General Finance News

If retirement life is causing painful penny-pinching, try some of these strategies for lowering your cost of living.

A house can be a major source of cost-cutting that can free up funds for a retiree. But there are also other options for cutting living costs. Here are some tactics to consider.

Cutting Home, Utility, and Car Expenses

Move to a cheaper part of the country. This option is pretty contingent on housing market conditions and could also be a personally wrenching situation. But the bottom line is, if you live in a very high-cost area, a move could mean buying a house for about half the price of the one you would be selling. Everyday living expenses would also be a whole lot less. There are websites that offer descriptions and costs for areas of the country that are ideal for retirees such as BestPlaces.net and RetirementLiving.com.

Lesser, but still lucrative options, are to buy a smaller home in the same locality or get a reverse mortgage. While a reverse mortgage usually means there will not be a paid-off house as a legacy, it could prevent your children from having to support you, and at the same time there will be more discretionary income to be enjoyed. AARP warns that there are pitfalls to a reverse mortgage, so be sure to deal with an established, reputable lender and read the fine print.

Review your phone service. Do not pay for features you do not use or need. Shop for the best deals with other providers. Bundled services, which combine Internet access with home or cell phone service, can yield significant savings. If you seldom make long distance calls, a telephone card might be a good move. Have the card for those occasions, and then you can sign up just for basic service with a provider.

Downsize your car situation. If you are a two-car home, compute your savings with having just one. It might be much cheaper to rent a car or take a taxi when a second car is needed. Other alternatives are keeping cars forever or buying smaller, more efficient ones, preferably used. Even a one-year-old used car saves thousands in depreciation, and avoids the much higher car registration and license fees slapped on a new car.

Insure your car and home with the same firm, and save up to 15% in combined costs. Another plus with this strategy is if you have an accident, you are less likely to get dropped, since the insurer wants to keep all your business. Get out of the fast lane. Driving 55 mph instead of 65 mph burns 15% less gas.

Potential Income Tax Savings

Keep up with tax law changes. They change every year and some deductions and credits that may only be in effect for a year or two could save hundreds. Check the annual tax publications at your bookstore for their lists of commonly overlooked deductions. Many retirees are not aware there is an unbelievably long list of medical deductions–such as modifications to a home for the disabled, dental costs and insurance, mileage for doctor visits, hearing aids, acupuncture, new glasses, and contact lenses. Do not assume a tax preparer will always ask you questions pertaining to recent tax changes. Be your own best advocate.

Trimming Lifestyle Expenditures

Curtail recreation expenses. Check out Elderhostel, which offers educational adventure trips at great prices for the over-55 set. Fly smarter. These days you can find websites that not only search for cheap airfares but forecast whether or not the costs of the routes you travel are headed up or down (e.g., airfarewatchdog.com). One site actually uses people (gasp!) to find low fares that computers miss.

Get in shape on the cheap. Enroll in a low-cost community college class and use your ID card to work out in their gym. Watch movies at home. DVD on-line services like Blockbuster or Netflix that mail out movies allow you to watch as many movies you can handle each month at a very low flat rate.

So savings are to be had. It will take some investigation and analysis on your part, but the payoff could be an easier retirement and more peace of mind.

Similar Posts:

• Advantages of Reverse Mortgage
• Payoff Mortgage – Turn Your Home Into An Asset 107
• 3-2-1 Mortgage Buydown Helpful For Work Relocation
• $8000 First-Time Home Buyer Tax Credit: Must Live in House To Qualify
• British families packed like sardines in a crushed tin box