10 Reasons Why Retirement Isn’t as Expensive as You Think

(Drazen Zigic/Shutterstock)

Retirement is expensive—no matter if you’re a freelancer, business owner, or employee! Or so you’ve been conditioned to think.

After doing a simple Google search about retirement costs, you will come across some pretty outlandish articles. The amount of money needed for retirement seems astronomical! Articles like these appear left and right:You Probably Don’t Have Enough Money to Retire,You Need $2.5 Million to Retire,A 20-Year-Old Could Need to Save $7 Million for Retirement. No wonder few people save diligently for retirement. The task seems insurmountable! Why even begin?

But there’s good news! The article you’re reading is not about doom and gloom. This article looks at your actual costs during retirement. You will likely realize your costs at retirement are not as astronomical as you may have been conditioned to believe.

Think of retirement as the time when your living expenses either go on sale or are eliminated. For instance, have you considered selling your large single-family home? You could then buy a smaller home which better fits your current lifestyle. The final step is to pocket the difference! That could be a savings of hundreds of thousands of dollars. That’s just one of the ten ways discussed in this article for a person can save big money in retirement.

No More Commuting to Work

In retirement, commuting to work will become a distant memory. Depending on the length of your former commute, you may save huge amounts of money each year in retirement. According to AAA, it costs 60.8 cents per mile on average to operate a vehicle. This results in about $9,000 in motoring expenses over the course of a year.

In order to get your actual numbers, consider how many miles you drove each year in your working life. If you’re unsure, look at the title for your car. How many miles were on the car on the date of purchase? The title will say. How many years have you owned the car? Calculate the average miles per year.

Now, take the average miles driven each year and subtract the number of commuting miles. Most people work 50 weeks per year. Daily miles really tend to add up.

According to the Department of Transportation’s 2009 National Household Travel Survey, the average commuter in the US drives 13.6 miles to work. Let’s assume 260 works days per year. This means you probably drive about 7,000 miles each year just commuting. Using the aforementioned cost-per-mile numbers mentioned by AAA, you have likely spent $4,256 just going to work and back each year.

The Calculation

The calculation isn’t over. Finally, add the extra miles you will be driving during retirement. How often do you plan on going to the golf course, visiting the grandkids, or taking a car trip? You will be happy to know your cost-per-mile to drive will be lower upon retiring.

You will be driving in congested rush hour traffic far less often. Traffic jams and road rage will likely be witnessed at a minimum upon retirement. This means better fuel economy and less wear and tear on your car.

It becomes obvious you will be doing less driving (and for less money) during your retirement years. Also, you will likely save thousands of dollars just by not commuting to work. Retirement is looking for appealing already.

Make dinnertime a time to connect with and bond as a family—without phones in sight. (Drazen Zigic/Shutterstock)

Gone Is the Professional Dress

Another category where you’ll be saving money is in professional dress. Instead of wearing professional clothing five days per week, you’ll now be wearing it on rare occasions. Besides not buying a lot more clothing, you can also consider selling the professional suits you own right now.

A quality, timeless suit retains its value far more than you may think. Take your items to an upscale thrift store. Or you can sell your items online at sites like thredUP, Twice, or ReFashioner. Even if your clothing is vintage, their valuations may surprise you!

Will there be added clothing expenses in retirement? Probably. But Hawaiian shirts and flip flops are a whole lot cheaper than suits and sport coats!

Lower Food Costs

Your food costs will likely decline during retirement. Expensive, obligatory dinners with colleagues will be eliminated.

The average American worker spends $1,000 a year on coffee and $2,000 per year on lunch. During your working years, you may spend even more on convenience meals to stock your freezer at home. Who can blame you? After working so much, there’s not a lot of time left to think about meal planning. Although in retirement, you can focus on making healthy meals at home. Talk about a major savings!

You may also decide to start a garden in retirement. Burpee Seed Co. claims for every $50 you spend on seeds and fertilizer, you reap $1,250 in produce! This will put your food savings through the roof!

