This article takes a look at the 5 biggest expenses for retirees and how to minimize them. If you wish to check out our detailed analysis, you may go to 12 Biggest Expenses for Retirees and How to Minimize them.
5. Essential Services and Utilities
Insider Monkey Score: 15
Number five on our list of biggest expenses for retirees is essential services and utilities. It’s true that the smallest expenses can sometimes turn out to be the biggest, which is exactly the case with this expense head. Aspects like utilities, fuel, and public services eat up around $4,236 annually for seniors aged 65 and over. One major way retirees can reduce their utilities is by downsizing. Moving to a smaller home, preferably near amenities can significantly help retirees cut down on their fuel and utilities costs.
4. Transportation
Insider Monkey Score: 18
AARP says transportation is one of the most important expenses of retirement, but also the one that is least considered. As seniors age, they become more inclined to use services and public transportation to get to places. While there are yet many seniors who prefer to drive their own cars, there is always the cost of fuel and other related expenses. Either way, transportation is going to be a major expense for retirees, eating away 14% of their average annual expenditure.
3. Healthcare
Insider Monkey Score: 19
As retirees age, they will find healthcare expenditure to become more and more significant in their lives. Moreover, due to the rising costs of medical services, prescription medications, and long-term care needs, retirees often face a significant financial burden on their fixed incomes. “Health care costs tend to increase two or three times faster than the (cost of living) increases in Social Security income,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, a nonprofit advocacy group. Retirees can utilize preventive care services to maintain health, explore assistance programs, and explore supplemental insurance options. Another thing they can do is to maintain a healthy lifestyle to prevent chronic conditions and minimize healthcare costs over time.
2. Food
Insider Monkey Score: 19
Food is the second biggest expense for retirees on our list. Retirees spend an estimated average of $7,306 annually to cover food costs. To minimize this expense, retirees can employ strategies such as meal planning, buying in bulk, utilizing coupons, and opting for budget-friendly grocery stores.
1. Housing
Insider Monkey Score: 24
Everything from property taxes and home maintenance costs to mortgages eats up a significant chunk of retiree’s incomes. These home costs account for 35% of a retiree’s average annual expenditures, according to BLS figures. Strategies to reduce these expenses include downsizing to a less expensive home, relocating to an area with a lower cost of living, and reducing utility costs.
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