I recently received an email from a reader who retired last year. He is enjoying life as a new retiree and since he isn’t working full time as an HR Consultant, he has been able to focus more of his time on his interests and hobbies.
We chatted about a decrease in expenses when someone retires and I was surprised to learn where some of his savings were coming from. Most of them are fairly obvious but significant, and many people don’t realize the costs associated with working full time (that are no longer present in retirement).
Since the new retiree and his wife are no longer working (his wife still works part time as a receptionist) they no longer have to hire others to do some of the household work they weren’t able to do when working full time.
When working full time they found they weren’t able to keep their house clean enough for their liking so they relied on a housekeeper. The house was cleaned monthly and prior to retirement it cost them $175 per month. Since they have more time on their hands they can now do some of the cleaning themselves and their cleaning costs have been decreased to $60 per month.
Landscapers were also used to maintain their large backyard during the summer months. Since their grandchildren visit often it is important for them to have a kid-friendly backyard with grass and a play area for the kids. The landscapers used to receive $150 per month during the summer months but this has been cut entirely – for a savings of over $600 per year.
Another side benefit they have realized is lower auto insurance costs.
While they were working full time they used two vehicles and had full insurance coverage.
Since retiring they have sold off their second vehicle as they now have no use for it and have realized lower insurance costs on their remaining vehicle (a 2005 Ford SUV).
The insurance company explained that they are now driving less, driving for pleasure (rather than commuting for work) and no longer require a $500 deductible.
All of these factors have resulted in their insurance costs going down by about 20% – a huge savings that they didn’t even realize would happen upon retirement.
Upon retiring some people expect their food costs to go up – they have more time to eat healthy foods and have friends/family over for dinners, lunches etc.
For this new retiree, his food costs have actually decreased by about 15%.
He no longer has to buy expensive takeout after long days at work and can spend time making more meals from home.
He mentioned that he spends significantly more time cooking and prepping meals but claims that the time is well worth it because it allows for each meal to be customized to their liking.
In reality, his food costs have likely shifted (and possibly gone down as a result) –pre-packaged foods and takeout have been replaced by raw ingredients to make meals from scratch.
Conclusion: food costs, auto insurance and labor costs have all (surprisingly) gone down for this new retiree and he couldn’t be happier. The savings allow for more money to be spent on hobbies and interests like wine, travel and artwork.
Do you have any expenses you would expect to go down when you retire?