6 Things Seniors Should Consider When Re-Evaluating Their Budgets

 

A lot of people found themselves retiring a little early, at ages 55 to 60, after the 2008 recession with little more than their savings.

According to the U.S Bureau of Economic Research 19% of seniors are still going into retirement with no savings. It’s scary heading into retirement without the investments or assets you would have liked, but there are things anyone can do to make retirement more independent and enjoyable, even on a tighter budget.

The first rule of drawing up a budget is understanding where your money goes. This will give you a better perspective on where and how you can cut down, and where you can afford to spend a little more. According to The Employee Benefit Research Institute, the typical American budget breaks down like this:

  • 43% of money is spent on housing-related expenses
  • 13% on food
  • 11% on health
  • 14% on transportation
  • 9% on clothing
  • 10% on entertainment and other expenses

You might already recognize one or two expense categories that look wildly different than those numbers. That’s OK. Here are six expenses you can tweak to bring your monthly costs down:

 

1. Housing

Considering that this takes the biggest chunk of your budget, you may consider downsizing your home if it’s possible. With kids no longer in the house, you can afford to get a smaller home. Smaller houses have several benefits including lower utility bills, cheaper rental or mortgage costs, and smaller spaces to navigate. Further, you can sell things you don’t need and only keep absolute essentials.

 

2. Groceries and food

Seniors have some great advantages at the supermarket: You can qualify for various discounts, and you have the flexibility to go shopping when things are on sale.

Further, if your city has a farmers market, you will find that produce there can be cheaper than the grocery store’s fresh produce section. There, you’ll likely find a wider selection of fruits and vegetables, and you’ll have the chance to explore some ultra-healthy foods such as phytoplankton or black seed oil, for example. Make it a weekly thing to visit the local farmers market to get your fresh produce for the week.

 

3. Take advantage of other discounts you qualify for

The U.S. government is mindful of senior living costs, and it has a variety of programs to manage the cost of living. For example, you can

AARP also has a guide that lists benefits that seniors can get from government programs. It has all the guidelines you need to know to help you apply.

 

4. Downsize transportation, too

If you own a car, you might want to think of using it less or having a ride-share agreement with others in your area. Or, if you live in an area where public transport is not a problem, use it. You will find that as your car spends more time on your driveway than on the road, you can trim expenses such as gas, insurance and maintenance costs. Plus, public buses and trains have low senior rates you can take advantage of.

 

5. Be mindful of rising healthcare costs

As Peter J. Creedon, CFP®, ChFC, CLU, CSA of Crystal Brook Advisors told Ovid just before 2016, a senior’s healthcare costs will most likely go up over time. So, what might account for just 11% of your budget at age 65 could become 20 or 30% of your budget at age 85.

This means you’ll have to be smart about your savings in two ways. First, it might mean making additional budget cuts from some other item — transportation costs, housing costs — on the list. Second, it will behoove you to constantly look for ways to reduce your healthcare costs year over year. In fact, make a habit of doing this.

Here are a few tips to get you started:

 

  • Look into Medicare Part C coverage, Health.com says. This lets you buy Medicare-approved private health insurance while still retaining Medicare Part A and Part B coverage. If you are in reasonably good health, Part C plans can save you out-of-pocket costs. Check Medicare.gov to find out whether you qualify, and see whether this option can save you money.
  • Look into making your house ready for home care for when you might need it later, says Aol Finance: “Installing a walk-in shower or stair lift when you’re healthy may seem crazy. But making your home more accessible may pay off, especially if it eliminates the need for you to move to a special facility when you grow older. Some states and nonprofits offer loans and grants to help low-income elderly individuals make modifications to their homes.”
  • If you or your spouse has yet to sign up for Medicare, consider setting up a health savings account for both of you, Todd Campbell writes at The Motley Fool: “Although you can’t contribute to an HSA once you’re on Medicare, your spouse can. In 2017, your spouse can contribute up to $7,750 to an HSA account ($6,750 plus a $1,000 catch-up contribution) and as long as that money is used for your qualified medical expenses, it will be tax free. Unused money in an HSA can be rolled forward into future years, too.”

 

6. Look for new fun things to do

There is a general misconception that as we age our entertainment options get more limited. By giving into that misconception, you actually set yourself up for more expensive leisure activities. Instead, look into what free classes are available in your community. Maybe that’s Latin dance, or maybe there is a local hiking group.

If you love singing, join a choir. If you love the theater, volunteer at your local theater group. Check with local chambers for free concerts in the park and special movie screenings. You’ll be surprised at the options available to you.

This best thing about being a retired senior is that you have all the time in the world to try out things you couldn’t before. It’s a great time to learn and it provides you with countless opportunities to teach and share your passions with others. And a well-thought-out budget will help you live comfortably, stay healthy and enjoy the fullness of what life has to offer.

 


AUTHOR BIO

Casey Meehan is the founder of Epic Presence, a digital agency in Chicago.

 


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