Once you stop working, it can be difficult to generate extra income. If you can reduce your spending, however, you won’t need to withdraw as much money from retirement funds.
That helps make sure you aren’t forced to alter your lifestyle to pay bills — not to mention lessen the chances of outliving your retirement savings.
What follows are some atypical ways to lower your expenses in retirement.
1. Move in with adult kids
Children these days often remain at home until they’re well into their 20s. They can return the favor by allowing retired parents to live with them after they have formed their own households.
Parents living with their adult children is a growing trend, according to the Pew Research Center. The nonprofit reports that as of 2017, 14% of adults living in someone else’s home were parents of the head of the household. That’s up from 7% in 1995.
Further, housing-related costs are by far the largest type of expense for the average U.S. household led by someone who is 65 or older, as we detail in “How Much Does a Typical Retiree Household Spend in a Year?”
Before you share a home with your children, though, make sure you reach an agreement about whether you’ll help out with household expenses. To avoid conflict, you may need a plan for contributing to such expenses as utility bills, groceries and mortgage payments.
2. Rent out a room
If you have empty bedrooms in your house because your kids have grown up and moved away, why not rent one out?
Services such as Roommates4Boomers and Silvernest help older people rent out extra space in their homes or find an older roommate to move in with.
Other options include going through a larger or more generalized service like Airbnb or Vrbo.
Be aware that being a landlord of sorts requires some effort. You’ll need to carefully screen tenants, collect damage deposits and collect the rent unless you use a company that handles that for you.
Of course, you should wait until the coronavirus pandemic passes to pursue this route.
3. Grow your own vegetables
During the First and Second World Wars, the federal government encouraged people to grow their own produce in “victory gardens” at home to relieve pressure on public food supplies. The same principle can work today for retirees who are looking for ways to reduce grocery bills.
You can maximize your savings if you grow vegetables that can be easily stored or preserved, according to the Iowa State University Extension and Outreach program.
For example, potatoes, onions and winter squash can be stored for several months. Beans, tomatoes, cucumbers, beets and sweet corn can be preserved by freezing or canning.
4. Downsize your fleet
When you were working, you and your significant other may have had to drive each day to separate job locations. Once you retire, you may be able to share a single vehicle.
That would spare your budget from the expenses associated with owning and operating a second car — which might be more than you realize. Transportation-related costs are the second-largest type of expense for the average household led by someone who is 65 or older, after housing.
Be aware that having only one car may require you to occasionally rely on public transportation or ride-sharing services. But if you live in a community with good access to public transportation, it may be possible to get by without owning a car at all.
5. Drop unhealthy habits
You can reduce your medical costs in retirement if you make a greater effort to stay healthy.
One way to do this is to stay fit and active, as we detail in “7 Surprising Benefits of Staying in Shape After Age 50.” Another way is to avoid unhealthy habits, such as smoking or drinking alcohol to excess.
Smoking-related illnesses in the United States cost more than $300 billion each year, including nearly $170 billion for direct medical care for adults. People who stop smoking greatly reduce their risk of related diseases and early death, according to the Centers for Disease Control and Prevention. The health benefits are greater for people who stop smoking at earlier ages, but there are benefits at any age.
According to the National Institute on Aging, drinking too much alcohol over a long period may cause cancer, immune system disorders, and brain and liver damage. It also may worsen some health conditions such as osteoporosis, diabetes, high blood pressure, stroke, ulcers, memory loss and certain mental illnesses.
6. Consider canceling your life insurance
The purpose of life insurance is to replace the income of household earners, providing for dependents in the event of a breadwinner’s untimely death. But when you’re retired, the chances are good that your children are grown and supporting themselves.
If you no longer have dependents, the money you’re spending on life insurance might be better spent on meeting your daily needs. Canceling a term or a whole life policy could be to your advantage.
“If you plan appropriately, it can make a lot of sense to drop your life insurance,” Brandon Renfro, a financial adviser and an assistant professor of finance at East Texas Baptist University, tells Money Talks News.
7. Make plans to age in place
A 2018 AARP survey found that 76% of Americans age 50 and older prefer to remain in their current homes as long as possible, but only 46% expect to be able to do so.
If you take steps now to make your home safe and accessible as you age, however, you might improve your odds of staying in your home longer. And if you’re able to “age in place,” rather than moving into an assisted-living facility or nursing home, you’ll likely also save money.
So, take a look at your home and consider changes that would help you as you age. For example, carpeting hard floors can reduce the chances or injuries from falls. Adding grab bars and safety mats in the shower can reduce the chance of losing your footing.
