The financial transition into retirement can be daunting. A suddenly lower income often leads to lifestyle changes. These adjustments aren’t always easy, especially if you’ve landed in retirement without as large of a nest egg as you hoped to have. Even if you knew your budget would downsize, it can be tough to know just how to spend and where to cut back.


To live on a small budget during retirement, it can be helpful to:

  • Pay attention to your spending.
  • Set aside funds for unexpected costs.
  • Plan meals in advance.
  • Live in a low cost setting.
  • Opt for secondhand items.
  • Explore cheaper travel options.
  • Maintain your current household.

Consider trying some of these frugal living tips for seniors.

Know Your Numbers

Take a careful look at how you tend to spend money each month. “Divide your expenses between fixed and reducible so you can pivot, make changes or plan for upcoming costs,” says Chantel Bonneau, a San Diego based financial advisor for Northwestern Mutual. Fixed expenses are set costs that don’t frequently change, like a mortgage payment or utility bill. Reducible items might be a cable package you no longer need, entertainment expenses that could be lowered or clothing purchases that could wait until a later date. “Know what it takes to live your life so that you’re clear what you have to work with,” Bonneau says.

Keep an Emergency Fund

If you have money set aside in a separate account for unexpected expenses, it may be worthwhile to keep it there. If you don’t have an emergency fund, now might be the time to set one up. “On a tight budget, you’ll lack bandwidth for major cash expenses like an unexpected hospital stay, major car repairs or a needed home renovation,” says Earl Knecht, vice president and CFO of Napa Valley Wealth Management in St. Helena, California. Consider keeping enough in the account to cover several months of expenses.

Meal Plan to Save on Food

Frequent grocery trips for a few quick items often leads to a higher food bill. “Plan before you shop, and figure out exactly what you really need,” Knecht says. You might use a Monday morning to think about what dishes you want to eat at home during the coming week, any restaurant outings that won’t require a home cooked meal and additional snacks you will want on hand. After making a list, you can go to the store just once for the entire week.

Think About Where to Live

If you’re currently in an area with a high cost of living, it may be wise to think about places in the country where it’s easier to live on less. A move from an urban district to the suburbs could reduce costs. Downsizing is another option. If you want to save on taxes, you could look for a place in a state with lower taxes. In 2020, the states of Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming don’t charge any income tax.

To go a step further, you might consider a college town in one of the lower tax states. “In these towns, you will usually have good health care options, particularly if there’s a medical school at the university,” says Michael Gerstman, CEO of the Dallas-based retirement planning firm, Gerstman Financial Group. “Additionally, there are loads of low cost dining out options and no or low-cost entertainment options.” You might be able to attend concerts, plays or festivals for free. Many university cities also offer bike trails, walking paths and low-cost gym options.

Buy and Sell Second Hand

Rather than pay full price at retailers, you can peruse thrift stores and Goodwill locations for used items. Online sites for used secondhand products abound, including Facebook Marketplace, Craigslist, Sell, Geebo, Letgo and Mercari.

Besides buying secondhand, you might be able to sell what you don’t use. Take note of what you see while shopping at thrift stores and browsing online for previously owned housewares. You might realize you have extra items in a closet or garage that are still in good condition and could be sold to others in your area.

Travel in New Ways

With the flexibility of a freed-up schedule, you might be able to take advantage of seasonal deals, especially as hotels and airlines slash prices in the midst of the coronavirus pandemic. The option of house exchanges and house watching can also lead to low-cost ways to see the world.

“My husband and I have been able to travel inexpensively around the world by housesitting,” says Silvana Clark, an adventure seeker in Bellingham, Washington. You generally need to pay for your airfare to get to the place you’ll be watching. The lodging is provided at no cost, in exchange for caring for the household, which might include pets. “We have had ‘free’ stays in Japan, Australia, England, Germany, France and many other places,” Clark says.

In addition, learning about other areas of the world may be as easy as heading to the local library for travel-related books or presentations. Cultural activities in your region, like art festivals and museum exhibits, might be engaging as well.

Take Preventative Steps

Caring for your current household can help everything last longer. Instead of purchasing a new vehicle, you can schedule regular maintenance for your current auto. Using coverings for patio furniture can help it stay in solid condition, season after season. The same is true for your health. Focusing on daily exercise, healthy meals and solid sleep can help prevent higher doctor bills in the future.


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