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With rising prices, unpredictable health care costs and new aging-related expenses, like needing to seek outside transportation or make home modifications, creating and sticking to a post-retirement budget has never been more important for senior citizens. That’s particularly true in Arkansas, where nearly 70,000 of the 65+ population live below the federal poverty level and Social Security benefits account for almost half of the median annual post-retirement income of $48,000. 

The first step to making a budget is anticipating your income. For seniors, that typically includes any incoming money from sources like Social Security, a pension, investments or retirement accounts and any work performed. 

From there, calculate fixed expenses — insurance, rent or mortgage, debt payments, utilities and other bills, and annual taxes — and variable spending, like groceries, doctor’s office co-pays, home and car maintenance, and pet expenses. 

Tip: The National Council on Aging offers a Benefits CheckUp tool that older adults can use to find local, state and federal financial assistance. Seniors may be eligible for decreases in their monthly expenses through the Supplemental Nutrition Assistance Program, which can help with food costs; Low-Income Home Energy Assistance Program, which provides funds for heating and cooling your home; property tax relief; and Medicaid waivers for home modifications, among others. 

After comparing income and expenses, create a reasonable monthly budget that accounts for both fixed and variable expenses. AARP has a free budget calculator specifically geared toward seniors, and the National Council on Aging also provides a detailed Budget CheckUp tool that can help outline your financial priorities and provide tips for ways to decrease expenses.

Tip: AARP recommends putting monthly bills, like utilities and insurance payments, on auto pay. Most banks can help walk customers through this process. Ensuring all bills are paid on time can help avoid late penalties and harm to your credit score. 

Accumulating savings after retirement is also important, as it can help seniors avoid taking on new debt when an emergency occurs. The 70/30 rule is a common technique, wherein a person lives on no more than 70% of their income and saves the remaining 30%. Sticking to the 70/30 rule can help rein in discretionary spending. 

“When you’re on a fixed income, saving money can seem impossible,” says Jessica Johnston, senior director for the National Council on Aging’s Center for Economic Well-Being. “But building up a financial safety net is crucial at any age. Sticking to this guideline creates personal accountability.”

Tip: Avoid reliance on credit cards whenever possible, and pay off the balance of any cards every month to avoid interest accumulation. The APR on credit cards has increased significantly in the last decade, growing from averaging 13% in 2010 to nearly 23% in 2020, according to the Consumer Financial Protection Bureau. AARP also recommends freezing your credit through the major credit bureaus (Equifax, Experian and TransUnion), which can prevent scammers from opening new credit accounts in your name.

Be honest with yourself about how you’re using your money. The National Council on Aging recommends outlining your budget on a monthly calendar to track when income is received and when expenses are due. Apps like Rocket Money can also help automatically categorize spending based on categories input by users. Look for discounts from major retailers, evaluate discretionary expenses like subscriptions regularly and when needed, seek out public assistance, like food banks and libraries. 

Common Scams and How to Avoid Them

Seniors are often targets of scammers, and the Arkansas Attorney General’s Office offers tips on avoiding losing your savings to fraudsters:

The Family Emergency Scam involves a scammer posing as a family member or friend of the family and claiming they are in dire need of money. With new AI technology, these scammers can even replicate the voice of a close relative. They may ask for a direct wire transfer or gift card codes. The AG recommends calling your family member directly to confirm whether there actually is an emergency.

Medicare scams involve scammers calling Medicare beneficiaries and requesting personal information, like Social Security numbers and bank account information, in order to steal funds or credit directly. The scammer may even reference fictitious companies or federal agencies in order to trick their victims. It is against Medicare’s policy to ever call a beneficiary to request personal information or cash payments; never provide this information to someone claiming to represent Medicare, no matter how official they sound.

Credit card robocalls offer seniors lower interest rates, but typically, such offers don’t result in long-term debt relief. According to the AG, some of these callers assess a flat interest fee but never actually lower their rates, while others transfer existing debt to a new card with a temporarily lower rate which then rises to the same level or higher than the previous rate.

Quick tips

• Don’t answer calls from unfamiliar numbers. 

• Hang up on scammers or robocalls. 

• Don’t wire money; there are no protections to retrieve funds if you later find out the person sent the funds is not who they claimed to be.

• Never share personal or banking information in response to a phone, email or mail request. Contact the entity requesting the information directly yourself to verify they need the information.

• Never send money to someone you don’t know and haven’t met in person.

• Requests for pre-paid gift cards are always a scam.

• When donating to charity, give only to organizations with long, reputable histories. Write a check or money order payable to the organization instead of providing cash or directing funds to an individual.

• If the offer sounds too good to be true, it probably is.

• Report suspected fraud to the Arkansas Attorney General’s Office or Senior Medicare Patrol.