5 expenses that vanish during retirement

Everybody dreams of the day they can stop working for good. But worries about finances can cloud the sunniest visions of retirement. How will you cover daily expenses when you no longer can count on a regular paycheck?

Fortunately, there are a few costs that disappear once you quit the rat race. Following are five expenses that vanish during retirement.

1. Commuting costs

The daily grind can wear away at a worker's wallet. In fact, the average American worker spends $2,600 annually on commuting costs, according to 2015 survey commissioned by Citibank. And that number has been rising, with 60 percent of workers in the survey saying their costs had risen in the previous five years.

When you exit the workforce, much of the money you otherwise would have spent on getting to and from work will remain in your pocket.

2. Payroll taxes

A paycheck is a beautiful thing – but it is often less pretty than it appears on the surface. Payroll taxes siphon 6.2 percent of your salary for Social Security, and 1.45 percent more for Medicare.

If you earn big bucks, you stop paying taxes for Social Security on any amount you earn above $118,500. But there is no limit on how much of your income is subject to Medicare tax. In addition, a provision in the Affordable Care Act requires individuals who earn $200,000 or more and couples who make $250,000 or more to pay an additional 0.9 percent on amounts over those thresholds.

The situation is even more grim if you are self-employed. Instead of splitting payroll taxes with your employer — 7.65 percent paid by you, 7.65 percent paid by your company — you are on the hook for the full 15.3 percent.

Fortunately, once your job disappears, so does your obligation to fork over payroll taxes.

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3. Saving for retirement

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Millions of American workers desperately pinch pennies so they can save money for retirement, often in a tax-advantaged investment account such as a 401(k) or an IRA.

But once you stop earning income, you can start reaping the benefits of all those years of saving for "the future." Instead of contributing to your retirement accounts, you will be withdrawing from them. That means you no longer will have the "expense" of contributing up to $18,000 for a 401(k), or $5,500 for an IRA. Add those amounts don't even include catch-up contributions for those who are age 50 and older.

4. Life insurance and disability insurance

Typically, workers purchase life insurance to protect their families in the event that the worker dies and leaves loved ones without income. Similarly, disability insurance is there to replace a worker's income should he or she become ill or injured and unable to work.

But if you are retiring from work, chances are good that you plan to live off of savings, investments and Social Security. In other words, if you have enough money to retire, you probably no longer need to insure your income.

While these policies can still make sense for some retirees, others can say "so long" to these forms of insurance — and their associated costs.

5. Clothing

The average U.S. household spent $1,846 on apparel and related services in 2015. Chances are good that in many homes, a large percentage of that budget went toward work-related clothing.

When you finally retire, you can trade in those fancy suits and sheaths for T-shirts and jeans. And as your wardrobe becomes more modest, your apparel costs likely will follow suit.

What other expenses can you think of that disappear in retirement? Let us know by commenting below or on our Facebook page.

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