I’m having trouble seeing how I’m going to save very much money just because I’m going to be retiring.
Among the expenses I incur from going to work - I don’t spend much on clothes now, so I wont’ save much there. I’ll still want to keep my transit pass, although as a senior I will save maybe $40 a month. I won’t have to buy my lunches and snacks 5 days a week, so that will add up (although I will have to buy more groceries for at home). Say $200/month savings there.
The two of us might be able to get along with just one car, so that would save on gas, upkeep and insurance. I don’t drive my beater that much, so I’m going to guess a savings of $1000/year.
So that’s a total of just under $4K/year. That’s not bad…
On the other hand, I want to travel a lot more than I have done while working, and even on the cheap that costs more than staying at home.
Also when my partner decides to stop working all he will have coming in is social security, as he hasn’t saved anything, and that will be a lot less than he is getting now. My share of household expenses will go up.
Then I’ll be paying for supplemental health insurance that I don’t have now, I have no idea how much that will cost.
So are there other ways I will be able to save while retired that I’m not thinking of? What has been your experience?
Roddy
I’m not retired, but the standard assumption in financial planning is that the biggest savings in retirement will be for housing. The idea is that you spend your productive working years paying a mortgage, and when you retire you own the house outright, so your housing costs, typically the largest chunk of your expenses, go down to almost nothing (you will still have property taxes, maintenance, etc.).
I see. Unfortunately that’s totally out for us. Our mortgage will be paid off in 23 years (we got started late). We have put in a lot of work on this house, we don’t have empty nest syndrome because there are no kids in the picture, it’s just right for us and we don’t want to move. Under absolute necessity we could sell and realize some cash, but our housing costs would not go down much unless we move to another part of the country.
So I hope there are more ways for seniors to save out there.
Roddy
Food is a big one. When you are working full time you not only eat out a lot, but when you eat at home you get high-priced prepared foods. When you are retired you have plenty of time to cook from scratch and grow a big garden.
Likewise you have time to do minor household repairs, mow the lawn…which you might have hired others to do when working. There is plenty of time to shop the sales when shopping–thus saving money.
A lot of people work part-time. My neighbor retired from truck-driving and now does odd jobs.
I’m saving money the same way I did when I was a SAHM. I make things from scratch rather than buy pre-made. Fewer convenience foods, don’t go out to lunch. I know a lot of frugal recipes. In nice weather hang the laundry outside to dry. Wash dishes by hand. Sometimes I bake my own bread. This last is not as much of a cost savings as one would hope. It’s so good that we eat more of it!
Also, of course, no commuting expenses or work wardrobe.
I retired 3 years ago and haven’t really found too many ways to save money. The biggest for me was wardrobe. I went from expensive suits, dress shirts, nice shoes, etc. to jeans, t-shirts and sneakers. Cooking more meals at home saves a bunch. Being able to take advantage of lower cost daytime admissions, etc. (actually its more about not having to do everything during peak hours which are when they are the most expensive.)
The OP sounds like finances are going to be a big issue which begs the question why retire? Any chance to go to part time? Pick up some side work? Check out things like working at the polls, school crossing guard, and other public sector part-time work. Also look into seasonal work.
Why retire? Because after working hard and supporting myself for over 46 years I want to do what I want to do.
Finances are not dire, I should be able to retire with about the same gross income as I am making now. The problem is that my grossest expenses (mortgage, utilities, property tax) will remain the same, and some of the things I want to do, such as travel and other hobbies, cost money that I’m not spending now. So I’m looking to see where I can save.
Actually, I just realized - I have been socking away 15% of my gross salary every year, and even without the pre-tax savings, since I will stop doing that I should have a good 7 or 8% additional net to spend. I feel better now.
Still, if anyone has any tricks up their sleeve, I’d be glad to read about them. I may not be poor, but I am cheap.
Roddy
Once you are retired you can travel off-peak season or take advantage of last minute deals, so your travel costs might not be as high as you expect.
Transportation was a huge cost savings when I retired. I went from putting 35,000 km per year on my vehicle (and the corresponding gasoline and maintenance cost) to less than 10,000 km per year. That savings easily paid for a 2 or 3 week holiday every year.
I retired about three years ago and my husband two years ago. You don’t really save money. Our income is less than it was when we were working. Our utility costs haven’t changed, nor have our house insurance or property tax payments. We both also had health insurance through our jobs, but now we pay for that, too. We also would like to travel, but that’s expensive.
