How To Lower Retirement Expenses

[cs412a]

Downsize. No house. No car. No internet/cable. No TV. Rent 1 bedroom apartment with working heat/AC in a walkable L/MCOL town or near bus stop. Minimal and light furniture/stuff. Houseplants instead of garden. Art on the walls in lieu of a view. Participate in free/low cost activities. Talk to people. Make friends with the neighborhood cat. Read. Write. Draw/paint. Listen to music. Make music. Cook. Drink water. Don't smoke.

I own a condo, I own a car, I have internet. I travel. I have a small garden on my terrace: native plants (bumblebees, honeybees & hummingbirds visit), tomatoes & (just planted) spinach. I look out my window & see trees. I am a member of the local astronomical society, the local museum and wildlife park (among other organizations) and regularly donate. I am not squeaking by. Jeez.

What's your monthly spend?

$3000/month.

[Beensabu]

What's your monthly spend?

$3000/month.

How much of that is housing and how much is transportation, if you don't mind sharing?

[LilyFleur]

Sell the house and rent
Cancel cable
Exercise minimum 3x per week

This actually would make my life much less affordable. I've owned homes since 1983 in a VHCOL area. I currently own a very modest post-divorce condo that is paid for.

There's a reason they call it personal finance; everyone's situation is different.

[cs412a]

What's your monthly spend?

$3000/month.

How much of that is housing and how much is transportation, if you don't mind sharing?

I spend less than 25% of my income on housing (includes mortgage, HOA fees & property tax) and < 10% of my income on auto expenses (repairs, gas, insurance). I'm retired, so most driving is local but it includes longer drives to places wheres I regularly volunteer (state tree nursery and legal aid office), and visits (400 miles RT) to see family. I don't think I need go into further detail; I can assure you that I'm not making these numbers up.

[dbr]

What's your monthly spend?

$3000/month.

How much of that is housing and how much is transportation, if you don't mind sharing?

I spend less than 25% of my income on housing (includes mortgage, HOA fees & property tax) and < 10% of my income on auto expenses (repairs, gas, insurance). I'm retired, so most driving is local but it includes longer drives to places wheres I regularly volunteer (state tree nursery and legal aid office), and visits (400 miles RT) to see family. I don't think I need go into further detail; I can assure you that I'm not making these numbers up.

I know people with budgets in the same category. There is no reason to doubt.

[celia]

We do all of that (and always have) even though we have a large house, 2 cars, have pensions and SS and like to travel.

We had a mortgage but every time we re-financed, we made sure the new loan ended at the original 30-year ending date. I don't understand how someone retiring can start a 30-year loan and expect to pay it off. That would be a big burden in retirement for me.

You're saying you "do all of that", on $2k-$3k/mo? Or do you mean you do the items in the list, regardless of your finances? For me that retirement spending range is roughly taken up by taxes alone, even though I'm confident my lifetime earnings were well below average for Bogleheads.

We've done all the items on the list with incomes that were all over the place. There was one year we were both out of work and lived off of unemployment and severance pay. HD went back to get another degree and didn't work for several years. Several times I worked part of a year and was on unpaid maternity leave for 6 months. (Family Leave didn't exist back then.)

But there were also years we made over $100K and paid the necessary taxes. I even considered the drop in income taxes that would be owed when we knew our income would drop on our projections.

Of course, when we started over 50 years ago, $2k or $3k a month was more than we imagined we would earn and inflation has increased costs as well as incomes.

[tibbitts]

We do all of that (and always have) even though we have a large house, 2 cars, have pensions and SS and like to travel.

We had a mortgage but every time we re-financed, we made sure the new loan ended at the original 30-year ending date. I don't understand how someone retiring can start a 30-year loan and expect to pay it off. That would be a big burden in retirement for me.

You're saying you "do all of that", on $2k-$3k/mo? Or do you mean you do the items in the list, regardless of your finances? For me that retirement spending range is roughly taken up by taxes alone, even though I'm confident my lifetime earnings were well below average for Bogleheads.

