That means that you will probably be spending more when you stop working than you anticipated.
As MarketWatch reports, the biggest flow of funds outwards goes to housing. The average monthly nut is $1,322. Even if you have already paid off your mortgage, there are property taxes, which keep going up. There are also repairs, utilities and insurance.
If you did what some personal finance experts advise and sold the family home, when you went to rent you probably encountered Landlord Nation.
What's posted on the internet is usually a teaser rate. Go in and talk with the complex's leasing agent. There could be add-ons of more than $100 a month. For example, a 600-unit property outside Pittsburgh increased what was advertised by $125 a month for trash, snow removal, and so on. Also, factor in monthly rent for animal companions. For each, that could be as high as $40.
When renewing the lease year to year the renter has no control over how much that will be. In supposed retirees' paradise - Tucson, Arizona - a 100-unit usually jacked up the rent $50 a month annually. In addition, the record heat in Tucson mandated the air conditioner be on a lot. Even for a studio apartment that would add on another $130 monthly.
One retiree did her due diligence on affordable living and discovered that small towns in Eastern Ohio had overall less expensive rent than in the southwest.
What would be a solution is alternate housing. How about bringing back the boarding house? Many Baby Boomers remember bunking in them during college and when going for advanced degrees. Not only was living cheap. There was a built-in social network.
The other major expense for retirees is transportation, which for most still means maintaining a car. Yearly, that averages $6,814.
With gas prices surging, that could total much more. For those I coach heading into retirement and considering relocation, I recommend an area with excellent public transportation. Tucson had that going for it. Many renters didn't have cars. In an emergency they called a cab.
Some retirees who can't keep up with this level of expenses are investigating leaving the U.S. But more and more articles in the media are warning about the culture shock. In Ecuador, for example, there is a tomorrow ethos. Americans could experience that as frustrating.
What they have to do first is invest in paying for a tour to any location outside the U.S. Check out what kind of apartment in what kind of neighborhood you can rent for $200 a month.
Meanwhile, retirees can downsize monthly expenses by:
- Shopping for household items and clothes in thrift stores such as Goodwill. Usually their bargains top those at garage sales.
- Rent out rooms if they own their residence. This can be done strategically. A former lawyer leases a bedroom and garage space to a man who loves to cook. The latter prepares all the meals, in exchange for a discount on the rent.
- Barter services. We walk your children to school if you keep up our lawn.
- Before going for services, check online for coupons. Oil-change franchises usually have $5-off coupons for regular oil and more for premium.
- Take day trips versus vacations which incur lodging fees.
Also, retirees can increase their income by working part-time. The Federal Reserve Board found that one-third of those who retire return to the workforce. They can also start a small business.
Contact Jane Genova firstname.lastname@example.org.