Retirement presents new financial challenges, especially when social security constitutes all or most of your income. To ensure good quality of life later, it is essential to reduce expenses now.
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But where is the best place to start? Accommodation. By eliminating or reducing mortgage payments and other stopping costs Retirees can finance a better lifestyle as they age.
Housing costs represent the most important expenses for retirees. They represent approximately 25% of expenses for Americans aged 65 and over. For 40% of older owners who still have a mortgage, this percentage is generally much higher, according to a report by the Joint center for Housing Studies at Harvard University.
In 2023, holders of retired mortgage claims had average monthly housing costs of almost $ 1,800 compared to owners without mortgages, who paid around $ 600, and tenants, whose average monthly housing costs are about $ 1,000. This is why it is logical for retirees and soon retired to reduce their homes, or even consider moving to less expensive regions.
By minimizing or eliminating Mortgage paymentsFixed income people can save for expenses likely to increase as they age: namely health costs. Fidelity estimates that average average annual health expenses are almost doubled by people between 55 and 75 years old and that a retirement couple over 65 will spend $ 300,000 in health care throughout retirement.
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Not only possession of a cheaper house reduces mortgage payments, but this also means spending less for maintenance. Home repairs are the most common unexpected expenses of retirees, according to the News companyAlthough this financial surprise can be reduced by having less house to maintain.
Reduction of workforce to a cheaper house Can also result in additional retirement savings. According to Vanguard searchPeople aged 60 to 69 have the greatest potential to unlock equity by relocation, which can be used to inject more money into a retirement nest egg – a useful money for those with limited income.
An intelligent relocation can also mean alleviating other important expenses that can eat social security benefits. For example, getting around somewhere with good access to public transport can eliminate the need to have a car – another major expenditure for retirees. The American Automobile Association puts the annual estimate of the possession of a car at more than $ 12,000 – a prohibitive expenditure for half of the Americans based mainly on Social Security.
