When it comes to saving for retirement, the sooner you start the better. The longer your money is invested, the higher the rate of return you receive when you cash out for your retirement. But there’s no changing the past, and if your retirement savings aren’t quite as substantial as you’d like them to be, there’s no need to worry. Employing a few frugal living tips for seniors will help you stick to your budget by cutting down on unnecessary things and taking advantage of a few deals available exclusively to people of a certain age.
No one wants to get older, but the reality is that growing older and one day leaving the workforce is something everyone has to confront at some point in his or her life. Whether you’ve recently retired and are trying to decide where to go from here, or you’re planning on retiring soon and are looking for tips, you’ll find that living frugally on retirement income can still be the relaxing retirement you worked for and deserve. Here are a few tips to minimize your expenses and save money in retirement:
Create a Budget
Creating a budget is one of the first steps to frugal living, and retirement doesn’t change that. If anything, budgeting is more important than ever when your income from work is no longer coming in. Add up all of your basic monthly expenses such as groceries or utility bills before factoring in any other discretionary expenses. Now that you’re no longer earning an income and have officially retired, your expenses can usually be cut down sizably. This is especially true since you no longer have to save for retirement; you’re there already!
Housing costs and healthcare are most likely going to be your two largest expenses, so making cuts in other areas is going to be your best bet to financially support yourself in the years to come. If you continue to spend less than you earn, you’ll be able to sustain yourself through a long and relaxing retirement without having to worry about running out of money.
Even though you’re not earning an income, you still have funds to manage as a retiree. Social security, a pension, retirement savings, and investments are all forms of income that you can collect post-retirement. Allowing yourself full reign over your retirement account can cause you to easily overspend, but if you give yourself a consistent “paycheck” you can avoid the temptation to go beyond your means.
You’re playing the long game in retirement, and pacing yourself is necessary to avoid financial misfortune. There’s a reason many people who win the lottery choose to take it in frequent payments rather than as a lump sum; the more money you have access to, the greater the temptation is to overspend and waste money. Don’t fall into this trap, but instead be your own boss and pay yourself!
Factor in Healthcare Costs
Medicare is a national health insurance program in the United States that provides health insurance for Americans aged 65 and older. It’s typically a much cheaper option for seniors than other private health insurance carriers. While Medicare is an excellent way to save on healthcare in old age, it does not cover all of your healthcare expenses. The service still contains premiums, deductibles, and coinsurance.
The older you are, the more healthcare you typically need, so you’ll need to factor in a substantial portion of your budget to covering healthcare costs. Making healthy choices before and during retirement can help reduce the costs of healthcare by aiding your health and longevity. A healthy diet, regular exercise, and preventative care will all save you money spent to treat long-term issues that can arise.
Maximize Social Security
Every American citizen first becomes eligible to receive partial monthly Social Security benefits by age 62. However, the longer you wait to receive benefits, the higher the portion of benefits you’ll receive each month. If you wait until age 66 to start receiving Social Security, you’ll receive full benefits for the rest of your life.
Waiting to retire until age 66 allows you to take full advantage of your Social Security benefits without having to be strapped for cash in the meantime. If you want to retire before then, you may want to try and rely on other retirement savings in the meantime to bridge the gap until you can receive full benefits.
If you wait to receive Social Security until 66, you’ll have earned more money in the long run by the time you turn 75, so life expectancy plays a large factor in whether or not you want to receive benefits early. Of course you can’t predict when you’re going to die, but you certainly want to ensure that you’ll be taken care of in the event that you live much longer than you expected.
Ask for the Senior Discount
No one wants to claim senior status, but the reality is that the rewards offered to seniors are incredible. A variety of airlines offer discounted rates to seniors including United and American Airlines. All you have to do is speak with a customer service representative, ask for the senior fare, and confirm your age to receive a reduced rate on airfare. When it comes to traveling, old age pays off.
It’s not only airlines that offer senior discounts; ground transportation such as Greyhound and Amtrak offer 5-15% discounts for seniors over 62. And hotels such as Comfort Inn or Clarion both offer up to a 10% discount for seniors over 60 if you book in advance. No matter where you go, don’t be shy about asking if there’s a senior discount; after all, you won’t know if you don’t ask!
