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Personal Finance Advice from

These 5 Expenses Will Probably Cost You a Lot Less in Retirement

Fewer expenses could mean more money in your pocket in your golden years.

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There are a lot of scary headlines out there about how poorly prepared people are for retirement. And it's hard to deny the research: Many people simply are not saving enough.

See Also on Kiplinger: 10 Things You Must Know About Social Security

One silver lining in the retirement funding equation, though, is that you'll probably spend less in your later years. Let's take a look at some of the most common costs that decline after exiting the workforce, along with some that may go up. (See also on WiseBread.com: 7 Retirement Planning Steps Late Starters Must Make)

1. Housing Costs

Ideally, you'll retire your mortgage by the time you retire. Of course, you'll still be on the hook for property taxes and insurance, but entering retirement mortgage-free is one of the best ways to reduce the cost of living in your later years.

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You may also decide to downsize, which could cut the cost of home maintenance, repairs, and insurance, too.

2. Work Costs

If you're no longer working, you no longer have to worry about the cost of commuting, work-related clothing, or all those restaurant lunches. Plus, you'll no longer have to contribute to Social Security or Medicare as you probably had been doing via withholdings from your paycheck.

3. Car Costs

If you've been a two-car household during your career, it's possible that you could make it just fine as a one-car household in retirement, which would reduce the cost of vehicle maintenance, repairs, insurance, and gasoline. (See also on WiseBread.com: You Can't Make It as a One-Car Family: Now What?)

4. Saving "Costs"

It's hard to call adding money to a 401(k) or IRA a cost, but the reality is that once you're done working you'll probably stop contributing to your retirement accounts and start withdrawing from them.

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By the same token, if you had been stocking a 529-plan account or two with college money for your kids, hopefully they'll be done with school by the time you retire, so those "costs" should disappear as well.

See Also on Kiplinger: 10 Financial Decisions You Will Regret in Retirement

5. Kid Costs

Speaking of kids, even though people are marrying and starting families later in life, by retirement, the kids should be on their own. Just think of all the money you've been spending on their clothing, food, activities, medical care, insurance, and more.

Caution: Your Retirement Spending May Change

While many costs may come down when you leave the workforce, keep in mind that retirement is not a homogeneous season of life. You'll probably be healthiest and most active when you're newly retired. That means some of your costs could actually go up right after retirement. You may spend more on travel and recreation, for example.

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Then, as you age, you'll probably become less mobile, which means eventually you'll spend less on recreational activities than before you retired.

The Big Unknown

The largest question mark looming on the retirement horizon is health care. Your monthly insurance premiums may decline once you go on Medicare. However, what about your potential need for nursing home care?

While that's not the happiest topic to think about, it's far better to deal with it now than when you actually may need the care. To manage that risk, you may want to look into the cost of long-term care insurance. And keep in mind, your choice is not just between paying the high cost of as much coverage as possible or none at all. You could opt for a more affordable policy that would help with some of the costs, while leaving you responsible for some, as well.

See Also on Kiplinger: 9 Retirement Strategies for Women

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The Bottom Line

The very real possibility that your living expenses will be less in retirement than they are now is not an excuse to shortchange your retirement accounts. The best approach is to run some numbers, creating pre- and post-retirement budgets based on your unique circumstances and retirement goals.

This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website.

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This article is from Wise Bread, not the Kiplinger editorial staff.