Tuesday, February 24, 2015

Ways to cut expenses in retirement...before retirement

This week's Dollar Stretcher newsletter features an article called "Reducing Expenses After Retirement." Laid out in a slideshow format, it offers useful tidbits on such matters as cutting the cost of transportation, food, and entertainment once you no longer have the demands of a nine-to-five job to cope with. I flipped through it without too much optimism, thinking that advice for retirees might not be that helpful for someone who doesn't expect to retire for a good twenty years or so. But in fact, I found that the problem was just the opposite. Not only did the advice in the article apply to me and Brian, it all applied so well that we were pretty much following it already.

The five topics covered in the piece were:

1. Driving expenses. The article points out that a couple working two jobs probably needs two cars, while after retirement they can go down to one. Sound advice, but Brian and I did this years ago, after I left my office job to become a freelancer. Working from home is still work, but it doesn't involve a commute, so it allowed us to become a one-car family even with two two incomes.

The article also notes that the extra time you have to spare in retirement may make it easier to do your own auto maintenance, at least for basic jobs like oil changes. The truth is, our jobs don't keep us on such a busy schedule that we don't have time to do an oil change on a weekend; we used to do it all the time with our old Accord. We haven't been changing the oil on our "new" Honda Fit (actually about four years old now) partly because the tools we had for the old one didn't fit it, and partly because we thought only a professional could reset the new car's electronic oil life indicator. However, this turns out to be pretty simple to do yourself (this YouTube video shows how), so it might be worth investing in the proper oil filter wrench for the new car—or just using an old belt to remove the filter, as recommended in this other video.

In any case, being employed certainly is no barrier to doing this job ourselves. In fact, it seems to me that doing this job ourselves is probably easier for us now, while we're still reasonably spry, than it's likely to be in twenty years, when we don't bend so easily.

2. Food costs. The article lists several reasons it may be possible to spend less on food during retirement. First, kids are probably grown up and out of the house, so you're no longer "feeding ravenous teenagers" (a problem we've never had and never expect to have). Second, you can cut the lunches out and overpriced coffees that are part of so many people's workday routine. And third, after retirement you can spare the time to pare down your food bill by shopping sales, clipping coupons, and even gardening to raise your own produce.

Again, this is all sound advice, but it's advice we've already been following for years. Neither of us has ever made a habit of lunching out on workdays, and while I did at one point spend a couple of bucks each day on coffee and a roll for breakfast before taking the train to work, I eventually gave that up as well in favor of home-brewed coffee and an English muffin in a paper bag. And though we aren't exactly extreme couponers, we've always kept our grocery bill down by shopping multiple stores to get the best deals, buying store brands, stocking up on sale items, and using coupons as appropriate. As for our garden, I think that's a hobby that's just as useful for de-stressing from the work week as it is for keeping busy in retirement. So once again, these are tips that work just as well before retirement as they do afterward.

3. Selling unwanted stuff. The article recommends "giving your closets...the cleaning they so desperately need" and selling all the excess stuff at a yard sale, on eBay, or in whatever other way you can to pick up a few extra bucks. This only works, however, if (a) you actually have a lot of excess stuff lying around, and (b) it's stuff that other people would be willing to pay for. Brian and I have been pretty good at getting rid of stuff we no longer need over the years, so that we don't have huge piles of unwanted items lurking in every closet and corner, but I'll concede that we probably a fair number of things we don't really need that we've never bothered to dispose of (because, as I noted in my first post of the year, we had plenty of room to spare). But I feel quite confident in saying that none of these things have any significant value. We had a yard sale once, a few years ago, and made so little money that we concluded it would be a better use of our time to spend the whole yard-sale weekend shopping, rather than selling. Even if there happen to be a few items in our Freecycle pile that might be worth a few bucks to someone, the meager amount of money involved definitely isn't enough to justify the extra time and hassle. Anything that had enough value to make it worth selling, we've already sold.

4. Entertainment costs. With all the extra time on your hands in retirement, the article suggests, you can dump your pricey satellite TV and instead enjoy local events, such as outdoor movies and concerts, or check out books, movies, and music from the local library. This struck me as one of the sillier ideas in the article, because what is there about an outdoor movie that takes more time than watching the same movie at home on your "premium movie package"? Just the time it takes to walk there and back, and that counts as exercise. The same goes for watching the same movie on a DVD from the library. There's literally nothing about this advice that's more appropriate for retired people than it is for working folks—which is why Brian and I eschewed cable completely for so many years, and only have it now in order to save on our phone and Internet bills.

The only idea in this section that seemed valid to me was that retired people can more easily give up restaurant meals and invest some time in learning to cook at home. Cooking from scratch does indeed take more time than eating fast food (although there are many meals you can make at home in less time than it would take to go out and order them at a restaurant). And learning to cook, if you don't already know how, is an even more significant time investment. But if you already know how to cook—or if you have a husband who knows how and enjoys it—then there's no good reason to eat out any more often during your working years than during retirement. You just save the more time-consuming dishes for weekends.

5. Home maintenance. The last suggestion in the article is to devote your extra time in retirement to taking over home maintenance tasks, such as yard work, that are now hired out. It goes so far as to suggest that yard work and gardening together could provide enough exercise to take the place of  "your expensive health club membership," for a further savings. Here, once again, we have a piece of advice that works just as well before retirement as afterward—if not better, because younger muscles are better equipped for pushing a mower and wielding a hedge trimmer. And, of course, if you've never had a pricey gym membership in your life, you can't save anything by dropping it, though you might gain some health benefits by adding more activities to your routine.

So all in all, I'd have to say there really isn't a word of advice in this article about spending less during retirement that isn't just as useful before retirement. In fact, adopting most or all of these habits before retirement, as Brian and I have done, should allow you to get to retirement much sooner. In the first place, you'll be saving more money during your working years, so you'll build up your nest egg faster; and in the second place, you won't need as big an egg to retire on. Once you're used to living on a smaller budget, you won't need to accumulate as much to support yourself throughout retirement in the modest lifestyle to which you have become accustomed. So it's definitely in your interest to adopt frugal habits while you're still working, rather than waiting until you retire—because every dollar you save before retirement benefits you twice.
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