11 Expenses You No Longer Need in Retirement

Happy senior couples

While many Americans are understandably concerned about rising living costs and whether their retirement nest egg is big enough, one thing many don’t consider is expenses you won’t have once you ditch your day job. While costs like healthcare can obviously go up after retirement, it can be exciting to realize you can slash your budget in other areas to save money.

Here are eleven monthly costs that will become a thing of the past once you retire. Get ready to kiss them goodbye as you enjoy your golden years.

1. Commuting Costs

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Commuting costs are an immediate cost retirees can cut from their budget. Once someone leaves the workforce, they will likely save a lot of money on gas every month. It is one of the unforeseen benefits of relaxing in the yard instead of stressing out in gridlock traffic each afternoon.

Additionally, new retirees can expect to spend less money on car maintenance. Most people will notice their tire tread lasts longer, things break less, and oil changes get stretched out longer than before.

2. Second Car

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Many new retirees learn that having an extra car is no longer needed once they leave their careers. A second car becomes even more disposable once both household partners are retired. Now that both of you stay home, you can save money each month by trading in that extra car.

The money from the second car can help you pay off your bills, build up your retirement fund, or enjoy a much-needed vacation. Recent surveys suggest Americans spend up to $10,000 each year on their vehicles, so picture how you can put that sum of money to better use than a second car in the garage.

3. Housing Costs

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When a couple retires, they often choose to downsize their housing situation to eliminate extra space and save money on rent or mortgage costs. A smaller space often means lower utility costs, less maintenance, and potentially lower property taxes.

Unfortunately, this comes with selling a home you may have lived in for a long time and raised a family in. It is a compromise to help reduce extra costs once their professional careers are over. So, if you aren’t attached to your current home, look into downsizing in your golden years.

4. Life Insurance Premiums

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Surprisingly, a life insurance policy can be easily removed once you decide to retire. Most people take out a life insurance policy to protect their family from financial disaster due to an untimely death from the policyholder.

It is important to check your life insurance policy before you cancel it. If your retirement funds are sufficient to cover a spouse, or your coverage is for a set period, getting rid of your policy could make sense.

Also, life insurance policies can become more expensive as one age. Check your rates, and cancel once it makes financial sense.

5. Lower Taxes

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One of the many benefits retirees can take advantage of is falling into a lower tax bracket. This is due to them being taken out of their salary-based earnings to their income from Social Security, pensions, retirement accounts, and investment income.

Newer retirees can save extra money by strategically planning withdrawals from retirement accounts. Be sure to check with your accountant to learn the optimal times to withdraw to avoid unwanted taxes, based on whether you have a traditional IRA, Roth IRA, or 401(k) account.

6. Retirement Savings Contributions

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A responsible individual new to retirement likely spent the last 30 years saving money each month in preparation. They likely contributed at least 10-15% each pay period to build their retirement fund, which can add tens of thousands of dollars annually.

The good news is once you enter retirement, you no longer have to spend that money each month. Your job is to now maintain those funds to get you through your golden years. Now, you have one less responsibility to remember each month, and you can spend your hard-earned money on vacations and have fun.

7. Child-Related Expenses

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Depending on your age, you may have lowered your child-related expenses sooner than retirement. Still, once your children have left the house and you are entering retirement age, you will see a lot of extra costs disappear each month.

These expenses include sports leagues, extracurricular activities, travel fees, car insurance, college tuition, and other random costs. This can free up a lot of money for retirees to put into their savings. This transition of spending can add significantly to your retirement in the final years of your savings.

8. Food and Dining Out

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Many retirees love to enjoy an evening dining out in a nice restaurant. While you might think retirees spend more money dining out than non-retired couples, think again. It is actually the opposite.

If you think about how many times you grab a coffee on the way to the office or pick up lunch on the go, you will be surprised how fast those expenses add up. Once you spend your days at home rather than on the go, you will eat more meals and make coffee at home. You can use that money to splurge on a night out while still saving.

9. Training and Educational Expenses

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Many professions require continuing educational training to keep licenses. These jobs include doctors, lawyers, pilots, nurses, teachers, and financial advisors. These training classes can come with expensive travel fees, often including flights and hotel stays.

Thankfully, you can kiss these classes goodbye once you retire. No more boring seminars, lectures, readings, and courses to keep your licenses current. Save that money for your next Caribbean cruise with your family.

10. Vacation Costs

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One of the main perks retirees enjoy is the ability to travel and vacation more than they used to. You might think this is an extra cost, but you have to remember that having the flexibility to travel during off-season and non-peak times can save a ton of money.

This added freedom can let retirees track flights and get the best rates. Since they don’t have to request time off work, they can pick up and go on a whim. How exciting would it be to pack your bags and, get on a flight and find yourself on a tropical beach in less than 24 hours?

11. Living in a Cheaper Area

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Once you have decided to leave the workforce, you open up the ability to live wherever you want. You no longer have to live within commuting distance of the office, which can lead you to move to a part of the country that offers a lower cost of living.

Many communities across the country cater to newly retired individuals. These retirement communities usually have amenities like swimming pools, activity rooms, golf courses, restaurants, community centers, and outdoor BBQs. These are a great way to stay active, meet new friends, and save money.

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