Downsizing your way to retirement
Moving to a retirement community can also be a cost-saving option and at the same time offer the retiree more social interaction and services. Stone says one of her clients recently moved into an apartment at a retirement community because she felt lonely and didn't want the upkeep associated with a larger condominium.
"She absolutely loves it because now she has a smaller home and she has fixed costs for her meals," she says. "Her grocery bill has been cut by two-thirds because she only has to make breakfast and lunch."
Donate and deduct
If having a garage sale is not your style, donating to charity can be an excellent way to get rid of things that take up space, help others in need and get a tax write-off. But make sure you get an itemized receipt. Such documentation can be important if the IRS questions you at a later date. IRS rules for donations have become stricter in recent years and limit you to a deduction of between 30 percent and 50 percent of your adjusted gross income, depending on the type of property donated. The receiving organization must also be a charity under code section 501(c)(3) for your donations to qualify as a tax deduction.
Communications is an area where seniors can really cut back, without largely impacting their lives. "I think the first thing most people should look at nowadays is how much they're spending on things like cell phones, land lines, cable TV and Internet," says Henry "Bud" Hebeler, author of "Getting Started in a Financially Secure Retirement."
Hebeler says eliminating land lines and premium cable channels can save you a bundle over the course of a year. Many retirees have cell phone plans with more minutes than they actually need, says Certified Financial Planner Kevin Reardon of Brookfield, Wis.-based Shakespeare Wealth Management. Re-evaluate how you're using your phone to determine if you can change your plan to a less costly one that would suit your needs.
Voice over Internet Protocol, or VoIP, may be a viable alternative to your land line, Reardon adds. "You can get it through cable or a Vonage-type provider, and it's usually a lot cheaper.”
Ditch the extra car
Selling that extra vehicle wrapped in the car cover seems like an obvious way to save some money. But parting with old Betsy can be painful for some. "There is some ego involved in this," says CFP Stone. Are you merely holding onto your extra car for sentimental reasons?
Remember, by selling the extra car, you'll also save on insurance, registration and gasoline.
If you are in the market for a new car, evaluate your driving needs to determine whether a less expensive car would suffice. "Instead of spending $35,000, you can spend $15,000 on a decent car that will get you from point A to point B," says Reardon. It's an issue of budget and willingness to downsize.