If you’re retired, you need to be smart about how you spend your money. To do that, knowing how you spend your money is essential.
For most retirees, spending follows a particular pattern. In fact, research shows that 80% of all spending in a typical elderly household goes toward securing five basic needs: healthcare, housing, food, clothing, and transportation.
The good news is, there are small and large changes you can make to lower spending in all five of these areas. Here are some tips on how you can save.
Saving on healthcare
Healthcare is one of the biggest expenditures for many seniors, especially those experiencing health issues. Some key ways to save on healthcare include:
- Align insurance coverage to your needs: While seniors are typically covered by Medicare, purchasing a Medigap plan or opting for a Medicare Advantage plan could help seniors further reduce healthcare costs. Shop for supplementary coverage carefully, considering premiums, services covered, and coverage limitations, taking your health into account. If you use a lot of care services, it makes sense to pay higher premiums to get more comprehensive coverage.
- Talking with your doctor about cutting costs: Doctors and patients rarely discuss cost-saving measures. In fact, an analysis from Duke University found costs of care came up in only 30% of conversations between doctors and patients. Around half the time costs are discussed, a strategy is developed to successfully reduce out-of-pocket expenditures. By raising the issue, you could find ways to save.
- Exploring generic prescription options: Although seniors 65 and over account for just 12% of the population, they use 34% of all prescription medications and 30% of all over-the-counter drugs. Prescriptions make up a big part of spending thanks to Medicare coverage gaps for prescriptions known as the donut hole. Choosing generics instead of name-brand medication could provide significant savings, especially as generics must be substantially the same as brand-name pills.
- Taking steps to stay healthy: By remaining active, limiting alcohol consumption, keeping weight down, and maintaining other healthy habits, you can reduce the care you require and keep your healthcare costs low.
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