Are you looking to cut your retirement costs? If so, here are ten tips to help trim your budget:
1. Restructure Your Debt
One of the most effective methods for cutting expenses is to reduce existing debt (and, of course, avoiding taking on new debt). Take a look at your credit card statement: are you carrying a balance over month to month? If so, can you pay off any of it? Or transfer the balance to an account that charges a lower interest rate?
Similarly, can you consolidate or rework any other loans? Take a hard look at everything from your auto payments to any outstanding educational debt. And if you have a mortgage, check to see if this is a good time to refinance.
2. Downsize Your Home
Usually rent or mortgage payments are the largest monthly expense for a household. Given that, is this the time to downsize? Besides the expected benefits — lower payments and extra money from any equity — there are also a host of unexpected pluses to moving into a smaller, less expensive home. For example, you may save on real estate taxes and pay less for utilities/upkeep.
3. Move Somewhere Cheaper
Moving somewhere cheaper doesn’t have to mean trekking to Belize (though it might). You may be able to significantly reduce your expenses by shifting just a few towns over — it’s sometimes surprising how much local taxes and costs of living can vary within small distances. That said, before you relocate take into account moving expenses and additional travel costs.
4. Cut Your Transportation Costs
Speaking of travel costs, sit down and examine your transportation budget. If your household has multiple vehicles think about whether you really need all of them. Also, make the most of public transportation discounts — many systems offer significant savings for seniors.
5. Examine Your Insurance Costs
Do you still need that big life insurance policy? Are you paying too much for your Medicare Supplemental Insurance? Do you have an auto or home policy that covers more than you need? Answering these questions can be difficult, but it’s still worth diving in. If you’re looking for help trying to sort through health insurance in particular, try starting with this page from HealthCare.gov — it covers some of the basics and can point you towards a number of useful resources.
6. Cut the Costs of Prescriptions
The cost of prescriptions can be significant for many retirees. You can start reducing those expenses by signing up for the Medicare drug coverage plan if you qualify. To learn more about the plan check out this guide. Lower income retirees may qualify for the Extra Help plan as well — you can learn more about it here.
You may also be able to cut costs by getting your prescriptions filled by mail. Check with your plan to see if they have recommended providers.
7. Travel Smart
One of the great benefits of retirement is that you don’t necessarily have to travel when everyone else does. By visiting places in the off-season you’ll save money and deal with smaller crowds.
Even if you’re looking to travel on-season, take the time to search online for discounts and deals before booking. Over the past few years, “flash sale” websites like Jetsetter.com have sprung up — offering sometimes steep discounts on hotel stays. Also, offerings like the Travelzoo.com newsletter and Expedia.com deals page sometimes have surprisingly large discounts on popular trips.
8. Look at Your Fees
The seemingly little fees you pay each month or each year can add up to large amounts over time. One of the biggest culprits is often investment fees. For example: do you know what the fees and expenses are on any mutual funds you own? Are there lower cost funds that do the exact same thing? If you’re unsure, it may be worth sitting down with an unbiased financial planner to find out.
Also, take a look at your bank and credit card fees. Credit unions often offer much lower fee accounts than big banks, and there are plenty of no fee credit cards out there.
9. Make the Most of Discounts
Most people know about the major discounts available to retirees, but there may be thousands of smaller ones that you’ve never come across. Start by checking out this list of AARP discounts, and this page of discounts for seniors compiled by Retired Brain. And, even if you don’t see a vendor on those lists, don’t forget to ask every time you purchase something — often merchants have a discount that they don’t advertise publicly.
10. Trim Your Monthly Household Expenses
Cutting back on monthly household expenses is usually first on most lists for trimming spending. Why did we put it last? Because often it is easier in theory than in reality. Many people do a fairly good job of managing their regular expenses (such as utilities, groceries, cable, etc) precisely because they’re regular — they appear each month on a bill and are easy to see.
That said, there are probably savings to be had in your usual spending. To start, if you don’t have one already, set up a system that shows exactly where the money is going. We like Mint.com, because it’s free and imports all your checking and credit card transactions automatically into a simple interface.
Next, take a hard look at each individual transaction and see if there are any possible savings. Do you really need your phone landline? Do you actually watch all those cable channels? Can shop at a less expensive grocery store? Again, remember that while the individual savings may seem small they can add up to big numbers over time.
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