23 Ways to Cut Costs for Retirement

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Editor’s Note: This story originally appeared on NewRetirement.

Most of us could benefit from reducing our expenses. And, it is especially important now with inflation eating away at buying power. Whether you are focused on saving for retirement or are currently already living on a fixed retirement income, you may find that you need to cut costs for retirement goals.

Living more frugally can be done no matter your income bracket. And while the idea of a more modest lifestyle may not appeal to you, it may be necessary — and not as bad as you expect.

And, a recent survey on NewRetirement found that 48% of NewRetirement Planner users are cutting costs.

Here are 23 ways for managing your budget for a secure retirement:

1. Know Your Purpose and Have a Plan for How You Want to Spend Time

Office worker
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It’s easy to fritter away both time and money. You can save more of both by knowing:

  • What is important to you
  • How you want to be spending your time

2. Prioritize

Happy confident senior woman
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It seems like everyone is looking to cut costs as inflation takes hold. However, we probably aren’t all cutting the same things, and that is great.

Spending is a way of expressing what is important to you, and you get to decide what that is. If you want (and can afford) an $8 coffee, don’t let anyone make you feel bad about it. Just be sure that you are cutting things that are less critical to your own well-being.

You might not want to cut everything on this list, and you shouldn’t. Just cut what you personally can do without.

3. Know What You Spend Your Money on Now

Couple sitting down to budget
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It is a lot easier to spend less when you know how much you are spending on what.

In order to reduce expenses, it is best to get a very clear understanding of exactly how you are spending your money. Try keeping a record — in a notebook, a spreadsheet, a software program or on your phone — of EVERY dollar you spend.

Many people are actually really surprised to learn how much little things add up over the course of a month.

And, if that is surprising to you, go ahead and calculate what that monthly amount means over an entire year! For example: if you are spending $100 a week on a service, that’s $400 a month — which is a lot. But if you think about that over an entire year, it becomes a more significant sum — $4,800.

4. Create Long-Term Budget Projections and Identify Opportunities

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Projecting your retirement spending is a good way to determine how much savings you really need to fund your retirement.

While accurately estimating your expenses for the rest of your life is a daunting prospect, the right tools and advice can make it easy. And, you’ll likely find huge opportunities for cutting costs.

5. Stay Healthy and Have the Right Medical Coverage

Happy senior couple putting on rollerblades to exercise
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Some retirees spend more in their lifetime on out-of-pocket health care costs than they earn in lifetime Social Security payments.

You can do a lot to cut medical costs by staying healthy and choosing your Medicare coverage carefully. There are many choices, and the timing of those choices can be very important. If you have questions about Medicare coverage, consider talking with an unbiased expert who can explain your options.

Here are some tricks for reducing retirement health care costs.

6. Lower Insurance Costs by Paying a Higher Insurance Deductible

A senior couple shops for health insurance online
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A low deductible may sound appealing when you think about a costly claim down the line, but you’ll pay much more in higher premiums.

Car insurance

For car insurance, according to the Insurance Information Institute, raising your deductible from $200 to $500 can reduce the cost of your comprehensive and collision coverage by 15% to 30%. Worried you won’t be able to come up with the higher deductible in the event of an accident? Put the amount you’re saving in premiums every month into an interest-bearing account and save it for a rainy day. Chances are, the balance in the account will be greater than your deductible long before you’re in an accident.

Health insurance

The same principle holds true for health insurance. A plan with a high deductible will cost you less on a monthly basis. And, it can make you eligible to save money to cover health expenditures in a Health Savings Account which is one of the most tax-efficient ways to save money.

7. Shop Around to Reduce Insurance Costs

A young woman at her desktop computer searching for the best insurance companies for her car
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Auto insurance and homeowners insurance are highly competitive industries. As such you may be able to shop around and find a less expensive option than your current provider.

Some services may be able to help you find a less expensive option. Compare Auto Insurance and Homeowners Insurance rates.

8. Eliminate Smoking (or Overpriced Coffee and Bottled Water)

smokers outside
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You might not think of these consumables as scams — but they can be dumb ways to spend money.

Sodas, lunch out, lottery tickets, daily paper, and other low-cost items are everyday expenses for millions of retirees. However, these items are not necessary. And even though the daily costs are small, the total expense over a year could represent a significant savings.

Smoking especially. And, smoking costs a lot more than the price of a pack of cigarettes. The average cost of a pack of cigarettes in the U.S. is $8, but the health-related costs per pack are about $35, according to the American Cancer Society. Over the course of a year, that adds up to over $15,000 for a pack-a-day habit.

