As seniors retire and find themselves on fixed incomes, it is natural to consider ways to cut costs so that you can a semblance of financial independence.
After all, no parent wants the burden of having to rely on their children…or even worse, moving in with their kids because they can no longer afford to live on their own.
To that end, Yahoo Finance recently wrote an article about the 10 Ways to Significantly Cut Retirement Costs. My personal opinion is that some of the recommendations are good and some are bad or impractical.
So what I wanted to do was take a look at their suggestions, see how seniors could actually use some of the recommendations, and then offer a few suggestions of my own that I feel would be better…
Pay Off Your Mortgage
The first recommendation was to pay off your mortgage. Now, I know plenty of seniors that could have benefited from the Yahoo Finance article, but the first and most obvious question that they would have asked is, “How!?”
After all, seniors are on fixed incomes so if they still have a mortgage payment in their 60’s, the only real options are to continue working or to consider the benefits of a reverse mortgage.
There is not going to be a way to magically payoff your mortgage in retirement. Without a job and only relying on a pension or Social Security, which are probably less than what you were making when you are working, how are you going to accelerate this debt after your income drops?
The Yahoo Finance article offers nothing in terms of advice as to actually pull this off…other than to state the obvious that this would significantly reduce your monthly expenses in retirement.
Of course it would, and I am pretty sure that if seniors could pay off the mortgage they would, realizing this.
Like I said, the real world answers come down to three potential solutions…
• Continue working
• Take out a reverse mortgage, or…
Downsize Your Home
This second suggestion was at least a practical source of advice. There are many seniors who find downsizing a great way to save money and aggravation.
First of all, transitioning from a home to a condo will in all likelihood save money.
Not only that, the reduced maintenance issues with a condo, where the owner is not responsible for the outside of the property, moving the lawn, snow removal, etc…are also practical ways in which seniors are able to enjoy their quality of life while at the same time saving money.
Move To A Cheaper Area of the County
Yes, there are plenty of places which are probably cheaper than where you are now. The question is, do you really want to move?
After all, moving could mean moving away from your children, if they still reside in the same area that they grew up in.
Worse, that means moving away from grandchildren. And the thought of only being able to see your grandkids a few times a year for many seniors would be unbearable.
So this is a suggestion that really needs to be mulled over. Yes, it can work but the emotional cost could outweigh the financial gain.
Sell Your Car or Go Carless
Personally, I think this is a ridiculous suggestion. After all, you want to enjoy retirement, right? So, if you are still able to drive safely, why limit yourself to car rentals and mass transit?
You want to have the freedom to enjoy life in retirement, not stand on line for a bus. So personally I think this is one of those suggestions that the author just threw in there in order to get to 10 suggestions, just like the next two are…
Reduce Your Tax Bill/Investment Fees
Yes, it can lead to savings, but both of these suggestions are stating the obvious. If you are going to read an article about the 10 Ways to Significantly Cut Retirement Costs wouldn’t it be nice to get some really innovative ideas?
Instead the author talks about reducing your tax bill (which is something everyone already strives for) and reducing the fees on your investments (ditto). These are steps you should have been taking your entire life, from the time you got your first job.
Minimize Health Care Costs
This one is massive, but the author avoids the 800-pound gorilla in the room when talking about it.
But as I said the author avoids the 800-pound gorilla, probably because she doesn’t want to offend you. So let me tell you what you really need to hear…
The best way to minimize health care costs is to live a healthy lifestyle. And that means eating right, exercising and losing weight.
You can reduce or even eliminate your reliance on medications for high blood pressure, diabetes and a whole host of ailments as you get healthier.
And improving your health will also allow you to run around and enjoy your grandkids more. So take control of your health, live a more happy life, and reduce those health care costs.
Due to the fact that seniors are retired, they are travel off-peak when they do go on vacation, plus your destination will be less crowded.
Once again stating the obvious. There are hundreds of thousands of senior discounts out there…all you need to do is ask for them.
My Added Suggestions
Now that I have complimented the author on a few of the above suggestions…and shredded them for a few ridiculous ones, I now want to talk about a few practical ways that seniors can cut their retirement costs.
I totally agree with the downsizing suggestion above, and added my own two cents to the part about minimizing health care costs, but the facts are that most seniors are living on a limited budget, and based upon the questions and requests for help that I receive on a daily basis, many have lost their health insurance or dental coverage, have no prescription drug coverage, and are living from one Social Security check to the next.
Here is how to handle that situation, which the author of the Yahoo Finance article doesn’t even touch…
Office of the Aging
My very first call would be to call your Local Office of the Aging and explain the situation. Tell them what is going on in your life and see if they have a benefits counselor who can sit down with you and explain what type of local programs are available to assist you.
Prescription Drug Discount Card
There are plenty of seniors without prescription drug coverage. To that end, there are prescription drug discount cards available that will allow seniors to save 50-80% off of the cost of their medications.
The one above is free. Feel free to download it. It is accepted at over 60,000 pharmacies in the US.
It even works for those seniors who have pets and cannot afford pet medications!
So there are real, practical ways for people to save significantly in their retirement. I just wish the author of the Yahoo Finance article actually told people how to do it.