A retiree’s house probably has the greatest potential for lowering living expenses, but there are also some other good options for cheaper living. Here are some money-saving tips to consider.
Saving Money Tips – How to Save on Housing Costs
Moving to a cheaper part of the country could save thousands. However, this option is pretty contingent on housing market conditions and could also be a personally wrenching situation. But the bottom line is, anyone living in a very high-cost area could buy a house for about half the price of the one he or she would be selling, and then be able to bank the profit. Everyday living expenses would also be a whole lot less. There are websites that offer descriptions and costs for the best places to retire.
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 provide a much higher income. AARP warns that there are pitfalls to a reverse mortgage, so it pays to deal with an established, reputable lender and read the fine print.
Saving Money Tips – Ways to Reduce Utility and Energy Costs
To lower utility bills, a home energy audit is a necessary starting point. Many utility companies will do it for free or at low cost. Alternatively, a retired senior can do one alone. The Department of Energy (DOE) has sponsored the Home Energy Saver Calculator which it says will empower a person to “save money, live better, and help the earth by reducing energy use in your home.”
Kitchen appliances that are over 10 years old are energy hogs and should be replaced with ones sporting the Energy Star label. They usually cost more upfront, but save 30% in costs over the long haul. Using compact fluorescent bulbs instead of incandescent bulbs can mean a savings of 66%.
Saving Money on Phone and Internet Services
Phone service should be reviewed to be sure there are no features that are not used or needed. Shopping around for the best deals among the various providers can be an eye opener. Bundled services, which combine Internet access with home or cell phone service, can yield significant savings. If long distance calls are infrequent, a telephone card might be a good move. Then only cheap, basic service will be needed from a provider.
Lower Car and Home Insurance Costs
Are two cars still really needed? If calculations show that having just one reaps big savings, it might be much better to rent a car or take a taxi when another 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.
Insuring the car and the house with the same firm can save up to 15% in combined insurance costs. Another plus with this strategy is if an accident occurs, there is less likelihood of being dropped, since the insurer wants to keep all your business. Getting out of the fast lane also saves. Driving 55 mph instead of 65 mph burns 15% less gas.
Income Tax Savings
Keeping up with tax law changes is an overlooked strategy for many. The laws change every year and some deductions and credits that may only be in effect for a year or two could save hundreds. Checking the annual tax publications at your bookstore for their lists of commonly overlooked deductions should be added to the to-do list. 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. A tax preparer will not always ask you questions pertaining to recent tax changes. Be your own best advocate.
Reducing Travel and Lifestyle Costs
It is worth checking out Exploritas (formerly Elderhostel), which offers educational adventure trips at great prices for the over-55 set. Flying smarter is easier these days with the newer websites that not only search for cheap airfares but forecast whether or not the costs of the routes frequented by you and yours are headed up or down (e.g., airfarewatchdog.com). One site actually uses people (gasp!) to find low fares that computers miss.
Getting in shape can be accomplished on the cheap by enrolling in a low-cost community college class and using your student ID card to work out in the college gym. Signing up with online movie services like Blockbuster or Netflix that allow subscribers to enjoy as many movies as desired each month at a very low flat rate.
With some investigation and analysis, savings are to be had that could result in an easier retirement and more peace of mind.