Almost every retirement account that comes tax-deferred expects retirees to have less income during retirement so that the tax savings are realized. Less income implies a smaller cost of living. This raises the issue of finding ways to actually live on a reduced income by spending less. At retirement, a number of ways emerge to lower living expenses for many people.
Eliminate paying for services that you do not fully use or need.
Retirement may be the point to rid yourself of a land-line telephone if you have a cell phone. Even if you buy your internet service from the phone company, it may not be necessary to pay for phone service. Reduce your cable or satellite contract if you find that you have a hundred channels that you never watch.
Do more for yourself since you have additional time.
If you have your lawn mowed or serviced, it may be possible to take this work over yourself now that you have more free time. You can detail your own car. Take the time to give everything that you pay someone else to do a good look to see if you really need to pay for that service.
Adjust your wardrobe ahead of retirement.
How you dress may not be as critical after you retire. You will still need a few nice outfits or suits for special events. After that, you should not have to maintain a separate wardrobe for work attire. By getting starting the switch to a more casual wardrobe during your last year of work, you will be prepared to save some money on clothes during your retirement.
Take advantage of not needing to commute to work.
Unless you are a car aficionado, you should be able to reduce your fleet. Swap your vehicles to eliminate any that you do not need and replace them with practical retirement transportation. Since your kids are grown, you should not have to maintain more cars than there are drivers in your home. This will save on upkeep, gasoline, insurance, and other expenses associated with car ownership.
Downsize the house.
How much time will you be spending at home? If you plan to travel a lot, you may find that you do not need much space to live comfortably when you are at home. This means that you can take advantage of lower cost housing. Renting may even prove to be a viable option since it removes the cost of maintenance and real estate taxes. Renting will also lower the cost of insurance and possibly cost less for utilities also. Relocating to a less expensive community or neighborhood might be another way to economize on housing costs.
Take advantage of discounts.
Having the wonderful benefit of bonus time, you should be able to explore your options for saving money. Coupons and discounts are readily available to seniors. Reductions in the cost of eating out, traveling, and other services can save 10% to 25%.
Pay off debt and make purchases in advance before retirement.
Unless you become disabled or get terminated from your job, retirement does not creep up on you. You can see it coming for several years. Even without having all of your retirement properly funded, you can do other preparations during the final five or so years before you exit the workforce. Updating your car a year or two before you retire should give you reliable transportation for years since you may drive less.
Retiring debt removes the cost of the monthly payments from your budget. Acquire any tools or toys that you will need for your retirement hobbies. Getting these things while you are working will give you time to purchase them and recover financially from the cost before you start living on a fixed income and spending down your financial assets.