Nobody likes to spend more money than they have to—especially when it comes to retirement. And while spending was once thought to decrease come retirement years, this simply isn’t the case anymore. As a matter of fact, a recent study found that in the first two years of retirement, 45.9% of households spend more than what they had prior to exiting the workforce1. With more time on our hands, we have more time for the things we love—our hobbies, passions, entertainment, and even travel. However, it’s no secret that these things come with a price tag.
As we all know, costs can add up quickly, so it’s smart to find ways to save money whenever possible—especially when living on a fixed income. Fortunately, there are plenty of ways to do so. If you’re looking to cut back on expenses, consider some of these discounts and smart savings opportunities to help you live the retirement you’ve always dreamed of.
Identify Savings Opportunities in Your Household Budget
They say there’s no place like home—and what better place to start saving? When looking to save money for a great second act in retirement, your household budget is the ideal place to begin. Start with the essentials such as shelter, food, transportation, and utilities—these are the things you really can’t go without. By lowering these fixed expenses, you’ll withdraw less from that coveted savings account, which will ultimately help your money last longer.
Easier said than done? Even small savings can add up. By reducing everyday household expenses by just 25%, you’ll save hundreds of dollars each month. And the savings don’t have to stop there—this same 25% “rule” can also be applied to your mobile phone bill, auto insurance, and even common spending areas such as dining out and housekeeping.
Save on Utility Expenses
Speaking of household expenses, let’s talk about utilities. Often a larger expense in terms of home budgeting, it’s smart to benchmark your gas and electricity expenditures. See how much you’re spending now compared to this time last year. Did the bill increase? Did it stay relatively stagnant? You can also call your service provider and ask them to compare your spending to other households in your neighborhood or immediate area.
If you’re spending more than you’d like to or your budget allots for, there are simple ways to cut down on consumption and save. For instance, raising your thermostat during the summer and lowering it in the winter (even by a degree or two!) could reduce your bill and add up to significant savings over time. Unplugging devices when not in use, turning off lights when you leave a room, and using energy, efficient light bulbs are also small measures you can take to curb consumption. And with more energy-efficient solutions and smart home technology than ever before, there are virtually endless ways to save.
Take Advantage of Senior Discounts
Arguably, one of the most underrated perks of reaching retirement age, senior discounts go a far way in maximizing your savings as you shop. From restaurants and hotels to department stores, supermarkets, and pharmacies, there is a wide range of businesses that offer discounts to seniors. And while many advertise their discount days and senior-friendly promotions, others may be a lesser-known best-kept secret. What’s more, many businesses don’t restrict senior discounts to those only over the age of 65—so you may be eligible sooner than you think. Even in your 50s, you may qualify for discounts that could save you hundreds, if not thousands, of dollars every year. All you have to do is ask!
Shop Around for Insurance Savings
When’s the last time you got a quote for homeowners or auto insurance? If it’s been a while, you may want to do so. With insurance being a highly competitive industry, you may be able to shop around and find a less expensive option than your current plan. And while auto insurance rates are known to rise as drivers become less dependable in advanced age, you may be eligible for lower premiums as you are putting less mileage on your car.
In addition, you may be able to maintain or even lower your rate by inquiring about mature driver discounts, which typically just require you to attend a defensive driving course. Available for as little as $15 in some locations, the courses are good for 3 years and can save you an average of $61 per year2. These types of savings add up!
Cut Credit Card Fees
Nobody likes to pay fees—especially when it comes to credit cards. But there is good news—you don’t necessarily have to. In some cases, cutting or reducing introductory and annual credit card fees is as simple as getting on the phone with the card provider and asking. Give them a call and see what they can do for you!
Furthermore, make sure you make payments on time to avoid those dreaded late fees. Whether you set up automatic payments or leave yourself reminders for when the due date is approaching, you want to ensure prompt payment to avoid such fees altogether. Struggling to make your next payment? Tapping into your home equity with a reverse mortgage is one solution designed to help seniors eliminate debt in retirement—including paying off credit card balances and other debts. Learn more about reverse mortgages here.
Pay off Your Mortgage
Housing is undoubtedly the biggest expense retirees face—and represents a large percentage of total retirement monthly income. As a matter of fact, research shows that the average retiree spends $16,723 on housing before utilities. This number is staggering, especially given that the average Social Security beneficiary collects just $17,532 per year3.
On the flip side, home equity is a largely untapped resource that can help older adults supplement their incomes and buffer financial shocks in retirement. Now, imagine having access to that equity to pay off your mortgage. If you’re 62 or older, a reverse mortgage can help you do exactly that. Reverse mortgage proceeds are first used to pay off your existing loan, eliminating that large monthly expense. And since there are no monthly mortgage payments required on a reverse mortgage*, you can free up more cash and use the remaining funds as you wish.
When it comes to retirement, running out of money is a top concern—and understandably so! While many seniors live on a fixed income, even those living comfortably are often looking for ways to save money to travel more, leave a bigger inheritance, or simply have a larger nest egg available in the event of a financial emergency.
By leveraging some of these savings tips, you can cut down on monthly expenses and start transforming your financial future—one dollar at a time. But if your expenses just can’t be cut, tapping into your home equity for some additional monthly income could be just the solution.
*Real estate taxes, homeowners insurance, and property maintenance required.
- Source: 2010 NRMLA study