Retirement has long been billed as the best time of your life. Assuming you did everything the right way, you should be able to retire with a comfortable nest egg and live out your golden years just the way you wanted.
Yet certain economic conditions are making that financially comfortable retirement harder to obtain. Food prices are rising. Personal health expenses are going up. And other sustained costs you never imagined when you were a younger working professional, like high-speed Internet connection, are now essential.
As cost-of-living increases can be especially hard on a fixed retirement income, take a moment to consider these five strategies to lower your costs and save money.
Use apps that can lower personal health care expenses
Despite multiple bills and pieces of legislation aimed at lowering health care costs and increasing access, health expenses have been rising. The amount the average American spends on personal health care has increased by 5,039% since 1970. It’s projected to rise by another 318% by 2028 if nothing changes.
Those numbers are staggering. And since personal health care is extensive, encompassing everything from dental visits to nursing home care to eyeglasses, it’s also a category that’s hard to avoid — especially as a retiree.
Numerous companies have developed apps and web-based services that are swooping in to save the day. GoodRx, for example, is an app that can help you find the best prices for prescription drugs. If you need glasses (which tend to be expensive for sometimes unclear reasons), several websites and apps can help you get an eye exam, choose prescription lenses, select frames and get everything shipped to you at a fraction of the cost.
Effectively, if a personal health care concern or unexpected cost come up, some apps and websites are dedicated to helping people lower those expenses in meaningful ways. For example, Virtuwell is an app that provides 24-hour access to licensed nurses who can diagnose and prescribe medication for simple medical conditions. The app charges a flat fee of $59 per appointment — much cheaper than your average doctor’s appointment — and will even bill your insurance.
Take a digital approach to car insurance
Auto insurance has come a long way, and the number of insurance providers has rapidly expanded in recent years. The insurance landscape is also more digitally focused than it was in the past, leaving room for savings that could hardly have been possible before.
Thanks to the auto insurance industry embracing digitization, car owners can save money in a variety of ways. One is to use comparison shopping tools that pull data from across the industry to show you the best possible rates for your circumstance. That wealth of information empowers insurance buyers to find companies that offer better rates, making it far easier to save money at the outset.
Additionally, many car insurance providers offer digital methods to help car owners with good driving habits save money. Usage-based insurance is an emerging trend that allows you to measure how you use your vehicle, either through a phone app or a device plugged into your car’s OBD port. The less you use your vehicle (or the safer you drive), the lower your rates will be.
Maximize your credit card rewards programs
Credit card rewards programs are nothing new. Morgan Stanley’s Discover division and its similarly named credit card introduced a “cash back” program in 1986. However, the advance of financial technologies has made rewards programs easier to create and much cheaper to offer. Consequently, most credit cards now have some type of rewards program available.
The bigger question is what type of rewards you want to enjoy and whether the program suits your needs. If you like to travel, search for a credit card that provides air miles. If you like to shop at certain stores, most have their own credit cards with assigned point schemes.
The benefit of modern reward point cards is that they’re far easier to track. Most now have simple apps with user-friendly interfaces that let you quickly check and redeem available points. As always, however, your points won’t mean much if you’re carrying a credit card balance every month; carrying a balance diminishes the value of your points. Paying off your balance monthly will prevent interest from accruing and boost your credit score so you can maximize your card’s benefits.
Ignite a love of coupons and store brands
Food prices have been steadily increasing over the years. Inflation, however, has reared its ugly head and is causing common staples to increase in price even further and more rapidly. The average monthly grocery bill in the U.S. is nearly $400.
Aside from switching to rice, beans and ramen, using coupons and opting for store brands over name brands could be huge cost savers. Most grocery stores still offer coupons — either in physical form or via the store’s app — on select goods. Some stores may also have built-in couponing for members, and most grocery store memberships are free.
Alternatively, you may want to start buying store brand goods where possible. Some store brand items (also known as “private labels”), like soda, can be 20% cheaper than their name-brand counterparts, according to a 2020 McKinsey study. The study also found that affordability and improved quality are the driving forces behind store brands’ growing popularity. Now, consumers can opt for a cost-effective alternative without having to sacrifice user experience.
Combining coupons and private labels can likely save you hundreds of dollars each year on grocery bills.
Downsize your housing
Even during retirement, housing remains the biggest regular expense for most people. Nearly 45% of Americans are still paying a mortgage upon retirement. And with the median monthly mortgage payment at just over $1,600, this can be a huge budget line item for many retirees.
It may not be easy to say goodbye to the home or apartment you own or rent, but downsizing might be a wise choice to stretch your retirement dollars. You may not even need to sell your house; you could rent it out via Airbnb or as a long-term rental to help subsidize the cost of moving to a smaller and cheaper apartment or house.
Beneficially, if you do choose to turn your home into a rental, the income may not count against Social Security income limitations.
You worked hard to get to your retirement. Enjoy it as much as possible by prioritizing your costs. Save money where you can so that you’ll have more resources available for the joys in life that matter.
Maxime Rieman is product manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
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