Retirement tests everyone’s money skills.
Seniors have to stretch savings over as much as three decades, face steep health care costs and have few ways to make up for any shortfall. For most, savvy spending habits are simply a must.
But being smarter about money goes beyond sticking to a budget and checkbook-balancing. It’s about spending not just carefully but meaningfully.
The profligate spending of years past just doesn’t feel good in a financially constrained era, especially at an older age, says 66-year-old retiree Lynn Colwell of Renton, Wash.
“We’re just so overwhelmed with ‘stuff’,” says Colwell, a retired life coach. “To myself and other seniors I’ve spoken to, it doesn’t seem as necessary or as important as it used to.”
Their finances can be challenging, but retirees don’t have to Dumpster dive in order to substantially cut their spending. These nine money-saving tips can be a great starting point:
1. Control prescription costs.
Think generics and store brands. It can cost more than three times as much to fill a brand-name prescription than a generic equivalent. There’s a smaller but still significant savings to be had by buying store brands of over-the-counter medicines, too.
Joining store discount programs will compound your savings. Pharmacy, grocery and big-box chains offer them, usually for an annual fee.
Also take a look at Consumer Reports’ “Best Buy Drugs” website, which mixes education with consumer tips. “It will help you talk to your doctor about prescription drugs, and find the most effective and safe drugs that also give you the best value for your health care dollar,” says Karen Hoxmeier of deal site MyBargainBuddy.com.
2. Join a club.
Retiree couples or singles may think they don’t have enough food or shopping needs to join a warehouse club. But it’s not necessary to buy in bulk to save enough to quickly cover the $40 or $50 annual fee. Non-food items from books to clothes to electronics and gasoline are discounted at places like Costco and Sam’s Club, and they can stock up on non-perishable grocery items. There’s also the possibility of joining with neighbors or friends to split large purchases.
3. Save on travel costs.
Planes, trains and automobiles — it’s possible to find deals on all three.
Air travel discounts for seniors aren’t what they were a decade ago, when those over 62 could get 10 percent off most fares. But some carriers still offer special prices in certain markets. American, Continental, Delta and United all offer senior discounts on certain flights, and Southwest has them on its flights for those 65 or older, according to Cheapflights.com. Such tickets sometimes cost more than the airlines’ online-only specials, however.
Amtrak provides 15 percent discounts for those 62 or older. And retirees can find senior prices on auto rentals as well as hotels, tours and cruises through AARP’s active discount travel program.
One real gem is the $10 lifetime pass issued by the National Park Service that admits seniors 62 or older and their travel companions for free to most U.S. national parks, monuments and recreation areas.
4. Reevaluate insurance coverage.
Retirees should evaluate their auto, homeowners, life, disability and any other insurance annually and try to find lower premiums, discounts or other potential price cuts. If in doubt, call the insurer and ask for a reduction.
Review deductibles on all policies and get price quotes to see what the rate would be if, for example, the auto insurance deductible was bumped from $500 to $1,000. It could save you 15 to 30 percent, according to the Insurance Information Institute.
Those who still have life insurance and grown independent children, might consider dropping coverage. If you’re in your mid-50s or older, consider getting long-term care insurance — it could be hundreds of dollars a year cheaper than if you wait.
5. Seek out senior specials.
Many businesses offer senior discounts, but you may have to ask. Savings can be substantial; for example, AMC Theaters and Carmike Cinemas give seniors a 35 percent savings.
One good place to check is Sciddy.com, a new daily deals site for seniors. It offers deals in several categories from automotive and beauty to pet services and more.
6. Get serious about coupons.
Even if you don’t master “extreme couponing,” whose practitioners can get a shopping cart’s worth of goods for a pittance, learning how to categorize, combine and maximize the coupons you find online and elsewhere can pay off in huge savings.
Restaurant coupons are particularly popular with seniors and others living on a limited budget. But the biggest coupon savings can be had on groceries. “By staying organized and on top of the latest and greatest deals, you can save a significant amount of money every week on one of your most significant expenses,” says Andrew Schrage of the personal finance website Money Crashers, which provides tips in its Extreme Couponing 101 at http://www.moneycrashers.com/coupons-from-casual-to-extreme/ .
7. Go local.
Take advantage of opportunities in your community. See plays and concerts for free by volunteering as an usher. Use your local library more. Besides books, CDs and DVDs, some libraries now have e-readers you can check out. And most offer great free programs for all ages — from movies and lectures to various performers.
8. Limit family spending.
Even if it sounds heartless, cut back on gifts and spending on kids and grandkids. Remember, it’s in their best interest; keeping your finances in order ensures they won’t have to come to your rescue someday.
Retirees need to hold their boundaries and teach their children that in these economic times you need to make tough choices in your financial priorities, says Julie Murphy Casserly, a financial planner with JMC Wealth Management in Chicago.
9. Think secondhand.
Borrow, swap or hit garage sales and thrift stores. Make a habit of checking your local version of Freecycle, http://www.freecycle.org , a nonprofit network focused on “keeping good stuff out of landfills,” or check the listings for free and secondhand items on Craigslist.
This approach is at the core of the eco-friendly principles of reduce, reuse and recycle. It can make retirees feel good while protecting their pocketbook.
Personal Finance Writer Dave Carpenter can be reached at http://twitter.com/scribblerdave .