10 helpful tips for budgeting for seniors. Learn how to manage and stretch your budget and enjoy financial security during your glorious retirement years.
Why is Budgeting for Seniors Essential?
After retirement, budgeting can feel like a monumental task. Suddenly, your income is fixed, and while you’re looking forward to enjoying your golden years, you’re also keenly aware of your finite resources. For many seniors, this is a scary time. Fortunately, it doesn’t have to be. By thoroughly examining your financial picture and making a few adjustments, you can stretch your budget and make living on a fixed income a breeze.
Let’s discuss 10 actionable tips for extending and managing your finances as a senior. From budgeting tips to managing your monthly income and expenses, we’ve created a comprehensive guide to budgeting for seniors.
Budgeting for Seniors Tips and Tricks
Tip #1
DEVELOP A BUDGET
When determining how to budget and save money, the first rule of thumb is to put your budget on paper (or screen). Older adults living on a fixed income must focus on good money management. Monthly expenses such as phone service, car payments, life insurance premiums, and health insurance can add up quickly, leaving little remaining for other needs or recreation. However, knowing exactly how much income you can expect and how much your expenses are each month will help you save money and stretch your budget.
A great place to start is by using a budgeting app. Apps such as Monarch allow you to link your accounts directly and categorize your income and expenses so you know what areas of your budget require an adjustment. You can even set budget alerts that will let you know when you’ve exceeded your budget for a particular category. While it can be nerve-wracking to link your bank account to a budgeting app, they are considered generally safe to use for money management.
If using an app or online program isn’t something you’re comfortable with, you can create a budget using pen and paper in a notebook or in a budget planner that you can purchase at many retailers.
Tip #2
PROTECT YOUR ASSETS
While it may seem counterintuitive, purchasing an identity theft protection plan is an excellent addition to your budget. If you have room for the expense, identity theft protection keeps your information and financial assets secure, saving you money in the long run if a thief ever attempts to steal your identity. Statistics show that 1 in 10 older adults fall victim to identity theft each year, with the average elder losing $33,000.
Bank accounts, credit cards, and even your home and auto title are at risk if not protected. If you’re unable to add on an identity theft protection plan, there are some steps you can take to protect yourself, including:
- Create strong passwords
- Freeze your credit through the credit bureau
- Never share personal information such as your social security number
- Monitor your bank and credit activity regularly and report any suspicious transactions
- Keep personal documents in a locked file cabinet
- Lock your phone screen with a passcode
Tip #3
STRETCH YOUR FOOD BUDGET
Inflation has hit the food market pretty hard. The US Bureau of Labor Statistics indicates that in the last 5 years, grocery store prices have increased by 28%. Unfortunately, income has not kept pace, making food one of the largest expenses for seniors. Fortunately, we have some money-saving tips that can help you budget for your groceries.
Start by setting a food budget and sticking to it. This may mean eating fewer meals out and cooking more or even choosing to forego some expensive ingredients, such as steak, for some meals. If you struggle to stay consistent or to figure out what to make and how much to purchase, consider using a meal kit delivery service. While these services aren’t always a cost-saving measure for large families, they can be for a single senior or a couple. Most meal kit services allow you to browse their website to collect information before buying.
Once you’ve set your budget, plan your meals carefully. Always go into the store with a list of what you need and do your best not to deviate from it. Then, ask about senior discounts. Some grocery stores, such as Weis Markets, offer a senior discount on certain days of the week. Also, sign up for the grocery store’s club card and use discounts and points to save further. If you decide to eat out, ask about a discount for seniors or a senior menu at the restaurant.
If your budget doesn’t cover your food costs, programs are available to help.
- Food Assistance Programs through your state may provide a monthly allotment to use at the grocery store. Call 211 for more information.
- Some seniors may qualify for the Senior Farmers’ Market Nutrition Program, which provides coupons for fresh fruits and vegetables.
- Food banks that provide free food are available in most towns and cities nationwide. To find one near you, check out this search tool from Feeding America.
