20 Sneaky Expenses Prepared Retirees Stop Paying Once They’re Ready to Quit the 9-5
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Traditionally, retirement is the golden chapter of life where we get to relax, have the time to explore the things we’ve always wanted to, and enjoy financial freedom. That freedom does not come by chance; you need to plan carefully and reduce unnecessary expenses. The U.S. Bureau of Labor Statistics reports that the average retiree spends an average of $4,065 a month or $48,791 yearly for living expenses, but with smart budgeting this can be reduced.
Often, while working, we miss many expenses that creep into our budget without us even realizing it, but well-prepared retirees know exactly where to trim the fat. They identify and eliminate sneaky costs, which ultimately allows them to save as much as possible and enjoy their retirement. Read on to learn 20 sneaky expenses that the most prepared retirees stop paying.
Daily Workday Coffees and Lunches
Without a daily commute to the office, the need for expensive coffee shop runs, and takeout lunches reduce. Brewing their own coffee and having home-cooked meals becomes a joy for retirees.
Data from SmartAsset shows that ditching daily coffee shop visits can add up. A habit of buying a $5 coffee 5 times per week for 50 weeks per year leads to $1,250, and with tips, that amount can quickly go up.
Dry Cleaning Costs
Retirees no longer need office attire that needs to be maintained, so the dry cleaner is less used. They can save between $500 annually and $1,500 annually, depending on previous work wardrobe demands.
Alternatives to dry cleaning include home laundering methods or selecting clothes that require less maintenance, which result in savings over time
Premium Cable Packages
Prepared retirees realize that they do not require 300+ channels and can curate their entertainment through affordable streaming. Cutting traditional cable, which often costs $100 a month or more, could save up to $1,200 per year.
For that reason, most retirees tend to pay $10-$20 per month for services such as Netflix and Hulu to stream their favorite shows.
Gym Memberships They Don’t Use
Rather than contributing to expensive and underutilized gym memberships, retirees get their exercise through walking, yoga, and local fitness programs. AARP often highlights different resources and programs for seniors, like free fitness classes at the local community center.
These classes are an excellent way for retirees to stay active, socialize, and improve their physical and mental well-being.
Gasoline for Daily Commutes
Retirees spend much less on fuel since they don’t commute each day. According to data provided by the American Automobile Association (AAA), in 2023, it costs an average of $12,182 to own a vehicle (including fuel expenses, maintenance costs, insurance, and other costs) and driving it 15,000 miles a year.
Finding other ways to reduce fuel consumption, like carpooling, using public transportation, or driving a more fuel-efficient vehicle, can lower these expenses.
Over-the-Top Insurance Policies
Insurance is undoubtedly a necessity, but overinsuring can drain retirement funds. ValuePenguin determined that switching to bundled or insurance specifically labeled for seniors could save retirees more than $1,000 per year.
Purchasing several types of insurance (home and auto, for example) from the same provider usually earns discounts.
Excessive Dining Out
Working less allows more time to cook at home than eating out at expensive restaurants. Cooking delicious home-cooked meals can be a great way to try new recipes and get new cooking skills, and you’ll also save a lot.
Preparing your meals at home can help you eat healthier and more personalized meals.
High Tax Burdens
Retirees can save thousands each year if they take the time to understand their tax obligations. Distributions, along with tax deductions, are planned to reduce retirees’ overall tax burden.
Smart retirees move to tax-friendly states like Florida or Texas that don’t offer state income taxes. Depending on where a retired person lived before, this strategic move can save them thousands of dollars a year.
Credit Card Interest
Prepared retirees prioritize paying off credit card balances before retirement. Having no steady paycheck implies that high interest rates can deprive you of a good chunk of your saved retirement funds.
Those that may not have credit card debt can often save money by choosing and using carefully cash-back or rewards credit cards that match their spending profiles.
Expensive Home Maintenance
Retirees who are ageing choose small homes that require less upkeep. These downsized homes save them time, energy, and money on upkeep costs.
They can save further by taking on those small tasks or hiring a handyman to tackle more extensive improvement projects.
High Bank Fees
To avoid high bank charges, retirees could switch to banks that don’t charge for checking accounts or refund ATM fees and pay higher interest on savings. These little fees over time through retirement can cost you, dipping into your retirement fund.
Retirees should search for the best banking options or consider online banks, which often have lower fees and better interest rates.
Subscriptions and Memberships They Forgot About
Those “small” subscriptions — from magazines to streaming services — add up. Prepared retirees routinely audit and dump unused services, saving more than $600 a year.
They also choose cheaper alternatives, like borrowing books from the library or utilizing costless online resources, rather than paying for paid memberships.
Mortgage Payments
Retirees that have paid off their home won’t be shelling out monthly mortgage payments during their retirement years. This is one big chunk of money that they can save annually and put toward other things.
Additionally, many retirees downsize their houses to decrease mortgage payments and slash utility bills.
Child-Related Costs
Retirees no longer have to pay for children’s tuition or extracurricular fees as they are grown. They also no longer need to financially support adult children who are working and living on their own.
That way, when they reach the end of their working life, retirees can concentrate on their own financial goals and priorities instead.
Professional Development Costs
Retirees can save a lot of money not paying for professional certifications, conferences, or industry memberships.
This savings can be redirected to the other priorities or simply enjoy it as more disposable income.
Career-Related Travel Expenses
Retirees won’t be making business trips or commuting to the office anymore, which results in big savings on travel costs.
They can use this time and money to enjoy traveling for pleasure and leisure, making the best use of senior travelers’ discounts and travel offers after off-peak days.
Expensive Work Attire
Suits, ties, or formal dresses will be splurged on no more. According to the Bureau of Labor Statistics’ Consumer Expenditure Report, retirees can save an over $1,000 a year on clothing by embracing a comfortable, casual wardrobe.
After retirement, since they are free to dress in comfort instead of style, many retirees get creative in turning their old work wardrobe items into something else.
Lavish Gifting
Retirees who are beyond the business of raising children and grandchildren may no longer be driven by the pressure to shower their family with costly gifts. They gift less as they don’t have to impress colleagues or clients and can save hundreds per year without the pressure.
However, if they opt to give you something material, they might as well choose something more meaningful: gestures, experiences, or time.
Fancy New Cars
Many retirees no longer need to be impressed by the latest, flashiest cars. They don’t purchase new vehicles every few years but instead get their hands on reliable and cheap used cars or lease one.
Buying a used vehicle instead of a new one can save you up to $20,365 on average, according to data by Edmunds.
Big House Expenses
Retirees go small, cheap, and more manageable houses, cutting thousands a year. Living in a downsized 1,000-square-foot house (as opposed to an average of 2,300 square feet) can save on property taxes, utilities, and maintenance costs.
You get to free up substantial equity—up to a staggering $300,000 in high-value markets, according to a Money report.
Disclaimer – This list is solely the author’s opinion based on research and publicly available information.
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