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10 ways for retirees to cut their cost of living

(MoneyWatch) This is the second part of my discussion of tips for making delayed retirement work for you. These two posts help you make lemonade out of lemons by turning the phrase "work sucks, but I need the bucks" into a two-step strategy:

1. Don't do work that sucks
2. Need fewer bucks

One suggestion I offered in my previous post to make continued work more enjoyable was to take a career risk by striking out in a new direction. Another idea would be to reduce your responsibilities and/or your hours on the job. Both of these proposals require learning to live on a reduced income, and this post offers some ideas to help you do just that.

Reducing their living expenses is the No. 1 strategy cited by retirees in various surveys for making ends meet in retirement; most of us will need to employ this strategy even if we keep working in our retirement years. The overall goal is to buy "just enough" to meet your needs and make you happy.

The secret that will make, or break, your retirement
How much is just enough? A smart spending strategy
Delaying retirement? Just two steps to make it work

Let's look at 10 ideas that can help you reduce your living expenses during your retirement years.

Ideas #1 and #2: One big move can take care of two problems. If you're like most Americans, the top two items in your budget are housing and transportation. You might be able to really boost your budget and your life satisfaction in one big move: Downsize your house to smaller and less expensive quarters and dramatically shorten your daily drive times, perhaps by moving to a more urban environment with lots of cultural activities near by. You could also increase your use of public transportation and bicycles. See if you can get by with one car, or even -- gasp! -- no cars.

Idea #3: Get rid of unnecessary insurance. If you have no dependent children, you may be able to discontinue group term life insurance premiums, or convert whole life insurance to paid-up. Take a look at other forms of insurance with questionable values, such as insurance on cell phones and other devices. Save on premium costs for car and homeowner's insurance by increasing your deductibles, then reduce the odds of incurring a claim by being careful and vigilant with your driving habits and taking steps to protect your house.

Idea #4: Become an informed medical care consumer. With the advent of high-deductible medical insurance and soaring health care costs, medical costs will take an increasingly large share of your budget. But there's a lot you can do to reduce your costs if you need medical care. First, ask if your provider is in your insurance network, and find out the cost of office visits. If your doctor is outside your network, you're most likely paying higher fees, so it might pay to find someone who's part of the network. If a procedure is recommended, ask how much it will cost and if there are less expensive alternatives. Seek bulk purchase discounts for maintenance prescription drugs, or use mail order whenever possible. If your medical plan offers financial incentives for wellness activities, don't leave that money on the table! Hopefully you get the picture -- shop for the least expensive care that meets your needs.

Idea #5: Pare your monthly utility costs. You might be able to save $100 or more per month by making a few simple changes. Try turning down the thermostat and wearing sweaters, reducing the water heater temperature so that your shower feels just right with only hot water, and reducing the refrigerator temperature. Change your sprinkler settings to fewer and shorter watering times, and be sure to turn them off in the winter when they're not needed. Take a lesson from the younger generations, and ditch your landline phone. Take a good look at your cable TV bill -- do you really need 500 channels?

Idea #6: Buy second-hand. I've bought some really nice clothes and home goods at vintage and second-hand stores at a fraction of the cost I'd pay at regular retail stores. You can also shop for the grandkids at resale clothing stores -- the way kids grow, clothing is often almost like new. Or use my father's trick -- early during his retirement, he once found some shoes he really liked that happened to be on sale. So he bought three pairs, thinking that the shoes would last the rest of his life (they did!).

Idea #7: Use free/low-cost learning opportunities. You can dramatically reduce the amount you spend on books, magazines, and videos by borrowing them from your local library instead of buying them for yourself. Take classes from your local community college, adult education center, or senior center to stimulate your brain and meet new people. These classes are usually low cost or even free.

Idea #8: Seek out free entertainment opportunities. My wife and I just attended a series of free afternoon concerts at an internationally acclaimed concert hall by aspiring young musicians who needed the practice in front of large audiences -- they were great! You can also find free guided hikes, free summer evening concerts, free admission to museums on certain days, and free art shows, as well as gallery-hopping or strolls through major parks. Form or join a book club. And don't forget your local library, bookstore, or civic organizations -- they often sponsor distinguished speakers and other guest presenters.

Idea #9: "Eat out" without the high costs. My wife and I belong to a wine club of 12 couples who meet once per month. Each month, a different couple takes turns hosting our club members, and we "eat out" for $20 per couple; the money is used to defray the host's costs for food and wine. It's great fun and keeps us in touch with our friends.

Idea #10: Reduce your food costs. As much as possible, buy fresh produce and purchase from farmer's markets when available. Not only will your food costs be cheaper compared to buying expensive processed foods, but you'll most likely be eating healthier as well. One trick: Make your purchases near closing time at farmers markets when prices get reduced further by vendors who want to get rid of unsold produce. My wife and I shop at a local farmer's market every Sunday, and it's also a form of entertainment, as we stroll around talking with the vendors and listening to the musicians who play there. In terms of benefits, it's a three-fer: healthy, cheap food; great entertainment; and outdoor exercise.

I realize that all these ideas won't work for everybody, but hopefully some will work for you. And some might inspire your own creativity and resilience. We're all in this together, so if you have good ideas to share, please share them in the comment section.

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