Retirement Means Lower Medical Costs

As bizarre as it sounds, there’s a lot of money to be saved on medical bills in retirement. According to AARP, stress causes many types of health issues such as heart disease, metabolic syndrome, colds, weight gain, slower healing, ulcers, and back, neck, and shoulder pain–just to name a few.

Work-related stress will be erased in retirement. Instead, you can fill your time with tasks which bring you complete happiness.

Not only will your stress level decrease, your physical condition will likely improve upon retirement. Sitting in a chair for 8-hours a day is detrimental to your health. In retirement, your time is freed up for exercise and being outdoors. Being outdoors is also another way to improve your health. According to USA Today, being in nature improves physical and mental health.

During retirement, you won’t be around your usual group of coworkers carrying the flu virus. You’ll likely enjoy flu-free winters during retirement. Your exposure to the flu virus will be reduced and the immune system you built up in your working years is now plenty capable with keeping up with your lessened exposure. In financial terms, this means fewer pain pills, doctor’s visits, and boxes of tissues!

Consistent moderate exercise is important, so walk your dog daily, not just on weekends. (LightField Studios/Shutterstock)

Retirement Means Fewer Insurance Needs

Again, this sounds bizarre but there’s logic behind saving on insurance in retirement. It’s simple math, really.

First, consider dropping your life insurance coverage. Upon retirement age, the premiums are probably pretty expensive. They will only get more expensive as time moves on. They will likely get so expensive in fact it would be cheaper just to save on premiums and leave a greater inheritance for your loved ones. To make getting rid of life insurance coverage even easier, ask yourself why you still have it in the first place. Really… just ask yourself. What reasons did you come up with?

The reason life insurance exists is so a person can take care of their dependents after their death. Since you are retired, you probably no longer have any young children at home who cannot fend for themselves. Life insurance becomes unnecessary typically when your children turn age 18 or once they graduate college. Your spouse likely has their own needs taken care of as well. But before you drop coverage, make sure your will or any trusts you have are in order. Make sure your loved ones will get your assets upon your death.

Another area to save on insurance is with car insurance. Since you will likely be driving fewer miles each year, why not reduce your coverage? Statistically, the chances of you getting in an accident decrease so why shouldn’t your monthly payment decrease? Consider reducing your coverage to liability only.

Also look at your coverage amounts. Most state minimums for bodily injury are set around $100,000. Some insurance company’s lard on 10 times that amount to increase your premiums even though the chances of you seriously injuring a busload of people are pretty darn slim.

Check your state minimum auto insurance requirements. Consult your current insurance policy and make adjustments according to your comfort level. Consult a licensed insurance agent before making any changes. You may also decide to drop down to a one car or no car household. That’s the ultimate way to save on car insurance!

Some so-called superfoods are expensive and exotic, but others carry a credible claim to
the title—without the high cost. (Africa Studio/Shutterstock)

A Less Expensive Home

As mentioned earlier, you’ll likely enjoy a much lower priced home in retirement. Who wants to clean a 5-bedroom house anymore? Most people prefer to pocket the different in price between your family home and a condo, for instance. Downsizing during retirement could turn less into more.

Right now, your home is probably the same home you used to raise a family. With the kids out of the house there’s probably a lot of unutilized or underutilized space. The house is possibly in a high-priced area because of its excellent school district which you longer take advantage of. The house may also be close to your work, which is no longer relevant.

A fun exercise before retirement is to go house shopping online. Do you see houses to better suit your needs? Are they priced for less than your current home’s assessed value? You may be able to add another few hundred thousand dollars towards your retirement nest egg just from buying a more appropriate house for your new situation. Talk about savings!

Not only will less of your money be tied up in home equity, you will also save on carrying costs. A small home is more cost-efficient in nearly every conceivable way. You will pay less for heating and cooling. A remodel will cost less since there is less space to fix up. Repairs will likely cost less not only because the reduced volume of things to break but also the things to break will likely cost less to repair or replace. Think about a small air conditioner unit, hot water heater, and furnace … they cost less than their big brother alternatives.

However, if you can’t cut costs by 25 percent or more by moving, it may not be worth it to pack up. Why?

