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Clever Ways to Cut Costs When You're Retiring Soon

By Jamie Richardson | May 2, 2022

If you are soon to retire, you’re probably seeking some financial guidance in advance to plan for downsizing and reducing your expenses. As you get closer to your retirement date, you’ll find some of your priorities changing and you’ll need your finances to mirror these adjustments.

The greatest fear for most retirees is not being able to finance their current lifestyle once they have retired. 

If retirement is a must, regardless of the amount of savings you have stashed away, there are nonetheless some actions that you can take to manage your retirement income more effectively and acquire some peace of mind so you can enjoy your well-deserved rest from the workforce.

Begin with a Budget Simulation

If you plan on retiring in less than five years, you need to know if your savings and pension are adequate. If you are not on track, you will need to increase your current income and savings or eliminate some expenses now.

You may decide to work longer, save more money, or get account management for ira. However, by cutting costs you may be able to manage a lower monthly income with less of a problem.

Reduce Transportation Expenses, Gas Expenses, and Car Insurance

Think about downsizing your current auto. If your car is new, consider paying it off before retirement to eliminate a monthly payment. For auto replacement, consider a reliable used vehicle. 

Gas expenses can be reduced by using an app to compare local gas prices and getting cash back on fill-ups. GetUpside is one example, or you can look for a credit card that offers benefits specifically for gas purchases.

Reduce the cost of your auto insurance. Every six months, shop around for car insurance when rates can change. Consider occasional driver insurance if you plan on driving less. Look for senior citizen discounted options and consider changing providers if you can  get a better premium rate.

Pay off Your Mortgage

If you have a mortgage, pay it off before you retire. That’s one less monthly payment to worry about. Consider selling your home and choosing a smaller one. You may be able to pay off your mortgage and still pay the entire cost of a smaller, less costly home. You can also attempt to refinance your mortgage for a lower interest rate

Eliminate Debt Before Retirement

If you have high-interest debt such as with credit cards, get that paid off before retiring. However, don’t use your retirement savings to do so.

By withdrawing a significant amount from your retirement account, your income tax may increase to the point that any savings from eliminating high-interest debt will be paid to Uncle Sam as taxes. 

Another way to cut costs is by using a best balance transfer card that may offer you a 12 to 18-month interruption in interest if you transfer your debt to a card like this. Use the saved interest to pay down the principal.

Reevaluate Your Insurance Coverage 

While health insurance and long-term care insurance will remain a necessity, you may want to look for savings if you have life insurance or home insurance. You may not need the same amount of coverage. 

Utility Costs

Save with energy-efficient appliances, low-flow toilets, or home improvements that add value to your property while saving you money on utilities.

Groceries and Shopping

Apart from clipping coupons, find a grocery rewards app that will offer cashback for using a specific credit card or for scanning receipts. Some credit cards offer as much as 6% for grocery purchases. Buy bulk for non-perishable items and look for sales. 

Look for cashback apps that aren’t limited to groceries, so that every time you shop, you earn. Choose the app with the highest return or that offers convenient gift cards. Always look for senior discounts! 

Internet and Streaming

To reduce the price of your internet service, shop around. Then call your provider and tell them you want to switch because you’ve found a better price. You should get an offer for a better rate. 

If you use streaming services, try to arrange a group plan with family members or friends and share an account. And if you pay with the right credit card, you may get cashback for streaming services as well. 

The Phone Bill

Consider a group plan with other family members to lower costs. Check to see if you're paying extra for data usage, and if so, sign on for an unlimited plan, then use apps like Whatsapp, Skype, Facetime, or any number of internet-based apps for video calls. If you can reduce data use and opt for a limited plan, you’ll save money monthly. 

Banking Fees

If you’re paying quite a bit to the bank in fees, consider opening a new account. Many accounts don’t charge fees, and you might make some added interest by changing to a savings account with a high-yield interest rate. Also, opt out of overdraft protection to save on fees.

Declutter with a Garage Sale

If you need to downsize and reduce your belongings, apart from donating, you can also sell some of your belongings to make some extra cash either by hosting a garage sale or listing them on eBay, Craig's list, or similar. 

It’s never too late to begin managing your money efficiently

Put some of these strategies into practice while you are still earning because good management now means less worry later on.

Jamie is a 5-year freelance writer who enjoys real estate. He is currently a Realty Biz News Contributor.
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