10 Bills That Drain Your Retirement Savings — and How To Cancel Them
Written by
Tiffany Lew
Edited by
Amen Oyiboke
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Retirement savings aren’t foolproof. A withdrawal here and there, while easy enough to overlook, can have a rippling financial impact.
Here are ten sneaky bills that can drain your retirement savings, and what you can do about them.
Healthcare
Whether it’s premiums, deductibles, or co-pays, retirees can face significant out-of-pocket costs — even with Medicare. The average out-of-pocket healthcare costs in the U.S. are about $1,425 per person per year, according to Barnes Welsh & Perry. Consider using accounts like a health savings account (HSA) or a flexible spending account (FSA) in your retirement years to cover some health-related costs, or combining Medicare with a supplemental policy.
Housing
Some retirees may still be paying mortgages, and even if your mortgage is paid off, your house will face ongoing expenses like property taxes and insurance. So consider the value of your house and try to plan ahead, setting aside funds for these steady, expected payments.
High-Fee Credit Cards
The appeal of a strong credit card often also comes with high annual fees reaching several hundred dollars. Premium credit card fees are rising, but are they worth it for your retirement lifestyle? Consider downgrading to a little to no-fee credit card or switching to a card with benefits that make more sense for your current spending habits.
Emergencies
Family and pet crises, and unforeseen home and car repairs, can too easily derail a budget or empty out savings. Emergencies happen, so try to plan for them accordingly with an emergency fund, even in your retirement years, and focus on finding ways to replenish it when necessary. Some financial advisors recommend retirees aim for 12 to 24 months for an emergency fund, and not necessarily more, according to AARP.
Debt
Debt, such as credit card balances, student loans, and car loans, follows you into retirement. The Fed’s most recent Survey of Consumer Finances (SCF) found that debt more than quadrupled in households headed by people aged 65 to 74 in the period between 1992 to 2022, and it has increased sevenfold for those 75 and up, from just under $5,000 to $36,000. So be sure to evaluate your financial health, even in retirement, and know your debt-to-income ratio.
Unused Subscriptions
Unused subscriptions are easy to forget for people of all ages and situations. These monthly or annual fees quickly add up — whether or not you’re using your subscription. So, whether it’s a streamer or a newspaper, consider what you actually want to keep and cancel or turn off auto-renewal for the rest.
Extended Warranties
Extended warranties play on anxiety, often costing more than a repair or replacement would. Consider the actual likelihood of needing a warranty and the cost for one. Whether it’s for a car or a smaller purchase, you’re often saving when declining.
Unused Gym Memberships
Ask yourself how often you use your gym membership. Studios that offer pay-per-class options or bundles are enticing for some. While others enjoy an at-home gym setup to work out in the comforts of their own space. Canceling a gym membership can be notoriously difficult, especially if you’re under a contract, so make sure you understand it. The FCC, however, recently unveiled a new rule that requires easy subscription cancellations.
Overpriced Cable and Internet Bundles
Similar to gym memberships, ask yourself if you’re using or needing the channels or speeds you’re paying for. For instance, typically, people need high-speed internet for online gaming sessions, streaming, or remote work. Consider your current needs and call your provider to request a downgrade.
Outdated Insurance
Do you have any adjustments you can make if you’re not, say, driving as much since you no longer commute to work? Or have you recently moved to a safer neighborhood? These factors can easily drop your insurance premiums. Review your coverage annually at least and adjust for your current needs.
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