Essential Budget Tips for Seniors on Fixed Incomes
For seniors, retirement brings plenty of welcome changes. You have more time to spend on your hobbies, see your loved ones, and simply relax. But you might also need to make some significant changes to your budget now that you're living on a fixed income — especially if you can't downsize to cut down on your cost of living.
There are plenty of resources that can help you prepare for major expenses like assisted living fees and health care, and in the meantime, you can implement some of these strategies to shrink your spending. If you are over age 50, planning for the decades ahead will help ease retirement stress. If you have an older parent, you can discuss their plans on being on a fixed income in their retirement.
Track Spending
To start cutting down on unnecessary spending, you need to go over your portfolio, figure out how much you can comfortably spend each month, and create a realistic budget. You'll need to begin tracking your spending to make sure that you're staying within your budget. While there are free apps you can use to log your spending, you can simply use a pen and paper if you'd prefer!
Use Coupons
It's important to shop from retailers that offer reasonable prices for their products. Before you go out shopping, do some research to see if you can find any applicable coupons. Using coupons can help you get discounts on everything from home goods to clothing. For instance, you can seek out coupons from popular retailers like Target. If you plan to do some shopping at Target, look for Target coupons, promo codes, and running deals to get the best prices and stay under your budget.
Lower Monthly Bills
You may have some bills that are fixed, but chances are, you can take steps to lower your utility bills. For instance, to reduce your electric bill, Allstate recommends switching to energy-efficient lightbulbs and unplugging devices and chargers when they're not in use. You can also research other Internet or phone service providers in your area to see if you could secure lower rates for these bills.
Cook at Home
When you're retired, it can be tempting to go out to eat or order takeout frequently. After all, when you are traveling more often, planning weekends with your family, or simply trying to relax, it's always easier to pay someone else to handle the cooking. But cooking at home can help you save hundreds of dollars per month. To save money on groceries, The Simple Dollar recommends shopping early or late in the day so that you can get the first pick of items that are on sale. Practice cooking new recipes to sharpen your skills in the kitchen, and consider starting a garden so that you can enjoy fresh vegetables, fruits, and herbs.
Try Free Activities
With extra free time, you might find yourself spending more than you used to on various activities. But you don't have to spend lots of money to have fun. Take some time to find free activities in your community. For instance, you can get a library card to check out books and movies and attend free events. You can explore local parks, go hiking, or go to the beach if you live near the coast. Visiting local museums is often free, too.
Tax Hints
The IRS reminds us that if you do not itemize your deductions, you can get a higher standard deduction amount if you and/or your spouse are 65 years old or older. Higher standard deductions are available if either you or your spouse is blind. There are credits available for the elderly and disabled.
Remember, tax rules change all the time. Find a tax professional to help you find the best ways to lower taxes and take advantage of credits and deductions.
Savings Money Starts Early
Saving and planning before your retirement will make your retirement much more successful. Contribute to an employer's 401(k) or other retirement programs when you have the opportunity. Leave that money alone! Remember, social security is only a supplement to your future retirement income.
Health Care
When you are age 65, you will have Medicare as your health insurance. You will want a Medicare Supplement to cover the large deductibles in the plan. If you think you will be on a very tight budget, Medicare Advantage plans could be an answer with little or no premiums. They also typically include prescription drugs and other services like dental. Keep in mind; generally, you will be in an HMO-type program with many of these Medicare Advantage plans, so find expert help before deciding that is an option.
Long-term health care is not covered by Medicare and supplements beyond a limited amount of skilled care. The best time to consider Long-Term Care Insurance is in your 40s or 50s. If you have savings to protect, you will want to speak with a specialist to determine if LTC Insurance is suitable.
It can take some time to get used to living on a fixed income. But as you adjust to your new budget, you'll find ways to improve your quality of life and enjoy your golden years without spending too much money. By following these tips, you'll see just how easy it is to live a happy, healthy lifestyle while staying frugal.
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