5 Ways Your Expenses Will Drop in Retirement and Put Money in Your Pocket
When people think of their finances in retirement, the focus is almost always on making the right investments, maximizing your RRSP contributions and calculating pension payouts.
But one less noticed financial change that happens in retirement is your expenses will also go down -- both due to the changing nature of retirement, and because there are easy changes that can be made to directly reduce your retirement expenses.
Here are five ways your costs will go down after you retire that will help you keep money in your pocket.
Reduced transportation costs
The big thing that changes in your retirement, of course, is that you no longer work. This means that your need to drive will decrease dramatically -- no more commuting twice every weekday. If, like many households, you and your partner both have your own cars, you will not need to drive as you once did, and you can likely get by just fine with one vehicle instead of two.
Going from two cars to one, by selling the extra automobile, will give your retirement an immediate cash boost from the car sale. But, more importantly, going from two cars to one will halve your automobile-related expenses: insurance, car maintenance, gas and even parking.
Many retirees find they get by just fine with one car, and even find themselves taking public transportation more than before, as they’re not in a rush to get to work and can spend a bit more time getting to where they need to go by taking the bus or train.
If you are ambitious and willing to be flexible in your senior years, you can also get by just fine without owning a vehicle at all, thanks to the proliferation of easy to use short-term car rental services, such as Zipcar, that cost only a minimal annual fee and a low hourly rental rate. Of course, you can get by just fine with using a formal rental car agency for those occasional weekend trips. What used to cost you over $1,000 a month will now be a fraction of that, and you won’t have to carry the stress of car ownership.
Reduced home ownership costs (if you downsize)
The monthly carrying costs of owning a house are substantial -- one of the largest financial commitments you will have.
This goes beyond paying the gardeners. Major home maintenance like fixing a leaky roof, property taxes, home insurance, any remaining mortgage payments: these can add up to thousands of dollars a month.
For those willing to downsize, you can discover major savings once you make the move to a smaller home, like a condo, rental apartment, or to an independent living retirement community like Orillia retirement home Sundial Lakeview Retirement Residence.
Where before you were paying the maintenance, heating, hydro and tax costs of an entire home, with multiple floors and commonly over 2,000 square feet of space, now you are paying a smaller per-square-foot cost or a simple monthly rental fee that can include property taxes and other costs.
Seniors’ discounts are everywhere, and add up
Businesses love shoppers in their golden years. How do we know this? Because many businesses and organizations offer generous seniors’ discounts. These discounts, while usually a percent off the purchase price, can add up -- especially if you act a bit strategically and know where to find stores with discounts (instead of stores without them).
You can find a quick list of seniors’ discount businesses here.
Some highlights include:
Major discounts at certain big-name pharmacy chains
Reduced admissions at major art and cultural organizations
Lower ticket prices on public transportation, including VIA Rail and local transit agencies
Many local businesses will also offer seniors’ discounts, including special seniors’ sale days, so keep your eyes open when you’re out shopping and write down businesses that have a promotion for those in their retirement years.
Reduced phone and TV bills
Do you need a landline phone in retirement? You may find that you spend less time using expensive telecom services, like a home phone and large cable TV package.
A home landline is a good place to start finding new savings. A home phone will cost around $50 a month from major phone providers. Even the discount digital home phone services are still upwards of $30 a month -- that’s nearly $400 a year. If you have a cell phone and a home landline, you can consider getting rid of the home line and moving that number to your cell phone.
If you have a smartphone, you may find yourself using it much less in retirement, as you’ll be busy with new hobbies and activities, giving you a chance to go to a lower-priced package with less minutes and data. You can also switch to a cheaper phone provider that doesn’t offer the complete country-wide reception coverage you likely no longer need. These providers normally have plans costing 50% less than those from the major phone companies.
Similarly, you can try reducing your TV bundle to a package with less channels. The urge to watch TV after a long day at the office won’t be there once you retire, and cutting your package down (or cutting the cord entirely and trying a low-cost streaming service like Netflix) can save you hundreds of dollars a year -- money that can contribute to your next retirement vacation.
Reduced spending on restaurants and takeout
The average Canadian family of four spends almost $300 a month on eating out (including takeout). The reason why isn’t hard to figure out -- nearly six in 10 of those born between 1965 and 1976 surveyed in a Dalhousie and Guelph university study say they don’t have the time to prepare a meal during the work week.
In other words, work gets in the way. But in retirement, your 9-to-5 job will no longer get in the way of home cooking, and the need to stop by a grab-and-go-counter or sit-down restaurant will no longer be there. Even small food expenses -- a latte, a breakfast bagel -- that are part-and-parcel of the dash into work will be gone, putting up to $10 a day or more back in your pocket.
And while you don’t have to stop dining out in retirement, you’ll learn to appreciate a meal out more once you can more easily find time to cook at home, which makes whatever money you do spend on prepared food feel more well spent.
If you move into a retirement community during your retirement, a lot of your costs will be automatically reduced. Some of the key ones we just discussed -- home-ownership related costs and meal costs -- will be cut down a lot, as modern retirement living at a community like Sundial Lakeview Retirement Residence will include many of the modern amenities you would otherwise pay out of pocket for.
These include meals cooked by a talented chef in our beautiful dining room, free entertainment at our in-house movie theatre and no-membership-needed exercise in our fitness room, in addition to free activities and outings arranged by our community programming team. Plus, you will get a comfortably sized suite that will cost you less than maintaining a house.
To find out more, we invite you to come and see Sundial Lakeview Retirement Resident in person. We’re happy to give you a complimentary tour of our Orillia retirement home and answer any questions you may have, just get in touch with us today to book your visit. We look forward to seeing you!