We hear a lot about how much money we’re not going to have when we retire, but it’s not all bad! Today we want to have a look at some of the things that will cost us less once we stop working.
Studies have shown that most people spend less once they’re no longer commuting into an office every day, dressing up and buying lunches and so on. In one survey, people reported spending around a third less once they were retired, another showed 85 per cent of respondents said they didn’t need to spend as much money as previously and were living just as well.
Of course, once retirement comes, we want to be able to spend our money on fun stuff, like holidays and treats for the grandkids, so here are five areas where you’re likely to save some cash to help you divert funs to the important things.
1. Getting around
The average costs of travelling to work on public transport is around $5000 per person. Not having to schlep into the office each day will make a significant difference to your weekly expenditure – and of course, you get public transport cheaper once you’re retired for the trips you do make.
For those who drive to work, according to the RACQ, a small to medium car costs around $200 a week to run, once you account for servicing, registration and running costs, thats $10,000 per year!
Can you make do with a single car between you and your partner? There’s more savings right there.
No one is suggesting you ditch your power suits for trackie dacks… however once you’re retired, you are permitted to dress down more frequently, meaning you can cut costs on work clothes, drycleaning, dress shoes and so on. A US study also found that people over 65 spent around $500 less each year on clothing than people who were still of working age. Savings of around $100 were also seen in personal care products such as makeup.
Have you been “putting something aside” each week or month? Gone is the tyranny of saving once you are no longer working – this could translate into 5 or 20 per cent less income required each week. In fact, many financial experts will tell retirees to plan on replacing 80 to 85 per cent of their pre-retirement income once they stop working. This is based on the assumption that you will no longer have to divert a portion of your earnings to savings or super.
Once you stop working, some of your insurance policies may no longer be necessary. These include income protection and permanent disability cover, which many people choose to give up. You might also want to rethink your life insurance policy, which is typically designed to provide your dependents with an income should you die unexpectedly. Obviously, these decisions need to be made in consultation with your family and financial advisor.
Will you be downsizing after you retire? Trading a compact townhouse for the family home can greatly reduce your home running costs.
You can also save by paying off your mortgage before you stop working – according to Harvard University research, the monthly housing costs (including property taxes, insurance, and utilities) for older adults who own their homes outright are less than a third of those for older owners with mortgages and less than half of those for renters.
Have you recently retired?or are you planning to do so soon? Where else can you save money?
Want more money saving tips? Check out our post The Hidden Seniors Deals in Every State.