4 ways to reduce your expenses as a retiree
Reaching retirement and finding that you don’t have enough money can be devastating.
You don’t want to withdraw too quickly from your retirement accounts and jeopardize the chances that your money will last a lifetime. And to make sure that doesn’t happen, you may need to make some pretty drastic lifestyle changes.
If you’re worried about running out of savings, making one or all of these four moves might just be the ticket to drastically cutting your spending and giving you a lot more leeway.
1. Move to a cheaper area
Moving could be the best thing you can do to preserve your nest egg and save your retirement. If you live in a place where housing, taxes, medical care, or other goods and services are expensive, you will inevitably be spending more. But by moving to a location with a lower cost of living, you can withdraw less money from your savings each year while covering basic costs.
In many cases, moving to a part of the United States inexpensively can result in a significant reduction in expenses. But if your savings situation is truly dire, you might want to consider retiring overseas, where the US dollar has a lot more purchasing power.
2. Eliminate a vehicle
Cars are expensive. In fact, according to an AAA study, owning a new car in 2021 costs $ 9,666 during the year.
That’s a lot of money for retirees who are worried about making their savings last. But the high cost of owning a car also offers an opportunity to save.
Seniors used to being a two-vehicle household could free up a lot of money if they eliminated a car and shared a vehicle with their partner. And those who live in a single-vehicle household may want to do the math and see if switching to public transportation, while still using the occasional carpooling service, could help. And sometimes moving can Also make it possible to eliminate one or more vehicles if the elderly move to an area more accessible on foot.
3. Reduce the size of your house
If you are not ready to totally uproot yourself by moving to a new location, you may be able to further reduce your expenses by simply moving to a new home.
Downgrading to a cheaper home could open the door to a mortgage-free mortgage and lower housing costs. Or you could take equity out of your home and put it in an investment account, where it could help generate income to support you as a retiree.
Apartment dwellers may also consider moving to a smaller location to reduce rent costs and free up more money for other things.
4. Stop supporting adult children
Finally, if you are supporting your older children, ending this arrangement could help strengthen your own financial security. Far too many parents end up sacrificing their future to help adult children. This often doesn’t help anyone in the long run, as those same kids could end up supporting broke parents whose retirement savings are depleted.
The point is, young people have more time to build wealth and often have more options to fund their efforts, such as taking out student loans. But if you are retired and empty your nest egg because you support your children, you may have little means to recoup.
Taking any of these four steps could make a big difference in cutting expenses and making your money last longer. And the more steps you take, the greater the impact on your financial security in your later years.