Many seniors fear they will run out of money in retirement. And that’s a valid concern.
The truth is, you can save diligently throughout your career, but if you’re not careful about what you spend as a senior, your nest egg can quickly run out. That’s why it’s important not only to stick to a retirement budget, but to aim to keep your expenses as low as possible. And here are a few ways to accomplish the latter.
1. Move to a cheaper house
You will often hear that downsizing makes sense in retirement, as a smaller home is likely to cost you less to live and maintain. But in fact, when it comes to housing costs, less square footage doesn’t necessarily mean less expense. If you swap your 2,500-square-foot suburban home for a 600-square-foot apartment in a large metropolitan area, you may find that the latter results in a higher mortgage payment.
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Rather than focusing on the size of your home, just try to spend less on a home. Downsizing can help you achieve this, but you might also find that if you move from a 2,500 square foot home just outside of a city to a similar sized home in a larger area. rural, your expenses – that is, your mortgage and property taxes – will go down. (And to be clear, not all seniors manage to retire without a mortgage, so you might have to face housing payments after your career is over.)
2. Move to a location with more favorable tax treatment
The state you move to might dictate how much you are required to spend on taxes in retirement, so a strategic move could really cut your costs. You might want to consider choosing a state with no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming all fit this bill. You can also choose a state that does not impose taxes on Social Security benefits. At present, there are 13 states that fall into this category.
3. Move to a pedestrian town
It costs an average of $ 9,282 per year to own a vehicle. If you are able to live in a retired place that doesn’t require you to own your own car, you could save a fortune. Plus, all of that walking is likely to be great for your health, so you might cut your medical bills as a bonus.
Keep in mind that even if you move to an area where a car is not needed, you may not be able to walk all over. The good news, however, is that public transport is often cut back for older people, so you may find that you still save a pass even if you end up taking the bus three times a week.
4. Choose the right Medicare plan
Health care is another major expense for the elderly, but you can lower your personal costs by choosing the right Medicare coverage. If you stick with original Medicare, you will need to select a Part D drug plan each year. Researching your plan choices could result in significant savings – think about lower premiums and co-payments.
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Another option you might want to consider is signing up for Medicare Advantage instead of the original Medicare. You may find that your premiums and out-of-pocket expenses are lower with Medicare Advantage, especially since Advantage plans typically cover key services like dental care, eye exams, and hearing tests, unlike Original Medicare.
5. Look for free entertainment
When you are no longer working, you will need something meaningful to do with your time. And to that end, the more creative you are in finding free entertainment, the less financially stressed you will be.
For starters, think about your interests. If you love the outdoors, you can explore free parks or hiking trails in your area, or see if it is possible to get involved in a community garden. If you’re into culture, look for free classes or concerts at community centers or free admission days to local museums. Of course, that’s not to say that you can’t or shouldn’t treat yourself to a casual afternoon at the movies or the mall. But if you strive for free entertainment, you will reap the rewards of your savings.
You deserve to spend your last years feeling financially secure. Make an effort to keep your retirement expenses to a minimum, and you’ll have less to worry about as you go through this exciting new stage in life.
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