Financial experts throw around a bunch of guesstimates about how much you’ll need to save for retirement, but one thing is certain: The more you can keep costs down once you stop working full time, the better off you’ll be.
Here are five retirement expenses that financial advisers and professors say you might want to drop:
1. Your second car or luxury car Do you and your spouse really need one or two fancy autos once you retire? After all, luxury car payments can easily run $500 a month, which amounts to $12,000 or more over a two-year period.
If you’re nearing retirement, there’s a decent chance you own at least one pricey car. TrueCar.com, an auto-selling site, found that boomers account for 56 percent of Mercedes-Benz buyers, for example, and 55 percent of Jaguar and Porsche owners.
Javid Jaraiedi, founder of the Jaraiedi Financial Group in Lawrenceville, N.J., says you might want to replace a deluxe model with a more modest auto. “Maybe you have one nice car to drive to parties and things like that and one less expensive car to take grocery shopping and on errands,” Jaraiedi says.
How to drop the expense One option is to sell your second car and replace it with a used auto. (Edmunds.com has useful advice on how to get the best price.)
Not only will your car payments drop, you may save hundreds of dollars a year on insurance because you might not need comprehensive coverage on a used car, Jaraiedi says. Comprehensive coverage reimburses you for incidents other than collisions, like damages if your auto is stolen. You may also want to drop collision coverage for an older car with little value.
Alternatively, you could try ditching the second car altogether, especially if you and your spouse expect to do most things together in retirement.
If you’re a little nervous about managing with one vehicle, consider joining a car-sharing service, says Lynn Ballou, the managing principal of Ballou Plum Wealth Advisors in Lafayette, Calif.
Zipcar, for instance, lets you rent its vehicles for between one hour and four days; its rates depend on where you live.
Hertz offers a similar hourly car-rental service, called Hertz on Demand 24/7, in about a dozen major U.S. cities.
2. High insurance costs Many people retire and hang on to all their insurance policies, but that can be a costly mistake, Ballou says.
For one thing, you may no longer need life insurance or disability insurance, she says, and ditching them could save you hundreds of dollars annually.
If you don’t have any dependents who’d need financial help after you died, you probably don’t need life insurance in retirement. If you aren’t working anymore, you can likely skip disability insurance.
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Those aren’t the only ways you can save on insurance in retirement, though. “A lot of people still have their homeowners deductibles and auto insurance deductibles set very low in retirement,” Ballou says. But many retirees have enough in savings to switch to higher deductibles and self-insure against small losses.
Upping your deductibles will lower your premiums and might put hundreds of dollars back in your pocket.
How to drop the expense If you – and your financial adviser, if you have one – decide you can scrap your disability and life policies, call your insurers to cancel them. Understand, however, the process may be more complicated than you think.
For example, if you have cash value in a life insurance policy, you should examine the tax consequences before dropping the coverage. “If you cancel, you might take a tax hit,” Ballou says. Once you surrender the policy, you’ll owe taxes on its tax-deferred earnings.
Rather than canceling the policy altogether, Ballou says, you may want to avoid the taxes by swapping life insurance for an annuity through what’s known as a tax-free exchange. If this idea seems appealing, discuss it with a financial adviser.
You should also call your homeowners and auto insurers to investigate raising the deductibles on your policies. Once you learn what your premiums would be at different deductible thresholds, visit an insurance price-comparison site, like Netquote.com or Insurance.com, to get competing quotes.
3. Your home If you’re still living in the house where you raised your kids and built up memories, you may be reluctant to sell it. But your home could be a money pit that also won’t be suitable as you age, says Kenn Tacchino, co-director of the New York Life Center for Retirement Income at American College.
You may also be paying the steep property taxes that go with living in a great school district, even though you no longer have school-age kids. Your home could be socking you with high utility costs as well. The combination of taxes and utility bills could cost you thousands or tens of thousands each year.
(MORE: How to Avoid Living Unhappily Ever After in Retirement)
The house might be difficult for you physically in retirement, too. Its multilevel steps could be tough on your knees and, if you live in a cold climate, you could endanger your heart by shoveling the walk and driveway.
How to drop the expense In a word, downsize. “Look for a smaller home that offers one-floor living and doesn’t require maintenance that comes with things like a large yard or pool,” Tacchino says.
Even if you’re not quite ready to sell, start thinking about the feasibility of maintaining your home in retirement.
If you just can’t bring yourself to move out, consider bringing in an aging-in-place specialist to retrofit the home and lower its maintenance expenses. The National Association of Home Builders has a directory of certified aging-in-place specialists on its site.
4. Your landline A home phone typically costs $15 to $75 per month, according to CostHelper.com, which can set you back between $180 and $900 a year. But if you have decent cell phone reception in your home, you might want to cut the cord and save the landline’s expense, Ballou says.
How to drop the expense Call your home phone provider and ask to cancel your service. Then shop around for competitive cell phone rates at a site like BillShrink.com.
The average monthly cell phone bill is about $47 per month, according to CTIA-The Wireless Association, a nonprofit that studies the wireless communications industry. But you might qualify for lower rates depending on the number of users in your plan and your data, text and minutes usage.
5. Your adult children OK, this may sound overly harsh. But the truth is that it may be wise to stop paying the bills for your grown kids once you’re retired.
Nearly 6 in 10 parents (59 percent), however, are currently providing financial support to their adult children who aren’t in college, according to the National Endowment for Financial Education. They’re paying living expenses, like rent and monthly bills, as well as providing spending money.
“Some parents spend thousands of dollars each month on their adult kids,” says Douglas Goldstein, president of investment services at Profile Investment Services in Jerusalem, a financial firm specializing in U.S. investment accounts.
If you’re assisting your grown children but haven’t saved enough to ensure that your retirement is comfortable, Goldstein says, ask yourself: Am I prepared to move in with my children later in life when I can’t afford my lifestyle? Are they prepared for that?
How to drop the expense When your adult child needs help covering the basics, consider letting him or her live with you for a while until landing a job, rather than shelling out thousands a year on rent.
As for non-essentials, from a new car to extra spending money, Goldstein's advice is straightforward: Just say no. For instance, if you’re still paying for your adult child’s cell phone service, isn’t it about time to scrap that expense and let your son or daughter foot the bill?
Talk to your children about your financial situation in retirement so they'll understand that you truly can’t afford to keep handing them cash, Goldstein says. And don’t allow yourself to lend them money. “You may never see it again,” he says.
Catey Hill is a freelance personal finance writer who has written for Next Avenue, The Wall Street Journal, SmartMoney and Worth.