Four ways you can cut spending in retirement — with little sacrifice
Looking for ways to control, perhaps slash, your spending in retirement without sacrificing your quality of life? Spending does generally decline in retirement. The real challenge for many retirees is how to cut spending in retirement — perhaps lots of spending — without resorting to radical, depressing solutions like eating bologna sandwiches five days a week.
Here are tips for saving money, often big bucks, in four key areas of retirement spending from experts:
Health care. This is the big kahuna of retirement expenses. Health care will cost a 65-year-old couple retiring this year a whopping $280,000 throughout retirement, according to Fidelity Investments.
How can you put a dent into such a staggering demand on your retirement finances? Exercise and education can make a big difference.
Corporate wellness programs are proliferating. Companies offer workers more and more incentives to exercise and change habits having to do with eating, sleeping, smoking and so on. Corporations are not pushing their wellness programs out of altruism. They see financial paybacks in the programs. It stands to reason that you can reap similar dividends by participating in what is in effect your own personal wellness program.
Here are the numbers: 57% of workers who were at high risk of cardiac problems because they had such red flags as too much body fat and high blood pressure had switched to low-risk status after six months in a wellness program, according to a 2010 Harvard Business Review study.
Those workers' medical claim costs fell by $1,421 on average compared to the previous year. For every $1 their employer had invested in the wellness program, it yielded $6 in health care savings.
In a separate, more recent study reported by the Society for Human Resource Management, an employer got a return on investment of $3.80 for the disease management part of its wellness program and an ROI of 50 cents for the long-term lifestyle improvement part.
The lesson: at the very least, exercise. If you can, join a wellness program that includes exercise at some place like a local health club or your condo's activities center. The participation cost is likely to more than pay for itself in lower medical costs. "Retire as healthy as you can," said Rich Ramassini, a senior vice president for strategy and sales performance at PNC Investments. "Then take steps to stay healthy and active. It pays off."