dishes in the comfort of their kitchen.
5. Impulse purchases
Conferences on “discretionary spending” are a must in these times of high inflation and consumer prices. However, this is not just chatter. Impulse spendingespecially big purchases like vacations and new electronic conveniences, tend to eat into your budget.
Like James R. admitted to Business Insider, “American culture is frenetic and consumer-driven. Think twice if you really want to be that person or not. If you can get away from it, it makes retirement life a whole lot easier.
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Relying on discipline and adopting a conservative approach to saving in retirement will serve you best throughout your later years, especially as the economy improves.
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