Photo via Pexels
For many people, retirement means living on a fixed income. While a reliable fixed income can give you the freedom to enjoy your golden years, you may have to adapt your lifestyle a bit. Don’t let debt, unnecessary purchases, and healthcare eat up your retirement income; some financial tweaking is all it takes to live within your means. The following financial tips can help you reduce your spending during retirement, so you have the money to do the things you love.
Healthcare is a massive retirement expense. According to Money Talks News, American households led by someone over 65 spend an average of $6,700 every year on healthcare costs. For seniors, healthcare is the largest spending category after housing and transportation. Revisit your Medicare plan to see how you can save money on your healthcare needs. By spending a little more on an alternative Medicare Advantage plan, you will end up paying much less for your essential healthcare services. These plans cover dental, vision, and hearing services in addition to prescription drugs and preventive care.
Seniors also spend a lot on other forms of insurance, including life insurance, home insurance, long-term care insurance, and car insurance. Take some time to assess your coverage under these policies to find out if you’re overspending.
Your car insurance is one area where you can save significant money by doing a little research. Shop around to find car insurance providers that offer discounted rates. For example, you may be able to get a discount for bundling your car insurance with your home insurance policy. Compare quotes from different companies to shave hundreds off your annual insurance rates.
Budgeting is all about finding ways to save money on everyday purchases. Shop during sales and use coupons to save money on everything from groceries to cleaning supplies. Try to swap your regular name-brand purchases with generic brands — you’ll see little to no difference in quality when it comes to condiments, pantry staples, and cleaning products.
As a senior, you have special access to discounts that the rest of the population doesn’t. Use them! You can get affordable seniors rates at various places, from fast-food restaurants to state parks. A lot of companies don’t advertise their senior discounts, so be sure to ask. Since you’re no longer working during the week, you can also take advantage of weekday discounts at places such as restaurants and golf courses.
While there’s nothing wrong with enjoying an expensive hobby or activity, you can save a lot of money by trying out new, affordable sources of entertainment. Guide for Seniors recommends several budget-friendly entertainment ideas like exploring your local tourist attractions, taking free online courses, and attending open mic nights. If you enjoy the great outdoors, try fishing, hiking, and camping. There are endless ways to have fun during your retirement without spending a fortune.
As you find new things to do with your time, you may be able to cut out some of your existing expenses. For example, say goodbye to magazine subscriptions, extra TV channels, and club memberships. You may be able to save a lot of money every month just by cutting your cable and getting your television through alternative sources like streaming services.
Tracking your spending for a couple of months and organizing your expenses into categories can help you visualize exactly where your money is going. This information will help you find certain expenses that tend to add up over time. If you plan to travel or enjoy a particularly expensive hobby, budgeting can help you save up the money for those pricier purchases.
Don’t feel like you have to categorize your discretionary spending. Instead, consider setting aside a certain amount of flexible money that you can spend on whatever you want each month. This will force you to make trade-offs. For example, you may have to limit your spending on dining out so you can spend your flex money on a new TV. Remember that every purchase is a trade-off. When you buy something, you’re giving up money that you could have spent on something else. Keeping this in mind can help you prioritize the purchases that really matter.
Like any other expense, interest paid on your debt is money that you can’t spend on anything else. Take steps to control and reduce your debt so you can pocket more of your fixed income. If you’re being burdened by a mortgage, you may consider downsizing or refinancing the mortgage on your existing home. Refinancing will best serve homeowners who plan on living in their homes long term.
You can also consolidate your debt in several ways. This can be useful if you’re carrying high-interest credit card debt. Talk to a trusted financial advisor about your options so you can take back control over your money.
Living on a fixed income doesn’t mean giving up all of the things you want to do during your golden years. Seniors can still enjoy a fulfilling retirement on a tight budget! Making smart financial decisions and finding ways to cut costs will help you live happily on any income.