Think you’re in the clear if you smoke electronic cigarettes? Think again. Although the average cost of e-cigs is less than a pack of cigarettes, the aerosols these products produce contain a variety of chemicals, some known to be toxic or cause cancer. Now that the FDA is going to start regulating e-cigarettes, we can expect more research on their long-term health effects.

A bottle of water might cost you $1 or $2 a day for something that is essentially free, and fancy coffee could be $8 or more for each cup. If you have any of these vices, cut them out and save more for retirement.

9. Do It Yourself

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When you are retired, you are usually rich in time — which could mean that you can now tackle household maintenance items that you used to hire someone to do.

BONUS: In addition to cost savings, research indicates that people who keep busy doing physical tasks live longer and healthier lives.

10. Travel in the Off-Season

Happy senior couple at a beach
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So many people have travel as a primary goal for what they want to do in retirement. Traveling in the off-season and grouping multiple small trips into one bigger trip is possible when you are setting your own schedule. These tactics can mean big savings. Here are:

11. Reduce Debt

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When living in retirement on a fixed-income, you will not have more money tomorrow to pay off the debt than you do today. It is usually best to eliminate any debt as fast as possible to save money.

For example:

  • The average person retiring today carries over $6,000 in high-interest credit card debt into retirement. Paying just the minimum payment will consume a total of over $22,000 over a period of 20 years.
  • By comparison, a person taking advantage of debt consolidation could pay off the same debt, with the same monthly payments in just six years and with a total of only $6,760.

Reducing your debt represents a huge opportunity to reduce your expenses in the long run. If you have savings, you might consider using those assets to pay off your debt. Refinancing your mortgage is another way to access cash – as well as potentially reduce monthly payments.

Here is information on the averages for retirement debt and 13 ways to manage the debt for retirement.

12. Figure Out What You Are Paying in Banking and Investment Fees

Shocked woman after looking at fees
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These fees can really add up. The first step for reducing banking and investment fees is to figure out exactly what you are paying — it is rarely obvious.

You might start by looking at your statements and calling each company. Ask them to explain to you how much you are paying to maintain each account.

13. Can You Eliminate or Reduce Your Mortgage Payment?

Senior couple signing mortgage paperwork
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Housing costs are usually by far the single biggest expenditure for any household. As such, your mortgage or rent represents a significant opportunity to reduce your retirement costs.

How? Consider these opportunities:

Use Savings or Other Assets to Pay Off Your Mortgage:

A study by the Center for Retirement Research at Boston College found that it is unlikely that many retired households will be able to earn a return on risk-free investments such as bank certificates of deposit, Treasury bills, and Treasury bonds that will exceed the cost of their mortgage.

Liquidity considerations aside, households holding such assets will generally be better off using them to pay down their mortgage. If your money is in stocks and earning a higher return than your mortgage interest rate then you need to weigh the risks inherent in stocks and the sure thing of being mortgage-free.


Finding a lower-cost home or a lower-cost community in the United States or abroad can pretty dramatically improve your monthly retirement budget. Depending on your interests and goals for retirement, downsizing can also represent a significant opportunity to improve your lifestyle.

Reverse Your Mortgage:

Another option if you want to stay in your existing home is to get a reverse mortgage. A reverse mortgage gives you access to home equity to spend in any way you please while also enabling you to eliminate your monthly mortgage payment.

14. Be Mindful

Woman shopping for pillows at a store
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Some of us spend money without thinking. My problem? I often plop fresh raspberries into my shopping basket. And, I have done it so many times, it is almost a habit. I am a sucker for those clamshell packages with pink juicy (expensive) treats. What makes the splurge really bad? They go moldy more often than not.

It is awfully easy to buy extra things that you don’t really need or even want — raspberries, a glass (or bottle) of wine at dinner, an extra round of golf, or new work gloves when you are at the nursery or home improvement emporium. And, there is nothing wrong with any of those things. However, it is a good idea to take a moment to think about the money you are spending.

Be mindful whenever you are in a situation where you could spend money. And, ask yourself if you really need and want each item or experience.

15. Gas and Electric Savings

Woman adjusts thermostat
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You might start by benchmarking your gas and electric expenditures. Call your service provider and ask them to compare your spending to other households in your area. Your service provider can also probably provide ideas for how you could reduce your usage.

Raising your thermostat in summer and lowering it in the winter, turning off lights, using energy-efficient light bulbs, and unplugging devices when not in use are easy ways to reduce your bill.

Or, if you are thinking about relocating for retirement, maybe you should consider a more temperate climate. And, have you considered alternative energies? The cost of solar power is getting lower and lower.

16. Don’t Go With the Flow: Cut Water Usage

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Again, benchmark your household against others in your area by consulting your water provider. And ask the utility for cost-cutting tips.