- You can enjoy complimentary meals at many Senior Centers. For those who cannot get out, free home-delivered meals are often available.
There is no reason for a senior to ever go hungry. When in doubt, call 211 for assistance. Programs are available to help those who need it.
Tip #4
UTILIZE SENIOR DISCOUNTS
Senior discounts are available on many different products and services if you’re willing to ask for them. While not always advertised, many companies are happy to give a discount to older adults who ask for it. While a few dollars off of your phone service may not seem like much, utilizing senior discounts adds up to decreased monthly expenses over time.
Always ask about senior discounts at:
- Restaurants
- Grocery stores
- Retail stores
- Amazon Prime membership through the Prime Access Program
- Hotels
- Pharmacies
- Phone service
- Rental cars
- Train tickets
- Bus fares
- Eyeglasses
- National Parks Service Pass
- Goodwill stores
- Movie theaters
- Hair cuts
- YMCA gym membership
Don’t forget to use your AARP or other membership cards for additional discounts.
Tip #5
USE A FREE CELL PHONE PLAN
When you’re creating your budget, every penny counts. Entirely eliminating an expense, such as phone service, allows you to utilize that money for other needs. So, if you qualify, it is imperative that you take advantage of programs such as Life Wireless, which provides low-income individuals with a free cell phone and service. The plan includes free data, unlimited talk, and unlimited texting. You can take their phone or bring your own, and it all comes with no credit checks or contracts. If you don’t qualify, check out our review of the best cell phones for seniors.
Tip #6
APPLY FOR ENERGY ASSISTANCE
If you’re a senior living on a fixed income, the fluctuating energy costs of heating and cooling your home could quickly blow your budget. Fortunately, programs are available for older adults who need to save money. These energy assistance programs can assist you with paying for your heating/cooling bills and provide assistance with weatherproofing your home. You can contact the programs directly or request assistance in applying by calling 211.
- Low-Income Home Energy Assistance Program (LIHEAP)-Provides financial assistance for heating and cooling bills and sometimes grants funds to make energy-efficient improvements to your home.
- Weatherization Assistance Program (WAP)– Provides funds to make your home more energy efficient and reduce future energy bills.
- National Energy Assistance Referral Project– Provides emergency assistance to low-income adults who need to keep their utilities on.
If you haven’t yet applied for assistance and are finding it difficult to keep your utility bills up to date, call your utility provider directly. Many will work with you on a payment plan or assist in getting you help. Not sure you need help with your utility bills? If you apply and qualify, taking advantage of these programs can help you apply your funds to other needs, such as saving for future expenses.
Tip #7
MANAGE HEALTHCARE COSTS
As you consider your retirement, healthcare costs are a major expense. As more medical interventions become available and people live longer, the healthcare costs not covered by Medicare can be hundreds of thousands of dollars. Fortunately, there are a few ways you can cut down on those costs and avoid spending your entire savings on deductibles, copays, and the cost of assisted living or long-term care.
- Apply for Medicare at the right time. Delaying the purchase of your Medicare plan long after you become eligible can leave you paying higher premiums going forward.
- Apply for Medicaid. If your income and assets fall below a certain amount, you may qualify for Medicaid. This additional insurance, funded by your state, will often cover the costs not paid for by Medicare. It also provides coverage for long-term care stays.
Consider purchasing long-term care insurance. According to the Federal Department of Health and Human Services, 64% of women and 49% of men who reach age 65 will require long-term care. With monthly costs of services well over $5,000, paying for it out of pocket could mean using up your entire retirement savings. However, you can use your long-term care policy to cover costs associated with in-home care, Hospice care, adult day care, long-term care, and assisted living. - Get preventative care. It goes without saying that the healthier you are, the less you’ll spend on health care costs. Medicare will cover many preventative services. Take advantage of these services by utilizing health screenings, tobacco cessation counseling, nutritional counseling, mammograms, glaucoma testing, and other preventative care exams to stay healthy and catch illnesses early.
