Ways to Live Frugally in Retirement


You may have visions of spending your retirement on a sun-soaked vineyard in wine country. But according to a September 2018 report by the National Institute on Retirement Security (NIRS), more than 100 million working-age Americans (57%) do not have retirement account assets. And even if you do save, the same study found that a whopping 68% of individuals between the ages of 55-64 have only less than one year’s worth of their annual income tucked away for retirement. If you find that you’re one of these individuals, it might be time to reassess. Here’s how you can live a frugal retirement.

1. Stick to a Budget Financial experts have long touted a successful budget as one of the most powerful financial tools in your arsenal.


Regardless of how much you earn, keeping track of your spending, giving each dollar a “job” and spending less than you bring in are all good financial practices.


Your biggest monthly expenses in retirement will likely be healthcare and housing costs, along with travel and transportation. Keep your other costs low to help offset these.


2. Plan for Healthcare Costs

One report estimated that retirees will need US$280,000 to cover medical expenses throughout the duration of their retirement. That same report also found that almost half of retirees polled thought they would need less than US$100,000 to cover medical care in retirement.


Help curtail these estimated costs by making healthy choices before retirement. Make a point to exercise, eat healthily and take care of any nagging injuries or issues. Once you do retire, be realistic about any long-term issues or illnesses you might have to deal with — and factor them into your budget.


Purchasing long-term care insurance may also be a good financial move.


3. Cut Your Housing Costs

Paying off your mortgage before you retire is a great way to live frugally in retirement. After all, roughly one-third of retirees’ spending goes toward housing costs.


This makes retirement an opportune time to downsize your living situation. Consider selling your home and moving to a smaller house or condo. You’ll save money on property taxes, maintenance and utilities. If you’re still a two-car family, retirement is the perfect time to whittle that down to one, since it will save money on gas, insurance and maintenance.


4. Pay Yourself

It may feel as though you have unlimited funds as a retiree, especially if your retirement account boasts a healthy balance. But don’t fall into the trap of spending whatever you want, whenever you want. Instead, give yourself a set paycheck monthly or biweekly. This can help you continue to stick to your budget, even in retirement. With better global life expectancy statistics nowadays, that’s all the more reason to pace yourself.


5. Move to a Lower Cost Area

Living in an area with a high cost of living will also eat into your retirement savings. Consider moving to an area with a lower cost of living to help stretch your post-retirement dollar. The AARP suggests cities like Portland, Maine; Gainesville, Georgia; and Tulsa, Oklahoma as some affordable options. Henderson, Nevada; Mesa, Arizona; and Pittsburgh, Pennsylvania, may be places to look at if you’re considering an early retirement.


If you’re feeling adventurous, try moving abroad to a country that still allows you a relatively lower cost of living. Some of the cheapest countries to retire are Portugal, Malaysia and Spain, all of which boast both affordability and safety.


6. Forgo Eating Out

The average American between the ages of 65-74 spends US$2,769 annually eating out, while those age 75 and up spend about US$2,142, according to information from the Bureau of Labor Statistics in US. So if you need to cut costs, you may need to cull dining out from your retirement budget.


7. Reassess Your Insurance Needs

Once you retire, life insurance may not be necessary. Here’s why: Life insurance is intended to serve as a stopgap measure to help financially support your dependents and maintain their lifestyle in the event of your passing. In short, its purpose is to match your income.


But if you’re living on your retirement savings — or other retirement income, you may not need to have a life insurance policy in place.


8. Don’t Stop Working

Whoever said you had to stop working once you retire? Consider taking on a part-time job to make extra cash, or even put off retirement for a few years. You’d be in good company.


While working a part-time job during retirement or putting off retirement altogether may not be on your shortlist of things to do once you hit 65, there are upsides. For one, experts have found that working longer may have certain health benefits.


The Bottom Line

No matter what your situation is right now, it’s important to be realistic about whether your finances will allow you to retire comfortably, or at least keep the same standard of living. Whether you’ve already saved a sizable amount or are counting on your local Social Security, living on a fixed income during retirement might require you to limit your spending. All of the above tips can make the difficult task of coming up with a frugal retirement strategy easier.


Content has been modified. To read the origianl article please click here.


Rachek Cautero, Smartasset

13 Dec 2019







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