Whether you're kicking off retirement with a sturdy nest egg or just a modest amount of savings, it helps keep your living expenses as manageable as possible during your golden years. If you do, you will want to make sure that you do not empty your nest egg too soon, not to mention stress. Here are three expenses that tend to cost the elderly a lot of money – and how to reduce them.
Just as housing was probably your biggest monthly expense during your working years, you may also be able to spend a large portion of your money on retirement. This is true even if you own a home with a mortgage loan that is already paid, since you still want property taxes, maintenance and repairs to contend with.
Therefore, it is wise to consider reducing the size during retirement. If you no longer have children living at home and you do not need the space, selling the house and buying a smaller place can save you money on everything from taxes to maintenance to heating and cooling. In addition, you have the opportunity to take the proceeds from the sale of your larger home and invest them to generate a new retirement income stream.
It costs an average of $ 8,849 a year to own a vehicle, according to the American Automobile Association, so if you are a two-car motorhome, unloading a car can reduce transportation costs during retirement. And if you only have one car to start with, you can see if it is possible to do without it. If you live in a very walkable city, or one with public buses and trains, you may find that it is significantly cheaper to pay for transportation on demand instead of bearing the cost of car maintenance and insurance.
Many people retire and expect health care to be fairly cheap under Medicare, only to learn that it is not. In fact, the average healthy 65-year-old married couple leaving this year is estimated to spend $ 387,644 on retirement health care, according to software provider HealthView Services. If you are in doubt about this figure, you may think that it is intended to cover expenses such as Medicare premiums, copies, deductibles, supplemental insurance and services not covered by Medicare, such as dental care and vision care.
However, you can lower healthcare costs by being smart about Medicare. First, run the numbers to see if a Medicare Advantage plan saves money compared to original Medicare. Then choose your drug plan carefully ̵
The goal of saving on smaller things, too
While reducing housing, transportation and health care costs can help make your retirement savings last longer, there are other areas you can also try to cut back. For example, if you have the habit of eating out often, eating out less than once a week and cooking at home instead, you can save a good amount of money within a year. The same goes for cancellation services you don't really use, like the upgraded cable package if extra channels you rarely watch.
If you are serious about saving money in retirement, you can go through your budget and see where there is wine room to cut down. Doing so can help preserve your nest egg so it is there for you when you need it.