Making Your Money Last
Making Your Money Last: Budgeting on a Fixed Income
When Gloria retired at 66, she felt ready. She had worked hard for over 40 years. She had saved some money. She had her Social Security check coming every month.
But after a few months, she noticed something. The money didn't stretch as far as she thought it would. Her electric bill was higher in winter. Her car needed repairs. And groceries cost more than they used to.
"I never really had a budget before," Gloria said. "I just spent what I needed and saved the rest. But now there's no paycheck coming in. I had to learn a new way."
Gloria isn't alone. About 40% of older Americans rely only on Social Security to get by.¹ And the average Social Security check is about $1,913 a month.² That can be hard to stretch—especially when prices keep going up.
The good news? A simple budget can help. It won't give you more money, but it can help you see where your money goes—and make sure you have enough for the things that matter most.
Step 1: Know What's Coming In
The first step is to figure out how much money you have each month. This might include:
Social Security
A pension from a job
Money from a retirement account (like a 401k or IRA)
Part-time work
Help from family
Write down each source and how much it brings in. If some income changes from month to month—like work or investment payments—use the lowest amount to be safe.³
Step 2: Write Down What Goes Out
Next, list everything you spend money on. Start with the things you must pay every month. These are called "fixed" expenses:
Rent or mortgage
Utilities (electric, gas, water, phone)
Insurance (health, car, home)
Medications
Car payment or transportation
Then list the things that change from month to month. These are called "variable" expenses:
Groceries
Gas
Eating out
Entertainment
Gifts
Household supplies
Don't forget things that only come up once in a while—like car repairs, doctor visits, or holiday spending.⁴ These are easy to miss, but they can throw off your budget if you don't plan for them.
Step 3: Compare the Two Numbers
Now add up your income. Add up your expenses. Compare them.
If your income is more than your expenses, that's good. You have room to save or spend on things you enjoy.
If your expenses are more than your income, don't panic. That just means you need to make some changes. You might need to cut back on some things—or find ways to bring in a little more.⁵
Step 4: Put Needs First
When money is tight, it helps to separate your "needs" from your "wants."
Needs are things you must have to live safely—like housing, food, medicine, and basic utilities.
Wants are things that make life nicer—like cable TV, eating out, or new clothes.
Make sure your needs are covered first. Then see what's left for wants.⁶
Some people use the "50/30/20" rule. That means:
50% of your income goes to needs
30% goes to wants
20% goes to savings or paying off debt
But on a fixed income, you might need to adjust those numbers. Many seniors find that a "needs first, then wants" approach works better.⁷
Step 5: Look for Ways to Save
Small changes can add up. Here are some ideas:
Cut subscriptions you don't use. Do you still pay for cable, streaming services, or magazines you don't watch or read? Cancel what you don't need.⁸
Use senior discounts. Many stores, restaurants, and services offer discounts for people 60 or 65 and older. Always ask.⁹
Switch to generic brands. Store-brand groceries and medications often cost much less—and work just as well.⁸
Save on energy. Turn off lights when you leave a room. Use LED bulbs. Seal drafts around doors and windows.⁷
Use the library. Borrow books, movies, and music for free instead of buying them.¹⁰
Cook at home. Eating out costs more than cooking. Try planning your meals for the week and making a grocery list.⁷
Step 6: Build a Small Emergency Fund
Unexpected costs happen—a broken refrigerator, a medical bill, a car repair. If you don't have money set aside, these can throw your whole budget off.
Try to save a little each month, even if it's just $10 or $20. Over time, it adds up. Having even a small cushion can give you peace of mind.⁵
If you're already struggling to make ends meet, this might not be possible right now. That's okay. Focus on covering your needs first.
Step 7: Check for Benefits You Might Be Missing
Many seniors qualify for programs that can help lower their costs—but they don't know about them or haven't applied.
These programs can help with things like:
Food (SNAP, also called food stamps)
Heating and cooling bills (HEAP/LIHEAP)
Medicare costs (Medicare Savings Programs)
Property taxes (exemptions for seniors)
Prescriptions (Extra Help program)
You may qualify even if you think your income is too high. It's worth checking.¹¹
The National Council on Aging has a free tool called BenefitsCheckUp that can help you find programs in your area. Visit www.benefitscheckup.org to get started.¹¹
Gloria's Story Continues
Gloria sat down one afternoon and wrote out her budget. She was surprised by how much she was spending on things she didn't really need—like a streaming service she never used and a magazine subscription she forgot about.
She canceled those. She started shopping at a store with senior discounts. She learned she qualified for help with her heating bill through HEAP.
"It's not like I'm rich now," Gloria said. "But I feel like I know where my money is going. That makes a big difference."
Where to Get Help
Your local Office for the Aging. They can connect you with benefits programs and help with budgeting.¹²
BenefitsCheckUp. A free online tool from the National Council on Aging. Visit www.benefitscheckup.org to see what programs you might qualify for.¹¹
AARP. They offer free resources on budgeting and money management for older adults. Visit www.aarp.org.
Nonprofit credit counseling. If you're struggling with debt, a nonprofit credit counselor can help you make a plan. Look for agencies that are members of the National Foundation for Credit Counseling (NFCC). Visit www.nfcc.org to find one near you.¹³
This article shares general information only. It is not financial advice. Every person's situation is different. Talk to a financial counselor or your local Office for the Aging if you need help with your specific situation.
References
National Council on Aging. "What Does Living on a Fixed Income Mean?" https://www.ncoa.org/article/what-does-living-on-a-fixed-income-mean/
National Council on Aging. "What Does Living on a Fixed Income Mean?" https://www.ncoa.org/article/what-does-living-on-a-fixed-income-mean/
SeniorLiving.org. "Tips for Making a Budget on a Fixed Income." https://www.seniorliving.org/finance/budgeting/
SeniorCenters.com. "Budgeting Strategies for Seniors on a Fixed Income." https://seniorcenters.com/budgeting-strategies-for-seniors-on-a-fixed-income/
Bethesda Gardens. "Budgeting on a Fixed Income: 7 Tips for Older Adults." https://www.bethesdagardensmonument.com/blog/budgeting-on-a-fixed-income-7-tips-for-older-adults
The Money Coach. "Budgeting for Senior Citizens: How to Thrive on a Fixed Income." https://askthemoneycoach.com/budgeting-for-senior-citizens-how-to-live-well-on-a-fixed-income/
SeniorCenters.com. "Budgeting Strategies for Seniors on a Fixed Income." https://seniorcenters.com/budgeting-strategies-for-seniors-on-a-fixed-income/
The Money Coach. "Budgeting for Senior Citizens: How to Thrive on a Fixed Income." https://askthemoneycoach.com/budgeting-for-senior-citizens-how-to-live-well-on-a-fixed-income/
Bethesda Gardens. "Budgeting on a Fixed Income: 7 Tips for Older Adults." https://www.bethesdagardensmonument.com/blog/budgeting-on-a-fixed-income-7-tips-for-older-adults
St. Paul's Senior Services. "7 Money-Saving Tips for Seniors on a Fixed Income." https://www.stpaulseniors.org/senior-care-blog/7-money-saving-tips-for-seniors-on-a-fixed-income/
National Council on Aging. "Budgeting Tips for Older Adults." https://www.ncoa.org/older-adults/money/management/budgeting/
New York State Office for the Aging. "Local Offices." https://aging.ny.gov/local-offices
National Foundation for Credit Counseling. https://www.nfcc.org/