Retirement is expensive — no matter if you’re a freelancer, business owner, or employee! Or so you’ve been conditioned to think. After doing a simple Google search about retirement costs, you will come across some pretty outlandish articles. The amount of money needed for retirement seems astronomical! Articles like these appear left and right: You Probably Don’t Have Enough Money to Retire, You Need $2.5 Million to Retire, A 20-Year-Old Could Need to Save $7 Million for Retirement. No wonder few people save diligently for retirement. The task seems insurmountable! Why even begin?
But there’s good news! The article you’re reading is not about doom and gloom. This article looks at your actual costs during retirement. You will likely realize your costs at retirement are not as astronomical as you may have been conditioned to believe.
Think of retirement as the time when your living expenses either go on sale or are eliminated. For instance, have you considered selling your large single-family home? You could then buy a smaller home which better fits your current lifestyle. The final step is to pocket the difference! That could be a savings of hundreds of thousands of dollars. That’s just one of the ten ways discussed in this article for a person can save big money in retirement.
1. No More Commuting to Work
In retirement, commuting to work will become a distant memory. Depending on the length of your former commute, you may save huge amounts of money each year in retirement. According to AAA, it costs 60.8 cents per mile on average to operate a vehicle. This results in about $9,000 in motoring expenses over the course of a year.
In order to get your actual numbers, consider how many miles you drove each year in your working life. If you’re unsure, look at the title for your car. How many miles were on the car on the date of purchase? The title will say. How many years have you owned the car? Calculate the average miles per year.
Now, take the average miles driven each year and subtract the number of commuting miles. Most people work 50 weeks per year. Daily miles really tend to add up. According to the Department of Transportation’s 2009 National Household Travel Survey, the average commuter in the US drives 13.6 miles to work. Let’s assume 260 works days per year. This means you probably drive about 7,000 miles each year just commuting. Using the aforementioned cost-per-mile numbers mentioned by AAA, you have likely spent $4,256 just going to work and back each year.
The calculation isn’t over. Finally, add the extra miles you will be driving during retirement. How often do you plan on going to the golf course, visiting the grandkids, or taking a car trip? You will be happy to know your cost-per-mile to drive will be lower upon retiring. You will be driving in congested rush hour traffic far less often. Traffic jams and road rage will likely be witnessed at a minimum upon retirement. This means better fuel economy and less wear and tear on your car.
It becomes obvious you will be doing less driving (and for less money) during your retirement years. Also, you will likely save thousands of dollars just by not commuting to work. Retirement is looking for appealing already.
Come back to Due.com for part two…