People who are approaching retirement often worry that they won’t have enough money to live comfortably. If you take a step back and assess your circumstances, goals and priorities, you might find ways to reduce your costs and possibly eliminate some expenses altogether.
Downsize
Housing costs are generally the largest part of an individual’s or family’s monthly budget. If your kids have moved out, you don’t need a large house anymore. Moving to a smaller house or an apartment can reduce the amount you have to spend on a mortgage or rent. You’ll also pay less for utilities, insurance and maintenance. That can give you a lot more breathing room in your monthly budget.
Relocate to Save on Taxes
If the state where you currently live requires residents to pay income tax, that might take a significant bite out of your monthly income. When you retire, you’ll have much more flexibility in terms of where to live. Consider moving to a different state with a lower tax rate, or no income tax at all.
Cut Back on Transportation Costs
When you were commuting to work every day and shuttling your kids to friends’ houses and after-school activities, a car was probably a necessity. If you and your spouse both worked, it’s likely that each of you had a vehicle.
After you retire, you won’t drive as much as you used to. That means you’ll have an opportunity to save a bundle on car loan payments, gas,and maintenance.
If you and your spouse each had a vehicle, you might be able to sell one and become a single-car household. You might not need a vehicle at all if you relocate to an area near public transportation or use a rideshare service to get around. If you move to a neighborhood with stores, restaurants and activities within walking distance, you might be able to eliminate transportation costs entirely and stay physically active and healthy.
Review Your Insurance Policies
You should periodically look over all your insurance policies, figure out if your coverage fits your current needs, and compare quotes from different insurers. If your children are grown up and financially independent, you might be able to cancel a life insurance policy and eliminate those premiums from your budget.
Review your auto and homeowners insurance policies and figure out if the coverage and limits you have are appropriate for your needs. You might be able to reduce your premiums by raising your deductibles. You can also shop around for lower rates, bundle two or more policies, and find out if you’re eligible for discounts.
