Retiring from your career doesn’t necessarily mean retiring from all of the responsibilities of life. However, there are actually some expenses you can look forward to leaving behind once you exit the workforce to focus on enjoying your golden years.
The end of such expenses can easily make it feel like you’re getting a bonus, even though your overall income may be less than it was while you were working. These vanishing costs can come from some pretty surprising places, too!
Let’s take a look at six big expenses you can say goodbye to once you enter retirement.
The irony of having a job is that many people spend quite a bit of money just to get to work each day. The cost of the gas needed to cover a commute can total hundreds of dollars per month. That doesn’t even take into consideration the wear and tear on a vehicle and the expenses of covering routine maintenance. A person with a daily commute of just 20 miles each way can easily expect to pay $50,000 in driving costs every ten years.
Even people who use public transportation each day will have to part with a big chunk of money every month.
Retirees may find that ending a commute can feel like getting an instant bonus. You’ll likely be a few thousand dollars richer by the end of just your first full year.
A vehicle is a lifeline to many of the things a family needs, and wants, to do. These days, most families require two cars just to be able to handle shuffling kids to obligations, running errands, and juggling the aforementioned work commutes. Add in that fact that over 60 percent of American households are now dual-income, and one car simply isn’t enough for many families.
The beauty of retirement is that most couples can easily live in a one-car household. That means one less auto loan payment each month if you finance your vehicles. Dropping a vehicle will instantly slash the amount you pay in personal property taxes and auto insurance. Plus, you’ll decrease the chances of an unexpected repair bill. Wins all around!
There is no dress code for retirement. This is good news for workers who spend years adhering to strict dress codes that require specific types of shirts, suits, and shoes. A person can save a lot of money when they’re not forced to update their wardrobe every season.
In addition, weekly bills for dry cleaning can add up to a substantial amount of money every year. You can look forward to pocketing a nice chunk of change when you’re not having your collars starched on a regular basis.
The reality (and perk) of post-career living is that retirees are free to dress in whatever they want. For many of us, that may mean never visiting the dry cleaners again.
Paying payroll taxes just becomes a part of life once you’ve worked for a few years. In fact, not everyone takes the time to examine their paychecks, and few realize that they’re even paying payroll taxes on their earned income.
Retirement means no more “earned income.” No more earned income means that payroll taxes vanish once a person enters full retirement. That’s a tax rate of 7.65 percent (for employees) that you’ll no longer be sending to Uncle Sam.
Life Insurance Premiums
Life insurance isn’t a necessary expense for many retirees. The primary reason for needing life insurance is to replace one’s income in the event of an unexpected death. If you die, you want to be sure that your family will be able to manage and not be thrust into undue hardship.
Most people don’t have dependents in their household by the time they retire. This means it’s not really necessary to pour money into premiums. Since you’re living off of your retirement savings and investments at this point, your spouse will not be suddenly affected by a change in income, were you to pass away.
Of course, it’s not unreasonable to keep paying for a small policy, which can cover things like funeral costs. But finishing out the term on a larger policy can save you a bunch in monthly or annual premiums, even if you maintain a smaller policy.
Learn More: Do You Need Term or Whole Life Insurance?
Retirement can be a great opportunity to finally devote time to hobbies, like cooking and baking. Many working people end up going out for lunch and picking up dinner on the way home simply because they are too busy to make food at home. Work lunches and networking happy hours can add up, but are a necessary evil for many careers.
Eating out at restaurants several times a week can quickly eat away at your budget if you’re not careful. Spending more time at home means new retirees won’t have to pay for pricey lunches on the go anymore. Even something as simple as making a cup of coffee at home every morning, instead of buying your java on the way to work makes a big difference.
Many of us look forward to retirement for a number of reasons. The idea of enjoying your golden years without job obligations is worth the decades of work preceding it. Spending time with family and fulfilling those fun dreams you never had the time for before? Can’t beat it. Some of us even seek to get out of the rat race sooner, eyeing an early retirement plan.
Aside from the basic pleasures of retiring, it’s nice to see how even everyday expenses will go down. Sure, you won’t be bringing in a paycheck any longer, and your income may even drop. But when you’re saving on payroll taxes and a busy city commute, you might not care.Topics: Retirement Planning