If you , one of the most important things you must do is ensure your finances are in order. Retirement is going to be a big change. You’ll no longer have a regular income from your job and will instead be relying on your retirement savings.
This can be a tough adjustment for some people. To prepare, now is the time to start planning your retirement budget. Understanding what expenses you need to keep and what might not make sense anymore can help make your finances in retirement a little more comfortable.
As you’re making your budget, consider these seven things you should probably stop wasting your money on. “Retirement isn’t a financial free-for-all. It’s about smart spending, careful planning and making your money last,” said Stoy Hall, CFP®, founder and CEO of .
“So unless you’ve got a crystal ball or a money tree in your backyard, .” Earning passive income doesn't need to be difficult. A year before you retire is probably not the best time to buy a new car.
Unless yours suddenly breaks down and you need something to commute to work, it’s best to wait for a purchase like this. While you might be driving a lot now, things might change after retirement. If you’re only driving when you run errands, you might find that the car you have is sufficient.
“When you’re about to retire, the last thing you need is a shiny new debt hanging over your head,” said Hall. “Getting a brand-new loan starts your clock all over again. You’re about to leave your steady paycheck behind, so why would you want to start a five-year car loan now?” Once you retire you’re going to have a little extra time on your hands to watch your favorite shows and cook meals, but do your best to avoid signing up for too many subscription services.
These can quickly eat away at your monthly budget. “Don’t spend extra on your variable bills like subscriptions or all of that,” Hall added. “Netflix, Hulu, Disney+, Spotify, meal kits – they add up fast.
Don’t go subscription crazy.” It can be tempting to upgrade your cellphone whenever something new comes out. It might have some new features you think you can’t live without.
However, when you upgrade, you will end up with a new monthly payment, which can get expensive depending on the phone you purchase. Instead, keeping your current phone as long as possible can save you a lot of money. New clothes are another expense that you should stop wasting money on if you plan to retire next year.
Fast fashion makes buying too many clothes too easy. Before you buy a new piece of clothing, ask yourself if you really need it, will wear it frequently and have the room for it. Your clothing needs may change next year when you retire, so try not to buy too many new things before then.
The same thing goes for shoes and accessories. If you are nearing retirement, you may still live in the same large house you have lived in for years. You probably raised your kids in this house and commuted to work from it.
Now that you are nearing retirement, having such a large house might not make sense anymore. If you’re still paying for a mortgage, there’s a good chance you’re paying for more house than you need. Even if you’ve paid off the mortgage, you need to consider other costs like insurance, repairs and maintenance.
As you get older, you may be unable to do everything around the house like you used to. That means you’ll need to hire someone for the work, which is another expense to budget for. Instead, it might make sense to consider downgrading to a small, less expensive and more manageable home.
The cost of eating out and ordering takeout can quickly add up. As you get closer to retirement, look at how much you’re spending each month at restaurants and think about whether it makes sense to cut back. If you’re eating out multiple times per week, you could likely save hundreds of dollars each month by simply cutting that back to once a week.
“Your taste buds don’t need a luxury upgrade,” said Hall. “Stick to your usual grocery budget and avoid eating out at restaurants as much as possible.” The odds of winning the lottery are roughly one in 300 million.
Given those low odds, it’s almost likely you’re throwing away money each month if you’re buying those weekly Powerball or Mega Millions tickets. When it comes to the casino, the odds don’t get much better. Instead of playing the lottery, you can contribute that money toward your retirement or into a taxable investment account.
If you’re planning to retire in 2025, you might have already started preparing your budget and know how much you’ll be able to spend each month. However, if you’re still hoping to beef up your retirement fund, now is the perfect time to start eliminating spending that could cost you in the long term. These items are a great place to start.
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