The Cheapskate's Guide to Retirement

Even if you're enjoying a comfortable retirement with a healthy portfolio, you may recognize a bit of yourself in retired physician Walter Gadkowski, 76, of Naples, Fla. He regularly tools around the neighborhood when his car runs low on fuel, surveying several gas stations for the lowest possible price. “I know we’re in a financial position where we don’t have to save pennies on gasoline,” he says. “But it’s just been part of our lifestyle for many years. It’s kind of fun for me to find the cheapest gas.”

Walter and his wife, Linda, 74, also own a house in Cape Cod, Mass. Linda sewed all the curtains in both their residences herself—because, as she explains, why pay twice as much to buy window dressings? And don’t get the Gadkowskis started about eating dinner at a restaurant with a group of friends and having to chip in for expensive drinks or appetizers that they didn’t order. “It used to really frost me, until we started saying, ‘Well, let’s do separate checks,’ ” Walter says. Pro tip from Linda: Wave the waiter over as soon as you are seated to request your own bill.

You may be well prepared financially for retirement when it comes to all the big-ticket items, such as your investments or your housing expenses. But you may not be thinking much about your smaller, everyday expenses: The book you bought on Kindle. The fancy chew toy you just picked up for the dog. The bottle of wine you gave to a neighbor. And trimming your basic budget might not even be on your radar. “People often have no idea where their money is going,” says Washington, D.C., financial planner Lori Atwood. “Everybody thinks it’s nothing, but these little things add up quickly. And when you are on a fixed income, it matters a lot.”

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You can’t control the uncertainty of the markets, and the adjustment from having a salary to drawing down retirement accounts that you worked so hard to accumulate may be unsettling, says Sarah Asebedo, president of the Financial Therapy Association, which represents financial planners and mental health professionals. But you do have control over your spending habits. And, like the Gadkowskis, you can focus your energy on cutting those everyday costs. If you learn to think like a cheapskate before you pull out your wallet, both your finances and your well-being in retirement may get a boost.

Finding deals and discounts can get overwhelming, but opportunities to save are ripe for the taking. Like the outdoors? Get a $20 annual senior National Parks pass, which gives you entry to more than 2,000 sites and parks. You could otherwise pay $30 or more to enter certain parks such as Yellowstone. Frustrated by a hefty cell phone bill? Join an adult child’s family plan, or take advantage of senior discounts from major carriers. Enjoy eating out at expensive restaurants? Avoid splurging for dinner and opt for a late afternoon lunch, where you’ll likely find better prices and service, says Potomac, Md., financial planner Barry Korb, citing his late father’s advice.

And now is a great time to trim the fees you pay for financial services, with fund companies competing to cut costs on products and services. Vanguard recently moved to commission-free online trades on nearly 1,800 exchange-traded funds, for instance, and Fidelity announced its first fee-free index funds in August. For banking, consider online banks, with low or zero fees for typical services. Ally Bank, for example, charges no monthly maintenance fees, requires no minimum deposits on bank accounts and reimburses ATM fees.

Get Frugal

But before you fine-tune your frugality, review where your money goes now, down to your smallest purchases, Atwood advises. “You have to know what you’re spending on discretionary items each month,” she says. Monitor what you spend, either on your own or with an expense tracking app, such as the one from Atwood’s personal finance website Fearless Finance. Be mindful when you’re tempted by an impulse buy; sometimes just stopping to think for a moment makes you reconsider a purchase.

Next, audit your spending. If you’re not really watching all those cable channels, switch to a less expensive, no-frills plan, for example. You also may be paying for other services you don’t use or need or have forgotten about entirely, Atwood says. She discovered she had two different anti-virus monitoring systems for her computer, she says, costing her $42 a year for both.

Many services, such as identity theft protection or magazine subscriptions, offer automatic renewals. But these can be difficult to cancel when you no longer want them. Advisers at The Planning Center, a fee-only financial planning firm, will set up a three-way call to help a client handle a pushy customer service representative. And rethink whether it’s worth paying for product warranties on items such as toasters or microwaves that might be cheaper to replace if they break down.

Gyms and fitness club memberships can be another spending hole. Kathy Steward, a retired teacher in her seventies from Alexandria, Va., took aerobics classes her entire adult life, paying about $120 per quarter at her local gym. But once she retired and began to travel and volunteer, “I was wasting a lot of money because I was only going to classes about half the time,” she says.

Steward did some research and found a community recreation center nearby with a low yearly fee of $45 for seniors, with the option for drop in senior exercise classes costing just $4 a session. Now, she only pays for classes she attends, and she doesn’t have to feel guilty when she skips, like she did recently to go golfing.

As you audit, keep in mind the influences of your retirement circle. Try to stick with like-minded retirees when it comes to spending behaviors. If your current circle of friends can afford extravagant trips or expensive meals and you can’t, you’ll feel pressured to overspend, says Paula McMillan, a senior financial adviser with Stearns Financial Group, in Greensboro, N.C.

Another area to get a handle on is requests for help from family and friends, says financial planner Rick Kahler, president of the Kahler Financial Group, in Rapid City, S.D. Kahler says such requests are a common money worry for his clients. He advises creating a separate, annual budget for gifts or loans to family and friends, limited to what you can afford to share. If you allocated $6,000, stick to that amount. Remind your children and other loved ones you need to take care of yourself first, so you won’t be a burden to them later.

Retirees Bob Mitchell and Janet Edgar, who live in New York City, make it a practice to check with one another first before agreeing to any financial gifts. That strategy worked well recently when Mitchell, 86, was asked to co-sign a loan for a relative. Edgar, 76, reminded him that he had co-signed a loan several years back that the borrower didn’t repay. So the couple gave what they could to help—but said no to co-signing.

