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11 Expenses You No Longer Need in Retirement

As you prepare for retirement, one of the questions you will want to answer is: How much money or income do you really need for this stage of life?  

Even if you have a decent nest egg, your income may not be what it was during your working years. But the good news is that your expenses won’t be what they were either.  

The transition into retirement often prompts a reassessment of needs, from transportation to housing and more.  

Here are some expenses you may be able to cut or at least significantly reduce in retirement. 

One of the first expenses that retirees can cut from their budgets is the cost of commuting to and from work.  

“After retirement, daily commuting expenses are drastically reduced, as you no longer need to travel to work,” said Jonathan Feniak, General Counsel at LLC Attorney

The cost of commuting is often a significant yet often overlooked portion of a worker’s budget. These costs encompass not just the obvious expenses like fuel or public transportation fares but also extend to wear and tear on personal vehicles, periodic maintenance, toll fees, and even the occasional parking charges for those driving to work. 

According to a study by Clever Real Estate, commuters in the United States spend an average of $8,466 on their commute each year, which comes out to about 19 percent of their annual salary.  

For public transit users, the expense might include monthly passes or daily fares, which can add up significantly over time.  

Upon retirement, these expenses can largely disappear from one’s budget, presenting an opportunity for reallocating funds towards other interests or savings. 

Commuting costs aren’t the only expenses that end when you stop working.  

“There are also plenty of expenses we face when working we don’t really notice, like extra clothing costs for work attire, makeup, lunches out, coffee runs, pet care, and even rent or mortgage costs if your work keeps you close to an expensive area,” said David Ciccarelli, the CEO & Founder of the vacation rental platform Lake and a graduate of Harvard Business School. 

Professional attire and grooming, for instance, can take a considerable slice of the budget. Suits, dress shoes, accessories, and the costs associated with maintaining such a wardrobe (dry cleaning, alterations, etc.) can add up. 

As retirees transition from their working lives, the cessation of these work-related expenses presents an opportunity not just for financial savings but for a reevaluation of lifestyle choices and priorities.  

The funds previously allocated to professional necessities can now be redirected towards fulfilling personal aspirations, contributing to a richer, more satisfying phase of life. 

For many working couples, maintaining two vehicles was a necessity, accommodating differing work schedules, work locations, and other commitments.  

However, as the daily grind gives way to a more relaxed retirement lifestyle, the need for multiple vehicles can diminish significantly, presenting an opportunity for substantial financial savings and lifestyle simplification. 

The costs associated with keeping an additional car go beyond the initial purchase price or monthly payments. To keep a car, you also must pay for insurance premiums, registration fees, regular maintenance, repairs, and fuel. 

According to, Americans spend an average of $10,728 on their cars each year, which comes out to almost $900 per month. 

In retirement, when income typically shifts from salaries to fixed retirement savings and pensions, reducing unnecessary expenses becomes even more crucial. 

This choice will depend on individual needs and preferences. If you are unsure if this is a move you want to make, give it a test run for a week or two before making a permanent decision.  

As individuals transition into retirement, the question of housing takes on new significance. 

For many, the dream is to enter retirement with a paid-off mortgage, getting rid of what is typically one of the largest monthly expenses.  

“If you’ve managed to pay off your mortgage by the time you retire, this can be one of the most substantial reductions in your monthly financial obligations,” says Dennis Shirshikov, head of growth at and former Professor of Economics at City University of New York.  

But what if you’re going into retirement with a mortgage? What options do you have? 

Here are some options for reducing or cutting this expense from your monthly budget: 

For many retirees, downsizing to a smaller home can offer numerous benefits and savings. A smaller space often means lower utility costs, less maintenance, and potentially lower property taxes.  

“Moving to a smaller house or a less expensive area can reduce costs related to mortgage, property taxes, and maintenance,” says Feniak. 

For those with equity in a larger family home, selling and moving to a smaller property can free up significant capital to bolster retirement savings or fund other retirement activities. 

Retirement also offers the freedom to relocate without the constraints of job locations or school districts.  

Some retirees may choose to move to areas with a lower cost of living to stretch their retirement savings further. 

Many prefer to stay in their current home in the community they know and love.  

If you want to stay in your current home but you still have a mortgage, one option to consider is a reverse mortgage loan.  

A reverse mortgage pays off and replaces your current mortgage, and it does not require monthly mortgage payments to pay it back if you live in the home full-time and meet certain criteria.  

A reverse mortgage also allows borrowers to receive additional funds as a lump sum, monthly installments, or a line of credit.  

A reverse mortgage can also be used to purchase a new home for those who want to downsize or relocate.  

Choosing the right housing in retirement is about finding the right balance between comfort, convenience, and cost.  

Another expense you may be able to cut is life insurance.  

Life insurance is primarily designed to provide financial protection for dependents in the event of the policyholder’s untimely death and may not serve the same purpose for retirees as it did during their working years. 

Many retirees may find that the financial obligations life insurance was initially intended to cover no longer apply. 

“If the primary purpose of your life insurance was to replace income or pay off debts that are no longer concerns, maintaining those policies might not be necessary,” explains economist Dennis Shirshikov. 

The decision to cut life insurance will depend on a variety of factors.  

First, if retirement savings are sufficient to support a surviving spouse or other dependents, the need for life insurance might be significantly reduced or even eliminated. 

