Retiring often means saying goodbye to the daily 9-to-5 grind and saying hello to living out your golden years. The average retirement age is 65 for men and 62 for women, according to the most recent data from the Center for Retirement Research at Boston College. However, retiring at any age requires a lot of financial planning and adjustments to your savings plan.
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When it comes to your retirement income, every little bit helps, whether that’s Social Security benefits, Roth IRAs, brokerage accounts, estate planning or even extra passive income you’re earning. What you’ve managed to save for retirement will directly combat increases in housing costs, transportation costs or even what you spend at the grocery store. It can be so overwhelming figuring out what to spend your money on that you may overlook where you can cut back.
Here are some insights on five expenses to cut in retirement that might be holding your savings account back.
Dining Out
For Maxime Bouillon, CEO of Archie, dining out was a major contributor to a slow-growing retirement fund. While you don’t need to live like a hermit before you reach full retirement age, cutting back on extraneous spending and being intentional with splurges is a good idea — and key to beefing up your savings.
“Regularly eating at restaurants and ordering takeout had an impact on my retirement savings,” Bouillon said. “Although it was fun at the time, these costs accumulated rapidly, often exceeding the expenses of meals. If I had dined out less, I could have put hundreds or even thousands of dollars each year into my retirement account. On average, American families spend $3,459 annually on dining out, which could add up to an amount over years if invested for retirement purposes.”
Cut out the midnight DoorDash orders and save the splurges for birthday dinners and special occasions with family and friends. That way, you can prioritize spending on events that create long-lasting memories instead of feeding short-term spending habits.
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Excessive Shopping
The dopamine hit from impulse spending is real, and saying no to great deals, small purchases and instant gratification isn’t easy. However, these little splurges can seriously derail your retirement plans. You don’t want to get to 65 and realize you could have been a lot more comfortable if you had tweaked a few things in your forties.
“Impulse buys and unnecessary shopping sprees really took a toll on my finances,” Bouillon said. “The fleeting joy of acquiring things usually ended up causing lasting challenges. Considering that 68% of Americans confess to impulse buying, it’s evident that this is a problem.”
If excessive shopping is your crutch, utilizing a budgeting app can also help you track where your money is going and set limits on impulse shopping. This way, you can cut back on excessive buys without depriving yourself of fun purchases completely.
High-Interest Debt
Perhaps the most significant obstacle that could crush your retirement dreams is debt. It’s easy to spiral out of control when you’re only paying interest and not chipping away at mounting bills. If you’re struggling with any high-interest debt, paying it off as soon as possible will have your retirement and future self thanking you.
“Having debt with interest, especially on credit cards, posed a major hurdle in growing my retirement savings,” Bouillon said. “Given the interest rates of around 16% on credit cards, the burden of this debt escalates rapidly, making it tough to set aside money for retirement.”
Unused Subscriptions
It’s not easy to cut the cord on your favorite subscription or streaming services. From Netflix, Hulu, Max and Amazon Prime to your local gym membership, staying on top of which subscriptions you’re actually using is crucial for your financial well-being. Most of these are on autopay so it can be easy to forget.
“I was quite taken aback when I realized the number of subscriptions I was paying for but never using,” Bouillon said. “These little monthly fees seemed insignificant at first. They accumulated over time, slowly eating into my savings. The statistic that 20% of Americans have subscriptions they don’t use yet still pay for highlights how common this problem is. If I had regularly checked my subscriptions and promptly canceled any services I wasn’t using, I could have saved money for planning my retirement.”
Unnecessary Car Expenses
The phrase “Keeping up with the Joneses” has never been more accurate when it comes to staying on top of vehicle trends or luxury car purchases. While the initial cost of a car is already astronomical, not being financially savvy with all the other car maintenance fees or loan repayment nuances can seriously impact your retirement plans.
“Expenses related to owning a car, such as upgrades, costly maintenance and expensive insurance fees presented an opportunity for me to save,” Bouillon said.
Maddie Duley contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: 5 Expenses I Wish I Had Cut Sooner While Retirement Planning
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