Editor’s Note: Now two years into living primarily on retirement income, I’m getting a better handle on our budget and how our spending habits have changed. That’s why a newsletter story piqued my interest.
The topic? Expenses retirees regret not cutting sooner.
It can be tough to figure out living expenses when making the shift from a regular paycheck to other income sources. For starters, getting real-time numbers from pension fund managers, Social Security and other sources is, in my experience, surprisingly complicated (at best) and difficult (at worst). My husband and I aren’t the only ones; friends who are going through the six-months pre-retirement circus are having the same experience, and they prepared for years — even decades — for retirement. I feel for folks who didn’t have the luxury or foresight to make those plans.
You can check out the article for more details, but I’ll include a few highlights here:
- Contributing more to traditional retirement accounts instead of Roth accounts. Many companies offer retirement plans with Roth options. That means money contributed today is taxed, but it is withdrawn tax-free in retirement. Traditional retirement account withdrawls are taxable, and that can put a strain on a retirement budget.
- Carrying debt into retirement. The best way to control expenses is to keep your money, not give it to a lender. A paid-off mortage, and no car payments or leases are two goals retirees say they wish they had achieved.
- Having too many/expensive cars. Life generally is simpler in retirement. Do you really need two or more vehicles? If you’re watching your budget, remember that expensive vehicles have higher insurance and maintenance costs.
Other retiree money facts:
- 60% of retirees are in debt. The median balance is just over $32,000, according to federal governement statistics. Most of that debt comes from credit cards.
- The rate of retirees with mortages has increased dramatically in the past 10 years. 41% of people ages 65-79 have a mortgage with a median balance of $110,000.
- Among young retirees up to age 74, just 23 % have no debt.
