Retirees Should Stop Paying These Bills Immediately

Arriving at the transition from worker to retiree is exciting and filled with nervous energy all at once. There's the completion of a longstanding project to celebrate, of course. Retirement is a task you'll prepare for throughout the entirety of your working life. But many people hit their 60s feeling like they're not ready to retire and behind on the financial milestones that will support a thriving lifestyle. 57% of workers across all age groups reported feeling behind their targets, according to a 2024 Bankrate survey. This signals that the restlessness surrounding the big leap from one phase of life to the next is felt by a significant portion of the population. The economics of retirement aren't simple, unfortunately, but there are plenty of strategic changes that can grease the skids.

While there's no substitute for quality retirement planning and an early start to your savings strategy, retirees do have plenty of things going for them. For one thing, retirees have the ability to cut down or even eliminate a number of ongoing expenses that feature prominently in the lives of workers. Reducing your outlays in some key areas can transform your finances for the better. Moreover, a few important bills that retires can ultimately drop from their budget are exceedingly expensive. This means that one or two important changes can make a world of difference in delivering a radically improved financial outlook.

Transportation costs are an unavoidable part of modern living. Most Americans own a car, with ownership rates hovering at almost 92% of households. Of course, urban city dwellers have less need for personal modes of transportation, but this doesn't mitigate the costs of getting around the community. There is, however, a definite shift that happens in paying for public transportation or personal vehicle utilization when you retire. Those still in the workforce average and expenditure of roughly $10,000 per year on things like gasoline, insurance, and other transportation costs. Retirees tend to spend around $800 less, primarily because they aren't getting in the car on a daily basis to commute to their workplace.

It's also entirely possible that a retiree may no longer need an extra vehicle. Some people may need a particular kind of car to help support their work but drive something else as they navigate the community on their personal time. If this describes you, a valuable option might be to trade in two cars for a new purchase when making your next exchange. This will net a bigger trade in value and eliminate ongoing operational costs at the same time. At the end of the day, if you haven't seen a notable decrease in this part of your budget then it's likely worth exploring ways to downsize your travel expenditures.

It's a bad idea to bring credit card balances into your retirement lifestyle. The reality is that in most cases you have the ability to push up your retirement or delay it for months or even years. There are many good reasons to delay your exit from the workforce, including an increase in the value of your Social Security checks. One other main feature of a decision to stay working a little while longer involves debt management. Once you exit your salaried job, the task of financing your life is no longer a trade of time for money. Instead, you'll start to withdraw funds from your investment accounts to cover living expenses. Managing heavy debt loads can be a hard pill to swallow, but it's one that every consumer who has let credit card spending run a little out of control will need to face.

Handling these kinds of debt obligations before retiring should be a non-negotiable feature of your plans. However, if you have already retired and still carry a revolving credit card balance or have added new credit card debt to your financial mix more recently, there are options. It's worth exploring settlement or negotiation avenues if you are struggling. Calling your card issuer directly to negotiate new terms or seek debt forgiveness can be immensely helpful. At the more extreme end of the spectrum you could contact a credit settlement company to negotiate a reduced settlement figure on your behalf or even consider bankruptcy.

People in the workforce require additional clothing items. No matter where you work you'll need to dress for the job, and this means frequently investing in a range of wardrobe staples. There's also a social component to the clothing items you wear to work. For those working purely from home, buying new garments may be less important on a regular basis, but there's a sort of social stigma attached to wearing the same pieces of clothing over and over again in any social setting. Workers feel pressure to continuously add to their wardrobe so that they look and feel good while interacting with coworkers or clients.

On top of the work-specific clothing that consumers invest in on a regular basis, there are other clothing related services that workers tend to require. Dry cleaning, for instance, adds into the mix and sends a typical workers overall clothing-related bill to a figure of roughly $2,000 annually. Retirees don't need to engage in this performative activity. There's obviously still a socialization element to leaving the house and wearing clothing that fits your chosen activity's norms. However, upon your retirement you'll no longer need to invest heavily in business casual attire or spend money on a routine basis keeping those items clean and tidy.

Renovations are generally undertaken as a means to improve the living space of your home. Some renovations can be worthwhile as a financial investment, but for the most part you'll want to avoid speculative upgrades if you're looking to sell your home. Renovations tend to make the most sense in a property you anticipate remaining in for many years to come. These are frequently upgrades that impact your life directly and include personalizations and other stylistic choices that suit your unique needs. As a result, home renovations aren't typically something that will feature as a good investment of your cash as a retiree. There are notable exceptions to this rule of thumb. After a major surgery you might require the installation of some mobility enhancing features around the house, for instance.

But the reality is that a renovation tends to demand at least a moderately-sized financial investment. Funding this kind of project will either add a new debt product to your financial mix or find the cash in your nest egg. Either way, this can be a problematic decision. Committing to a new monthly expenditure or minimizing the principal balance of your retirement portfolio can send shockwaves through your retirement finances. Another thing to keep in mind is that making substantial alterations to your home could ultimately increase the property taxes you owe. This can make the home more expensive to maintain long into the future, straining your fixed, retirement income in another way.

The self-storage unit can feel like an attractive investment that helps organize your home and life. In many cases a storage unit will enter your financial calculations during a move. Many homeowners who are downsizing will place some of their bulkier belongings into storage while relocating and then plan to work their way through the collection once they settle in. This is partially why storage units can burden retirees, specifically. Retirees often look to downsize their living space when they make this change. Older Americans no longer need the sprawling home that served their growing family. Moreover, in a large suburban home there are all kinds of additional maintenance requirements that may not be present elsewhere. Lawncare, significant volumes of cleaning throughout the home, and even additional tasks like pool maintenance tend to feature more significantly in suburban lifestyles.

