It is important to have a personal finance budget even if you are not retiring soon, but it is particularly important for senior citizens, especially for those who have little or no savings. As a soon-to-be retiree with no savings, I have been researching this. I have come up with some hints to help create a budget for retirees and soon-to-be retirees, that I think will help just about anyone figure out their financial issues. Please read on to see my research results.
Designate a Younger Relative to Help
It is best to pick someone in your family to help you with your finances, long before you really need the help. Anything can happen, and usually does! So it’s good to be prepared. The best way to do this is to keep a 3-ring binder with a copy of each of your account statements in it. Have your younger relative keep it at their house. You can put your living will and your wills and trusts in there as well, along with a list of your final wishes. That way, if something does happen, your family is not in the dark when they are wrapping up your estate. And don’t forget to update that book frequently.
Consider Online Banking
For some older people, I know the technology is hard to embrace. But I have been doing online banking for years, and have never had a single problem with it. You see what your accounts are doing real time, and you see if there are any problems real time. Plus you can give authorization for your trusted relative to have access to the account electronically. The relative can monitor activity on the account and help out real time when they encounter an issue.
Get a financial adviser
The time to get a financial adviser is before you actually need one. The sooner the better. They can help you with what you can be doing NOW to prepare for retirement as well as when you actually do retire.
Steps For Creating a Budget
- List all of your income sources. This includes any money you have coming in, including Social Security, pension payments, alimony, wages from your part-time or full time job, and any other payments you receive.
- List your essential household expenses. This would be payments you are required to pay, such as mortgage if you have it, utilities, and other essential payments.
- It’s a good idea to factor in your property taxes as a monthly expense, even if you pay them annually or semiannually. That big lump sum at the end of the year can be hard to come up with, so planning for that up front is very helpful.
- List your other expenses, that can be varied or adjusted. That includes groceries, transportation, entertainment, and perhaps your phone, cable TV, and internet service. Also include expenses for classes, hobbies, and holiday spending. List each of these separately, so you can perform analysis on each expense. Can the price of these items be reduced in any way? Your mission is to find out if they can be, and take steps to reduce them.
- Don’t forget to factor in savings. Even after you retire, you will want to consider saving some of your income, for emergencies and for if you live longer than what you saved for.
- Also, don’t forget your medical expenses. Not just your doctor visits, but your medications, and health club memberships.
Once you have all of this configured, you can make adjustments up or down on where your money is going. You can assess what you can cut as well as what will need more money budgeted.
How To Limit Your Spending Before You Retire
Put your retirement plans and potential budget in writing: If you are working through this with a spouse or significant other, you will be on the same page with a written budget and retirement plan. If you are working this out on your own, have your financial adviser review it. Or, have your trusted relative go through it with you, so they understand your wishes.
Deal with potential health issues now: The best example I can think of is Type 2 Diabetes. While you are still working and getting a paycheck, and are under your employer’s health plan, get your blood sugar under control, and get your weight down. If you are in need of joint replacements, there’s another issue you can tackle before Medicare. Get the treatments you need before you go into retirement, so you won’t be dealing with them when you are on Medicare.
Reduce transportation costs: Are you making a big car payment to that luxury automobile? You will save a ton of money downsizing your car, by reducing or eliminating your car payment, insurance, and expenses for upkeep. Can you be riding the bus or taking your bike instead of driving? Any time you leave your car at home, you are saving money.
Eliminate high interest debt: Credit card service charges and interest payments EAT money. Do your best to get everything paid off.
Pay off your mortgage: If at all possible, go into your retirement dept free. For most people, that mortgage payment is a big chunk of their income. Any way you reduce or eliminate that payment will help you in the long run.
Downsize your home: Please do not get sentimental about your home and think you should keep it and stay in it as long as you can. Large older homes are expensive to maintain, plus the heating and cooling costs can be rather expensive for a large home you only use part of. Find something smaller that is easier to maintain, and easier to pay taxes on.
Ideas On How To Limit Your Expenses Before, During, and After Retirement
Bundle Services: Can you save money by bundling TV, internet, and phone service? You bet you can. Do some research into what will work best for you.
Ditch cable and satellite TV altogether: There are so many internet TV services now that are inexpensive or even free. With internet TV, you choose what you want to watch, and you don’t have to pay for bunch of channels you don’t ever use. Even if you don’t have a smart TV, you can get an attachment, such as Google Chrome which will allow you to sync your phone with your TV, so whatever videos you watch on your phone, you can watch on the TV screen. We have done this in our house, and it works great.
Ditch your land line: If you haven’t already discontinued your home phone and gone only with your cell, consider doing so. Pretty much everyone is doing it.
Cut back on extras: Do you pay for memberships you’re not using? Are you buying newspapers and magazines that never get read and are just as good or better free online? Are you taking your clothing to the cleaners, rather than washing and drying at home? Are you getting a latte every day at the expensive coffee shop instead of making your own coffee at home? Are you eating out a lot instead of packing your lunch or eating at home? There are so many things you can cut out of your budget that are easy. You just need to weigh your priorities and decide what you can live with or without.
