8 Ways to Lower Your Expenses in Retirement

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Rising costs are a stressor for Americans of all ages. But for retirees, the pain of accelerating prices is especially acute.

While Social Security advantages get an annual bump to assist sustain with inflation, most retirees still repeatedly trim their spending to guard their nest egg over the long-haul.

And for a lot of staff near retirement age, cost-cutting won’t be a lot a sensible personal finance move as a necessity. About half of baby boomers and Gen Xers are at risk of exhausting their retirement savings, in keeping with a July report from Morningstar’s Center for Retirement & Policy Studies.

Here’s how you may cut costs — each big and small — and shore up your retirement budget.

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Rethink your housing

Housing affordability is a problem that affects all age groups. But for older Americans trying to cut their living expenses, tapping into your own home’s equity could possibly be the ticket to financial stability.

Real estate has long been a primary retirement funding tool. However the usefulness of so-called housing wealth has only grown as home prices have. One popular index finds that home values have risen nearly 400% since 1980, and the average home sale price is now above $501,000, in keeping with the Federal Reserve Bank of St. Louis.

Retirees who own their homes and want to cut expenses should consider benefiting from the present housing market by downsizing, moving to an area with lower living expenses or a mix of the 2.

1. Downsize your own home

The common American home measures around 2,300 square feet and all that living space can present challenges for those attempting to age in place. There are the financial burdens, resembling increasing property taxes, skyrocketing homeowners insurance premiums and better utility bills, in addition to lifestyle stressors like mobility issues and general upkeep.

Forty-four percent of 60- to 70-year-old homeowners are carrying mortgages into retirement, in keeping with financial services company TIAA. If that group includes you, the savings from downsizing are obvious: Selling your own home and using the proceeds to purchase a smaller, cheaper property means that you can offload (or at the very least, significantly lower) your monthly mortgage payments.

But even for those who own your own home outright, selling it and moving to a smaller property can still end in tremendous savings. Your utility bills and property taxes will shrink. And with Rocket Mortgage reporting that the median listing price per square foot is $233, downsizing from that average 2,300-square-foot home to a more reasonable 1,000-square-foot home could gross over $300,000 for retirees.

2. Relocate to a lower cost of living area

Selling your own home at a time when prices are near record highs can have additional advantages when coupled with moving to a lower cost of living area. Florida is commonly idealized as America’s retirement hotspot with 1,350 of coastline, a median temperature of 72 degrees and, crucially in your budget, no income tax.

However the Sunshine State isn’t a slam dunk for retirees anymore. Property taxes have been rising, homeowners insurance policies are the best within the nation and properties subject to homeowners associations are increasingly unaffordable as a consequence of ongoing assessment fees.

As an alternative, you could want to contemplate cheaper housing markets that aren’t generally known as retiree locales. Places like Syracuse, Recent York; Akron, Ohio; Augusta, Georgia; and Pittsburgh made Zillow’s list of most reasonably priced housing markets this 12 months and likewise offer an array of recreational activities. All of them have typical home values which can be about 40% lower than the national average, in keeping with Zillow.

Housing is the primary driver of the general cost of living in a selected region, but local taxes, groceries and healthcare all play a task, too. And you must map out typical spending on those essentials before making your move.

Benefit from senior discounts

If you happen to’ve noticed that your monthly bills are steadily increasing, you’re not alone. Prices for every part from electricity to automotive insurance to streaming services are on the rise, which may upend budgets for retirees counting on a hard and fast income.

Other than necessities like electricity, water and food, older Americans should routinely revisit their household budgets to discover ways to lower recurring costs. Before you make any drastic cuts, search for senior discounts, which may apply to each discretionary spending and consumer staples. Listed here are just a few common categories.

3. Cell phone plans for seniors

The common monthly mobile phone bill in 2024 is $141, in keeping with JD Power, or $1,692 per 12 months, which makes for a major line item in retirement budgets.

You may have the option to shrink that line by changing to a lower-cost mobile virtual network operator, or MVNO.

MVNOs offer services under their brand names but operate on other company’s networks, meaning they don’t need to shell out for network growth or maintenance. So firms on this space — like Cricket Wireless, Mint Mobile and Boost Mobile — are capable of offer lower-priced plans than their major carrier competitors like AT&T, Verizon and T-Mobile. (Learn more about these plans with Money’s list of best low-cost mobile phone plans.)

The opposite approach to lowering your monthly mobile phone bill is to research firms offering senior discounts. AT&T, for instance, offers senior plans for residents of Florida ages 55 and older that include unlimited talk, text and data for a monthly cost of $40 per line.

Vigorous from Best Buy offers cell phones and mobile medical alert systems with reasonably priced plans for seniors. Its basic plan for seniors starts at $19.99 per 30 days. For $30 more per 30 days, its premium plan includes features like an assistant that may schedule Lyft rides without requiring the app in your phone, no-call nurses and Vigorous Link, which alerts friends and members of the family if there’s an emergency.

