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After decades of saving and planning for retirement, turning 65 doesn’t have to mean buckling down. Although it’s important to have a budget, it’s about protecting what you’ve built and putting that money toward the things that matter.
“When a retiree asks me questions about creating a retirement budget, I tell them it shouldn’t feel like a punishment at all,” says Trevor Houston, CEO, ClearPath Wealth Strategies, LLCWrote in an email. Instead, it’s about being intentional and making the most of what you have.
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Why do retirees need to watch their spending?
“As we age, our expenses often become like layers of an onion that add up over time,” Houston explains. It’s not always easy to keep track of autopay drafts, regular bills, fees, and subscriptions you don’t remember signing up for.
“You don’t want to put your life in danger,” he claimed. “You’re trying to clear up a mess.”
What to cut from your budget after age 65?
Before deciding which expenses to cut, Houston recommends asking yourself: What is most important to me at this stage of life?
Once you decide on your priorities, it becomes easier to cut unnecessary expenses. And these don’t require drastic cuts, and according to Houston, retirees should see it as a way to redirect money toward things that either protect their health, increase their independence or enhance their connection with the people they love.
Here are some good places to start:
- Unused subscriptions and subscriptions. This could be streaming services, unused smartphone apps, monthly subscription boxes, or a subscription you rarely use. “These are the quickest ways to free up some cash and can add up to thousands in cash per year,” Houston wrote. Linda Jensen, wealth manager and principal owner for individuals and business owners Hart Financial GroupRecommends looking at your bank account to find out these costs and unsubscribing or canceling services you no longer use or don’t need.
- Transportation costs. Most transportation costs generally do not decrease after retirement. “You may still have a car payment or you may be paying more than necessary for insurance on new vehicles,” he explained. “You can have two cars even when you only need one.” To save, one option is to use a rideshare service or take a taxi. But if you prefer to use your own vehicle, consider downsizing a car for lower insurance premiums and no monthly payments or trading in a new car for an older model.
- A house that is very big. “I had a client whose entire retirement was locked up in the equity of his home,” Houston wrote. Downsizing is an option that many retirees take advantage of. “A smaller home can mean smaller utility and maintenance costs, as well as potentially eliminating or reducing mortgage payments, which can make a huge difference,” Jensen said.