Budgeting & Investment Tips for Senior Citizens

As a senior citizen, you probably have to worry less about most things in your life. As long as you have a decent amount of savings, you are set and good to go. However, there are usually a lot of things that you must consider especially for someone living on a fixed income. Think of the health insurance coverage, taxes, and other daily indulgences which are all expenses. Talking to a retirement planner San Diego, will help you to plan better on your finances as you enjoy your retirement.

If you are not too careful, even your decent nest egg may not be enough to keep you going for the time you anticipated. It is, therefore, best that you have a good budgeting plan to help you manage your fixed savings, so you live a more stress-free financial life.

Here are some amazing budgeting tips from an experienced retirement planner San Diego that you should try out.

1. Have a fixed budget

After retirement and as people get older, expenses also change. This means that your budget might need some fine-tuning for you to have a more comfortable life. This is possible with a decent budget that states how you spend your money. You can include your daily, weekly, and monthly spending like your mortgage payment, doctor’s visit fees, monthly bills, groceries, and other allowances. Creating a good fixed budget also helps you know how you plan to use your retirement funds. As with everything else, it is always best to prepare yourself. And a good fixed budget can help you do that.

2. Use senior discounts

Many stores and businesses offer senior discounts on items they purchase. This discount is usually on things like movie tickets and groceries. You can take advantage of these senior discounts to make your life financial life more affordable. It may look like a just a few dollars here and there. But if you make use of your senior discount offer, then over time, the amount adds up, and you realize that you have saved up quite a lot. You only need to ensure you have a valid ID with you in case the clerk asks for it to verify your age.

3. Eliminate home maintenance costs

After retirement, it is always best to move to a smaller, more affordable home to try and eliminate as much of the home maintenance costs as possible. It may have been fun living in a big house before. But the moment you retire, you start using your savings and have little to no source of income. So, moving to a home with fewer maintenance costs is a good idea. You can always search for a cheaper decent location where homes are more affordable and rent one that you feel meets your preferences. If possible, try and look for a home near nursing homes or assisted living facilities.

4. Cut out unnecessary spending

As a senior who lives on fixed savings, you want to take out any expenses that you do not need anymore. Sometimes, even the little expenses like magazine subscriptions can eat into your savings. You might also want to cut off the movie or cable packages that you no longer watch. You will realize that these small expenses can pile up and cause a huge dent on your fixed savings.

As a senior citizen, you have very little or no source of income to match your expenses. But there are ways with which you can limit the amount of your savings you use by budgeting for everything you do.  Many people spend years in retirement which sounds great. The challenge comes in prolonging the use of your savings so you don’t need to come out of retirement. Here are some investment tips for retirees with minimal risk involved.

1. Real estate

The investment trusts here invest in direct equity positions or mortgages in various properties. Yield from real estate investment trusts is usually higher than those of stock dividends. Real estate investment trusts are the way to go especially when there is a decline in the general stock market. They are not linked with stock exchanges, and therefore as the market goes down, they are less likely to go down with it.

2. Peer-to-peer (P2P) lending

P2P lending links borrowers and investors online in a manner benefitting both parties. Banks are not used as intermediary here. Prosper and Lending Club lending platforms are the largest. Interest rates paid out from form P2P lending are higher than those form stock market investments. You should know, risk and reward vary considerably depending on who you loan money.

3. Municipal bonds

Municipal bonds are debt securities. The state, county, and municipal governments, and their agencies issue municipal bonds. The interest you earn is tax-free for purposes of federal income tax. If you are a resident of the state where the municipal bond is issued, you may also be exempted from local and state taxes. Municipal bonds offer you a high yield with short maturity on top of the tax-free benefit.

4. Annuities

An annuity is an investment contract between an insurance company and yourself. You can get an annuity in different forms. A guaranteed return at a specified rate is usually included. Annuities can be variable or fixed with the return rate dependent of stock market performance. A provision within the contract may limit your downside risk in case of a market decline.

Fees and commissions charged by annuities may be very steep, always pay attention here. Moreover, fully understand the product you are buying and how your tax liability will be affected.

5. Treasury inflation-protected securities (TIPS)

TIPS are another type of U.S. Treasury debt. Compensation for inflation sets them apart from other Treasury securities. They pay interest as well as the additional principal. Annual inflation adjustment is on the basis of the Consumer Price Index. The percentage change in CPI is not paid out as interest but added to the value of the principal. Upon maturity, you are paid the higher amount based on the CPI. Deflation can also cause your TIPS value to drop.

6. Dividend-paying stocks

Most companies are paying dividends on their stock. The dividends are usually higher than that you could get from a safe investment. High dividends can help you ride out a lengthy market decline. Compared to growth stocks, dividend-paying stocks often perform better in bear markets. You also have the option of buying an index fund comprising many dividend-paying stocks.

7. U.S. Treasury bonds and notes

Yields from this investment are higher compared to those form money market funds and certificates of deposit. The fact is great because bonds and notes are long-term securities paying higher interest rates. You can buy Treasury securities through the U.S. Treasury portal.

All investments come with uncertainties. To be on the safe side, it is best you have multiple investments of different types that can cope with a changing market. This provides you with income on your savings, capital appreciation, and protection in times of inflation.