SPECIAL FROM Next Avenue
By Greg Daugherty
I first noticed it with the water bill: $30 for the preceding three months, lower than I could ever remember.
Having nothing better to do, and being the sort of person who actually saves his old water bills, I checked. Sure enough, the bill for the same period last year was $158.
Sleuthing My Water Bill
It didn’t take long for me to come up with a hypothesis. The only major change in our suburban New York household between those two periods was that we were now empty nesters. Both of our kids were off at college, our son having just started freshman year and our daughter now a senior.
The freshman has a particular fondness for long showers, so long, in fact, that I have often expected a frantic call from the local waterworks or even the reservoir upstate. On the other hand, he is a very clean young man.
After the delightful water-bill news, I started wondering if becoming an empty nester meant our other bills had declined, too, so I got them all out. What I found was a revelation — to me at least.
A Financial Revelation
Not only had our household expenses gone down since my wife and I starting having the house to ourselves (which I probably could have guessed), they had fallen faster and further than I would have imagined and in a whole bunch of areas.
To be fair about it, our children still bathe, eat, and use electricity, as far as I know. But their major day-to-day living expenses, which conveniently fall into the category of room and board, are now paid out of their 529 college savings plans — money we had saved for that purpose — rather than from our household budget.
And when they are out of college, making their way in the world, those expenses will be theirs to deal with, though we’ll try to help if they need us.
Household Expenses: Then and Now
What follows is a rundown of how some of our major expenses have slid —useful information, I hope, for anyone else about to become an empty nester or who has kids at home (boomerang, anyone?) and wants to ballpark what it’ll cost to live in retirement.
A caveat: As the mutual fund and EPA disclaimers say, “Past performance is no guarantee of future results” and “Your mileage may vary.” That said, here’s how it’s looking at our house now that both kids have moved out — at least for the time being:
Gas and Electric: The gas and electric bills at our home have declined 27 percent from the same period a year ago. Not only have those long, hot showers ceased, but we’re doing fewer loads of laundry and dishes.
In cold weather, we lower the thermostat on the kids’ rooms and in warm weather we’re running the air conditioners less often.
Water: Though this is one of our smaller bills in dollar terms, it has seen the greatest savings on a percentage basis: down 65 percent.
Gasoline: As the person in our household most likely to fill up the tank when the Empty light goes on, I found this expense easy to check from my credit card statements. Our savings: 38 percent. And that’s before the recent dip in gasoline prices.
Auto insurance: The kids are still on our car insurance policies, but as long as they’re away at school without a car, we save close to 10 percent on our premiums.
Groceries: We’re currently saving about 35 percent at the supermarket. At the same time, my wife and I are cooking at home more and eating out less. I wasn’t able to come up with a trustworthy figure for our restaurant savings because we pay for these meals with a mix of cash and credit, but I’m sure it’s substantial.
Bonus: My wife and I are enjoying cooking at home again, now that the mac-and-cheese decades are behind us.
Out-of-pocket expenses: I don’t have a solid estimate for this one either, but I know that slipping the kids a 10 here and a 20 there when they wanted to see a movie or make a Chipotle run used to add up to real money.
What Hasn't Gone Down
Not all of our expenses have declined, of course.
Our kids are still on our health insurance and cell phone plans, though that, too, will change someday.
And the bank isn’t giving us a break on our mortgage just because half as many of us live in the house now. The local tax assessor doesn’t seem to care either, sadly.
But by my calculations, we’re saving a total of 31 percent on the costs listed above, freeing up money that my wife and I can now use for serious stuff (like retirement) or simply for our own enjoyment (like going to the movies as a couple again).
Incidentally, since these comparisons really just reflect our savings since your youngest moved out, I know that had I consulted our bills from when both kids were still at home, the difference would have been even greater.
So it turns out that there’s at least one thing to look forward to during the empty nest years: We miss the kids, but we don’t miss those bills.
Greg Daugherty is a personal finance writer specializing in retirement who has written frequently for Next Avenue. He was formerly editor-in-chief at Reader’s Digest New Choices and senior editor at Money.