Be sure to familiarize yourself with this list of tips that can help older adults cut down on their living expenses.
If your parents are struggling financially, their money problems could become yours, too. You might have to pitch in and provide support. You might have to let them move in with you.
Or you could avoid these less-than-ideal situations by helping your parents get a handle on their finances before their money problems get too big. There are plenty of ways your parents can cut costs. They just might not be aware of these money-saving moves. That’s where you come in.
You can share these 12 tips with your parents or implement some of them yourself if you’re already managing your parents’ finances for them. Most likely, they’ll be grateful that you helped them find ways to save money. And, of course, you’ll be glad if you don’t have to jeopardize your own finances to support them.
Here's what you need to know:
Get a better deal on health coverage
Your parents might have supplemental Medicare coverage – often called a Medigap plan -- from a private insurer to fill the gaps in their coverage from Medicare Part and Part B. Or they might have a Medicare Advantage plan, which is an alternative to traditional Medicare.
The cost of Medigap plans and Medicare Advantage plans vary from provider to provider. Your parents could use a free service such as Boomer Benefits to help them compare plans and find the best rate.
[ Keep Reading: 15 Government Benefits That Could Help Your Parents Save Money ]
Pay less for prescription drugs
Basic Medicare (Parts A and B) don’t provide prescription drug coverage. It might be worth it for your parents to pay a little more for Medicare Part D prescription coverage or a Medicare Advantage plan if they take a lot of high-cost prescription drugs. And some pharmaceutical companies help pay for medications for people enrolled in Medicare Part D through the Pharmaceutical Assistance Program.
Medicare also has a program called Extra Help for low-income adults that limits the cost of generic drugs to $3.50 and brand-name drugs to $8.95. If your parents don’t qualify for Extra Help, they might be able to get help with prescription costs from a state pharmaceutical assistance program. Also, if your parents don’t have Medicare Part D coverage, they can get a free FamilyWize Prescription Savings Drug to save on medications.
Save on eye exams
Some Medicare Advantage plans cover eye exams and the purchase of glasses, but Medicare Parts A and B do not. So if your parents need help paying for vision care, they might qualify for free exams through EyeCare America. And New Eyes for the Needy provides prescription glasses for low-income adults who can’t afford glasses.
Reshop insurance coverage
Your parents’ loyalty to their auto, homeowners or rental insurance provider could be costing them. Encourage them to reshop their insurance coverage every year or so to see if they can lower their premiums by switching insurers. For example, a 2017 study by personal finance website NerdWallet found that good drivers miss out on an average of $416.52 in annual savings by not shopping around for better auto insurance rates.
They can get quotes from multiple insurers and compare rates on a site such as Insure.com. Or they can work with an independent agent who can shop around for the best rate for them.
Ditch unnecessary insurance
Your parents might be paying for life insurance policies they no longer need now that they’re retired and no longer have children to support. If they have enough cash to cover final expenses such as a burial, they might want to ditch their life insurance policy.
If they have a permanent life policy with cash value, they could surrender the policy and get the cash value in a lump-sum payment that could help cover other costs. (Term life policies don’t have any cash value.) They might want to consider hanging onto that policy, though, if they don’t have another way to pay for long-term care. They can take loans from the cash value to help cover the cost of care if necessary.
Cut the cost of cell service
Your parents might be able to dramatically cut the cost of their cell service by switching from a major carrier to a wireless service reseller such as Cricket, Consumer Cellular and Republic Wireless. Help them compare cell phone plans at MyRatePlan.com to see which carrier offers the best value based on how much data they use, how many minutes they need and how many people will be on their plan. They also should ask providers about senior discounts, which many cell phone service companies offer.
If your parents have limited income, they might qualify for Lifeline. This federal program lowers the cost of phone or Internet service by giving qualified customers up to $9.25 for their bill. Visit lifelinesupport.org to see if they qualify.
Reduce energy bills
Many of the strategies to lower electric costs require an initial outlay of cash, which your parents might not be able to spare on a limited income. However, they might be able to get cheaper service by shopping around for lower utility rates if they live in one of the states with deregulated electricity or gas markets. ElectricChoice.com has a map of deregulated energy markets and a tool to compare rates. Because providers are competing for business, your parents might be able to save money by switching.
If their income is low enough, your parents might qualify for the federally funded Low Income Home Energy Assistance Program. The Department of Health and Human Services has information on where and how to apply for assistance.
Negotiate monthly bills
Your parents might be able to get better deals on cable TV, Internet, phone and other services by calling providers to negotiate. They can compare plans for TV and Internet at a site such as Allconnect.com. Then they can ask their service providers if they can match their competitors’ prices – or your parents could simply switch providers.
If they don’t like the idea of negotiating lower rates, they can use a service such as BillCutterz to do the haggling for them. Its negotiators will call providers and will split the savings 50/50.
They might also have recurring bills or subscriptions that they forgot they had signed up for. You can use a service such as Carefull to automatically identify all of their bills and subscriptions, get notified if any are running late and ensure that nothing is slipping through the cracks.
Eliminate unnecessary fees
Your parents could be paying monthly maintenance fees on their checking and savings accounts. These fees can range from $5 to $15 a month, according to Bankrate. They can be easily avoided, though, by switching to a free checking or savings account.
Check their investment accounts to see what sort of fees they’re being charged. Even small transaction fees and annual fees can eat away at the value of their retirement portfolio. So switching to a low-fee brokerage such as Charles Schwab, Fidelity or Vanguard could help them save money over time.
Also check their checking account and credit card statements for monthly or annual charges for services or subscriptions they’re no longer using or don’t need, then cancel those services.
Encourage parents to downsize
You could help your parents trim a lot of small expenses from their budget, but of course their biggest expense of all is most likely their housing. They might be paying much more than necessary to put a roof over their heads if they haven’t downsized yet to a smaller home or apartment.
Yes, talking to your parents about selling the family home can be a challenge. But you’ll have more luck persuading them if you focus on the positives of moving – less maintenance, lower costs, more room in the budget for things they enjoy. The National Council on Aging has a calculator you can use to show your parents how moving will impact their finances.
Consider a roommate
If your parents are unwilling to move, encourage them to consider getting a roommate to offset costs. This could be an especially good move if Mom or Dad is living alone. Perhaps there’s a family member who is a recent high school or college grad looking for an affordable place to live. Maybe Mom has a friend who recently became a widow and doesn’t want to live alone. Or your parent could connect with someone who is looking for housing through services like Nesterly or use the National Shared Housing Resource Center to connect with someone who is looking for housing.
Apply for property tax relief
Your parents might be able to cut housing costs by getting a break on their property taxes. Several states offer property tax relief to low-income seniors. Your parents should contact their local or state tax administration to see whether tax relief is available and how to apply.