Financial experts throw around a bunch of guesstimates about how much you’ll need to save for retirement, but one thing is certain: The more you can keep costs down once you stop working full time, the better off you’ll be.
Here are five retirement expenses that financial advisers and professors say you might want to drop:
1. Your second car or luxury car Do you and your spouse really need one or two fancy autos once you retire? After all, luxury car payments can easily run $500 a month, which amounts to $12,000 or more over a two-year period.
If you’re nearing retirement, there’s a decent chance you own at least one pricey car. TrueCar.com, an auto-selling site, found that boomers account for 56 percent of Mercedes-Benz buyers, for example, and 55 percent of Jaguar and Porsche owners.
Javid Jaraiedi, founder of the Jaraiedi Financial Group in Lawrenceville, N.J., says you might want to replace a deluxe model with a more modest auto. “Maybe you have one nice car to drive to parties and things like that and one less expensive car to take grocery shopping and on errands,” Jaraiedi says.
How to Drop the Expense
One option is to sell your second car and replace it with a used auto. (Edmunds.com has useful advice on how to get the best price.)
Not only will your car payments drop, you may save hundreds of dollars a year on insurance because you might not need comprehensive coverage on a used car, Jaraiedi says. Comprehensive coverage reimburses you for incidents other than collisions, like damages if your auto is stolen. You may also want to drop collision coverage for an older car with little value.
Alternatively, you could try ditching the second car altogether, especially if you and your spouse expect to do most things together in retirement.
If you’re a little nervous about managing with one vehicle, consider joining a car-sharing service, says Lynn Ballou, the managing principal of Ballou Plum Wealth Advisors in Lafayette, Calif.
Zipcar, for instance, lets you rent its vehicles for between one hour and four days; its rates depend on where you live.
Hertz offers a similar hourly car-rental service, called Hertz on Demand 24/7, in about a dozen major U.S. cities.
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