Downsizing can help eliminate some of these costs but if you utilize a storage unit during the move you may end up paying for that space far longer than you anticipate. The typical storage unit costs between $49 and $296 on average per month in the United States. Even on the low end this can seriously add up over the long term. To make matters worse, in many instances a retiree will be holding on to things that belong to their adult children. All of this comes together to make the storage unit a costly choice for retirees that often becomes wasteful.

Digital services are an interesting area of your budget. Functionally, it costs the provider almost nothing to deliver services like cable TV, internet connectivity, and cell phone coverage to each individual subscriber. It's also relatively cheap to keep a customer. On the other hand, it's estimated that each customer acquired costs business in this marketplace about $500. Retention is therefore the name of the game and price reductions are frequently the way they incentivize customers. When signing up for a new contract, it's always a good idea to call in to ask about discounts (they won't extend them to you out of some kind of benevolence).

As a senior nearing or already in retirement, the ability to get a discounted price on a service you must have is intensely valuable. This is a tactic that every consumer can use to great effect. However, once you leave the workforce you'll be existing on a fixed income and so these kinds of price reductions become even more valuable. On another note, as someone who isn't aggressively ping ponging between the office and home commitments any longer, you may find that there's more time in your day to prioritize things like calling up your phone company to ask for a reduction. It's also worth noting that you'll get farther in this quest by doing a bit of research and coming to the conversation with definitive figures. Instead of saying "I can get it cheaper somewhere else," check out competitive prices on the market and say, for instance, "but Verizon will give it to me for $30 a month."

In today's market, there is absolutely no need to pay for routine brokerage service fees. in your retirement accounts, investing with the help of a financial advisor may be more beneficial. Financial advisors can provide key points of guidance to help you in your journey of growth as you progress through your working years and continue to save for retirement. Fee structures can vary, but these services typically cost around 1% of your portfolio value on an annual basis. For some, this may be worth the expense while others might launch their investment journey with the help of a professional and then take the reins themselves once they are more acclimated to the process.

Either way, portfolio balance priorities change as you age. With fewer years to recover from a market downturn, shifting gradually out of riskier growth assets and into more stable investments is the safest course of action. Functionally, this means that paying for the services of a financial planner will likely becomes far less important for a retired person. You really don't need to pay for the professional advice that "it's a good idea to invest in bonds and index funds." The internet is truly littered with articles about the value of these kinds of safe harbor investments. This change won't make a dramatic impact right away, but eliminating that 1% fee can ultimately become the difference between keeping your drawdown strategy in check or finding yourself at risk of running out of money.

Your mortgage is a little different than most other debt products that will help fund your lifestyle. A mortgage is a seriously long-term repayment commitment, and so it may not always be feasible to eliminate this expense entirely before you leave the workforce. For those at the tail end of their mortgage journey, there's not an inherent risk involved in retiring before the repayment is completed. However, it might not be a great idea to purchase a new home a few years before you intend to leave the workforce and carry a major repayment obligation into this transition.

It's also important to consider the math involved in managing a mortgage. The typical mortgage covers a 30-year term, and the average first time buyer is 38. Setting aside the reality that this number has climbed tremendously in the last few decades, a 30-year mortgage combined with this age places the typical contemporary purchaser at 68 when their mortgage will sunset. Even if you purchase a new home — assuming you roll the value that you've accumulated in repayments into new purchasing opportunities — you can largely expect to maintain this basic window. What that means is a typical first time buyer in today's marketplace will be one year older than the current full retirement age when they eliminate mortgage payments from their budget. Considering that the median payment is $2,259 dollars, that's a transformative change. Carrying a $2,000-plus expense into retirement can easily lead to excessive financial imbalance.

There are a wealth of free options to get the news you read. Both print and digital outlets offer a bevy of free sources, and so in today's marketplace paying for basic news isn't strictly necessary. Of course, if you have read a specific publication for many years and like the way they present information there's nothing inherently wrong with keeping that subscription. But you may want to explore other services that might be good sacrificial targets. The average American pays $205 in unused subscription services every year. That's likely more than enough to cover the cost of a newspaper or two that you want to keep.

If you are someone looking to retain existing subscriptions in this arena, there are often additional ways to reduce the costs without sacrificing access. There are numerous senior discounts available for all kinds of goods and services. Many local vendors like gyms and restaurants offer price reductions, and digital service providers also give discounts to older subscribers. Investigating the benefits page and subscription services of your chosen news outlet might yield a tidy savings opportunity simply based on your age or retirement status to give you exactly what you want at a lower price.

Taxes are something that can't be avoided. The average worker today receives a tax refund as a result of standard deduction rates. Retirees have a different reality to deal with. Generally, retired individuals won't be drawing income from sources that are taxed when they are deposited. You may end up being hit with a fairly substantial tax bill as a result. Each year will be different for a retired person, but that doesn't mean that you're doomed to pay an exorbitant amount in personal income taxes. In fact, if you begin planning your tax management strategies during your working years you may end up paying nothing in taxes. First of all, there's both state and federal taxes to consider. Many states won't tax your Social Security benefits or other retirement income sources, and some don't require you to file state reporting at all. Therefore, after you retire it might make sense to relocate in order to further reduce your tax burden.

On a more direct level, utilizing Roth IRA or 401(k) accounts will push all of the tax considerations forward. These accounts are funded with post-tax dollars, meaning distributions you take later in life will not be taxed. Depositing money primarily or solely in a Roth account will allow you to eliminate any sort of worry over your tax burden when you start taking distributions.