Certified financial planner Kevin Lum is known for giving real-world advice to retirees or hopeful retirees.
He recently explained in a YouTube video to his nearly 180,000 subscribers where retirees spend the majority of their income and how they can reduce costs in these areas to live a worry-free retirement without sacrificing every creature comfort.
Here are the five things retirees spend 80% of their income on, according to Lum.
Entertainment
Lum explained that retirees spend an average of $240 a month on entertainment alone, equating to around 6% of the total income. Entertainment encompasses a wide range of things from experiences to education, and the retirement expert doesn’t believe that these need to be sacrificed.
He encouraged retirees to take advantage of senior discounts or think outside the box by auditing a class at the local university. Seniors can also partake in free days at museums or enjoy “SilverSneakers.”
There are a number of resources available at the local library as well, according to Lum. He noted that in addition to books, libraries often have DVDs, musical instruments and tools that can be checked out at no cost.
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Food
One of the five largest expenses for retirees is on food. Lum noted that food eats up around 12% of the average retiree’s budget or around $500 per month.
To cut down on costs the financial planner suggested making a list and sticking to it when shopping, buying in bulk and avoiding impulse shopping.
As reported by AARP, some supermarkets also offer senior discounts. Taking advantage of one of these deal days could save between 5 to 10%, depending on the store. Seniors, however, are encouraged to check with their local retailer for discounts.
Healthcare
Retirees spend approximately $585 per month on health care, making it the third largest expense and equating to around 13% of most retirees’ budgets.
Lum said individuals can save money by shopping around and investing in the right plan. He suggested working with an experienced insurance broker to help find the right plan. Seniors should also try choosing generic drugs and to be their own advocate.
According to the National Council on Aging (NCOA), many seniors are missing out on programs that could help make everyday expenses, like food and healthcare, more affordable. Approximately 9 million seniors ages 65 and up fail to take advantage of programs like SNAP, Supplemental Security Income (SSI) and Medicare Savings Programs, despite being eligible.
Transportation
A retiree, on average, spends around $600 a month on transportation. To cut costs in this area, Lum recommended shopping around for cheaper gas, purchasing an electric vehicle and reducing insurance premiums.
According to The Zebra, insurance premiums can spike for people 60 or older. Between the ages of 60 and 80, drivers may see an up to 32% increase in their premiums. To save, the comparison site recommended shopping around, looking for discounts and considering paying per mile.
Housing
The final expense category for retirees and the most costly is housing. According to Lum, retirees spend between $1500 and $1600 per month on housing.
Even for retirees that own their own home, housing costs can be a burden. To save on housing costs, the financial expert recommended renting a part of the home out on Airbnb. While not for everyone, Lum noted that one client made around $3,000 per month renting out his converted garage.
Another way to reduce housing costs is by downsizing, relocating internationally or moving to an area with a lower cost of living, said Lum.
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This article originally appeared on GOBankingRates.com: 5 Things Retirees Spend 80% of Their Income on, According to Kevin Lum
