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?
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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!
Very nice information you have in this post and I’m sure it would be helpful to most people. Learning to budget well for retirement is a great act that very few people have mastered and all these tips you have shared are spot on. I have an uncle who will soon retire probably in 4/5years, this would be of immense help to him and I will gladly share it to him.
Hi RoDarrick, thanks for coming back to my site. I am grateful for your complements on my article, and I truly hope your uncle can get some good from it. Thanks again for your continued support and thanks for reading! Rhonda
Thats quite useful article as my father is going to be retiring in 5 years so I was thinking maybe I can introduce him some of these options to keep his free days interesting. I mean you are giving good advice to cut all the expenses that are really unnecessary, but I feel like my parents are used to live to a certain standard and cutting the cable telly would not be an option haha.
Any tips on that how should we explain this to our parents that this is something worth considering?
Cheers for an insightful read.
Hi Eugen, thanks for reading my post. I sure understand (and got a little laugh) about your parents not being comfortable with getting rid of the cable TV. I think when the time comes, I might have to pry the remote out of my husband’s hands and distract him with BBQ ribs or something!
One of the articles I read for inspiration for this article talked about how you broach the subject of budgeting to your aging parents. You can see that article here. Anyway, I hope this helps. Thanks again for your comments! Rhonda
Hello Rhonda. This is well written and precise. Truly it is not easy to put together good money when retiring but taking strict look at the way our money is spent can help us. In this case, one has to to prepare a budget and as you have said in this post, slicing premium insurance is really important too. I have an uncle who is soon to retire and I’m sure your post will be of great value to him. Great post you have here.
Hello Henderson, thank you for being willing to share this with your uncle. I hope it helps. I appreciate your complements on my writing. It really does help to take an honest look at what you are spending, and some of those cuts are easy to make. Thanks again for reading and commenting! Rhonda
Your website covers a very topical subject that is dear to my heart and that is how to live on a budget when you retire. The day is fast approaching for me so you have given me some very well thought out ways to save money and make your money go further, I especially like the way your husband had a problem with the car, he watches a YouTube video on how to fix it buys the part and is able to do the labor himself, saving an absolute fortune into the bargain! Well done on that,I also like your advice on getting rid of subscription TV in favor of internet TV, another great example of how to live on a budget, it can be done and now thanks to you people can go to your website and discover for themselves how it is done.
Hello and thanks for commenting. I think money and retirement is near and dear to a lot of people’s hearts these days. I am so glad you liked my post and my advise. Saving money doesn’t have to be hard. We kind of make a game of it, about who can get the best deal. So, again, thanks for reading, and I really appreciate your comments! Rhonda
Thank you for this advice. I like online banking and that’s pretty much what I do. What is the younger relative supposed to help with? That’s good advice to take care of major health issues before you retire, while you still have insurance. Letting go of cable TV and landline is a good idea and could save a lot of money when you added up over the years. Also limiting the electricity bill is very doable. Thanks for all these great ideas.
Hi Jen, thank you so much for your comments. You asked about the younger relative. It is a good idea to have someone in your family know what your finances are. For one, to make sure you are not a victim of fraud (see my article about elder fraud here). For two, the chances of you becoming mentally incapacitated as an elderly person increase significantly every year, and you may, out of the blue, need to have someone else handle your financial issues. It’s a good idea to get that set up before hand, rather than after an emergency occurs. So, that’s why I recommend a younger relative to help you out in that respect. Anyway, I hope this answers your question. Thanks again for reading and commenting! Rhonda