Living on a Fixed Income: How Small Changes Can Make a Big Impact

(Karen is a guest contributor to This Retirement Life. She is the author of Elder Wellness, a resource for seniors who wish to keep their minds, bodies, and spirits well.)

You don’t need to completely overhaul your budget in retirement. You can make simple adjustments that will make a big impact on your finances. With a little tweaking, you can live on a fixed income and enjoy your golden years. Here’s how.

Shop for New Healthcare Coverage

Spend a little more on an alternative Medicare Advantage plan to save more money in the long-term. Medicare Advantage plans are provided by private insurance companies that are contracted with Medicare. These plans provide at least the same level of coverage that Medicare Part A (hospital insurance) and Part B (medical insurance) provide, but many of these plans offer other benefits, including routine vision and dental care, prescription coverage, hearing aids, fitness memberships, and wellness programs. Even though a Medicare Advantage plan may cost more than Original Medicare, you may have $0 co-payments and limited maximum out-of-pocket expenses, leading to even more long-term savings. Take advantage of annual physicals and preventive screenings, which have a $0 co-pay through your physician.

Reduce Your Utility Costs

Cut back on power bills by going around the house and unplugging all the electronic devices you don’t use. When these items remain plugged in, they use power even when they’re off and you aren’t using them. Turn off heat and close vents in unused rooms in your house. Close off these rooms; you shouldn’t be paying to heat and cool rooms you never go into. Line drying your laundry is another way to cut utility bills. Use ceiling fans to cut heating and cooling costs, and make sure to keep your air filters clean and get annual HVAC maintenance done. The harder that your system has to work, the more energy it uses, and the more money you pay.

Refinance Your Home

The U.S. Bureau of Labor Statistics estimates that the typical American between the ages of 65 and 74 spends an average of 32.4 percent of their household income on housing annually. Therefore, if you can reduce your mortgage payments by refinancing, you could be making a significant impact on your overall budget. Refinancing at a lower interest rate (or for a longer term) will reduce your mortgage payments and thus add more money into your cash flow. To achieve even more cash on hand, you can do a cash-out refinance. This means your new mortgage will be more than your old mortgage, and you get the difference in cash. With any type of refinancing, of course, there are closing costs, just like with your original mortgage. Therefore, you need to shop around to different lenders and see what type of refinancing is available to you and what the costs would be.

Cancel Memberships You Don’t Use

Most people have memberships and subscriptions that they don’t use. Look at your financial statements and check out all the monthly payments that come out automatically. You are sure to find some things that you pay for and never use any more. Canceling magazine subscriptions, unused gym memberships, streaming services, and so on can reduce your monthly expenditures. For other services you pay monthly (for example, your trash service or insurance payments), call the company and see if they’ll give you a discount if you pay annually instead of monthly. You could save 10 percent or more by paying yearly.

Cut Back on Impulse Buys

When looking at your bank and credit card statements, you might notice that you make a lot of small expenditures that really add up. This is usually due to impulse buying, whether from ordering stuff on Amazon or picking up stuff at the grocery store every day. Change your habits and grocery shop just once a week (or every other week) with a list. Don’t order anything online without thinking it over. Put it in your online cart and then come back to it in a few days. Only complete the purchase if you need (or really will enjoy) the item.

Living on a fixed income can be a difficult transition. However, you don’t need to live like a pauper to make it work. With some simple lifestyle changes, you can make adjustments to your budget and live your golden years happily and healthily.

(Photo via Pixabay)