As the average life expectancy grows, more and more Americans will have to live on fixed incomes. So how to save money as a senior citizen should be a topic of the utmost importance for both retired Americans and those about to retire over the next few years.
The life expectancy of the average American has substantially increased over the last century and is now at 78.7 years. The bad news is that this means Americans will have to live on fixed budgets for longer periods. So it’s high time we got serious about senior savings.
While those halfway through their careers may know about the need to build a nest egg, those already retired and living on a fixed budget won’t have many viable ways to increase their income.
Problem Number One: Nobody’s Interested in Senior Savings
There’s a good reason for disappointment. The mainstream media is mostly interested in the financial interests of millennials, like cryptocurrencies, real estate investments, IPOs, and on-demand finance apps. Little attention is paid to the financial problems of senior citizens.
This life period can also have health scares, resulting in unavoidable medical bills on top of all the expenses for groceries, other purchases, and monthly bills.
So, with nobody to talk to or financial counselors to turn to, seniors often see a gradual decline in their lifestyles To help out retirees, here are seven practical tips on saving money as a senior citizen.
7 Ways American Seniors Can Save Money
Money-saving tips for seniors are quite different from those for people who are still actively working or living with children. For starters, most of their expenses are tied to their immediate needs, so there aren’t many expenses for them to come back on.
Money saving tips for seniors must be both practical and easy to implement. Some of these tips require some effort, but they will pay dividends for a long time.
1. Downsize to a Smaller Place
Nobody wants to move out of their home. Your home may be where you’ve spent most of your life. It’s in all likelihood the biggest purchase of your life, and you may have worked for decades to pay off the mortgage.
Perhaps more important than the financial attachments, a home also has emotional aspects that tie you to it. It’s where your children may have grown up. It isn’t merely a building. It may have been your family home for decades.
But now, you may not need such a big house. Even if your home isn’t that big, without your children, realistically you don’t need that much space. One of the smartest decisions a senior citizen or couple can make is to move to a smaller place.
How does this help? To begin with, you’ll pay less for utility bills. Your homeowners’ insurance premiums will also go down. Remember that these are regular expenses, and any reduction will automatically turn into a regular increase in your senior savings.
There’s another way you’ll make money when moving out: while cleaning out your house, you’ll discover things you no longer need or hardly use anymore. Why not have a yard sale or sell your items online? You’ll make money and get rid of things that would have taken up space in your new house.
2. Consider a Reverse Mortgage or Refinance
Unfortunately, there are a lot of misconceptions regarding reverse mortgages. Although a reverse mortgage should be the last option for most people, it’s a viable idea for senior citizens living on fixed incomes.
One benefit of a reverse mortgage is that the factors that determine whether a reverse mortgage is a good option are the age of the borrower, the loan amount, and the value of the house. What’s not a factor is your credit history. This makes it easier to secure a reverse mortgage. Secondly, unlike the usual mortgages, the mortgage issuer will claim the loan payment only when your ownership over the property ceases.
Thirdly, if the value of the property decreases sharply, your heirs won’t owe more than the loan amount. Finally, the lender can’t ask you to vacate the property. All these factors make a reverse mortgage a practical option for those in their golden years who need to increase their senior savings.
3. Review Your Insurance Policies
Your insurance policies provide essential coverage for various parts of your life. You may not need those big policies now. But most retirees don’t spend enough time reviewing their insurance policies or the total premiums they pay every year. This leads to a huge waste of much-needed money.
You could lower your insurance policies and even get rid of those you may not need anymore. Why pay hundreds of dollars every year on disability insurance when that’s not a likely scenario now? With a few hours of work, you could have substantial annual savings by lowering your coverage or cancelling unnecessary policies.
4. Join the American Association Of Retired Persons (AARP)
With over 38 million members, the AARP is one of the most powerful organizations in the country. As a retiree, one of your first steps should be to join this collective, which will offer you several tangible and intangible benefits.
You’ll get discounts at stores and have access to the organization’s healthcare options. You’ll also be able to get insurance products at friendly prices. On top of these perks, you’ll also get learning resources and travel-related services.
The greatest intangible benefit of an AARP membership is the security it provides. This organization is one of the most powerful lobbying groups in the country, with a presence in Washington, DC and all state capitals. They work to ensure that governments at the federal and state level protect the rights of senior citizens and work for their welfare.
5. Look for New Medicare Coverage
Most people are content with their existing coverage not because of the benefits it offers but because of the perceived hassle of getting a new policy. But that bit of effort could lead to senior savings worth hundreds or even thousands of dollars a year.
Confused about the nuanced differences between the coverage options offered by different providers? You can reach out to AARP or any government organization working for retirees to learn more about the right Medicare coverage for you.
6. Take Advantage of Senior Discounts
From airlines, to restaurants, to salons, there are senior discounts everywhere. You can find out about outlets or service providers who offer these in your area. They may be just a block or two away, but that extra distance will yield significant annual savings in groceries, travel, lodging, and entertainment.
Once you find a store or service provider who offers senior discounts, try to stick with them to secure loyalty benefits and bundled products or services.
7. Save on Travel
Do you really need your car? If not, selling it could be one of the wisest decisions you make as a retiree. Remember that the earlier you sell it, the higher the price you’ll be able to command. With nothing to pay for gas or maintenance, you can substantially decrease your annual expenses.
This doesn’t mean you shouldn’t travel. You can always use a ride service like Uber or Lyft. Better still, try the carpooling services of these companies. If you and your spouse are planning a vacation, join another couple and save on everything from gas to lodging and food.
There are certain expenses that are bound to stay with you and even increase in your golden years. These can be especially difficult to manage on a fixed budget. But all that’s needed is a bit of preparation and imagination to reduce expenses and increase your senior savings. Once you start doing that, you’ll notice that the cumulative savings will be substantial, allowing you to spend more on entertainment or travel.