How to spend less when you retire

What expenses can you ditch in retirement to save a little cash? identifies this list of six items:
  • Disability and life insurance -- if you have no one depending on you for support, then you don't need life insurance. And if you aren't working, disability won't pay, even if you need it.
  • High investment fees -- If you're putting your money in safe CDs -- the choice of many retirees -- don't pay investment fees at all. Just march yourself to the bank and buy them. No expertise needed.
  • Your house. Getting rid of a property that comes with high utility and maintenance costs as well as a big tax bill can result in significant savings.
  • Landlines. Not many people these days need both a landline and a cell phone.
  • Interest payments. People living on tight budgets can't afford debt.
  • Inefficient appliances. Spend money to save money by getting rid of expensive-to-operate refrigerators, dryers, air conditioners, heaters and replacing them with new, energy efficient models.

All of these are good ideas, but another logical step is to compare the amount you spend on everything with the amount other people spend, identify where you spend more than average and figure out why.

The Bureau of Labor Statistics compiled this 2008 table of American's average expenditures.

For this 2008 survey, the BLS identified and profiled the expenditures of almost 27 million households made up of just a husband and wife. Their average age was 57.6 and their average income before taxes was $75,312 with 1.2 earners per household.

Here's how they spent the biggest chunk of their money:

Housing. Some 86% of these households own a home and 45% have a mortgage. On average, people who own their homes spend $651 per month in mortgage payments, property taxes and insurance. What that suggests is that if you're paying much of a mortgage at all, you're paying more than most people at or close to retirement. Getting rid of your mortgage will save you a bundle.

Transportation. On average, people in this category owned 2.4 vehicles and spent a total of $10,202 per year on car payments, insurance, gasoline and maintenance. If you're not driving to work every day, ask yourself, do we really need two cars?

. Electricity was the priciest item in this category at $1,464 or $122 per month. Phones were the next biggest category at $1,145 or $95 per month. Overall, people spent an average of $4,025 for gas, electricity, phones and water. Looks like getting rid of that landline is a good idea.

Entertainment. This group likes to have a good time, spending $3,621 or $302 per month, on cable TV, Internet, pets, tickets and admissions. The biggest category was cable/Internet, which came to $96 per month. After you get rid of that landline, think about ditching all but basic cable.

Healthcare. At $4,725 or $394 per month, this seemed surprisingly low, especially since people complain all the time about the cost of healthcare. This amount is not enough to cover a Medicare supplement for two people older than 65. Anyone approaching retirement had better plan to add a few bucks to this segment of the budget.

Household Furnishings and Equipment. This is another one that surprised me, The average expenditure was $2,092. I would think that by this time in life most people would have bought all the furniture they need. Must be all those people replacing their inefficient appliances.

Food. The average total spent annually on food is $6,772, with $3,913 spent eating at home and $2,859 spent dining out. After people stop working, there's a category that could be put on a diet.

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