Once you leave your job, you may be able to get by on less money than you did while employed. There are many expenses associated with working that can be reduced or eliminated upon retirement. Here are four costs to cut after you retire:
Housing. The largest expense for many families is housing. Once you retire, you won’t be tied down to a location anymore, and the possibility of moving to a cheaper location opens up. Even if moving is out of the question, there are ways to reduce your housing expenses. Most of us pay a professional to do yard work or other household repairs. Once you retire, you will have the time to do it yourself instead of hiring someone. It’s easy to find an instructional video or article on the Internet or at the library. Improving your living space will also keep you from getting too bored in retirement.
Transportation. Perhaps the most obvious expense reduction in retirement is transportation. When you stop driving to work, you will save a significant amount of money on gasoline. Don’t forget to call your insurance agent to report your mileage reduction. They should be able to reduce your rate a little bit. If your family has multiple cars, perhaps you can sell one of them. This will cut out insurance, maintenance, and repair costs. Some people will be able to eliminate parking fees and car payments. You may also be able to do more maintenance on the vehicle yourself instead of paying the car dealer for every little thing.
Food. Let’s face it, cooking can be difficult when you work full time. By the time you get home, you are exhausted and it’s easier to order takeout or eat frozen food. When you’re retired, you can learn to cook your favorite cuisine and enjoy it at home with your family. Cooking at home is healthier and more economical. The only downside is that it can take a lot of time, but that’s something you’ll have in retirement. Along with food, you can prepare beverages at home instead of supporting Starbucks every day. Those $3 drinks add up to real money in the long term.
Health care. Most financial advisers will tell you that the cost of health care will increase after you retire. This is true because as you get older, you’ll need more health care. On the other hand, I think that some people may be able to reduce health care expenses for a few years at the beginning of retirement. You’ll have more time to relax, and all your accumulated job-related stress will be gone. If you work in an office, I’m sure you have some kind of backache or other repetitive stress injuries. I spent quite a bit of money on massages, physical therapy, acupuncture, and chiropractor adjustments. All these helped me feel better in the short term, but the problems always returned. Working in front of a computer for eight to ten hours per day will do that to anybody. Once you retire, you won’t be sitting in a chair all day anymore, and some of the problems may disappear on their own. You can also get out and exercise more. All these factors could add up to lower health care bills in the short term.
When we are working full time, we never have enough time to do everything, so we tend to spend money on conveniences. With more time and less income, we need to reverse that habit. Instead of paying someone else to do things for us, it’s much more economical to spend the time to do it ourselves.
Joe Udo is planning an exit strategy from his corporate job by reducing expenses and increasing passive income. He blogs about his journey to early retirement at Retire by 40.