If you're someone who's kicked off retirement with a large amount of savings, then you may have plenty of options for your senior years. Those could include traveling, living in a larger home, and being able to cover all of the expenses you paid for while you were still working full-time.
But if you're a retiree without a very large 401(k) or IRA balance, then you may need to be prepared to make some hard choices in the context of cutting expenses. Motley Fool research finds that as of 2022, the median retirement savings among seniors aged 64 to 74 was just $200,000. Among those 55 to 64 (a range that can also include retirees), it was $185,000. So if you're a retiree with similar cash reserves, slashing your costs may be necessary.
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The good news is that there's one bill you may be able to cut that could free up a world of money in retirement. But the question is whether it'll work for your lifestyle.
Giving up a car could save you thousands
As a retiree, your car is something you may not need every day. If you're no longer commuting and you live in a walkable area, then you may find that you don't have to bear the expense of owning a car. And the savings there could be huge.
AAA reports that as of 2023, the average annual cost to own a new car was $12,182. On a monthly basis, that's $1,015.
Even if you don't own a new car, owning any vehicle is going to come with expenses that include auto insurance, maintenance, fuel, and in some cases, parking. So if you don't need a car on a daily basis anymore, then it definitely pays to see if you can get by using a combination of public transportation, rideshares, and your feet.
In fact, let's say you own your car and don't have a loan payment to make on it, but it still costs you $300 a month between maintenance and insurance (keeping in mind that rates can rise for older drivers). It may be that you can access a lot of the places you need to go by bus or foot during the month. Even if you spring for a rideshare once a week (say, for a larger supermarket haul), you might still only end up spending $150 a month. So that's $150 in savings.
See if you can live vehicle-free
If you live in a very rural area, then giving up a car completely in retirement may not be feasible. But it does pay to consider that option if your home is centrally located enough that you can get places using public transportation or via a good old-fashioned walk.
In fact, you may find that being vehicle-free inspires you to walk more frequently, which could be a good thing for your health. So it's a move to consider regardless of the potential savings. But if you're worried that money might get tight in retirement, then it pays to see what dumping your car could do for you.
