You might think that by the time you and your spouse retire, having financial conversations will be a thing of the past. After all, you have no one to support and have simple sources of income with Social Security and your investments.
However, managing your finances when in retirement is still critical, and arguably more so. This is because you have a set amount of money to survive on, so you need to make sure you are handling your spending correctly while still enjoying life and achieving your goals.
We put together this list of 15 strategies for managing finances as a senior couple to help you avoid pitfalls and ensure you’re in the best financial health moving forward. These are simple things you can start right away without any issues.
1. Sign Up for Medicare Immediately
As you age, you naturally require more healthcare visits, whether you’re seeking preventative care or treatment for a specific condition. This is going to cost you money, but even more, if you don’t sign up for Medicare.
Get on Medicare as soon as you can so that you can start saving money on your healthcare needs. Several plans are available, so make sure you find the right one for you and your spouse.
2. Know When to Start Dipping Into Your Retirement Accounts
Your retirement accounts are nest eggs that can help you navigate all of the expenses you’ll encounter throughout retirement. However, knowing when you and your spouse should start using these assets is important.
You should first look to spend mainly on your Social Security and any other recurring income like annuities. Then, focus on spending a little bit of your savings from retirement accounts yearly (something like 4%), focusing on tax-deferred accounts like your 401k or traditional IRA first.
3. Create a Comprehensive Budget
Budgeting never becomes less important with time. Sit down with your partner and come up with a budget that fits your joint income. This is especially important as you transition into retirement and start to move away from the income that accompanies traditional employment.
If you have a strong budget, it becomes hard to start building debt that further burdens your golden years.
4. Become Friends with Shopping Apps and Promo Sites
One thing that’s unavoidable is inflation. Fortunately, senior couples don’t just have to give in. Downloading shopping apps, member apps, and extensions helps you find promos for the things you regularly buy.
Consider tools like Rakuten, Honey, and Capital One Shopping as options to save when shopping online. Also, download apps to the stores you frequent, as many offer digital coupons. There may still be some strain on your budget, but this should make it easier for the two of you to afford what you need moving forward.
5. Discuss Goals and Habits Together
What are your financial goals as a couple? What do your spending habits look like? Are there any needs or wants that you’re unwilling to compromise on? The hardest part of managing finances as a senior couple is often the communication that needs to go into planning your future.
Discuss your goals and spending habits now so you’re on the same page throughout your senior years.
6. Address Debt as Early as Possible
Debt can be a major strain as you age. If you’re on a fixed income, that amount will naturally eat into your finances, leaving you less money to afford the other things you will need.
Try to tackle debt as early as possible, leveraging effective repayment strategies, low-interest balance transfers, or even picking up side hustles to pay it off. You and your spouse will thank yourselves later!
7. Look for Ways to Stay on Top of Finances More Effectively
Having multiple accounts at different banks and brokerages can make it challenging to get a handle on your overall finances. This is where third-party apps and tools come in handy.
Many free tools are available from providers like Empower, which allows you to aggregate all your accounts in one place.
Additionally, many budgeting apps allow you to pull in all your financial accounts. Setting it all up might take a little time, but it will be worth it in the end.
8. Set Up Automatic Savings
Saving is an activity that continues well into life, no matter how much money you have. Set up automatic savings so that you have cash on hand should you face an emergency like your car breaking down or your house getting damaged.
You and your spouse can decide how much to put away monthly depending on the level of risk you two may face when it comes to emergency situations.
9. Talk About What the Future Entails
Not all couples share the same vision of the future. This can be problematic if you start using finances to work toward different goals.
Ask your partner what they are looking for in retirement. Topics like downsizing and travel can be crucial to discuss now so that you can make the right moves in the near future.
10. Tackle Estate Planning as Soon as Possible
Estate planning can be a tricky topic, mainly because it can bring up thoughts about being without your spouse. However, it’s important that your spouse (or you) and your children receive everything you want them to receive should you or your spouse pass.
The sooner this is taken care of, the easier you can rest. If you do need to make any amendments, you can meet with your lawyer to adjust your will and your trust later on.
11. Learn How to Have Fun in a Way That Suits Your Finances
Some couples will go into retirement, live it up, and then realize they’re broke. While treating yourself occasionally is warranted, it’s important that you and your partner agree on living within your means.
There are plenty of things to do that don’t cost tens or hundreds of thousands of dollars. Some older couples employ a strategy where they spend a little more one year to travel, then take the next year easy and spend less.
12. Reassess Your Insurance Policies
Insurance is an essential expense. No matter the type, it prevents you from dealing with even larger expenses after an incident. That said, your insurance needs will change over time. Whether you change properties or vehicles or find that your life insurance is no longer meeting your needs, you should reassess and change your policies.
Spending money on insurance you don’t need or having a policy that covers you for more than your property requires can be a waste of money in your senior years.
13. Avoid Taking on More Debt
It’s easy to believe that when you’re older, it’s the right time to finally buy something you’ve always had your eye on. This could be a boat that you and your spouse could take to the lake or even a second vacation home.
The important question to ask yourself is, can you realistically afford it? Taking on more debt can wreck your finances if you cannot keep up with the payments. This will then affect your current quality of life and result in your assets being repossessed or foreclosed on.
14. Be Realistic About the Level of Support the Two of You Will Need
Are you and your spouse currently in good health? Do you and your spouse have a family history of certain conditions that could change your life in an instant? Everyone’s senior years look different. Some people maintain their good health for a while, while others start to get older and either develop or continue experiencing certain health problems that go on for a while.
In the latter case, you’ll need to use a lot of your resources to get the healthcare and support you need to lead a better quality of life. This may include at-home medical care, a wide range of medical tools, and various prescription medications. Underestimating the severity of the situation could put you in a precarious financial situation.
15. To Live in Place or to Live Elsewhere?
Continuing with the above point, many seniors want to continue living in their homes, but this may not always be possible. You could choose to invest in your home to age in place.
This often entails renovations like installing a walk-in shower or investing in less slippery floors or wider hallways. It may also include getting someone who can check on you and provide care throughout your day-to-day. However, this may not be viable for everyone. Consider whether you can live in your home in your senior years or if you should consider alternatives to make sure you have the care you need.
