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Category: Insurance

Two Ways to Trim Your Spending in Retirement

Two Ways to Trim Your Spending in Retirement

Saving money before and during retirement so their standard of living doesn’t suffer is important for many retirees. Unfortunately, many Americans aren’t saving nearly enough and are falling short of setting aside adequate funds to support their retirement needs. The average retirement savings for people aged 56-61 is only $163,577.[i] Meanwhile, one estimate of what retirees can expect, on average, to spend on healthcare is nearly $275,000.[ii] The National Institute for Retirement Security estimates that America has up to a $14 trillion gap in retirement savings.[iii]

If you are retired and find that balancing your savings and spending is an ongoing challenge, follow these tips for ways to trim your expenses and save more.

  1. Cut Your ‘Time-Saving’ Costs

When you’re employed and busy managing your career and family, spending money on time-saving items—like professional house cleaning or monthly food-subscription services—can be helpful. Once you retire, however, you typically have more time on your hands. You may be paying for items that are no longer necessary. You can save money each month by trimming or eliminating any time-saving resources you don’t need to support your retirement lifestyle.

  • Actions to take:
  • List all the monthly, quarterly, and annual subscriptions and services you have. Identify which ones aren’t necessary.
  • Consider taking over household chores you pay someone else to manage.
  • Assess how much you spend on eating out, and switch to eating in for some of those meals.

2. Reduce Your Health-Care Costs

Actions to take:

Retirees typically spend a large amount on health care, often siphoning income that could be used for other expenses. Unless you have the money to pay these bills, they could leave you in a financial bind. You can help reduce some of your medical costs by learning to shop around. For example, changes like getting an MRI at a radiologist instead of a hospital can make a difference in your medical bills, as the radiologist is typically less expensive.[iv]

  • Get comparative quotes from hospitals and other medical professionals.
  • Check prescription costs at different pharmacies and consider buying generic.
  • Revisit your insurance plans to help identify if you’re receiving the best value.

Every retiree’s financial life and needs are different, so knowing a true breakdown of your daily, monthly, and yearly costs (your budget) is important for finding ways to save. By taking time to assess what may be unnecessary spending in your life, and reducing or eliminating these expenses, you may have more money on hand for other lifestyle needs.

To learn more about how you can trim your spending or pursue other financial goals in retirement, please contact us at 800.929.1001 or visit our site at http://capsouthwm.com/services/financial-estate-planning/ We’re happy to help you explore strategies for your unique needs.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.thebalance.com/average-retirement-savings-by-age-4155888

[ii] https://www.cnbc.com/2017/08/24/average-couple-will-spend-275000-on-health-care-in-retirement.html

[iii] https://www.forbes.com/sites/andrewbiggs/2016/07/21/how-much-retirement/#1c4486b94d28

[iv] http://www.investopedia.com/articles/personal-finance/091615/7-ways-reduce-healthcare-costs-retirement.asp

Toilet Paper And Eggs

By a show of hands, who’s been in this situation?

1) Needed a light bulb for your closet – but didn’t have one.
2) Needed a roll of toilet paper AFTER reaching the point of no return – but didn’t have one.
3) Needed an ironed shirt for the next day – but didn’t have one.
4) Needed one more egg for the cookies – but didn’t have one.

What do these have in common? Well, they’re usually situations you find yourself in after it’s too late. Thankfully, the solutions aren’t hard to come by and you likely won’t lose any sleep over them.  A quick trip to the store (or the dry cleaners) will usually fix what ails you. Not a big deal. (Although number 2, no pun intended, sure seems like one at the time.)

But what about life insurance? Different story. Once it’s realized you needed more, it just might be too late. “How could it be too late?” you ask.  Well, you could be uninsurable – or dead. Understandably, life insurance isn’t the first priority of the young and the healthy. (Folks who’d typically pay less for life insurance, I might add.)  And why should it be, right? You’re young, healthy, and full of life! Who has time to think about dying?

You do.

If you’re reading this blog, young or not so young, you have time to think about life insurance. And really, it’s not about you. It’s about those you’re leaving behind. Ask yourself this one question:  If I should die tomorrow, what financial condition will I leave behind for my family? If you can satisfy your family’s needs, future goals and dreams with your current insurance policy (or policies) and/or savings account, then great. If you don’t know the answer to that question, then I might suggest sitting down with someone who can help you through it. In our financial planning process, life insurance is a vital consideration. And in some cases, it’s relatively inexpensive. For a 40 year-old non-smoker, you might be able to get an additional $500,000 term life policy for an annual cost that’s less than you’re paying for the eggs, toilet paper, and dry cleaning referenced above. Still not convinced? Then please consider this. The grief will be hard enough for your family to go through. If you could afford to eliminate at least the financial burden, why wouldn’t you?

5) Needed a life insurance policy that would protect my family – but didn’t have one.

Can’t really help you with the first four needs, but we can help with number 5.  Give us a call. Together we’ll make a plan. And you just might sleep better.

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