"In this sticky web that we're all in, behaving decently is no small task." -- Novelist Stacey D'Erasmo

Saturday, February 2, 2019

Saving Money in Retirement

     I was visiting my sister in Jacksonville, FL, who is a self-proclaimed cheapskate. Maybe for that reason the topic of saving money came up . . .

     . . . because for many people, retired or not, the prospect of life without a paycheck is scary. Then the financial experts stoke our anxiety by saying we need a lot of money, as much as $1 million, or 20 times our old annual salary, saved up to provide a comfortable retirement.

     The financial experts are right, in principle. We do need a lot of money to retire -- in the form of Social Security, plus pensions and 401K plans and IRA balances, as well the value of the help we get from family and friends. But my sister and I decided maybe we don't need quite as much as the experts would have us believe.

     Why? Because after we retire, our expenses go down. And there are plenty of pain-free ways to push them even lower. Here are some that we came up with, maybe you have others.

     Clothes. This is the first idea my sister offered. You don't need any more expensive business suits, or uniforms that you have to pay for yourself; no more need to buy and inventory a closet full of shoes for every occasion. (My sister does have closets full of clothes, but hardly anything that she's bought since she retired seven or eight years ago.)

     Commuting costs. We no longer have to buy a commutation ticket for the train, or pay bus fare or parking fees. If you drive 20 miles to work every day, you'll save almost 10,000 miles a year, which at the IRS mileage allowance of 54.5 cents a mile, equals more than $5,000 a year!

     Lose a car. If you're no longer commuting, maybe you can sell off one of your two or three cars, because you don't really need it anymore. In my sister's case, she and her husband still have two cars; but her husband sold his motorcycle when they retired.

     Move. My sister is retired in Jacksonville, where the cost of living is already low. But you don't have to relocate to Florida or Arizona to save money. I moved from New York to Pennsylvania, some 120 miles away, and now save almost $10,000 a year on my real-estate tax alone. Sometimes moving 20 miles farther out from your business hub can save a huge amount of money in housing and other living costs.

     No more kids. My sister doesn't have any kids, but I have two of them and I know that you spend a lot less after your kids have finished school and  moved out on their own. No more college tuition; no more sports equipment and sports club fees. Now they buy their own clothes . . . and you can't believe how much you save on your grocery bill!

     Entertainment. I assume everyone asks about senior discounts wherever they go. In our case, on Wednesday when it was too cold to be outside, we went out to lunch, instead of going out to dinner, and got pretty much the same meal for half the price. Then we hit the movies for the afternoon matinee . . . for $8 a piece instead of the usual $11. (We saw If Beale Street Could Talk -- I liked it, she didn't.)

     Travel. Of course, you can always spend boat loads of money if you go first class to all the hot spots. But the beauty of retirement is that you can travel mid-week, when air fares are cheaper; you can go during the shoulder season, when rates are lower. And . . . you can go visit your sister who will put you up for free!

     Save on saving. We're retired, so we no longer have to save for retirement. In my case, the kids are through college so I don't have to save for their college tuition. Since we no longer get a paycheck, we're no longer subject to the payroll tax. Instead, we are now, finally, on the receiving end of Social Security and Medicare!

19 comments:

DJan said...

I love this post. It's all true for me, too. I live comfortably on Social Security and our annuities, but we are not rich, by any means. Our needs and wants are few in retirement. My sister also lives in Florida, near Tampa, and in a recent visit I was shocked by the incredible snowbird traffic! It's a nice place to be in the winter, but summer is another story altogether. :-)

gigi-hawaii said...

It costs very little to live in Hawaii because of our reverse mortgage. We don't buy much apparel. David wears shorts and T-shirts most of the time, and I wear muumuus all of the time.

Tabor said...

All true. But as a retiree I do spend more on eating out, never could afford it before, and on travel.

Barb said...

Mainly true, although I subsidize tuition. And have taken on an expensive hobby I didnt have before retirement and started to eat out more (mainly though, as you say, on the lunch menu, which begins at ten dollars-if of course, I don't ad wine. or desert, or both).

Janette said...

You hit all the ways we are living on much less money then before we retired.
We are able to save from pensions and SS so that we do not have to dip into nest eggs to travel.
I am glad we saved what we did and hope we will never need to deplete our savings to live.
Personally, we figured out that we could easily live off of $2,000 a month.

Red said...

You've touched on the biggies. We could be more efficient in some things as we have time to research.

Diane Dahli said...

I retired a few years ago, and find that what you say is very true! You could also add entertaining—we just don't do that any more. I was apprehensive about money before I retired, but took the plunge anyway. Not one bit sorry—and the finances have worked out fine!

Jono said...

As long as we realize that we really don't need much I think we'll be okay.

Wisewebwoman said...

Living alone I eat out, but not extravagantly and take advantage of any senior discounts. You are bang on with the reduction in clothing and travel costs and I hadn't realized how much maintaining a home office was costing me in supplies, etc. etc. Simple living. I have some savings and my expenses run slightly over my CPP and OAS and small annuities but I try and keep a lid on anything else.

My desire for travel has left me completely and I don't envy the bunch of my friends who cruise incessantly (it seems) all through the winter. The cost takes my breath away.

XO
WWW

Tom said...

Come to think of it, B and I do go to more restaurants now than we used to when kids were around. But then, it's cheaper to pay for two meals rather than four meals. And B does remind me now and then that restaurant food is full of fat and salt and is simply not as good for you as eating at home . . . so the health concern helps limit the financial concern.

Rian said...

We have been retired from 2009 (DH) and 2011 (me)... and we do fine (definitely not rich, but are able to pay our bills and live comfortably (no round the world cruises on the horizon, but that's OK). However, I have to admit that your comment, "retired or not, the prospect of life without a paycheck is scary." is very true.

Linda Myers said...

Our spurges are travel and massages and home meal kits. But you're right. If we bought only the necessities we'd be fine. I'm looking forward to selling our big house in Washington and spending most of the time in our small park model trailer in Arizona.

Just before I retired I was very afraid I wouldn't have enough money. That's when I started my blog, "Thoughts from a Bag Lady in Waiting." After nine years of retirement, it's "so far, so good."

Rebecca Olkowski said...

I think it's true you don't need tons of money to live if you downsize, use discounts, etc., like you mentioned. There's no need to live in a palace with expensive maintenance and there are ways to travel on the cheap. I still work on my home from home and probably always will but it's flexible and doesn't cost me hardly anything to do it.

David @ iretiredyoung said...

This easy to follow list is spot on. I suspect many people are scared of taking the plunge into the retirement they want because of money worries, and this gives some easy to do things that can ease those concerns.

We seem to better of financially than I imagined, but this list reminds me that we can continue to have a great lifestyle on a smaller budget if we need or choose to.

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James said...

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Randi said...

I retire at the end of this month. My first big task is to go through each cupboard and closet and finish my de-cluttering. I've been boxing everything up as I go and putting it in the garage. Which is getting pretty full! I'm giving myself until mid-May...that's when the Giant Garage Sale is going down.

I feel that, in retirement, I can live more simply and enjoy my space more. Plus, I really love going through stuff and organizing. :)