Clip coupons and shop sales: I make it a point to only buy clothing on sale. I watch for my favorite store sales, and often get 60% to 70% off and free shipping, by just paying attention. I buy my groceries through an app on my phone that automatically adds coupons, and also builds up points that I use at the grocery store’s gas station for fuel. We make it a rule to only eat out if we have a coupon for the restaurant. We save money, and we get to try new places to eat.
Slash insurance premiums: Perhaps the easiest way to do this is to raise your deductibles. Also, get rid of any coverage you don’t need. You can save a lot by going with liability only and dropping comprehensive. The caveat there is that you are out of luck and out of your pocket if there is a car accident. This is something we have chosen not to do, because the cost of replacing one of our cars would not fit our budget. We pay insurance to get replacement cost if something happens at this point in our lives, but can likely change that later.
If you are a couple, consider getting rid of one of your cars: My retired sister and her husband have sold all but one of their cars. They only need one because they are within walking distance of a lot of their activities, and they usually go everywhere together. This really reduced their expenses: no payment, no insurance, no maintenance, all of which cost precious dollars.
Get energy smart: When you replace appliances in your home, do research on how energy efficient your replacement will be. Be sure to determine if keeping and repairing an old appliance is better than getting a new, energy efficient one.
Be smart about how you run your appliances as well. Don’t run your dishwasher for just a few dishes. Hang clothing out to dry instead of using your clothes dryer. Turn off lights when you leave the room. Turn your furnace down a degree or two and put on a sweater. Get a programmable thermostat that turns your heat down when you aren’t home, but turns it up once you get home. Of course do the opposite if you are cooling a home in a hot climate. Also consider alternative energy such as solar and wind. One of our best cost savings is to burn wood in the winter. We live in an area where firewood is very cheap or free, so our heating bills are drastically reduced.
Seek cheep thrills: There are so many things that seniors can do at low or no cost. Check out books from the library instead of buying books. Go to free concerts. Go camping instead of staying at a hotel. Invite your neighbors over for board games. Go berry picking, and freeze your berries. Go for walks or hikes. Join social groups. Check with your local senior center for fun, inexpensive activities.
Take advantage of your senior discount: Funny story time. My father-in-law was eating out a lot when my mother-in-law took a lengthy trip back to the old country to care for her mother. He was in his early 50s, but had graying hair. Restaurant employees saw that he was “older” and eating alone, and often assumed he would like a senior discount on his bill. He got offended at first because he didn’t think he looked THAT old. But then later he said, “Now wait a minute!” If he could get a discount out of the conversation, why was he fighting it? He decided it wasn’t such a bad idea to have people assume he was older to get the senior discount.
So, the moral of the story is, don’t be offended if someone offers a senior discount. Take it! You can get senior discounts from just about any retailer and restaurant. Just ask. Oh and don’t forget state and national parks that give a senior membership for a reduced cost.
Pay bills on time: Late fees are expensive and they add up. Get yourself a bill pay app that reminds you when bills are due, or keep a calendar handy. Get in the habit of paying bills right when you get them. Or set up your online banking to pay certain bills automatically.
Learn how to do more yourself: This is something my husband has embraced. He watches You Tube videos on how to fix things, then does it himself. Example: We had an issue with our car. We took it to the dealer, and they wanted $1300 for the repair. My husband watched a few videos, bought the part, and replaced it himself. That repair ended up costing $75 total. You can get tutorials on anything, from home improvements and car repairs to canning vegetables and making home made gifts, all of which can save you a ton of money.
Look for government and community programs that assist with senior living expenses: These will vary from state to state and even from county to county. But look into them. You may qualify for assistance with housing, food, transportation, or utility bills. You paid into these programs all you life, so why not take advantage of them when they come available to you?
A Great Way For Seniors To Relieve Budget Stress
I’ve said it before and I will say it again. Seniors should seriously consider affiliate marketing with Wealthy Affiliate. It’s a great way for retirees and soon-to-be retirees to earn extra cash. Wealthy Affiliate has world-class training that will get your website up and running the right way. You will have great web hosting, research tools, image creation and editing, and of course the best online community to help you every step of the way. It’s budget friendly with a free membership, but even the premium membership is only around $30 per month if you subscribe for a year at time.
See my articles about Wealthy Affiliate here:
Budgeting doesn’t have to be rocket science. It can be as easy as Money In – Money Out = Savings. That’s really all there is to it. Just learn to use a few easy tools, and keeping track of your money will be a walk in the park. It doesn’t have to be a prison sentence either. You can have a fulfilling life without spending a lot of money, and lifting the financial burden you carry when you don’t have a budget will free you up to enjoy your life a little more. So, get started today and learn to keep an eye on your finances. It will be great for you in the long run.
Please put your comments and questions below, and thank you for reading!