4. Discounts for streaming services

Streaming services can’t stop raising their prices. Working example? Warner Bros. Discovery’s Max, Comcast’s Peacock, Disney and Paramount all raised the price of their services prior to now five months, CNBC reported.

This comes on the heels of Netflix raising its subscription prices in October 2023, with one other increase expected sooner or later this 12 months. Overall, streaming prices have doubled prior to now decade, in keeping with Quartz. Moreover, Americans are paying for more individual services as more media firms have launched their very own. Greater than half of households reported paying for 4 or more streaming services, in keeping with Consumer Reports.

The excellent news is that several services are actually offered in bundles, like Xfinity’s StreamSaver + Web, which incorporates access to Peacock Premium, Apple TV+ and Netflix for $45 per 30 days. You might also have the option to trim your monthly costs by switching to a lower-tier, ad-supported plan. You possibly can save $100 a 12 months on Netflix, for instance, by switching from its standard plan to the cheaper ad plan. Finally, with so many services attracting customers with original content, you may avoid wasting money by simply signing up and canceling services as you need to watch particular shows.

5. Travel deals for seniors

Top-of-the-line parts of retirement is embracing the flexibility to travel more. But travel, like most other facets of life, is getting costlier. In response to the U.S. Travel Association, the Travel Price Index, which measures changes in the price of travel on a seasonally-adjusted basis, increased roughly 19% prior to now five years. Every little thing from rental cars and cruise prices to hotel lodging and recreational activities is on the rise.

The silver lining: Senior discounts can assist offset lots of these increases. For seafaring fans, Carnival Cruise Line offers those 55 and up its Senior Special, and MSC Cruises offers those 65 and older as much as a ten% discount on all of its cruises. Moreover, several cruise lines offer discounted rates for AARP members.

In the case of rental cars, AARP members can again make the most. Membership provides discounts of as much as 35% for major rental firms, including Expedia, Avis and Budget.

The identical goes for lodging, with AARP members eligible for discounts at hotel chains, including Best Western, Days Inn, DoubleTree, Hampton, Hilton, Margaritaville, Radisson, Wyndham and dozens of others.

One other easy method to save? Without work tying you down, you’ve got so much more flexibility about if you jet set. Go for off-season or shoulder-season deals to make your money go farther.

6. Save on pharmacies and groceries

Retirees can even reap the benefits of senior discounts for on a regular basis purchases like pharmacy items and food staples.

Walgreens’ Seniors Days, for instance, are held in-store on the primary Tuesday of each month or online for prolonged periods. You possibly can snag 20% off eligible items during lately.

Food inflation has finally slowed, but prices remain above pre-pandemic levels. Nonetheless, major supermarket chains routinely provide senior discounts, which can assist offset the elevated cost of groceries. Fred Meyer, a Kroger subsidiary with locations in 4 Western states, gives those ages 55 and older a further 10% off the primary Tuesday of every month. Shoppers on the East Coast, meanwhile, can use Harris Teeter’s Club 60 Senior Discount, which provides a 5% discount to those 60 and older every Thursday.

Shop around for higher insurance

Although only just a few major insurance providers offer senior discounts, there are methods to seek out cheaper plans. This is significant as rates for some insurance products are inclined to increase with age, with the best increases coming at age 75.

Finding a method to reduce your insurance costs can assist offset other — and infrequently more pressing — monthly expenses, like healthcare, housing or groceries.

7. Senior discounts for auto insurance

It’s smart practice to buy auto insurance quotes at the very least annually, experts recommend. That’s very true in case your driving habits have modified, you wish different coverage otherwise you swap to a cheaper automotive — all of which may end up in a lower automotive insurance premium.

Beyond shopping around, several firms offer discounts to older drivers.

Farmers Insurance, for instance, offers a mature driver discount for those over the age of 55 who’ve accomplished a state-approved protected driver training within the last three years.

Older Geico policyholders in 30 states can qualify for a reduction in the event that they meet certain conditions, including not having any traffic violations or accidents prior to now three years.

And Nationwide offers a defensive driving discount to drivers 55 and older in the event that they complete an accident prevention course and don’t have a recent at-fault accident on their record.

8. Bundling your insurance

One other method to get monetary savings in your insurance is by bundling your policies. The savings will vary by company, but multi-policy deals often end in a reduction of 10% to 25% off the policy premium, which may translate to considerable savings.

Liberty Mutual offers savings as much as $950 per 12 months if you bundle your own home and auto insurance. State Farm allows those that bundle home and auto policies to save lots of greater than $1,200. And bundling home and auto insurance online with Allstate can save policyholders as much as 25%.

Be prepared for prices to maintain climbing

As costs proceed to rise, retirees or those nearing retirement will all the time face the prospect of diminished purchasing power on fixed income. Understanding that risk is step one in overcoming it.

Routinely revisit your household budget to know where — and by how much — expenses will be cut. Negotiate your bills repeatedly and take the time to research the most effective deals available for seniors. Do not forget that with some planning, retirees can enjoy years of monetary stability despite rising costs.

Finapress