According to an article from CNBC, after moving many people still spend like they own a big home. Although they have good intentions, many people want to redecorate the new space, buy a more expensive car, or do other things to keep their expenses on the same level as before. Personal finance is so much about will power. If you strongly believe you have the will power to spend less, it’s worth downsizing.

You can better avoid a stress fracture by easing into activity and giving your bones a chance to strengthen and adjust to your new demands. (Tom Wang/Shutterstock)

Ability to Live Anywhere

If you decide on selling your current home, feel free to take things a step further. Consider moving to a completely different location. Ask yourself, why do you live where you currently live? It makes sense upon retirement to rethink where you belong.

There are many fantastic reasons for moving away. It’s more than just about getting a fresh start for this new chapter in life. For starters, many people move for financial reasons. Retirees enjoy states such as Arizona and Florida largely because of how well they treat retirees. States like these offer a low cost of living as well as other perks such as mild temperatures.

You may also save money by not having to travel to and from your favorite vacation spot–as long as your favorite vacation spot isn’t Vail or the Hamptons. Retirees who flock to the south over the winter and north in the summer are referred to as snowbirds. Keeping up two homes can get expensive. Relocating is the cheaper and simpler option.

Additionally, think about how social security is taxed where you want to move. Certain states calculate a portion of social security as taxable income. If you are counting on as much social security income as possible, keep this in mind. If this is the case, avoid these 13 states.

Also, think about how your estate will be settled. Inheritance taxes vary by state. This will likely be a greater concern than the taxation of your social security income. View this PDF guide to see which states impose heavy estate taxes (also known depressingly as “death taxes”). The guide also explains in great detail how each state handles estate taxes. For instance, some states follow the Federal threshold for taxes, others do not.

According to Kiplinger, the most tax-friendly states for retirees are the following: Florida, Georgia, Mississippi, Louisiana, South Dakota, Wyoming, Arizona, Nevada, Delaware, and Alaska. View Kiplinger’s retiree tax map to compare any of the 50 states.

Where have your kids settled? Perhaps they live far away from your current home. Consider moving closer to be able to help take care of grandchildren and spend more time with your loved ones. Retirement should be about doing what makes you happy.

Don’t worry if you don’t know where you’d like to move to at this point. Begin traveling. Many people move to their favorite travel destination.

(sirtravelalot/Shutterstock)

Travel Will Be Cheaper Than You Think

Retirement often means to trips to Hawaii, Europe, and road trips through the western states. Sounds expensive, right? It isn’t as expensive as you think. Upon retirement, you’ll have time to plan your trips in order to maximize your fun and your money. Just like finding discounts during your working years, there are many discounts you’ll be able to find.

For instance, consider traveling during the ‘shoulder’ seasons. Shoulder season is a travel season between peak and off-peak seasons, especially spring and fall, when fares tend to be low.

According to the noteworthy travel guide extraordinaire, Rick Steves, “Shoulder season—generally April through mid-June, September, and October—combines the advantages of both peak-season and off-season travel.” Rick Steves goes on to tell how the shoulder season is different for every region. Even if you can’t travel during the standard shoulder seasons, find places to go which don’t follow the typical shoulder season. Try Paris for instance. According to Rick Steves, “Paris is surprisingly quiet in July and August.”

Being in retirement, you’ll also have more time to book a ticket at the prime time. According to CNBC, the cheapest time to book a flight is 59 days before departure. Mark your calendar and don’t miss it!

If you don’t have to hurry home after a trip, consider continuing your travels. Embrace long-term travel. It may sound more expensive, and it is, but it’s far cheaper than traveling home after each one of your trips. Continuous trips home get expensive. Instead, keep going around the globe so you only have to pay for one return flight home instead of many.

If you want to go really crazy, consider buying a ‘Round the World’ fare. With this type of ticket, you’re able to choose among many destinations on many continents around the world. You simply book the ticket (3 continents, 4 continents, 6 continents, etc.) and choose your destinations according to your plans. Round the world tickets typically cost $3,000 to $5,000 per economy ticket. Some can be as low as $2500.