I think many retirement advisors say to expect to spend as much, if not more, money in the first years of retirement. Once we get older and less active I’m sure we will have a couple years where we don’t spend as much, but since my husband is in his mid 70s and I in my early 60s, nursing home costs are right around the orner, so then we will really be spending.
Well, I don’t know what you wore to work, but you won’t need to buy fancy clothes and shoes anymore. There’s some nice stuff at the Goodwill, as my retired father used to say.
I was going to retire in Feb, after 40 years employment, then I got asked to start an interesting project and decided to put retirement off. When I told our leadership, their little faces lit up like a child’s at christmas.
ANYWAY, I had been putting off buying new clothes, so when I decided to stay, I had to start buying new stuff to keep from looking like a hobo.
I was considered self-employed for tax purposes so when I retired I didn’t have that big church of change going out. Income taxes are somewhat less, and obviously I’m not putting money into my pension. But I’m sure Roddy already figured that. A tax advisor can give you some advice that might minimize your liability going forward. I don’t work because I wouldn’t be dependable, but if my health permitted, I think I’d look for something fun and seasonal. I’ve got a friend that works at a golf course in return for free greens fees. The best part of retirement is freedom. I hope you enjoy it! Really!
Realistically, for you, the main advantages are food, commuting expenses, and not-being-tied-to-work-hours. matinee movies are much cheaper, weeknight minor league baseball games are $7, etc. Travel can be very cheap if you’re incredibly flexible - there are some crazy Groupon travels deals for trips only a bit off peak, usually with limited travel dates that will be no problem for you. This sort of thing 11 days, three cities in Italy for $1,400 including airfare (must travel November-March) or 10 days in Munich, Salzburg and Lucerne, 4-star hotels and airfare included, for $2299 (travel April May or June).
I don’t know that you should totally dismiss part time work, if its something you would enjoy. Many people with hobbies like knitting or woodwork find working at a hobby shop or hardware store fun (and good for discounts). You could put the extra income towards repaying your mortgage early, or for trips.
I’m going to probably retire in 3 or 4 years. We save now, so I’m not too worried. The biggest savings will be in selling our way too large home and buying something smaller with the equity. So, no more mortgage and lower utility bills.
We’ll be retiring in seven or eight years with a larger net income than we have now. No mortgage, vehicle costs halved, food costs lower by eating at home more often, kids grown. Those first two are big, especially if you have a substantial commute. Just add up depreciation and operating expenses on even a modest car and reducing those by 50-60% is a big annual savings.
My plan has always been to sell the house and downsize into an apartment at 60. I plan to have SS obviously, but also plan to have a healthy pool of cash. Don’t have kids so wife and I hope to end with as close to zero as possible. Save money, I plan to have two paid off cars, no house upkeep or taxes. Our life will be a bit duller than it is now, but I have no doubt that as long as we can keep working until retirement age we should be just fine. The problem comes if physically we need to retire earlier than planned.
Our biggest savings has been in transportation. We’re driving less than 200 miles a week, and the only reason we have two cars is because they’re both paid off.
We’re also saving big on clothing and food. Since I have time to cook, I cook everything. I even make desserts, so we don’t spend money on pre-baked cakes, pies or cookies, much less eating out.
Others have talked about clothing. In the last three years, my biggest clothing expenses have been for socks and underwear, to replace the stuff that’s wearing out.
Also, having less income, we’re paying much less in taxes. We’re floating between the 15% and 28% brackets.
I’ve saved virtually nothing since I retired, getting on to 14 years ago (last day of 1999). I always brown-bagged lunch, no savings there. Mortgage was paid off in 1990, no savings there. Real estate taxes increase monotonically. Transportation: I used to walk one way and take the commuter train home 4 days a week. I do the same only about one or two days a week and the train is cheaper (except the senior fare now is about what the full fare was in 1999). Tiny savings there. I always wore jeans and shirt and still do; no savings there. I do try to save a little against inflation since my pension will not be indexed. So far, I have, basically the payments from my RRSP (just like a 401k, as far as I can tell).
We live in a small town. There aren’t really many. I can get a Coke at McDonald’s for 75¢, and the pizza place I go to gives me 10% off, but that’s it.
There is no public transportation here, the movie theater doesn’t give senior discounts when we go (matineé), and the other restaurants in town don’t offer them, either.