Low flow toilets, fixing leaks, reducing the need to water plants with efficient landscaping are a few considerations.

17. Rethink Phone Costs and How You Consume Media

Young woman watching streaming TV
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How we use phones and how we consume media at home is dramatically changing and you may find some opportunities for reducing these expenses.

  • If you still have a traditional phone line at your home, you can explore eliminating it and just relying on your cellphone.
  • Have you shopped around for a better cellphone rate lately?
  • Do you have cable? Would you be better off watching shows via services like Netflix, Amazon Prime, and Hulu?
  • Are you getting the newspaper delivered? Magazines? Could reading these subscriptions online reduce your monthly spending?

18. Can You Eliminate Your Car?

Young woman riding bike in the city
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Transportation expenses are actually the second biggest spending category for most retirees (after housing). According to data from the Bureau of Labor Statistics, for adults age 65 and older, transportation costs represent 16% of retirement costs — even more than health care, which represents 13.4% of average retirement expenditures.

If you want to get rid of your car, look at the walkability of your neighborhood, public transportation options, and the availability of taxis, ride- and car-sharing services (zipcar, getaround and Hertz on demand) in your community.

However, if you must drive, hopefully you don’t need to replace your car right now. If you do, consider this:

  • Traditionally, a new car loses 8%-11% of its value the second you drive it off the lot and perhaps another 10% every year for the first five years.
  • What’s worse, with the new wheels comes new expense. A newer car will likely mean higher insurance premiums and higher registration fees.
  • Buying used has always been the fiscally smart decision. However, used cars are one of the categories most impacted by inflation and are incredibly expensive.
  • Fortune Magazine estimates that the price of used cars is up 40% in the last year while new cars are going for over sticker price and are up about 15%.

19. Use Coupons: Quickly Search the Web for Discounts

Hands holding a cellphone with a digital coupon showing.
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In addition to traditional coupons found in newspapers, flyers, and magazines, there are myriad of websites that enable you to find the latest coupons for all kinds of stores.

Most of these sites are searchable and are well worth a visit before you make any kind of purchase. Just try doing a google search for “coupon” and the store where you would like to shop or the product you would like to buy. You are almost guaranteed to find some kind of savings.

Or, try going directly to some of these sites:

Coupon Cabin

20. Use the Library

College student at library
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Your local library can be a tremendous source of free entertainment. Books, as well as movies, can be borrowed without any cost at all.

21. Take a Look at What Happens to Your Lifelong Finances if You Cut Costs

Couple budgeting
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Perhaps the best way to get inspired to spend a little less each month is to look at what a more frugal budget will mean to your lifelong retirement finances. The Retirement Planner makes it easy to do this analysis.

Start by entering some basic information and get some initial feedback on where you stand. Then you can add a lot more detail and try an infinite number of scenarios. See how much longer your retirement savings last if you cut retirement costs — spend 2% or 30% less.

22. Ask for Discounts

negotiating price
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In some countries, haggling is considered an art form and expected as a part of any transaction. Not so much in the U.S. where the idea of negotiation intimidates most people. We’ve been trained to pay the sticker price without question.

Chances are, you could be paying less for almost any product or service. All you have to do is ask. A polite and easy way to ask is, “Is this the best price you can offer me?” You may also be able to get a discount for paying with cash since typical merchant companies charge up to 5% of everything the retailer earns through credit card transactions.

You may not always succeed at getting a lower price, but even saving 5% or 10% here and there can really add up to big savings over time. The worse thing that can happen? They say no.

23. ‘Luxury’ Goods and Services

Luxury watch
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You are entitled to spend your money however you like. If you want the Maserati, go for it. If you have wanted the Birkin Bag since you were in your twenties and still want it now, okay. Dinner out? Why not.

Just remember that luxuries may not be the wisest way to spend your money. But, we all do it to some extent. Research from Deutsche Bank found that spending on luxury goods is done by the richest as well as the poorest:

  • The wealthiest (top fifth of earners) spends around 65% of expenditures on luxury goods.
  • Middle-income earners spend 50% on luxuries.
  • And, the lowest-income families spend 40%.

Now, it is important to point out that what is considered a luxury by the wealthy may be vastly different than what is considered a luxury by someone with fewer resources. It is important to note that the researchers counted dinner at McDonald’s as a luxury in some cases.

The author of the study clarified that they defined luxuries as “goods or services consumed in greater proportions as a person’s income increases.”

So, of course, you are going to spend more if your income increases. And, if you were to just stick to the bare necessities, life would be pretty dismal.

But, consider splurges carefully (And, maybe focus your spending on what will really make you happy).

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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