A cartoon man and woman in purple and green with hard hats on and a red wheelbarrow full of coins with a red background
Ways to downsize during retirement

2. Donate and deduct 
When having a garage sale is not in the cards, donating to charity can be an excellent way to get rid of excess things in your home, help others in need and get a tax write-off.

If you downsize into a smaller home, chances are you'll have to get rid of a lot of stuff. Donating extra tools and furniture to charity can get you a decent tax deduction, but always make sure to get an itemized receipt.

"I would get written documentation and take photographs to back up that it's in good condition," says Certified Financial Planner Connie Stone.

Such documentation can be important if the IRS has questions at a later date. IRS rules for donations have become stricter in recent years.

In addition, retirees typically don't need as much clothing as people in their working years and they tend to dress more casually.

Stone says donating suits and dresses can net "hundreds, even thousands of dollars" as a tax write-off as long as the clothes are in good condition.

The IRS limits 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.

3. Curb communications 
Communications is an area where seniors can really cut back.

"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 contracts with way too many minutes, says Certified Financial Planner Kevin Reardon of Brookfield, Wis.-based Shakespeare Wealth Management.

Re-evaluate how you're using your phone and "ask yourself if you really need 1,000 minutes per month," says Reardon. Voice over Internet protocol, or VoIP, may be a viable alternative to your land line, he adds.

"You can get it through cable or a Vonage-type provider," he says. And it's usually a lot cheaper.

4. Chuck the second 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," CFP Connie Stone says. "Some people can get past it, some people can't."

Depending on the age, model and condition of your car, you could net several thousand dollars that can go into a savings or investment account. Check Kelley Blue Book, Edmunds.com and other reliable sources to determine a good selling price.

By selling the extra car, you'd also save on insurance and gasoline.

Evaluate your driving needs and decide whether a less expensive car can accomplish the same thing as a luxury sport utility vehicle.

"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 CFA Kevin Reardon.

It's an issue of budget and willingness to downsize.

"Cars today can go 12 to15 years if cared for properly," Reardon says.

Stone says to find a reputable used car dealer if you can't afford a new car.


"As long as you're buying a quality car that's been checked out and has a warranty, that's one way of saving money," she says.

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