How to Make the Most Out of a Fixed Income After Retirement
Retirement has come and gone, and with it, a healthy paycheck. As significant a transition as it might be to live on a fixed income, it’s really nothing that can’t be handled by solid budgeting.
With a fixed income, the objective is to live within your means while lessening — or even eliminating — debt at the same time. If that sounds familiar, it’s because it’s more or less what you’ve already been doing for most of your adult life. The only real difference is your income sources. It may be thinner now, but take a look at it positively — you always know what you have so there are no surprises. Suffice it to say, a little bit of financial tweaking will go a long way. Here’s how you can live your life to the fullest on a fixed income.
Budgets fail for many reasons, but a lot of it boils down to inconsistency and lack of focus, so know your priorities and double down on them. Start by making a list of all your expenses which you can break down by importance. You can then use this to determine which expenses you can do without and which ones you can keep. You will need to allocate a certain amount for prescription medication, property taxes, and utilities. But then, you probably don’t need all those cable channels or use your cellphone all that much, so there’s room to cut expenses.
Commit to Healthcare
A recent study shows that senior couples need a whopping $280,000 in savings to cover medical costs in the future. This is, indeed, an alarming figure, especially for those relying on a fixed income, and explains why healthcare is the biggest cost and concern for seniors.
But take heart — you are not without options. There is Medicare the federally funded health insurance program for seniors aged 65 and over. Unfortunately, this is not as comprehensive as most people would like, which is where alternative plans like Medicare Advantage come in.
Also known as Part C, Medicare Advantage is enforced by private insurance companies and comes with expanded benefits like prescription drug coverage. For example, Aetna Medicare Advantage plans include expanded coverage for prescription drugs, dental, vision, hearing, and even preventative care. Of course, Medicare Advantage plans require higher premiums, which can be unappealing when you’re already on a fixed income. However, this translates to larger savings in the long run. And the peace of mind it gives you? Priceless.
Check Your Car Insurance
Here’s an often-overlooked fact: For seniors, car insurance cost is often proportional age. This is because as you get older, your reflexes are slower, your hearing and vision start to decline, and you take a longer time to heal from injuries, making you more expensive to insure.
It is important, therefore, to check if your auto insurance coverage and cost have changed in any way. This often varies by insurance company and location. For most states, minimum coverage will often suffice, but for your own peace of mind, you may want to look into getting full coverage to make sure that you’re protected no matter what.
With a fixed income, it may even be more important for you to find out how you can save on auto insurance. Luckily, there are various discounts that you could qualify for. As an example, many auto insurance providers give discounts when you drive a “safer” car with modifications and an anti-theft device or if you’re a safe driver. You could also pay less if you drive fewer than 12,000 miles a year or if you bundle your policies. So, shop around and compare prices from different providers, as you may be in a position to save hundreds of dollars a year.
Living on a fixed income may seem like another item on your growing list of uncertainties, but it’s actually one of the easiest to overcome. With the right mindset and money-saving tactics, you’re well on your way to making your golden years a truly enjoyable one.
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