Rising costs are a stressor for Americans of all ages. But for retirees, the pain of increasing prices is particularly acute.
While Social Security benefits get an annual bump to help keep up with inflation, most retirees still regularly trim their spending to protect their nest egg over the long-haul.
And for many workers near retirement age, cost-cutting won’t be so much a smart personal finance move as a necessity. About half of baby boomers and Gen Xers are at risk of exhausting their retirement savings, according to a July report from Morningstar’s Center for Retirement & Policy Studies.
Here’s how you can cut costs — both big and small — and shore up your retirement budget.
Rethink your housing
Housing affordability is an issue that affects all age groups. But for older Americans looking to cut their living expenses, tapping into your home’s equity could be the ticket to financial stability.
Real estate has long been a primary retirement funding tool. But the usefulness of so-called housing wealth has only grown as home prices have. One popular index finds that home values have risen nearly 400% since 1980, and the average home sale price is now above $501,000, according to the Federal Reserve Bank of St. Louis.
Retirees who own their homes and are looking to cut expenses should consider taking advantage of the current housing market by downsizing, moving to an area with lower living expenses or a combination of the two.
1. Downsize your home
The average American home measures around 2,300 square feet and all that living space can present challenges for those attempting to age in place. There are the financial burdens, such as increasing property taxes, skyrocketing homeowners insurance premiums and higher utility bills, as well as lifestyle stressors like mobility issues and general upkeep.
Forty-four percent of 60- to 70-year-old homeowners are carrying mortgages into retirement, according to financial services company TIAA. If that group includes you, the savings from downsizing are obvious: Selling your home and using the proceeds to buy a smaller, more affordable property allows you to offload (or at least, significantly lower) your monthly mortgage payments.
But even if you own your home outright, selling it and moving to a smaller property can still result in tremendous savings. Your utility bills and property taxes will shrink. And with Rocket Mortgage reporting that the median listing price per square foot is $233, downsizing from that average 2,300-square-foot home to a more reasonable 1,000-square-foot home could gross over $300,000 for retirees.
2. Relocate to a lower cost of living area
Selling your home at a time when prices are near record highs can have additional benefits when coupled with moving to a lower cost of living area. Florida is often idealized as America’s retirement hotspot with 1,350 of coastline, an average temperature of 72 degrees and, crucially for your budget, no income tax.
But the Sunshine State isn’t a slam dunk for retirees anymore. Property taxes have been rising, homeowners insurance policies are the highest in the nation and properties subject to homeowners associations are increasingly unaffordable due to ongoing assessment fees.
Instead, you may want to consider more affordable housing markets that aren’t known as retiree locales. Places like Syracuse, New York; Akron, Ohio; Augusta, Georgia; and Pittsburgh made Zillow’s list of most affordable housing markets this year and also offer an array of recreational activities. All of them have typical home values that are about 40% lower than the national average, according to Zillow.
Housing is the main driver of the overall cost of living in a particular region, but local taxes, groceries and healthcare all play a role, too. And you should map out typical spending on those essentials before making your move.
Take advantage of senior discounts
If you’ve noticed that your monthly bills are steadily increasing, you’re not alone. Prices for everything from electricity to car insurance to streaming services are on the rise, which can upend budgets for retirees relying on a fixed income.
Aside from necessities like electricity, water and food, older Americans should routinely revisit their household budgets to identify ways to lower recurring costs. Before you make any drastic cuts, look for senior discounts, which can apply to both discretionary spending and consumer staples. Here are a few common categories.
3. Mobile phone plans for seniors
The average monthly cell phone bill in 2024 is $141, according to JD Power, or $1,692 per year, which makes for a significant line item in retirement budgets.
You might be able to shrink that line by changing to a lower-cost mobile virtual network operator, or MVNO.
MVNOs offer services under their brand names but operate on other company’s networks, meaning they don’t have to shell out for network growth or maintenance. So companies in this space — like Cricket Wireless, Mint Mobile and Boost Mobile — are able to offer lower-priced plans than their major carrier competitors like AT&T, Verizon and T-Mobile. (Learn more about these plans with Money’s list of best cheap cell phone plans.)
The other approach to lowering your monthly cell phone bill is to research companies offering senior discounts. AT&T, for example, offers senior plans for residents of Florida ages 55 and older that include unlimited talk, text and data for a monthly cost of $40 per line.
Lively from Best Buy offers cell phones and mobile medical alert systems with affordable plans for seniors. Its basic plan for seniors starts at $19.99 per month. For $30 more per month, its premium plan includes features like an assistant that can schedule Lyft rides without requiring the app on your phone, no-call nurses and Lively Link, which alerts friends and family members if there’s an emergency.
