3 Reasons Seniors Need a Budget, Too
by Maurie Backman | Published on July 25, 2021
Budgeting is important during your senior years. But once you retire, you're not off the hook.
You often hear that following a budget is important. Without one, you might easily lose track of your spending and wind up in debt. You might also fall short on financial goals like buying a home or building a retirement nest egg.
But just as it's important to budget during your working years, so too must people follow that rule when they stop working. Here's why it's essential that retirees stick to a budget as well.
1. Income is limited
Some people retire with a lot of money in a retirement plan, but many seniors live primarily on Social Security, which doesn't pay as generously as one might think. Because so many seniors are limited to a modest income, it's important to stretch that money as far as it will go. And following a budget is a good way to make that happen.
2. Expenses can shift throughout retirement
When you're working, your living costs can change. Your housing payments might go up if you move to a larger home, and your bills might go down if you pay off your car. Similarly, seniors' living expenses can change, too, for better or worse. But in the latter situation, budgeting becomes all the more crucial.
3. Seniors can't afford to land in debt
Taking on debt in your 20s or 30s isn't ideal, but at least at that point, you have many years to pay it off. But seniors who go into debt in their 70s or 80s risk taking it with them to the end of life.
You may think, "Who cares about debt once you're no longer roaming the earth?" But for seniors who want to leave behind an inheritance, debt is not helpful. Creditors can go after a deceased person's estate to satisfy unpaid debts.
Say you're a senior who wants to leave a paid-off home to a grandchild. If you pass away with a massive unpaid credit card tab, your card issuer could seek that money from your estate, and selling the home you wanted to pass on may be the only way your heirs can get that cash. Following a budget can make it easier to avoid debt in the first place.
The easiest way to budget
There are many budgeting apps that make it easy to track expenses. But seniors may find those overwhelming. If that's the case, there's nothing wrong with a paper-and-pencil budget. As long as the numbers are accurate, there's no need to use fancy tools to create and maintain a budget. At the end of the day, budgeting is about being mindful of spending, and it really doesn't matter how it gets done, as long as it becomes a priority.
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