We've done all the items on the list with incomes that were all over the place. There was one year we were both out of work and lived off of unemployment and severance pay. HD went back to get another degree and didn't work for several years. Several times I worked part of a year and was on unpaid maternity leave for 6 months. (Family Leave didn't exist back then.)

But there were also years we made over $100K and paid the necessary taxes. I even considered the drop in income taxes that would be owed when we knew our income would drop on our projections.

Of course, when we started over 50 years ago, $2k or $3k a month was more than we imagined we would earn and inflation has increased costs as well as incomes.

Oh, true, I should have said something about adjusted-for-inflation, since certainly "back in the day" spending as little as $3k/mo in nominal terms would have been much less challenging.

[Beensabu]

What's your monthly spend?

$3000/month.

How much of that is housing and how much is transportation, if you don't mind sharing?

I spend less than 25% of my income on housing (includes mortgage, HOA fees & property tax) and < 10% of my income on auto expenses (repairs, gas, insurance). I'm retired, so most driving is local but it includes longer drives to places wheres I regularly volunteer (state tree nursery and legal aid office), and visits (400 miles RT) to see family. I don't think I need go into further detail; I can assure you that I'm not making these numbers up.

Oh, I believe you. I'm not questioning your numbers, just trying to support my point about downsizing in retirement to lower expenses. It's the low housing expense that's making it work so wonderfully for you. I'd love to spend less than $750/mo on housing too. For a lot of people, the only way they can get it that low is by renting a smaller place in a lower cost of living area than where they are currently situated.

Imagine if your housing expense was doubled (or tripled). That would make it less lovely and more squeaky.

[cs412a]

What's your monthly spend?

$3000/month.

How much of that is housing and how much is transportation, if you don't mind sharing?

I spend less than 25% of my income on housing (includes mortgage, HOA fees & property tax) and < 10% of my income on auto expenses (repairs, gas, insurance). I'm retired, so most driving is local but it includes longer drives to places wheres I regularly volunteer (state tree nursery and legal aid office), and visits (400 miles RT) to see family. I don't think I need go into further detail; I can assure you that I'm not making these numbers up.

Oh, I believe you. I'm not questioning your numbers, just trying to support my point about downsizing in retirement to lower expenses. It's the low housing expense that's making it work so wonderfully for you. I'd love to spend less than $750/mo on housing too. For a lot of people, the only way they can get it that low is by renting a smaller place in a lower cost of living area than where they are currently situated.

Imagine if your housing expense was doubled (or tripled). That would make it less lovely and more squeaky.

First, I've lived in Chicago's Hyde Park, in an LA suburb, and in Stamford, CT. So I know about housing costs. I actually could afford to spend more on housing and I could afford to live nearer to my family a more expensive suburban area - I just don't need or want to. I hate the congestion and I like living in a small city with a storied history (and prehistory!). Not to mention that when I call the county assessor's office, guess what? I actually end up speaking with the assessor rather than getting a phone menu or busy signal.

Second - and this is not directed to you in particular - I am arguing against the mindset in which spending more money = better quality of life.

[JonFund]

I take a rather contrarian approach to my retirement spending, in that for my 40+ years of working, I lived a very frugal lifestyle. That has enabled me to build a sizeable enough nest-egg that I can afford to spend more in retirement, including relocating to a town with a better quality of life, even though the housing and cost of living is higher, and spend more on more frequent travel, as well as donate more to charities and causes that I support.

[Ependytis]

Most of the things I've done to lower retirement expenses involve doing it myself, such as:

• Investing

• Cleaning the house

• Doing the yard work (I used to dislike this, but now I take pride in having a nice yard and get a good workout at the same time).

• Cooking at home

A 100 other saving ideas are small, like saving <$50 a month here and there by buying generic groceries where it doesn't make a difference to me, cash back credit cards, giving up alcohol (by the way, no amount of alcohol is good for you), or price shopping on Google.

[Sagefemme]

There are three things I see people spending money on that seem to me to really add up:

PETS: An acquaintance recently started a Go Fund Me for an approximately $6500 surgery on her dog's leg. He already had the other leg done. Two to go! I'm shocked by this.