If the round the world fare is a bit extreme for your style, consider a continent pass. Airlines typically call them by fun names such as ‘The American Pass’ or ‘The Europe Pass.’ For a fairly low price, you’re able to fly around the continent using this bulk method of travel.

Are you thinking about traveling with tour groups? In retirement, you’ll have more time to plan ahead. This means you’ll be able to take advantage of early-bird discounts if you sign up months in advance. Some airlines even offer discounts for when you meet up and depart from your tour group. Be sure to use your AARP card, Senior Pass, and the like as often as possible.

(ViewApart/iStock)

More Time for Price Comparison Shopping

We’ve all been rushed to buy something before the weekend expires. We have to head back to work on Monday, after all. This leads to very little thought for how to get the best deal possible. Getting back to work has forced us to make quick purchasing decisions.

But upon retirement, you have 40+ hours freed up which was otherwise dedicated to work. Instead of focusing on making money, you can now focus on saving money. During retirement you can thoroughly read product reviews. You can shop around for the best deal. You are now in complete control of your purchases.

Not only can you save money on big purchases, you’ll also have time to save money on daily expenses. You can find the best deals on groceries, fuel, toiletries, lawn care tools, cars, investment advisors, electronics, and more!

Time for Do-It-Yourself Projects

Put down the checkbook (or digital currency)! During retirement, you’ll be able to lessen your dependence on outsourcing and begin doing the projects you love. Instead of outsourcing, begin insourcing (the opposite to the outsourcing you’ve been doing much of your life)! You’ll save money by mowing your own lawn, fixing things around the house, doing small car repairs yourself, cleaning your own house, and possibly filing your own taxes.

Another major area where you can now insource is your charitable giving. Instead of writing checks, consider volunteering instead. This will not only save money, it will also fill your heart with joy. You may feel like you’re retired so you’re not at the best point in life to volunteer. But actually, you’re at a fantastic point in life to volunteer! You’re wise. You can mentor children and young adults. You can teach practical, hands-on skills to a younger generation.

What’s especially worthwhile is to take what you enjoy (like wood working, for instance) and use your skill in a giving capacity. Help build a neighbor’s deck, teach a budding carpenter the ins and outs of the trade.

You may not initially consider this volunteer work–but you can start a blog! There you can share your wisdom with others to help make the world a better, more intelligent place. Offering free content to people in a virtual space can be just as rewarding as doing it in person.

In retirement, consider putting down the checkbook. Think back to the way your parents lived. If you’ve been accustomed to writing checks most of your adult life, you’ll have to reform your thinking to save money in retirement. There are plenty of resources to help with that.

Consult Pinterest and browse their list of DIY project ideas. Be sure to look through this list as well, The 52 Easiest and Quickest DIY Projects of All Time. Grow: How to Take Your DIY Project and Passion to the Next Level and Quit Your Job!, is a book about harnessing your DIY skills and using them to accomplish great things. Although this book is geared more towards people looking to quit their jobs, you’re already there. It should make you feel good about yourself. When reading this book, it may open up your mind to realizing you can create a second career upon retirement. The book offers ways to streamline your DIY projects in such a way, you may think about monetizing your skills. Maybe on top of volunteering, you can also charge for your services. Instead of only focusing on saving in retirement, you’re now earning in retirement!

Basically, whenever you get ready to write a check in retirement, ask yourself if you can insource the task instead. When you do insource a task, ask yourself if you can teach others the task and/or charge money for your services. This is what people mean when they say they get a whole new lease on life!

(Dmbaker/iStock)

Final Word

Retirement isn’t as expensive as you think. The possibilities for saving money are nearly endless–even if you travel the world, move houses, or buy new tools for your DIY projects. Don’t let outlandish articles make you feel insecure about your retirement plans—I doubt anyone reading this article will need $7 million for retirement.

Most importantly, enjoy retirement! Life is like a meal and retirement is the dessert. Enjoy retirement while also saving money. Surprisingly enough, those two ideas go well together—like chocolate and vanilla!

By William Lipovsky

The Epoch Times Copyright © 2022 The views and opinions expressed are only those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.