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Cut These 8 Expenses For An Easy Retirement

{ Posted on May 15 2010 by Marcus Alston }

Most retirees are on limited budgets that consist of social security and retirement savings.  The good news is, if you are at or nearing retirement, there are several expenses that should be at or near zero.  Eliminating these major expenses can help stretch your retirement budget and help you afford to retire or stay retired.

1. Child Care. By the time you reach the traditional retirement age of 65, your kids should be out of the house, all grown up, and taking care of their own kids, if they have any.  Child care should be a nice cost that you no longer have to worry about.  However, child care expenses for grandparents are becoming more common as more and more grandparents are raising or helping to raise their grand-kids.

2. Student Loans.  By the time people reach retirement age, student loans of retirees are often paid off.  This is a great relief to any budget.

3. Car Payments. Unless you want a new car every few years or you lease, you will eventually pay off your car and can enjoy having no car payments. Check out my reasons for buying instead of leasing.  Resist the temptation to buy that expensive “retirement car” unless it fits in your budget.

4. Mortgage Payments. The average age of first-time home buyers is 33 years, so many home buyers should have their houses paid off by the time they are 65 (assuming a traditional 30 year mortgage).  If you take out a second mortgage or refinance into a longer term mortgage, this may mean you are paying into your 70’s and 80’s.

5. Downsize to Save. Many people down-size into smaller, less expensive homes (or condominiums) later in life which means less space, but less home to maintain and lower over-head costs such as electricity, water, gas, landscaping, etc.

6. Life Insurance. Most life insurance is designed to cover your life during your primary wage earning years in order to protect your family from a loss of income in the event of your death.  Many plans end during your retirement under the theory that pretty much everything is taken care of financially by this point– your kids are grown, house is paid off, retirement savings are in place, etc.  Because of this, most plans will end during retirement and you will no longer have this cost to pay.  If you need to work many more years, do not have things set financially by retirement age, or you have a young spouse or young dependents, make sure you maintain your life insurance appropriately.

7. Retirement Savings. You may have been paying some percentage (hopefully 10%-15% or the maximum) into your 401(k) or equivalent.  If so, once you retire, you will no longer have this cost to pay.  And hopefully you have a nice retirement nest egg.  If you have other retirement vehicles as well, all the better.

8. Credit Cards.   This is one of those debts that could linger, even for those in retirement.  Fortunately, statistics show that older consumers have lower credit card balances.  Having less costs in other above areas will hopefully relieve some need to use credit cards.  For how to manage credit cards, click here.

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