A budget is a tool that can help aging adults live a comfortable life in retirement.
Aging adults need a budget because their expenses may increase, and they may be faced with unexpected medical bills that can cause unnecessary strain.
Medical conditions like Alzheimer’s and dementia may affect an adult’s ability to properly manage their money.
LogicMark’s medical alert devices are affordable enough to suit any budget.
Why Do Older Adults Need a Budget?
Everyone can benefit from having a budget, no matter their age—but it’s a most essential tool for aging adults as most of them live on a fixed income.
Unexpected expenses can affect an aging adult’s health, security, and overall well-being. Here’s how you can help your folks save money, enjoy their golden years, and see that their financial needs are met when it matters most.
What Does Retirement Cost?
By now you must have heard the saying, “I’m too poor to retire.” Retirement costs money, and people know this.
Due to the rising costs of living and having to wait until age 67 to claim social security benefits, many Americans are choosing to stay in the workforce longer.
Retirement is costly, and people who haven’t been contributing to retirement savings may fall short when they need to stop working. Even if you’re not about to embark on a world tour once you retire, the bills can still rack up really fast by spending money on the most basic things.
The latest statistics show that most people will need $1.04 million to retire comfortably.
How do seniors spend their money?
Individuals who retire in the U.S. will spend most of their money on housing. This includes rent, property taxes, mortgage payments, and repairs and maintenance.
A recent homeowner study showed that there are 10 million Americans over the age of 65 who are still making mortgage repayments.
After housing, the other major expenses for seniors in retirement include:
|What is the 50/30/20 Rule? |
This is a rule for dividing your monthly income in an effective way, and it may help seniors to draw up their budgets, too.
According to the rule, half—50%—of your income after tax is reserved for non-negotiable expenses, like food and rent.
After the essentials are paid, 30% is dedicated to things you’d like to have, while the remaining 20% goes to savings and debt repayments.
What is the Best Way to Budget on a Fixed Income?
People who have retired often rely on a fixed income that doesn’t really take inflation into account. The best way to make your money stretch is to cover the most important expenses first, and to ensure that you don’t spend more than you have each month.
But this is basic knowledge that most parents will know by the time they retire. However, cognitive issues—especially conditions like dementia and Alzheimer’s—make it easy for them to forget the budgeting rules they’ve practiced their whole lives.
Fortunately, you can guide them and ensure that they’ll be provided for in their golden years.
Steps for Budgeting for Retirement
The earlier you start preparing for retirement, the better your chances of retiring comfortably. Proper financial planning can prevent your folks from running up unnecessary credit card debt. Here’s what you can do to help your parents construct their budget for retirement.
Have that difficult conversation about money
Discussing income and expenses is something that makes a lot of people uncomfortable, and this may be true for your folks as well. So you may need to be the one who introduces the topic.
Medical costs and housing expenses are two important factors here because they’re potentially huge expenses that are unavoidable.
If your parents are not yet of retirement age, you can explain to them the value of preparing for retirement while they’re young.
Determine income and expenses
Even when you stop working, your expenses don’t end. They will continue and increase, even if you don’t earn more money from year to year.
To calculate monthly income, take into account social security benefits and income from investments or other sources, such as rent received.
Try to anticipate what your parents’ retirement expenses will be, and then make a list of them. Your list may include:
- Debt repayments
- Repairs and maintenance
- Subscription services, like streaming sites and phone bills
- Entertainment and travel
Keep a spending diary
A spending diary is a journal where you record daily or weekly expenses. You can use this tool to project how much money will be spent in a month, a year, or more.
By jotting everything down, you’ll be able to see where money may be being being wasted, where it can be saved, and where it should be spent.
Your folks should not be saddled with a huge mortgage in retirement. Chances are, they don’t even need the extra space anymore.
And if a parent has lost a spouse, they may be considering not living in their current home anymore.
The downsizing conversation can be even more difficult to have with a beloved parent than the budget conversation. If you need help bringing up the topic, read our article on downsizing.
Pay off debt
Ideally, your parents shouldn’t enter retirement with a mountain of debt. If they have assets they need to pay off, encourage them to do this before retiring or consult a financial advisor for help.
Debt is a burden that can cause unnecessary stress and worsen existing chronic conditions like hypertension. It’s the last thing your parents need if they want to enjoy a peaceful retirement.
Take care of your health
The best thing an older person can do is take care of their health. Medical expenses can claim a huge portion of your monthly budget and prevent you from truly enjoying your retirement.
For your folks to remain in good health, it’s important for them to eat well, get enough physical activity, go for regular checkups, and protect themselves from injury, which brings up the next point.
There’s a reason why the Centers for Disease Control and Prevention (CDC) has so many resources on fall prevention: falling is a major risk among aging adults.
Around $50 billion is spent on falls each year in the U.S. — and aging adults who fall can easily break their bones and may sustain serious head injuries, including traumatic brain injury.
LogicMark has affordable products that are designed to help an older person in the event of a fall or injury.
The range of medical alert devices can help simplify your parents’ lives and give them peace of mind.
You’ll find basic devices that connect directly to emergency responders, primary caregivers, or family members during emergencies.
Where Can I Learn More about Special Offers for Seniors?
Managing income and expenses isn’t easy, especially when every cent counts during retirement years. But a lack of funds shouldn’t prevent you or your parents from living a safe, comfortable life. LogicMark understands this, and we are here to help.
To make your life easier, we offer affordable devices with nonsubscription options. This means no extra monthly payments for parents on a budget.
If you’re a veteran, take our quiz to find out if you qualify for a free medical alert device. For more information about our services and special offers, get in touch today.