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Franklin had a problem that many people face, but few rarely talk about. He didn’t know much about money and debt management.
Until recently, this 72-year-old Cleveland resident used multiple credit cards to make his purchases—not an unusual situation. But without a solid understanding of his expenses or how he planned to cover them, Franklin often found himself between a rock and a hard place: He had to use his entire Social Security check to pay his monthly bills, which meant he had nothing left over for daily needs like food, utilities, or gas for his car.
Franklin’s inability to make ends meet spiraled into a crisis that threatened not only his financial stability, but also his health and well-being. Eventually, the stress of it all led him to his local Department on Aging, where he asked for help.
Why managing a budget is a common challenge for older adults
Seventy-two-year-old Franklin is most certainly not alone. In fact, you may even recognize him in yourself or someone you know. At a time of skyrocketing consumer costs, even the most money-savvy seniors can find it difficult to scrape by—especially when they rely on a fixed monthly income. Take these numbers, for instance.
UMass Boston’s Elder Index measures the income that older adults need to live independently. According to its interactive modeling tool, an older adult in excellent health who lives in the Washington, D.C. area and pays a mortgage needs $3,665 per month to cover basic living expenses.1
Now, consider that the average monthly Social Security check was $1,847 at the end of 2023.2
“Even with other sources of income, the margin between what many older adults spend versus what they take in can be razor-thin,” said Medicare expert Brandy Bauer, former Director of NCOA's MIPPA Resource Center.
That’s why being educated on how money management works—and learning how to implement strategies for managing debt, saving more money, and stretching the dollars they have—is so important," Bauer said.
Happily, this is now the case for Franklin. Newly armed with practical money budgeting tips he learned in a financial literacy course, he is now working toward greater economic independence and a more secure future.
Want to better manage your own money? These tips for older adults can help you do it
When you’re not working anymore, like Franklin, it’s important to make every penny count.
Using a budget calendar to track your spending can help you more easily visualize your monthly income and expenses. At the same time, there are a variety of steps you can take, strategies you can use, and resources you can tap to improve your financial well-being. Together, these can help you better weather today’s uncertainties—like when food prices rise; and enjoy tomorrow’s opportunities—like traveling to visit your grandchildren or friends.
“Even if you already have and use a budget, looking at ways to decrease your spending can be a great way to make those pennies count,” Bauer said. “And this doesn’t always mean cutting out things you need or enjoy. There may be several areas where you can reduce your expenses or capitalize on your existing assets—which is why it’s a good practice to evaluate those kinds of opportunities at least once a year.”
Top 10 budgeting tips for all seniors to consider
1. Your out-of-pocket coverage and policies
Why
Circumstances change, and your plans and coverage may no longer be relevant. It’s easy to forget about your choices once you’ve made them, but that means you could be leaving money on the table.
How
☑️ Gather together your spending commitments: supplemental health insurance; prescription drug coverage; and life insurance and long-term care policies.
☑️ Determine whether you’re getting the best rates or have the most cost-effective plan(s).
☑️ Enlist help from a knowledgeable friend, family member, or professional to evaluate alternatives before you make any changes.
2. Your Medicare health insurance
Why
You may be eligible to put $100 back into your monthly Social Security check. You could also save money on your premiums and co-pays.
How
☑️ Look into Medicare Savings Programs and learn whether you qualify.
☑️ Connect with an NCOA-endorsed licensed Medicare broker who will provide expert advice on finding the right program, at no cost to you.
3. Your Medicare prescription drug coverage
Why
Depending on your income, you could save money on your Part D premiums, deductibles, and co-pays.
How
☑️ Learn about Extra Help and see if you’re eligible.
☑️ Visit NCOA’s BenefitsCheckUp to apply for Extra Help online.
4. Your property taxes
Why
Home values are rising across the country—and updated assessments can be a shock to your wallet. Many states offer a senior property tax exemption for residents who are 65 or older, which means you could save hundreds of dollars a year.
How
☑️ Visit NCOA’s BenefitsCheckUp to learn whether this program is available in your state and how to apply.
5. Your phone service
Why
You could be paying more than you need. Depending on your income, you may be eligible for monthly discounts on your basic wireless or home telephone service through the government.
How
☑️ Read about the FCC’s Lifeline program.
☑️ Learn about the FCC’s Affordable Connectivity Program.
☑️ Visit NCOA’s BenefitsCheckUp to see how you can apply.
6. Your desire and ability to give back
Why
Do you have extra time on your hands? Your life and career experiences could potentially provide an extra source of income.
How
☑️ Check into AmeriCorps Seniors RSVP opportunities in your area.
☑️ See if you can participate in the U.S. Department of Labor’s Senior Community Service Employment Program (SCSEP). Created in 1965, SCSEP is the nation’s oldest program to help low-income, unemployed individuals aged 55+ find work.
7. Your home
Why
Your house, if you own one, likely represents your greatest financial asset. Even though its value isn’t liquid, there may be ways for you to leverage equity so you can continue to live independently.
How
☑️ Read about how you can use your home to stay at home. NCOA's guide walks you through different options on how to tap your home equity, including reverse mortgages and home equity lines of credit.
☑️ Talk to a trusted financial professional to decide whether any of these options are right for you.
8. Your senior discounts
Why
Why not? From national parks to locally owned stores, public transportation agencies to private entertainment venues, a variety of entities gratefully recognize your wisdom and contributions through reduced rates and prices.
How
☑️ In most cases, simply ask whether there’s a senior citizen discount. You may be pleasantly surprised!
9. Your estate
Why
Managing your money extends to how you’d like it distributed among your heirs, if you have them, or to charities you support. If you’re in a position to leave a financial legacy in any amount, it’s a good practice to communicate your wishes ahead of time.
How
☑️ Make a will.
☑️ Appoint a health care agent.
☑️ Designate a durable power of attorney.
☑️ Use NCOA’s partnership with FreeWill to get started.
☑️ Always consult an attorney.
10. Your other benefits options
Why
Millions of older adults miss out on saving money through public and private benefits programs simply because they don’t know about them, don’t believe they’re eligible, or aren’t sure how to apply.
How
☑️ Visit NCOA’s BenefitsCheckUp to see what’s available in your area and how you can apply for money-saving benefits.
Sources
1. UMass Boston’s Elder Index. Found on the internet at https://elderindex.org/elder-index (Data in the example accessed on July 14, 2022).
2. Social Security Administration, “Effect of COLA on Average Social Security Benefits.” Found on the internet at https://www.ssa.gov/oact/cola/colaeffect.html
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