CARS: I know lots of people who buy and sell cars a lot. Get dissatisfied with what they're driving, see something appealing, want to upgrade, own more than one vehicle, etc. We buy a car every couple of decades and drive it until it's good and thoroughly dead. We do live in a small city where you can walk and bike lots of places, so one car works for us.

BEVERAGES: I guess I've been drinking water when thirsty for so long I don't even like most drinks in cans and bottles! I'm lucky to live somewhere where the municipal water is delicious. My spouse does like some fizz, and for a recent birthday I bought him the Cadillac of carbonators--the Aarke. He can drink fizz to his heart's content now.

I guess all of these strategies were necessary when we had no money, and now they just seem like the normal way to live. I am certain that we have the net worth we have at age 63 in good part because of these habits which now seem like business as usual to us. We are probably going to have some trouble spending our nest egg when we fully retire. I've never felt one iota of deprivation.

We do not lead an ascetic life. We spend plenty on travel, our kids, wine, good food (although we don't eat out much any more. The dining out experience just isn't the same since COVID, somehow). But we seem to have saved a ton by avoiding the expenses associated with pets, cars, and drinks. BTW I loved our recently deceased cat. She never got much health care until the very end of her life when she did go to the vet a few times. Lived a fantastic outdoor cat life, I think, and passed peacefully at age 18. I would love to have another cat but think I'll resist the urge so that traveling is easier.

[gavinsiu]

Hey Bogleheads out there. Any tips to minimize expenses in retirement. The reality for most Americans is that they will need to cut expenses in retirement to meet their new income.
Pay off mortgage
No credit card debt
No car note
Cook food at home vs going out to eat.

What are some others? I cant imagine trying to retire on 2k/3k a month. However people do it. Curious if anyone has any other ideas. Thanks!

A lot of the expense are lowered for you.

• You no longer need to save. If you used to saving 20%, you don't need to do that any more.
• If you paid off your mortgage, then you no longer have a mortgage to pay.
• Your life insurance will likely to be gone by 65.
• Social Security is not taxed in most states and at the max only 85% of it is taxed.
• Many states may not even tax retirement income from IRA and 401K and qualified pension.
• You get a higher standard deduction at 65.
• Most state have property tax break for seniors.
• Take advantage of various senior discount.
• Get rid of your car if you have good public transport in the area.

My mom spends about $30K a year in the Northern CA. She keeps her expense down by not spending any money eating out or going out. She has no subscription. She buys only what is cheap at the grocery store. For entertainment, she goes for anything that's free at her retirement community.

[Robin1234]

I have several friends who moved from southern CA to lower cost of living areas, e.g. Arizona, Colorado, Las Vegas.

Consider moving even further, internationally.
The country of Panama uses US currency but mints their own coins, so the $5 fee ATMs there dispense US currency.
The cost of living, away from the capital city, will be cheaper than the same lifestyle in the USA. Due to Panama's near equatorial location, the daily temperatures are near the same all year but with daily afternoon rain in the wet season. You can go into the mountains to where the afternoon temps are not too hot, nor too chilled in the night, thus with low to no costs for heating or cooling, year 'round. Those locations are near the agricultural areas, so fruits and vegetables purchased in-season, from the growers, are inexpensive.

Many posters here may have taken a few semesters of Spanish courses since it is an easier to learn foreign language. You can show a translation on your phone to whoever you are trying to speak with.

Panama is not for someone who has very little financial resources. It is best for those who just don't have enough retirement income to live comfortably in the US.
Panama Relocation Tours is a business catering to those customers, but they do publish extensive Panama cost info in their dozens of free YouTube videos at https://panamarelocationtours.com/worri ... tirement.
I went on one of their tours in 2019.

I'm intimidated by long term care costs if I moved to Hawaii, but I can afford to live in similar weather in Panama which is south of the Caribbean's hurricane belt. See how Panama fits so well, in so many ways, with the exception of the different language.

I am curious how does long term care work in Panama? Is it easier to get someone to assist in very advanced stages of life? I am guessing this is very expensive in CA and one would likely have to rely on family, unless they can afford significant expenses (reverse mortgage or otherwise).

