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This may come as a surprise, but you might not have unlimited funds once you retire. You may have saved plenty of money, but there is a chance that it may run out during retirement. Therefore, it’s wise to eliminate certain retirement expenses that are a waste of money. So, if you want to cut costs in retirement, here are seven of the biggest budget busters, and how you can decrease your expenses in your golden years.
Buying unnecessary insurance policies
When you’re in the workforce, it’s important to protect your income if something were to happen to you. Paying for a disability insurance policy can help you ensure that you’ll have protection if you’re out of work for an extended period due to illness or injury. You may also have a life insurance policy if you have dependents or if your spouse would face financial hardship if you were to pass away.
Depending on your financial situation, these policies may be an unnecessary retirement expense. You may want to speak with your financial planner to verify that you no longer need this type of coverage. Keep in mind, that there are plenty of instances where retirees should still pay for insurance coverage, and the policies needed can vary from person to person.
Supporting adult children
According to a 2018 Merrill Lynch Survey, 79% of parents serve as the “family bank”. American parents are spending roughly $500 billion annually on their adult children. They are spending money on everything from big-ticket items to everyday expenses. While it’s understandable for parents to want to spoil their kids, there are other ways to help them without spending a dime.
Instead of showering your children with lavish gifts, try sharing some of your favorite financial tools such as money blogs or financial websites. You could also introduce them to your team of financial professionals. This will help them get their finances on track. There are plenty of ways to help your children without bankrupting your retirement. After all, you’ve worked hard to save for your golden years, you deserve to use your savings to spoil yourself. So, closing the “family bank is a great way to cut costs in retirement.
Keeping two cars
When you and your spouse need daily transportation, you may need two cars. But, when you eliminate your commute to work every day, it’s possible to get rid of one vehicle.
Ditching your second vehicle can save you money on insurance costs, gas, registration fees, and more. So, if you no longer need two forms of transportation, consider selling one of your cars to eliminate this unnecessary retirement expense.
Refusing to downsize your home and lifestyle
According to the U.S Bureau of Labor Statistics, one-third of Americans’ expenses go toward their housing and shelter costs. Because this is such a big expense, you would assume that may retirees would want to downsize to save money. However, 30% of retirees size up according to a Merrill Lynch study.
Since many retirees live on a fixed income, it’s wise to consider downsizing your accommodations to help your money go further. Not only will you save money, but you may save time since you will no longer have to maintain a large property.
Demanding name-brand medications
Just because you’re comfortable with a name-brand medication doesn’t mean there aren’t cheaper generic alternatives. Generic drugs must have the same active ingredients and they tend to cost significantly less than the name-brand drugs. So, why spend money on the costliest medication when you can get the same thing for less? Therefore, switching to generic medications can help you cut costs in retirement.
Forgoing senior discounts
While the sight of your new AARP membership may make you tear up, there’s no reason you should let your pride get in the way of a great discount. From car rentals to hotel rooms to cell phone plans, you can usually get a discount on almost anything for just being a senior. That should give you something to celebrate.
Therefore, before you purchase anything big or small, make sure to ask about the senior discount. Your wallet will thank you. That said, here’s a list of some discounts you may want to take advantage of in 2020.
Donating to every charity
Donating to your favorite charity can leave you feeling joyful and like you’re making a difference in the world. However, it’s not necessary to give to every charity or nonprofit who asks for a contribution. Even if the pressure from telemarketers or solicitors gets the best of you, remember, it’s okay to say “no”.
Some telemarketers may be trying to target seniors. If you say “yes” and donate to their so-called cause, you may be added to a list where other organizations can hit you up for extra cash. This may end up opening you up as a target for scams as well.
Instead of feeling like you must give, pick one or two charities where you are confident that your money is going to good use. You can even volunteer your time with them so you can see your hard-earned cash going to good use helping a cause you believe in.
The bottom line
The goal of saving for retirement is to have money left at the end of your life rather than having life left at the end of your money. Even the savviest savers can overspend in retirement. Be cautious about your retirement expenses and work to decrease or cut costs every chance you get. If you have questions about retirement, you may want to speak with a financial planner. You financial planner can help you to plan for retirement, save your money, and decide which retirement expenses you can eliminate.
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