Second, the type of life insurance policy you have can also influence the decision to keep it or let it go in retirement. For example, if you have a term life insurance policy that provides coverage for a specified period, it may simply expire if it is still in effect as you approach retirement.  

However, if you have a whole life insurance policy or another type of permanent life insurance, it can accumulate cash value over time, presenting retirees with options like cashing out the policy, converting it to an annuity for steady income, or maintaining it for the death benefit. 

Third, you will want to consider the cost. Life insurance premiums can be notably high as one ages, making it potentially cost prohibitive for those on a fixed income. 

For many individuals, the years leading up to retirement involve juggling work with the considerable financial demands of raising children, including childcare, which can be one of the most substantial household expenses. 

As retirees enter this new chapter, the direct costs associated with raising children — such as daycare fees, after-school programs, sports, and other extracurricular activities — typically fade away.  

As children age, this typically also means driver training, vehicles, car insurance, college, and more. 

These expenses can range widely depending on location and the number of children, but they invariably contribute to a significant portion of a family’s budget.  

Eliminating these costs in retirement can free up substantial financial resources, providing more flexibility in budgeting for other priorities. 

The transition into retirement often brings about a notable shift in tax obligations, with many retirees finding themselves in a lower tax bracket than they were in their working years.  

This reduction in taxable income stems from moving from salary-based earnings to income sources like Social Security benefits, pensions, withdrawals from retirement accounts, and potential investment income.  

Understanding how these changes affect tax liabilities and employing strategies to minimize taxes can significantly enhance financial security in retirement. 

Strategically planning withdrawals from retirement accounts can help manage tax liabilities.  

For example, knowing when to tap into taxable and tax-deferred accounts can significantly affect tax outcomes. Roth IRA withdrawals, for instance, are tax-free in retirement because the contributions are made from after-tax income, while withdrawals from traditional IRAs and 401(k)s are taxed at current income tax rates. 

If you are looking to relocate, it’s also worth looking for a state that doesn’t tax retirement income or Social Security benefits.  

“A retired homeowner can also facilitate the senior freeze tax, which lets senior Americans postpone their property taxes until death,” according to Ethan Keller, president of Dominion. “Texas allows this special tax break, and retirees of 65 and older with a limited income can take this advantage for their primary residence.” 

Several jobs and careers require continuing educational training for professionals to keep their licenses in that field and stay up to date on industry advancements. This includes doctors, lawyers, pilots, nurses, teachers, and many in the financial sector.  

“In most cases, retirees no longer need to invest in professional development or further education,” says attorney Jonathan Feniak. 

Continuing education for professionals usually entails registration fees, travel expenses to conferences or seminars, and sometimes membership dues for professional organizations. These activities can be costly, often running into thousands of dollars annually, depending on the industry.  

In retirement, these costs are no longer required, freeing up funds for other uses or savings. 

When you are working, one expense you likely have is saving for retirement. In retirement, the shift moves from saving to using those retirement savings. 

The typical recommendation is that individuals save 10 to 15 percent of their income.  

For example, if an individual was contributing 15 percent of a $60,000 annual salary to a retirement plan, they would be setting aside $9,000 per year. Upon retiring and stopping these contributions, that $9,000 per year stays in their pocket. 

The new priority once you hit retirement is no longer saving but carefully managing your cash flow and coming up with a withdrawal strategy that won’t cause you to deplete your retirement savings prematurely.  

A financial advisor can help you understand the best withdrawal strategy to make sure that your retirement savings last. 

One of the upsides to retiring is that you will have more time to travel than you did during your working years. Because of this, you may assume you will be spending more money on travel, but this is not necessarily the case.  

“As retirees do not have a work schedule, they can travel during off-peak seasons, benefiting from lower airfares and hotel rates,” explained financial advisor Ethan Richardson. 

“A strategic travel plan can result in significant savings and a more enjoyable travel experience,” Richardson added.  

When you are working, especially if you still have children at home, that means that you are restricted to traveling during school breaks as well as other timing restrictions you may have because of your job.  

To get an idea of how much you can save in travel, GOBankingRates says you can save 40 to 60 percent if you travel to the Caribbean or Mexico from June through November. 

Want to travel to Europe? Airfare and hotels are also significantly lower in the winter than in the summer, according to GOBankingRates. 

When you are working, there are simply more opportunities to spend money eating out, getting cocktails with co-workers after work, or picking up the much-needed afternoon cup of coffee.   

For example, if a worker spends $10 each workday on lunch, this amounts to $50 per week or about $200 per month.  

At the end of a long workday, you may feel more tempted to pick up dinner than cook at home.  

“With more time to plan and prepare meals at home, retirees often find they spend less on dining out and convenience food,” says economist Dennis Shirshikov. 

“The shift towards home-cooked meals can lead to both healthier eating habits and savings,” he added.  

The savings from buying groceries and cooking meals at home compared to eating out can be substantial. 

Retirement presents several opportunities for cutting costs as you transition from your working life to enjoying your golden years.  

These potential cost savings should make monthly budgets significantly more manageable even if you are living on a fixed income.  

By carefully reallocating resources that were once dedicated to these now unnecessary expenses, retirees can enhance their financial stability and focus on personal enrichment and enjoyment in their later years.  

Reverse mortgage borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.  

This information is intended to be general and educational in nature and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement. 

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