[heyyou]

I am curious how does long term care work in Panama? Is it easier to get someone to assist in very advanced stages of life? I am guessing this is very expensive in CA and one would likely have to rely on family, unless they can afford significant expenses (reverse mortgage or otherwise).

In Panama, you will be feeding and housing, or paying someone, but she may be related to your neighbors who are pleased to not have to support her.

A former owner of a rest home in the USA was building a rest home in rural Panama, but she ran out of money before completing it. When I visited the site, the resident rooms (studio, or one or two bedrooms) and the nurses' station were built but with no finish flooring anywhere, nor any electrical or plumbing fixtures installed. Each room would have a tiny kitchen with small appliances, but the resident could pay more to have three daily meals in the common dining room. Thus you could stay in your same room from early into later stages of retirement. Her long term plans included some additional regular apartments on the multi-acre site.

At the nice rest home in my small town, the food schedule is breakfast and an extended lunch period with an additional buffet of portable food so the residents carry their supper food back to their rooms, while the cooks are only working an 8 or 9 hour day.

[guyfromct]

Shop sales for groceries, my local market runs a weekly steak special, $9.99/lb for a rotating selection of T-Bone, Porterhouse or NY Strip. They cook at home because they have the time.

[ucla-engineer]

What's your monthly spend?

$3000/month.

How much of that is housing and how much is transportation, if you don't mind sharing?

I spend less than 25% of my income on housing (includes mortgage, HOA fees & property tax) and < 10% of my income on auto expenses (repairs, gas, insurance). I'm retired, so most driving is local but it includes longer drives to places wheres I regularly volunteer (state tree nursery and legal aid office), and visits (400 miles RT) to see family. I don't think I need go into further detail; I can assure you that I'm not making these numbers up.

If you plan to stay in the same house for at least a decade you may want to consider solar. This replaces or reduces a monthly cost that will likely keep increasing as the price to generate electricity rises and you are home more often. Use the online calculators and check to make sure if it makes sense in your area, but in some areas of the country you can get a 6 year ROI after the 30% federal tax credit.

[grok87]

You could start by tabulating what your spending is now.

This is an excellent idea because just the act of accounting for every dollar coming in and tracking where it all goes makes you more aware of where the "leaks" are.

Don't forget to track taxes and other withholdings that are sent in for you. Learn to use spreadsheets, at least how to enter the data and add up all the amounts in a row or table. (I use LibreOffice which you can download for free.)

https://en.m.wikipedia.org/wiki/LibreOffice


I also suggest you visit your local senior senior (if you consider yourself a senior). They usually have social, educational, and exercise activities and sometimes a social worker comes by to explain benefits you might be eligible for. Ours has an area where you can leave/take books and magazines, low cost lunches, free tax preparation (Feb to April), referrals to social services, a pool table, large Screen TV, and a few classes.

+1 for LibreOffice

[bltn]

There are three things I see people spending money on that seem to me to really add up:

PETS: An acquaintance recently started a Go Fund Me for an approximately $6500 surgery on her dog's leg. He already had the other leg done. Two to go! I'm shocked by this.

CARS: I know lots of people who buy and sell cars a lot. Get dissatisfied with what they're driving, see something appealing, want to upgrade, own more than one vehicle, etc. We buy a car every couple of decades and drive it until it's good and thoroughly dead. We do live in a small city where you can walk and bike lots of places, so one car works for us.

BEVERAGES: I guess I've been drinking water when thirsty for so long I don't even like most drinks in cans and bottles! I'm lucky to live somewhere where the municipal water is delicious. My spouse does like some fizz, and for a recent birthday I bought him the Cadillac of carbonators--the Aarke. He can drink fizz to his heart's content now.

I guess all of these strategies were necessary when we had no money, and now they just seem like the normal way to live. I am certain that we have the net worth we have at age 63 in good part because of these habits which now seem like business as usual to us. We are probably going to have some trouble spending our nest egg when we fully retire. I've never felt one iota of deprivation.

