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As a retired person, you can spend your time and money as you wish. Whether this involves traveling the world or playing a few extra rounds of golf every month, you have flexibility during this time of your life.
However, it’s a good idea to reevaluate your spending habits to keep your retirement stress-free and make sure you’re not overspending. That’s exactly what Patrick H. did when he retired several years ago.
He and his wife live mostly on Social Security and found that many expenses were a waste of money for them.
“We didn’t have a lot of retirement savings, so it really forced us to think deeply about what mattered most to us,” Patrick said. “We considered what would give us the most satisfaction. If a particular expense no longer had much value, we eliminated it.”
Let’s take a deeper dive into some costly mistakes boomers should avoid.
expensive vehicles
The average down payment on a new car in the United States is $735. If you have a two-car home, you could be paying more than $1,400 per month just on the vehicles — not including gas, maintenance or insurance.
Instead of wasting your hard-earned money on car payments, consider downsizing to a one-car home or buying a safe, reliable car with cash to eliminate car payments. This gives you more freedom in your monthly budget for other activities.
Patrick added, “After I retired I realized I wasn’t driving as much.” “My wife and I started discussing whether we could make it work with just one car. I had an old truck that was already paid off, but we were making car payments every month for my wife’s car. We decided to sell her car so we didn’t have to make car payments.”
Additional Insurance Policies
It never hurts to have a lot of protection – depending on your circumstances, it may be beneficial to invest in good life insurance or disability insurance. However, you may be presented with many insurance options that you may not need.
For example, if your children are grown and financially independent, do you need a larger life insurance policy? Or, if you’ve decided you no longer want to drive, you may be able to drop your car insurance policies altogether.
Take some time to talk to your financial planner to make sure you’re not paying for insurance you don’t need and that your beneficiaries are up to date on the policies you need.
“My wife and I had term life insurance policies, but after we retired we decided to let the policies lapse,” Patrick said. “We had paid off the mortgage on our home and our children were grown. We didn’t think there was much need to continue paying for life insurance at that time.”
gym membership
Depending on where you go and what classes you take, a gym membership can cost up to $100 per month. Although signing up for a gym membership with all your extra free time might seem like a good idea, it’s going to cost you a lot of money if you don’t plan on going to the gym consistently.
If you’re looking to invest in a gym membership or you already have one, make sure you’re getting the best value by comparing rates, asking for senior discounts and making sure you can use the facilities whenever you want.
“My wife and I both had memberships at our local fitness center, but it cost us more than $100 combined per month,” Patrick said. “My wife uses her subscription a lot, especially in the winter, but I haven’t for several weeks. We decided to cancel our subscription, but she kept hers. It helps us save a good amount of money every month.”
unnecessary subscriptions
Speaking of subscriptions, it’s also a good idea to check your current subscriptions and see if you use them. Often, you may sign up for a free trial and don’t realize you forgot to cancel, which turns into a paid subscription.
Not sure how to find all your subscriptions? You can start by checking your bank account and looking at the monthly recurring charges. Make a list of those subscriptions and look at them individually and see what you want to keep or cancel. Alternatively, you can use an online service, such as rocket moneyTo find unnecessary subscriptions and cancel them on your behalf.
“From time to time, my wife and I will sit down and look at our budget to see what needs to be revised,” Patrick said. “We noticed that we signed up for Peacock the last time we watched a Big Ten football game and forgot to cancel after the season ended. That cost us a lot of money over the last six months.”
college loan
While it may seem like a good idea to help guarantee your grandchild’s loan, it could get you into trouble for large sums of money – especially if the loan isn’t paid off or your grandchild decides not to finish school. Additionally, it can affect your credit score and make it harder to qualify for any additional loans you may get in the future.
If you want to help with college expenses, consider making a cash gift rather than taking out a loan yourself. This will ensure that there will be no long-term financial consequences for you while still being able to support your loved ones.
“When we were younger, we set up 529 accounts to help our kids pay for college tuition,” Patrick said. “By doing this we help both of our children graduate without any debt. However, we have friends who co-signed on the loan to pay for college expenses and now their name is attached to the loan. While their children make the payments, we did not want to be in a situation like this.”
new dream home
You may have considered buying your dream home during retirement, but now is the time to reevaluate that idea.
“My wife and I have lived in our home for 40 years,” Patrick said. “We’ve gone through a few renovations, but this is the home we love. It’s where we raised our children. We planned to pay off our mortgage, eliminating housing expenses from our retirement budget. Because of this, buying a new retirement home was never really an option.”
last attempt to go
While there are many things you might want or need in retirement, it’s important to examine your spending and make sure it’s really something you’ll put to good use. If not, don’t be afraid to take it out of your budget and use that money for something else.
Retirement should be a time of joy, not financial stress. Be wise with your spending, and you will have a much happier retirement.