Many people dream of retiring early, but hesitate to make the jump because they are worried about losing the security of incoming paychecks. But retirement might not be as expensive as you think. Some expenses are much higher for working people than retirees. Here are some costs that are likely to decline in retirement:
You don't have to buy work clothes anymore. There’s no need to get dressed up once you no longer report to an office. You probably won’t need to buy ties or expensive suits anymore, and there’s no reason to dress to impress. Instead you can switch to the likely cheaper clothes you feel most comfortable in.
Many work-related costs will disappear. Your long commute and the associated transportation costs will be gone in retirement. Overpriced sandwiches are out too because you will actually have time to make the sandwiches instead of buying an overpriced combo just to hang out with a colleague in an attempt to fit in.
Stuff will wear out more slowly, and you won’t have to replace it as often. You’ll put fewer miles on your car once you eliminate your commute, and your expensive clothes will stay nice longer because you'll likely wear casual clothes most of the time. Even your personal laptop could last longer because you aren't banging away at each key doing extra work at home on evenings and weekends.
Less income means lower taxes. Those with high incomes often pay a higher income tax rate. If your income is lower in retirement than your current salary your tax bill will decrease.
Time to improve your health. With the added free time, you will finally have time to exercise in retirement. But even the couch potatoes will benefit from less job-related stress because retirees typically get to set their own deadlines.
Time to negotiate. Working people often pay more than they need to for things to save time. Retirees have time to search for the best deal and negotiate in order to get the best possible price. For example, my medical bills often contain errors. The reason almost always boils down to someone punching in the wrong code, which is easy to fix. Workers may be too consumed to investigate, but retirees should have plenty of time to find someone who can correct the problem.
Avoid peak travel premiums. Many workers do their traveling and leisure activities during the same busy weekends and holidays. But why pay full price in retirement when you can potentially go to events or vacation any day throughout the year? Visiting places during the week or traveling during off-peak times that aren’t school breaks and major holidays can save you money and lead to a better and less crowded experience.
Retirement forces you to look at your expenses, so you are far less likely to throw money away on unnecessary items. While some expenses will go up in retirement, many others will decline or disappear, especially for retirees who take the initiative to cut costs.