We do not lead an ascetic life. We spend plenty on travel, our kids, wine, good food (although we don't eat out much any more. The dining out experience just isn't the same since COVID, somehow). But we seem to have saved a ton by avoiding the expenses associated with pets, cars, and drinks. BTW I loved our recently deceased cat. She never got much health care until the very end of her life when she did go to the vet a few times. Lived a fantastic outdoor cat life, I think, and passed peacefully at age 18. I would love to have another cat but think I'll resist the urge so that traveling is easier.

I highly recommend that you get another cat. They are low maintenance pets and a source for much love and attention. And entertainment. Go look at the local animal shelter. You ll be saving a kitty s life and getting a great companion. I can tell from your post that a cat would mean a lot to you.

My wife is a huge animal person. We have a dog that is like our current small child. She is a big part of our lives.

If there was ever retirement money well spent, taking care of a pet would be be in that category

[JediMisty]

It depends on the level of austerity required. For example, I moved from NJ where the property taxes are high and the cold weather made me miserable to a low property tax county in Georgia. I downsized slightly to a townhouse which has saved me on maintenance costs, carefully choosing a place where I'm not paying for other people's kids to go swimming at my HOA. (No pool!) Bonus savings I didn't expect were the lower utility costs for the same square footage as I have a heat pump for heating and cooling. On my expensive dive vacations I stay at an Airbnb and seldom eat out. I'm living large with most expensive category being dive vacations. Whereas, my older sister who still has a mortgage and higher HOA fees, lost the family car when her husband died suddenly. I resisted the urge to pay off the car loan because she had many accidents (drug issues) and the added expenses of the insurance, maintenance, etc would also been shouldered by me. Happily her condo is next to a grocery store, drug store, and bank, so many of her needs are walkable. Her plan was to move in with me to reduce costs, but I insisted she get a roommate instead. I pitch in less than I expected since she got a roommate. She shops at thrift stores, and gets food stamps, and gets food from a local food bank. Not surprisingly, her fixed costs are much higher than mine. Although my spend is probably 4x hers.

[Wannaretireearly]

There are three things I see people spending money on that seem to me to really add up:

PETS: An acquaintance recently started a Go Fund Me for an approximately $6500 surgery on her dog's leg. He already had the other leg done. Two to go! I'm shocked by this.

CARS: I know lots of people who buy and sell cars a lot. Get dissatisfied with what they're driving, see something appealing, want to upgrade, own more than one vehicle, etc. We buy a car every couple of decades and drive it until it's good and thoroughly dead. We do live in a small city where you can walk and bike lots of places, so one car works for us.

BEVERAGES: I guess I've been drinking water when thirsty for so long I don't even like most drinks in cans and bottles! I'm lucky to live somewhere where the municipal water is delicious. My spouse does like some fizz, and for a recent birthday I bought him the Cadillac of carbonators--the Aarke. He can drink fizz to his heart's content now.

I guess all of these strategies were necessary when we had no money, and now they just seem like the normal way to live. I am certain that we have the net worth we have at age 63 in good part because of these habits which now seem like business as usual to us. We are probably going to have some trouble spending our nest egg when we fully retire. I've never felt one iota of deprivation.

We do not lead an ascetic life. We spend plenty on travel, our kids, wine, good food (although we don't eat out much any more. The dining out experience just isn't the same since COVID, somehow). But we seem to have saved a ton by avoiding the expenses associated with pets, cars, and drinks. BTW I loved our recently deceased cat. She never got much health care until the very end of her life when she did go to the vet a few times. Lived a fantastic outdoor cat life, I think, and passed peacefully at age 18. I would love to have another cat but think I'll resist the urge so that traveling is easier.

I highly recommend that you get another cat. They are low maintenance pets and a source for much love and attention. And entertainment. Go look at the local animal shelter. You ll be saving a kitty s life and getting a great companion. I can tell from your post that a cat would mean a lot to you.

My wife is a huge animal person. We have a dog that is like our current small child. She is a big part of our lives.

If there was ever retirement money well spent, taking care of a pet would be be in that category

Our lil pooch is a great pet. We do pay for dog sitting when we’re out of town (not retired yet). If we ever do extended travel in retirement not having a pet could be good. Although, I’m not sure how long that travel bug/phase would last.

[snackdog]

Relocate to somewhere with a very low cost of living such as Central America or SE Asia.