Enroll in AARP
Although many people are reluctant to admit they’re a member and thus reveal their age, membership to the American Association of Retired Persons actually offers an insane amount of benefits. Membership is available starting at age 50, and many senior discounts with higher age requirements are also available to AARP members. This means that even if you don’t technically qualify as a senior at certain businesses, being an AARP member allows you to take advantage of the senior discount anyway.
Member benefits include insurance plans such as healthcare, Medicare supplement insurance plans and even insurance for your pets. You can also receive discounts at countless pharmacies, restaurants, and cruises. Spend only $12 on your first year’s membership or sign up for a multiple year term in order to take advantage of a discounted membership. By enrolling in AARP, you can let your years of experience work to save you money and enjoy retired life.
Reduce Housing Costs
Retirement is the perfect time to downsize, as retirees typically don’t need the same amount of space they did when they were working and raising a family. Paying off your mortgage before you retire will enable you to live much more frugally in retirement. If you haven’t yet paid off your mortgage, selling your home and moving to a smaller house or apartment will help you reduce the amount you’re spending on housing in retirement.
Reverse mortgages can be tempting if you’re in need of cash, but they come with a lot of fees and high interest that can make them a costly decision. Downsizing your living situation when you no longer need the extra space will enable you to cut the costs by saving on property taxes, maintenance, and utilities. You can even reduce the number of cars your family uses to save money on gas and insurance. Going minimal is an easy way to reign in spending when you find you no longer need quite as much as you used to.
Living in a city with a high cost-of-living can be necessary for work, but one of the luxuries of retirement is the ability to live wherever you want. Consider moving to somewhere more inexpensive, like a small town or an affordable city like Portland, Maine. Reducing the cost-of-living will help you spend less over time and make your retirement that much more comfortable. It may even help you save enough to allow you to retire a little bit earlier than you thought!
Retiring abroad can also be an option for those looking to live frugally, as many countries have relatively low cost-of-living. Countries like Costa Rica or Australia are affordable places to live with peaceful beaches to retire on. The paradise of the outdoors doesn’t have to be an expensive luxury for the wealthy; it can actually be a reality for the frugal-minded.
Everyone looks forward to retirement as a well-deserved break at the end of a long and productive career. But if you do something you love, you don’t have to quit doing it entirely. Putting off retirement for a few years, continuing to work part-time, or even working freelance are all options for those who aren’t quite yet ready to give up working entirely. While many people are ready to completely relax when they retire, having something to do in some form may be beneficial in providing purpose as well as continuing to supplement your retirement savings.
If your career was not something you wish to continue in, you can even find a part-time job in something fulfilling such as teaching or working for a group you care about. Retirement frees you from the burden of having to work a 9-5 job to pay the bills, but it doesn’t bar you from being able to create or do meaningful work that you enjoy.
Hire a Financial Advisor
The best time to work with a financial advisor is before you’ve reached retirement, but you can still take advantage of one if you’ve already retired or are nearing retirement. An advisor can help you figure out things like filing for Social Security, structuring retirement account withdrawals, and any other financial decisions that will impact your retirement.
If you hire one ahead of time, they can also help you determine whether or not you’re fully financially ready to retire. Fully preparing for retirement with the help of an experienced advisor ensures that you’ll be set for a long and pleasant retirement.
Eliminate Eating Out
Dining out is a huge expense that can quickly add up over time. One of the biggest benefits of retirement is the additional free time you have to do other things, so take that time to cook at home. Rather than being a chore you have to do at the end of the night after a long workday, cooking can be a relaxing hobby that allows you to try a variety of dishes and recipes while saving money by eating at home.
The more time you spend cooking, the more comfortable you’ll end up being in the kitchen. You’ll save on the inflated prices of going out to eat and be able to relax knowing that your frugal food choices are stretching your retirement savings that much longer. Plus you might find that cooking is a passion you never knew you had while you were working!
Why a Frugal Retirement is a Happy One
Frugality is a mindset that you can adopt whenever you choose; it’s never too late to become a frugal person. Even if you’ve spent your whole life never worried about money until facing retirement, you don’t have to feel the fear of financial insecurity. Implementing a frugal retirement life can ease your worries while allowing you to enjoy the fruits of your labor.
Living frugally on retirement income is not the strict and boring life you may think it will be; in fact, it allows you to enjoy retirement that much more knowing that you’re set for the rest of your days. Retirement should be a stress-free transition to a more relaxing and tranquil part of your life, and now that you know how to live frugally in your retirement, it can be.