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It is not uncommon for retirees over 70 to live on a fixed income. People who are no longer working probably have different income sources. The combination needs to be spent wisely to ensure that you have enough resources to make it through retirement.
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Cutting expenses first gives you time to test what works and create new habits to adopt in retirement, without feeling like you have to aggressively cut everything later. Here are five expenses that can help you do just that.
Also check out five expenses that most retirees underestimate that can cost them thousands.
1. Unused Subscriptions
It seems like everything is subscribed these days. A small monthly fee may not seem too steep, but as subscriptions increase, it becomes easy for those recurring charges to increase unnecessarily.
The average American adult is spending about $1,100 a year on subscriptions, according to CNET. What’s worse is that $200 of it is on unused subscriptions. Review your bank and credit card statements over several months to identify all of your subscriptions. If you don’t remember using the service in the last two to three months, turn it off.
2. Housing costs that don’t match your life
Housing is usually the largest component of the budget. An increasing number of Americans are spending excessively on housing, spending more than 30% of their income. About 43.5 million American households are in that category, according to Harvard Joint Center for Housing Studies.
Take time to identify solutions to reduce costs. Downsizing to a smaller home that suits your needs can help you recoup the savings.
3. Giving gifts
Gift giving, when done right, brings joy to everyone. Overspending on gifts or financially supporting adult children can easily put a strain on a retiree’s budget. If support has been given in the past it is wise to talk to adult children now to clearly set expectations.
Establishing an annual budget and setting boundaries can help bring clarity. You don’t have to cut back on generosity, but do so considering your changing needs and budget.
4. Unnecessary Insurance
Insurance needs change with age. Left unchecked, it’s easy to overlook how those changes can affect your finances. Some coverages may no longer be necessary, and some may require changes.
For example, if you’re driving less now, informing your provider may lower rates. It’s a good practice to bundle and compare rates, as well as review deductibles annually, to identify potential savings.
5. Telecommunication costs
Telecommunications costs like phone and cable bills can easily become expensive. No-contract cells are a great way to lower cellphone bills without sacrificing carrier coverage. As for TV costs, consider subscribing to a streaming service to meet your viewing needs. Even choosing some non-premium streaming apps can save significant money every month.
Most deductions made before age 70 are recurring costs that do not necessarily improve daily life. Identify a couple to make the cuts now to see if you can live with the change. If you can, apply the savings to other needs. This way, revisit all major expenses. Even if you don’t cut out everything, you can still claim savings that stretch your budget.