4. Discounts for streaming services
Streaming services can’t stop raising their prices. Case in point? Warner Bros. Discovery’s Max, Comcast’s Peacock, Disney and Paramount all raised the cost of their services in the past five months, CNBC reported.
This comes on the heels of Netflix raising its subscription prices in October 2023, with another increase expected at some point this year. Overall, streaming prices have doubled in the past decade, according to Quartz. Additionally, Americans are paying for more individual services as more media companies have launched their own. More than half of households reported paying for four or more streaming services, according to Consumer Reports.
The good news is that several services are now offered in bundles, like Xfinity’s StreamSaver + Internet, which includes access to Peacock Premium, Apple TV+ and Netflix for $45 per month. You may also be able to trim your monthly costs by switching to a lower-tier, ad-supported plan. You can save $100 a year on Netflix, for example, by switching from its standard plan to the cheaper ad plan. Finally, with so many services attracting customers with original content, you can save some cash by simply signing up and canceling services as you want to watch particular shows.
5. Travel deals for seniors
One of the best parts of retirement is embracing the ability to travel more. But travel, like most other facets of life, is getting more expensive. According to the U.S. Travel Association, the Travel Price Index, which measures changes in the cost of travel on a seasonally-adjusted basis, increased roughly 19% in the past five years. Everything from rental cars and cruise prices to hotel lodging and recreational activities is on the rise.
The silver lining: Senior discounts can help offset many of these increases. For seafaring fans, Carnival Cruise Line offers those 55 and up its Senior Special, and MSC Cruises offers those 65 and older up to a 10% discount on all of its cruises. Additionally, several cruise lines offer discounted rates for AARP members.
When it comes to rental cars, AARP members can again take advantage. Membership provides discounts of up to 35% for major rental companies, including Expedia, Avis and Budget.
The same goes for lodging, with AARP members eligible for discounts at hotel chains, including Best Western, Days Inn, DoubleTree, Hampton, Hilton, Margaritaville, Radisson, Wyndham and dozens of others.
Another simple way to save? Without work tying you down, you’ve got a lot more flexibility about when you jet set. Opt for off-season or shoulder-season deals to make your money go farther.
6. Save on pharmacies and groceries
Retirees can also take advantage of senior discounts for everyday purchases like pharmacy items and food staples.
Walgreens’ Seniors Days, for example, are held in-store on the first Tuesday of every month or online for extended periods. You can snag 20% off eligible items during these days.
Food inflation has finally slowed, but prices remain above pre-pandemic levels. However, major supermarket chains routinely provide senior discounts, which can help offset the elevated cost of groceries. Fred Meyer, a Kroger subsidiary with locations in four Western states, gives those ages 55 and older an additional 10% off the first Tuesday of each month. Shoppers on the East Coast, meanwhile, can use Harris Teeter’s Club 60 Senior Discount, which provides a 5% discount to those 60 and older every Thursday.
Shop around for better insurance
Although only a few major insurance providers offer senior discounts, there are ways to find more affordable plans. This is important as rates for some insurance products tend to increase with age, with the highest increases coming at age 75.
Finding a way to reduce your insurance costs can help offset other — and often more pressing — monthly expenses, like healthcare, housing or groceries.
7. Senior discounts for auto insurance
It’s smart practice to shop for auto insurance quotes at least once a year, experts recommend. That’s especially true if your driving habits have changed, you need different coverage or you swap to a more affordable car — all of which can result in a lower car insurance premium.
Beyond shopping around, several companies offer discounts to older drivers.
Farmers Insurance, for example, offers a mature driver discount for those over the age of 55 who have completed a state-approved safe driver training in the last three years.
Older Geico policyholders in 30 states can qualify for a discount if they meet certain conditions, including not having any traffic violations or accidents in the past three years.
And Nationwide offers a defensive driving discount to drivers 55 and older if they complete an accident prevention course and don’t have a recent at-fault accident on their record.
8. Bundling your insurance
Another way to save money on your insurance is by bundling your policies. The savings will vary by company, but multi-policy deals often result in a discount of 10% to 25% off the policy premium, which can translate to considerable savings.
Liberty Mutual offers savings up to $950 per year when you bundle your home and auto insurance. State Farm allows those who bundle home and auto policies to save more than $1,200. And bundling home and auto insurance online with Allstate can save policyholders up to 25%.
Be prepared for prices to keep climbing
As costs continue to rise, retirees or those nearing retirement will always face the prospect of diminished purchasing power on fixed income. Understanding that risk is the first step in overcoming it.
Routinely revisit your household budget to understand where — and by how much — expenses can be cut. Negotiate your bills regularly and take the time to research the best deals available for seniors. Remember that with some planning, retirees can enjoy years of financial stability despite rising costs.
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