Have you ever wondered how some older adults can afford to take a luxury cruise trip once or twice each year without going broke, despite having retirement savings similar in size as yours?
One possible reason is that they are more skilled at money management. After years of saving and preparing for retirement, they may have developed effective budgeting strategies and continue to adjust their budgets to accommodate life on a fixed income.
Money management is particularly important as you age. The financial strain of not being able to cover basic living expenses can lead to increased anxiety, depression, and even serious health issues. Thus, taking proactive steps to create an effective budget and manage your resources effectively is key to a happy retirement life.
How to do that? In this blog, we will share useful budgeting tips for older adults to help you smartly allocate your income and manage expenses.
Have a better idea of available income
Living on a fixed income does not necessarily mean that the monthly income stays unchanged. While retirement savings and social security benefits are two primary sources of income for most seniors, there may be other sources of income, such as investment income from stocks or real estates investments, insurance benefits (life insurance or long-term care insurance), and annuities.
List all your expenses
Gather all your monthly bills that need to be paid and categorise them into two groups of expenses: variable expenses and fixed expenses.
Fixed expenses are those that require the same amount of payment each month, such as property taxes, home security, insurance premiums, and car payments. On the other hand, variable expenses include items such as groceries, utility bills and entertainment.
Take the time to go through the list and determine which expenses are essential and which are discretionary. For example, property taxes and utility bills are generally considered essential expenses, as they are necessary for maintaining your basic needs and well-being. However, car payments could be considered discretionary if you have alternative means of transportation, such as a family member who can drive you to places.
By carefully analyzing your expenses, you can gain a clearer understanding of your financial obligations and spending habits. This list will also help you decide how to reduce expenses without sacrificing the quality of your life.
Explore extra income sources
Now that you have an overview of your expected income and where your money goes each month, it's time to explore ways to generate additional income or trim unnecessary costs. This can help you build a travel fund or an emergency fund that improves your retirement lives.
Seek expert advice
Consult with your financial advisor for personalized guidance on maximizing your income by structuring your savings and investments to meet your financial goals.
Go back to work
Look for opportunities to take on a part-time job or freelancing to fully utilize your time, career experiences or hobbies. AmeriCorps Seniors RSVP and the U.S. Department of Labor’s Senior Community Service Employment Program (SCSEP) are two platforms that provide such information for seniors.
Leverage your house
Your house is not just a financial burden. There are ways that you can turn your house into a source of income, including reverse mortgages and home equity lines of credit.
Cut back on expenses
If you find it impossible for you to earn more money, focusing on reducing expenses becomes a more realistic approach. Remember, saving money does not have to mean lowering your quality of life. There are various discount programs and government assistance programs available that can help you save money while maintaining a decent standard of living.
Medicare health insurance
You may be able to put $100 back into your monthly Social Security check, save on premiums and co-pays if you meet specific eligibility requirements of the Medicare Savings Programs. The program is a sub-set of Medicaid benefits that assists with the costs of Medicare. You can apply for the program through a local Medicaid agency. Eligibility is reassessed each year.
Medicare prescription drug coverage
You may qualify for the Limited Income Newly Eligible Transition (LINET) Program that provides immediate, temporary drug coverage if you qualify for Medicare's low-income subsidy (or Extra Help) and have no prescription drug coverage.
Property tax exemptions
Seniors who are 65 or older may save up to hundreds of dollars a year on property taxes in certain states. The senior exemption reduces the value of your home that’s subject to taxation. Tax savings vary by state depending on the taxable value of your home, your age and other relevant factors. Visit National Counsel on Aging’s BenefitsCheckUp to learn more.
Internet and phone service
You may qualify for a FREE smartphone, and cheaper internet and mobile phone services if you meet specific requirements of the Affordable Connectivity Program (ACP) and Lifeline Program. These two programs aim to provide affordable and high-qualify communications services for low income seniors.
If you qualify for the ACP or Lifeline and apply directly with service providers like EASY Wireless, you will receive more benefits! Residents in certain states can score an EASY Wireless Unlimited Plan which include:
- FREE Unlimited Data
- FREE Unlimited Talk
- FREE Unlimited Text
- FREE SIM Card Kit and Activation
- Choose to Keep Your Number or Get a New One
Drop by one of the EASY Wireless's retail stores, or simply click the below button to apply with EASY Wireless:
Start Saving Today!
Increasing food prices have become a heavy burden for many seniors. If you face difficulties, try applying for the Supplemental Nutrition Assistance Program (SNAP, or food stamps), which provides financial support for needy senior to buy basic food, including vegetables, fruits, meats and dairy products.
Inflation has been driving up energy costs across the nation. But you may be able to cut the amount of money spent on electricity, heating and cooling if you qualify for the Low-Income Home Energy Assistance Program (LIHEAP). The program aims to assist with low income seniors with energy costs. Check your eligibility here.
When you reach certain age, you can often enjoy senior discounts at many businesses, from national parks, local stores to restaurants. Look for discount information in the store or simply ask if there’s a senior citizen discount.
You don't always have to pay to access entertainment facilities. For example, local libraries provide a variety of FREE books, movies, audiobooks, music and games! Check it out and you'll be surprised what you can get!
Choose debit card over credit card
Paying off increasing credit card debt could be challenging when you live on a fixed income. If you are facing such issues, consider using cash or a debit card instead. This will help you keep a close eye on your finances and avoid overspending with a credit card.