- Use generic prescriptions. If you regularly take medications, ask if you can use a generic brand. Generic medications are the same as brand-name medications but cost much less.
- Be strategic in getting care. If you’ve already paid your deductible for the year, you may consider scheduling visits and procedures to be done before you roll over to a new year and a new deductible. Keep track of what you have paid out of pocket and time your health care to save you on these expenses.
- Plan for end-of-life care. Medicare will cover the cost of Hospice care during the final season of your life. However, you’ll need to plan ahead for using this benefit by communicating with your healthcare provider and your family about your wishes. Do you wish to spend your final months or days in a hospital? Would you prefer to be at home? Do you wish to be on a ventilator? Would you opt for tube feeding? These questions should all be answered long before they come up to ensure everyone knows what you prefer and that your funds are used accordingly. Don’t worry; you can always change your mind if something changes, but pre-planning helps to get the conversation on the table.
Tip #8
CONSIDER DOWNSIZING
When retirement comes, and you’re considering your monthly expenses, you may want to think about downsizing your home. Yes, the thought is sometimes heartbreaking. Your family home, where you raised your babies, had fellowship with friends and neighbors, and lay your head each night, is such a source of comfort. Unfortunately, it may also have you drowning in property taxes, a hefty mortgage, homeowners insurance premiums, and other high monthly expenses.
Take some time to consider your needs. Do you need the square footage you’re currently managing? Do you need space to entertain? Do you need lower monthly expenses? Downsizing can give you financial peace of mind and less property and home to clean and maintain. Are you worried about entertaining? Many communities boast entertainment spaces that you can rent out for large family gatherings.
Tip #9
SEEK OUT SAVINGS ON PRESCRIPTION DRUGS
The cost of prescription drugs is increasing, often faster than the price of inflation. According to the Office of the Assistant Secretary for Planning and Evaluation (ASPE), during 2022-2023, the cost of more than 4,200 drugs increased by 46%, outpacing the inflation rate. For some seniors, this can mean choosing between taking a life-saving or life-altering medication and forgoing it altogether. Fortunately, seniors have options for saving on the cost of their medications.
If you’re a member of AARP, you can use your AARP prescription discount card to save on your medications. The card is free to members and provides Optum RX discounts that are even deeper than those provided without an AARP membership.
GoodRx is a free prescription savings program that is available to all. Use the service to search for pharmacies with the best prices for your medication and find discount codes and coupons that can lower your out-of-pocket expenses even further. If you don’t care to use the online services to search for discounts, you can order a physical GoodRx card and present it anytime you pick up prescriptions.
SingleCare and RxSaver are services similar to GoodRx, allowing you to search for a drug and its cost. Then, you can access coupons to lower your out-of-pocket cost. You can also utilize your SingleCare Prescription Discount Card or access savings at your pharmacy.
Join store-specific discount programs. For instance, Costco members may already enjoy discounts on their prescriptions, but with the Costco Member Prescription Program (CMPP), they may receive even deeper discounts. CVS Pharmacy offers savings options through its ExtraCare program, and Walgreens offers similar discounts through its Prescription Savings Club.
The cost of prescription drugs can add up each month, so always take advantage of any available discounts.
Tip #10
BE A SAVVY SHOPPER
If you’re an older adult living on a fixed income, breaking your budget on new clothes, furniture, gifts, and other necessities can happen quickly. However, becoming a savvy shopper can help you save a significant amount. Here are a few tips for saving on all your fluctuating expenses:
- Always ask about senior discounts.
- Use coupons when available.
- Shop sales, waiting to make your purchase until prices are reduced.
- Purchase gifts beforehand so you’re not scrambling at the last minute.
- Consider giving homemade or sentimental gifts when appropriate.
- Shop thrift stores and other second-hand markets when possible.
- Compare prices between stores before making a purchase.
- Never purchase from a high-pressure salesperson.
- Utilize loyalty programs at the stores where you frequently shop.
- Plan ahead to avoid impulse purchases.
- Fix and maintain your current items to increase their lifespan.
- Shop the clearance or seconds section when possible.
