![]() What’s more, the cost of new vehicles also climbed 8.4% in the past year, with used car prices rising 2%. ![]() That’s before gasoline prices reported a year-over-year increase of 17.5%, as of October 2022. If you are no longer commuting into the office and have a partner at home, can you all go down to one car? Can you pay off your car, so it’s just gas, insurance and maintenance you are paying for? Could you get rid of a car altogether?Ĭonsider this: the average individual in this age group spent $1,396 on fuel in 2021, according to BLS data. Next to housing, transportation is often the second costliest thing the 65 and older age group spends money on, BLS data reveals. “For example, if I have a gym membership and a Peloton, do I need both? If I like to go out to dinner twice a week, should I reduce it to once? During times where inflation is at all-time highs, we have to make short-term decisions to help with long-term results,” he explains. However, he adds that “a couple, as opposed to an individual, does not use twice the amount of utilities.”īefore making the decision to move, “which is an option and not off the table,” says Colancecco, retirees or those planning to retire soon should first put together a budget of their total monthly expenses. “A single individual might be more apt to squeeze into a studio apartment, versus a couple who would occupy a one-bedroom, for instance,” says Palion. Master Plan Advisory’s Palion says it’s especially challenging for single individuals in high-tax regions of the country. On the other end of the spectrum, states like New Jersey, which has an average tax rate of 2.49% and home price of $484,393, carry monthly levies that can quickly eat away at a single retiree’s cash flow. States like Alabama and Louisiana have average state tax rates of 0.41% and 0.55%, respectively, and their median home values are also relatively low at $209,000 and $217,296, according to a Bankrate survey. “Owning your own home will certainly cut down on living expenses,” says NerdWallet investing spokesperson Alana Benson, although she also adds: “aggressively paying down your mortgage may make it difficult to save or invest pre-retirement.” Consider moving to a lower taxed, and less costly state (or country)īenson says one of the best ways to combat rising consumer prices is to move to a more cost-friendly location - “to a state with lower taxes … and a lower cost of living.” That’s because, the amount of money “you’ll need for retirement will entirely depend on your lifestyle and living expenses,” she adds. ![]() ![]() Of course, paying off your mortgage doesn’t release all housing costs (you’ll still need insurance, taxes and more), but it can alleviate the biggest chunk. That’s a problem for those trying to retire on a tight budget for one big reason: housing is expensive. And for older households, housing tends to be the greatest expense in average dollar amount and as a share of the household budget for older households, the Bureau of Labor Statistics revealed. Roughly half of retirees now have a mortgage, Harvard’s Joint Center for Housing Studies revealed in 1990, it was only about 1 in 4. Here are a few ways to slash expenses in retirement: Pay off your mortgage before you retire It’s going to be tough, and you will likely “have to do things differently,” says East Norwich, New York-based adviser Peter T. ![]()
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