One common retirement planning rule of thumb is that you will need about 80 percent of your pre-retirement income to maintain your lifestyle. But what if your projected retirement income isn’t enough? Then you will have to find ways to reduce retirement spending. Here are some ways to make do with less money in retirement:
No new clothes in 2013. One big expense that can be eliminated after retirement is your clothing budget. Once you’re retired, you won’t need to buy business clothes anymore. I’m sure your closet is full of clothes in good condition that will take years to wear out. Unless you are already a minimalist, I’m sure your closet can stand a little paring down. If you are near retirement, see if you can get through 2013 with no new clothes.
Cut transportation expenses in half. The average commute distance for American workers is 32 miles per day. Once you retire, you won’t have to drive that much anymore. While gasoline prices came down a bit, the over $3 a gallon price tag can still put a dent in your budget. Don’t forget to tell your insurance company about your reduction in driving. They should be able to reduce your rate a little.
Reduce your food budget. It’s so easy to spend money on food and drinks when you’re working. Just going out to lunch with colleagues and drinking two cups of coffee from Starbucks will cost more than $10 per day. Dinner out with the family usually costs much more than that. After retirement, you’ll have a lot more time to prepare healthy meals and snacks.
Downsize your cell phone bill. Many smartphone owners are shelling out around $100 per month to their cell phone provider. Smart phones are very useful for work and entertainment, but do you really need such devices that much in retirement? Downgrading to a prepaid cell phone can save you a lot of money every month. Let’s face it, our eyes are getting worse as we age, so why should we squint at those tiny screens? A tablet with wi-fi is a much better option for entertainment.
Reduce housing costs. It’s difficult to move for many retirees. But if your budget is falling short, then one good option is to move to a smaller home or to a cheaper location. Retirees aren’t tied down to a location near work anymore, and moving even 10 miles away can sometimes greatly reduce housing expenses.
Maintaining your lifestyle in retirement is a worthy goal, but it’s also important to consider whether or not that lifestyle is worth maintaining. Would you work five extra years so you can spend the same amount on clothing and a cell phone after retirement? If those things are that important to you, then you might have to work longer to finance a more expensive lifestyle.
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.