The Social Security Administration increased benefits by 8.7% in 2023, making the average Social Security check just a little over $1,800 per month. That doesn’t seem like enough to cover costs for the average person. While Social Security was never meant to be our only source of income during retirement, it is for many people.
The cost of living continues to increase every year, often at faster rates than Social Security benefits. If you’re looking for a few ways to save money during retirement, consider making these five money-saving moves.
Purchasing something seems a bit counterintuitive to saving money, doesn’t it? That’s usually true, but not in this case.
If you are someone who is enrolled in Original Medicare (not Medicare Advantage), you are leaving yourself open to many out-of-pocket medical costs. Original Medicare (Parts A and B) has no limit on its cost-sharing responsibility, which means you could be on the hook for thousands of dollars every year.
To mitigate those costs, enroll in a Medigap plan like Plan G. Plan G will pick up all remaining costs except for the Part B deductible, which is $240 in 2024. Yes, you will have a monthly premium for Plan G, but the out-of-pocket costs it will save you far outweigh the premium. Plus, your healthcare costs will be much more predictable, allowing you to plan for them over the course of your retirement
Did you know that about 40% of cancer insurance policies actually get used? Compared to home insurance, which gets used at a rate of 0.04%, and auto insurance, which gets used at a rate of 0.06%, cancer insurance almost seems like a no-brainer. And yet, many of us don’t carry cancer insurance policies.
If you took our advice in the first tip, you’ve already got great cancer coverage. What you might need help with are other costs like prescriptions and travel. Lump-sum cancer insurance policies pay you the minute you are diagnosed with cancer. You can use those funds however you need - for travel, to supplement your income, or to help pay for expensive medications that aren’t covered by Original Medicare or your Medigap plan.
The best part is that these policies are relatively low in cost. Most plans base your premiums on your age when you purchase the policy. The younger you are when you enroll, the lower your premium.
We often get asked if you have to enroll in a Part D prescription drug plan if you aren’t taking any medications. Our answer will always be YES!
The reason you need a Part D plan is that you’ll want to avoid paying any late-enrollment penalties down the road. Penalties will start adding up each month you go without coverage. And the worst part is that you’ll pay the penalty every month for as long as you have a Part D plan. (Presumably, for the rest of your life.) Choosing a low-cost Part D plan now will save you a ton of money in the future.
In addition, you can only enroll in Part D during certain times of the year. If you find yourself needing an expensive medication, it may be outside of the enrollment period. In this case, you’d have no choice but to pay out-of-pocket until you could enroll in Part D.
Each of us has a full retirement age (FRA) based on our birth year. For example, people born in 1956 have an FRA of 66 and 4 months. However, if you were born in 1960 or later, your full retirement age is 67.
Regardless of your FRA, you can begin taking Social Security benefits when you reach the age of 62. Taking benefits early means you’ll have them for longer. The downside of this is that your benefits will be reduced. On the other hand, if you wait until after your FRA, you’ll be eligible for even more benefits. Most of the time, this means waiting until the age of 70.
Of course, this might not work for everyone. But if you have other income and can postpone Social Security benefits, you’ll have bigger checks every month.
Most of us will need less and less space as we get older. Your kids’ rooms will likely be empty, and you may find that you need less space if your nest is empty. Downsizing your home is a simple, fast way to start saving money in retirement. You’ll have smaller monthly payments (or extra money in the bank after the sale), and your utilities and maintenance costs will all be lower.
The decisions you make right before and during retirement will have a huge impact on your budget. It’s best to start planning early so you aren’t caught off-guard by surprise expenses. If retirement is around the corner, chat with the Local Medicare Specialists. We’ll help you plan for healthcare costs during retirement so you can enjoy your golden years.
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LocalMedicareSpecialists.com is privately owned and operated by LMS Insurance LLC. LocalMedicareSpecialists.com is a non-government resource for those who depend on Medicare, providing Medicare information in a simple and straightforward way.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area which are United Healthcare, Aetna, Humana, Cigna, Blue Cross Blue Shield of Arizona, Centene, Devoted, and Scan. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program to get information on all of your options.