Skip to main content
No. of Recommendations: 3
The Top 3 expenses for most people are Housing, Food, and Transportation. There's often a lot of low-hanging fruit to cut.

Cutting these expenses can add $500K to retirement savings, study finds



That's a good article.

Yes, the big three gotcha expenses are indeed housing/transportation/food. Keep housing and transportation costs low (as well as eating out costs) - chances are highly likely you'll win the game from the get go. Intercst points out some of the other low hanging fruit that might be able to be trimmed early on to boost savings and potentially grow the nest egg enough to FIRE.

Another additional link that helps you take a look at your current spending vs. others in your age category:

According to the charts provided, my wife and I are in the young baby boomers category that, according to the data presented, averages a daily spend of $178.01 per day (equals $64,973.65 annually) for that age category. That's not too far off from where we actually are (now that the nest is empty).

The spending categories within those figures do not include income taxes or savings, but do include most everyone's household expenses (needs/wants/variables) and I am assuming the housing costs also includes PITI and repair/maintenance for homeowners. At least we include that in our housing costs in our annual expenses and when breaking it down daily:

•Housing (Rent/Homeownership)
•Health Insurance
•Charitable Donations
•Vehicle Insurance
•Eating Out
•Cellphone Service

As we think about expenses we all do have or will have in retirement, breaking it down into a daily cost is one way to look at it, as well as weekly, monthly, annually - it all works. Taking a close look certainly helps one plan in terms of reaching a multiple in your risk portfolio that will cover all of the expenses whether one is factoring in no SS, pension, annuities, or other income streams - or if one is factoring all of those income streams and when they come on line at particular ages.

Obviously, in the decades leading up to retirement being able to cut expenses beyond the big three of housing/transportation/food is another ticket to being able to place more income into savings. No pets? Save a buck or two a day. Walk to work? Save on gas and parking. No cell phone? Save a few bucks a day. Don't eat out? Save nearly $8-10 a day if you average out the year. Don't drink booze? Save a buck or two or more a day. Don't donate to charity? Save $6-8 bucks a day. Live in lower cost housing? Save a nice chunk each day. And on and on.

After going through a layoff a year ago, you bet we took a close look at trimming any low hanging fruit as part of the hunker down routine to adjust to our new household income reality and fear of losing out on any OMY's of working and producing income from our combined human capital. Luckily, since our nest emptied a couple of years ago I had spent a lot of time examining our low hanging fruit expenses to start with so we could dial in the lifestyle for two in the house as opposed to four in the house. It's always been one of the maddening steps for me of planning for retirement during our 30's/40's/early 50's due to not really having an idea or being able to calculate expenses that are closer to what it will actually cost two of us compared to a full house of four of us. The layoff led to a closer examination. Things like subscription creep, cell plan, charity, annual memberships, religious tithing, etc... .

As the article that intercst linked, for those under retirement age, there is still time to boost retirement savings via cutting some of the low hanging fruit. Maybe not to the tune of boosting it an additional $500K+ that could be accomplished if one had started way earlier in their 20's/30's, but certainly for those in their 40's and 50's the article shows you can still boost your retirement nest egg by $35K - $145K for those who are age 45-64 if they simply cut their non-essential spending in half between now and then. In other words, it is never too late to teach an old dog new tricks!

Where do all of your expenses on a daily basis fit into the age categories listed here?

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.