The 3 Biggest Expenses Stopping You From Retiring Sooner

Couple tearing their hair, looking at a piggy bank.
Photo by Inesbazdar / Shutterstock.com

Pop quiz: How much money did your household spend last year? If you don’t track expenses, you may have no idea how many dollars departed your bank account in 2016.

The average household, however, blew $57,311 — an increase of 2.4 percent since 2015. Most of that spending — 61.3 percent — went toward only three types of expenses: food, housing and transportation.

This unsettling data is courtesy of the U.S. Bureau of Labor Statistics’ recently released Consumer Expenditure Survey data for 2016. The data measure how consumers allocate their spending, with expenditures classified into eight main categories.

Here’s how much the average household spent in those categories last year:

  • Food — $7,203
  • Housing — $18,886
  • Apparel and services — $1,803
  • Transportation — $9,049
  • Health care (includes health insurance) — $4,612
  • Entertainment — $2,913
  • Cash contributions — $2,081
  • Personal insurance and pensions (includes Social Security) — $6,831

Every dollar you spend on expenses like food, housing and transportation is another dollar you didn’t invest in a retirement account. So, such expenses stand between you and retirement: Technically, the more money you allocate to them, the further back you push retirement.

Let’s take a closer look at the three biggest expenses that are keeping Americans from retiring sooner.

1. Food

The Consumer Expenditure Survey further categorizes food expenses as either “at home” or “away from home.” Spending in one of those categories ballooned a lot more than the other last year:

  • Food at home — $4,049 (up 0.8 percent)
  • Food away from home — $3,154 (up 4.9 percent)

Unless dining out frequently is more important to you than retiring sooner, perhaps it’s time to review articles like “The $200,000 Lunch” or “12 Ways to Slice Your Next Restaurant Check in Half.”

Even if eating out is important to you, though, know that giving it up is not the only way to save money on food away from home. As Money Talks News founder Stacy Johnson points out in “The 10 Commandments of Wealth and Happiness“:

“If going out to dinner with your significant other is something you enjoy, not doing it may create a happier bank balance, but an unhappier you. … Eating an appetizer at home, then splitting an entree at the restaurant, however, maintains your quality of life and fattens your bank account. Finding ways to save is important, but avoiding deprivation is just as important.”

2. Housing

A traditional rule of thumb says that to maintain a healthy budget, you should not spend more than 30 percent of your income on housing.

That might seem impossible, given that home prices and rent costs generally have increased in recent years. Still, it won’t hurt to take a closer look at your housing costs and current options for decreasing them.

Stacy offers tips for potential buyers in “Stop and Think: How Much House Can You Really Afford?” He says:

“One of the dumbest things Americans do is buy the biggest, fanciest things they can possibly afford. And nowhere is this mistake more evident than in home shopping.”

Renters might want to check out “How to Live Rent-Free (or Way Cheaper Than You Are Now).”

3. Transportation

Getting around is our second-biggest expenditure despite that transportation spending has fallen in recent years. Total transportation expenditures by the average household dropped 4.8 percent between 2015 and 2016. The Bureau of Labor Statistics primarily attributes this to folks spending 9.1 percent less on vehicle purchases and 8.7 percent less on gas and motor oil last year.

The average annual gas and motor oil expenditure has been falling since 2012.

The only transportation cost subcategory that increased last year, rising by 4.6 percent, is the “other vehicle expenses” subcategory. It includes:

  • Finance charges
  • Maintenance
  • Insurance
  • Rentals/leases/licenses

If more drastic money-saving methods like ditching your car aren’t options for you, check out “6 Ways to Cut the Cost of Your Commute to Work.”

What’s your take on this news? Sound off below or our Facebook page.

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