Find Your Inner Cheapskate

After you’ve gotten a handle on your spending and whittled unnecessary costs, start implementing some practical cheapskate strategies in your everyday life. From shopping to travel to housing, there are myriad ways to cut costs.

For everyday spending, you can scour websites for senior discounts, but some may be out of date or invalid. Get in the habit of regularly asking about senior discounts when you’re at a restaurant, theater or museum, and when making travel plans or even taking a local bus or train.

Entertainment. The Gadkowskis are not alone in worrying about restaurant spending, says Kahler. The check-splitting dilemma is one of the most common complaints he gets, even from wealthy retirees.

You could think like a millennial and try a payment-sharing app such as Venmo. But if you’re not comfortable with such technology or waving down the waiter, then don’t just sit there frustrated and fail to enjoy your meal, Kahler says. Order a few extras. You won’t save money, but you also won’t feel cheated.

If you like the performing arts, serve as an usher at your local theater in return for a reduced-price ticket or attend pay-what-you-can performances. If you visit New York often, consider membership in the Theater Development Fund, which is open to retirees and gives you discounts on Broadway, off-Broadway and cabaret shows, says Old Greenwich, Conn., financial planner Loretta Nolan.

Travel. With the free time to hit the road, traveling is tops on many retirees’ lists. And there are a number of ways to pinch pennies while still seeing the world. Road Scholar, a nonprofit that provides educational trips geared to older adults, will match you with a roommate to avoid extra charges for traveling solo on their group trips. It also offers grants to help family caregivers offset the costs of arranging substitute care while they travel. Try vacation volunteering on a tax-deductible trip with Global Volunteers. And there’s no age limit to joining World Wide Opportunities on Organic Farms, where you can volunteer at an organic farm in, say, Tuscany in exchange for free food and board.

If you love cruises, choose the least fancy cabin—you won’t spend much time there anyway. “I did this on an Impressionist Artist Cruise down the Seine this past summer,” Korb says. He and his wife probably saved $1,000 each by also booking last minute, he says.

Use lodging services such as Airbnb or VRBO, but consider renting by the month, not by the week, for a cheaper rate. If you’re thinking of moving in retirement, such long-term rentals can help you determine whether you’d be comfortable in a community well before you plunk down a major chunk of your retirement money on a second home, Kahler says.

Using a single airline credit card with mileage benefits can help you rack up free airfare. When overseas, use a card with no foreign transaction fees. Check whether your card offers other travel benefits such as lost luggage benefits or rental car insurance.

Second-hand shopping. One way to cut your clothing budget is to go thrifting. The second-hand industry offers plenty for older adults, including bus tours to thrift shops and personal shopping services, says Margaret Engel, co-author of ThriftStyle: The Ultimate Bargain Shopper’s Guide to Smart Fashion (Imagine, $16). Besides clothes, you can also find deals on items such as electronics, Engel says.

New Yorkers Edgar and Mitchell spend part of the year in California, where they do their thrifting. “On the West Coast, they have Goodwill stores so fabulous you can’t imagine,” Edgar says. Mitchell, a retired garment industry production manager, bought a lambswool Italian jacket recently, likely worth $500, for $17, he says. “I knew when I touched it what it was,” he says. But the couple thrifts for their everyday clothes as well. “We’ll buy everything at Goodwill but underwear, shoes and socks,” Edgar says.

And you can turn your own closet into profit. Gowns from the ’80s with shoulder pads and rhinestones are in demand at vintage stores right now, Engel says. For men, certain old Levi jean styles can fetch $1,500 or so. Look for consignment stores that also sell your clothes online, to get the highest price. Don’t just sell your old jewelry to your neighborhood jeweler for a small amount of cash; use auction houses for higher returns. And don’t pay for a storage unit each month—clear your closet and consign or sell what you can instead.

Housing. A big move some retirees have made to cut costs: retiring abroad. Ecuador has a much lower cost of living than the U.S., which was a draw for Edd and Cynthia Staton, who moved there from Las Vegas nearly a decade ago. In addition to a lower cost of living, the Statons wanted a temperate climate, relatively close access to the U.S. to visit grandchildren, cultural amenities and expert health care they could afford.

The Statons live in a two-story penthouse apartment in a prestigious neighborhood but pay only $700 a month in rent. Their entire monthly budget is less than $2,000, which their Social Security easily covers. Paying out of pocket for a doctor’s visit costs from $30 to $40. “Pretty much everything here is cheaper,” Edd says.

But you’ll still need to work to find bargains in some locations. Randi Benner, 66, of Atlanta, and her husband spend considerable time in Costa Rica, where they bought a condo more than a decade ago and plan to retire full-time next year. Costs are going up, but the Benners save money on housing by living further from the beach. Plus, being surrounded by mountains means no need to pay for air conditioning. Randi also regularly checks expat Facebook pages for money-saving tips, such as shopping at the local farmer’s market versus the grocery store.

Rather not leave the U.S.? Consider if moving to another state would help you trim costs. Some states offer retirees better tax breaks on retirement income than others. And some localities offer seniors breaks on their property taxes. Check out Kiplinger’s Retiree Tax Map to learn about your current state’s breaks for retirees and how they compare against other states’ breaks.

Or stay in your current town but downsize your residence. A smaller home could help you save money not just on taxes, but on insurance and utilities costs, too.

No matter how you pinch pennies, don’t drive yourself crazy trying to save. You’ll ruin the vacation in Paris you dreamed of if you obsess over whether the taxi driver gave you the right change. Instead, make your cheapskate lifestyle pay off for you. The Gadkowskis, for example, enjoy traveling to see their kids and grandkids without worrying too much about money. All those pennies saved at the pump can make a difference.