Saving money before and during retirement so their standard of living doesn’t suffer is important for many retirees. Unfortunately, many Americans aren’t saving nearly enough and are falling short of setting aside adequate funds to support their retirement needs. The average retirement savings for people aged 56-61 is only $163,577. Meanwhile, retirees can spend nearly $275,000 on health care. The National Institute for Retirement Security estimates that America has an up to $14 trillion gap in retirement savings.
If you are retired and finding that balancing your savings and spending is an ongoing challenge, follow these tips for ways to trim your expenses and save more.
1. Cut Your ‘Time-Saving’ Costs
When you’re employed and busy managing your career and family, spending money on time-saving items—like professional house cleaning or monthly food-subscription services—can be helpful. Once you retire, however, you typically have more time on your hands. You may be paying for items that are no longer necessary. You can save money each month by trimming or eliminating any time-saving resources you don’t need to support your retirement lifestyle.
Actions to take:
- List all the monthly, quarterly, and annual subscriptions and services you have. Identify which ones aren’t necessary.
- Consider taking over household chores you pay someone else to manage.
- Assess how much you spend on eating out, and switch to eating in for some of those meals.
2. Reduce Your Health-Care Costs
Retirees typically spend a large amount on health care, often siphoning income that could be used for other expenses. Unless you have the money to pay these bills, they could leave you in a financial bind. You can help reduce some of your medical costs by learning to shop around. For example, changes like getting an MRI at a radiologist instead of a hospital can make a difference in your medical bills, as the radiologist is typically less expensive.
Actions to take:
- Get comparative quotes from hospitals and other medical professionals.
- Check prescription costs at different pharmacies, and consider buying generic.
- Revisit your insurance plans to help identify if you’re receiving the best value.
Every retiree’s financial life and needs are different, so knowing a true breakdown of your daily, monthly, and yearly costs (your budget) is important for finding ways to save. By taking time to assess what may be unnecessary spending in your life, and reducing or eliminating these expenses, you may have more money on hand for other lifestyle needs.
To learn more about how you can trim your spending or pursue other financial goals in retirement, please contact us. We’re happy to help you explore strategies for your unique needs.