FINANCIAL FOCUS Remote work may offer financial benefits January 25, 2021

During the COVID-19 pandemic, home during your remote workday. many of us have been forced to work Lower clothing costs – Despite the from home. But once we’ve moved past rise in “casual dress” days, plenty of the virus, many workers may continue workers still need to maintain appropriate working from home. More than one- office attire. By working from home, third of companies with employees you can “dress down,” reducing your who started working from home now clothing costs and dry-cleaning bills. think that remote work will stay more As you can see, it may be possible common post-pandemic, according for you to save quite a bit of money by to a Harvard Business School study. working from home. How can you use This shift to at-home work can affect your savings to help meet your longterm people’s lives in many ways – and it may financial goals, such as achieving end up providing workers with some a comfortable retirement? long-term financial advantages. For one thing, you could boost your

If you’re one of those who will con- investments. Let’s suppose that you tinue working remotely, either full time can save $2,500 each year by working or at least a few days a week, how might remotely. If you were to invest this you benefit? Here are a few possibilities: amount in a tax-deferred account, such

Reduced transportation costs – as an IRA or your 401(k) or similar Over time, you can spend a lot of money employer-sponsored plan and earned commuting to and from work. The a hypothetical 6% annual return for average commuter spends $2,000 to 20 years, you’d accumulate more than $5,000 per year on transportation costs, $97,000 – and if you kept going for an including gas, car maintenance, public transportation and other expenses, depending additional 10 years, you’d have nearly on where they live, according $210,000. You’d eventually pay taxes to the U.S. Bureau of Economic Analy- on the amount you withdrew from sis and the U.S. Census Bureau. If you these accounts (and withdrawals prior are going to work primarily from home, to age 59½ may be subject to a 10% IRS you should be able to greatly reduce penalty), but you’d still end up pretty these costs. far ahead of where you’d be otherwise.)

Potentially lower car insurance premiums You also might use part of your savings – Your auto insurance premi- generated by remote work to help ums are partially based on how many build an emergency fund containing a miles you drive each year. So, if you few months’ worth of living expenses. were to significantly reduce these miles Without this fund, you might be forced by working from home, you might qualify to dip into your retirement accounts to for lower rates. pay for something like a major home

Lower expenditures on lunches – If repair. you typically eat lunch in restaurants Becoming an at-home worker will or get takeout while at work, you could no doubt require some adjustments easily be spending $50 or more per on your part – but, in strictly financial week – even more if you regularly get terms, it could lead to some positive coffee drinks to go. By these figures, results. you could end up spending around

$3,000 a year. Think how much you could reduce this bill by eating lunch at