Are you approaching retirement or already enjoying your golden years? One question that probably keeps popping up in your mind is “What should I do with my money now?” It’s a valid concern. After decades of working and saving, making the right financial decisions during retirement is crucial to ensure your money lasts as long as you do
In this article, I’ll talk about how to manage your money in retirement, including what to buy and what to stop spending money on. Let’s look at some smart money moves that can help you stay financially stable in retirement.
Understanding the Retirement Financial Landscape
Before we jump into specific strategies, let’s understand the current situation for most seniors:
- According to the Federal Reserve, the average American aged 65-74 has retirement savings of about $164,000
- Many experts suggest this amount isn’t enough for a comfortable retirement
- With life expectancy increasing, retirement funds need to last longer than ever before
- Rising inflation means your money needs to work harder to maintain purchasing power
The good news? There are plenty of practical strategies to make your money last longer and even grow during retirement.
Smart Investment Options for Seniors
1. High-Yield Savings Accounts
A high-yield savings account earns more interest than a regular account, so your money grows without you having to do anything.
Why consider this option
- FDIC-insured up to $250,000
- Currently offering around 4% yearly returns
- Minimal financial risk
- Daily compounded interest
- No monthly fees at many institutions
Potential drawbacks:
- Interest rates vary between banks
- May have penalties for excessive withdrawals
- Returns may not keep pace with inflation
2. Certificates of Deposit (CDs)
CDs are time deposits where you agree to leave a fixed amount of money for a specific period in exchange for a guaranteed return.
Benefits:
- Fixed interest rates (no worrying about changing rates)
- FDIC-insured up to $250,000
- Higher interest rates than regular savings accounts
- Zero risk with guaranteed returns
Limitations:
- Penalties for early withdrawal
- Not ideal if you need immediate access to funds
- Some CD brokers may be fraudulent (always verify credentials)
3. Treasury Securities
Treasury bills, notes, bonds, and Treasury Inflation-Protected Securities (TIPS) are government-backed investments.
Why they’re worth considering:
- Extremely safe (backed by the U.S. government)
- Provide steady, reliable income
- TIPS specifically protect against inflation
- Various maturity options (from days to 30 years)
Potential downsides:
- Lower returns compared to riskier investments
- Not FDIC-insured (though still considered very safe)
4. Dividend-Paying Stocks
Well-established companies often pay dividends to shareholders, providing a more consistent income source.
Advantages:
- Provides income even when the stock market isn’t performing well
- Generally less risky than growth stocks
- Offers potential for both income and growth
Risks to be aware of:
- Companies can cut dividends during tough times
- Stock values can fluctuate
- Not guaranteed returns
5. Money Market Accounts
Similar to savings accounts but often with higher interest rates, especially for larger deposits.
Why seniors might choose this option:
- FDIC-insured up to $250,000
- Higher interest rates than traditional checking accounts
- Easy access to funds for emergencies
Considerations:
- May require minimum balance
- Possible monthly fees
- Withdrawal restrictions at some institutions
6. Fixed Annuities
A deal you make with an insurance company where you pay a large amount all at once in exchange for regular payments over a certain amount of time
Benefits:
- Guaranteed income stream
- Minimal risk
- Peace of mind for retirement planning
Drawbacks:
- Early withdrawal penalties
- Potentially high fees
- Limited liquidity
- Complex terms (consult a financial advisor)
10 Things Seniors Should Stop Spending On
Making smart investment choices is only half the equation. Equally important is cutting unnecessary expenses. Here are 10 things that many retirees should think about cutting back on:
1. New Clothes and Accessories
Most retirees have closets full of office attire they rarely use anymore. Instead of buying new clothes:
- Shop your own closet (seasonally rotate items to rediscover forgotten pieces)
- Visit second-hand shops for occasional new items
- Focus on comfortable, versatile pieces rather than trendy items
2. Pricey Gifts
While you love giving to grandchildren and family members, retirement might be time to adjust your gift-giving strategy:
- Consider giving personalized gift cards rather than expensive presents
- Set a reasonable budget for gifts
- Focus on experiences and time together rather than costly items
3. Collectibles
Many retirees have spent years amassing collections that now take up space:
- Consider stopping the expansion of your collection
- Plan for the future home of your collection (donations to libraries or museums)
- Sell items that no longer bring you joy
4. Warehouse Store Memberships
Those bulk purchases made sense for a house full of kids, but now:
- Assess if the membership fee is worth it for smaller households
- Consider if bulk quantities lead to waste
- Look at alternatives like local supermarkets for smaller quantities
5. Books and Magazines
Love reading but not the expense? Consider:
- Using your local library for free books, magazines, and newspapers
- Taking advantage of library e-book services like Libby and Hoopla
- Joining book exchanges with friends
6. Peak-Season Travel
Now that you’re not tied to school schedules:
- Travel during shoulder or off-seasons for significant savings
- Look for senior discounts on hotels, flights, and attractions
- Consider extended stays for better rates
7. Multiple Vehicles
With no daily commute:
- Consider downsizing to one vehicle per household
- Save on insurance, maintenance, and registration costs
- Use the proceeds from selling extra vehicles to boost your savings
8. Family Cellphone Plans
Surprisingly, many seniors still pay for their adult children’s cell service:
- Have adult children transition to their own plans
- Look for senior-specific cell phone plans with discounts
- Evaluate if you need unlimited data in retirement
9. Garden Centers and Florists
For plant lovers, there are cheaper alternatives:
- Shop at discount retailers like Trader Joe’s or Home Depot
- Grow your own plants from seeds or cuttings
- Check if your local government offers free mulch or garden equipment rentals
10. Property Maintenance Services
With more time available:
- Consider doing your own housecleaning or lawn maintenance
- These activities provide good exercise
- Hire help only for tasks that are physically challenging
Other Smart Money Moves for Seniors
Beyond investing wisely and cutting expenses, here are some additional financial strategies worth considering:
Start a Side Gig or Small Business
Retirement offers time to pursue passions that might also generate income:
- Turn a hobby into a part-time business
- Consult in your former professional field
- Sell crafts or artwork online
Donate to Charities
If you’re financially comfortable, consider:
- Increasing contributions to favorite charities
- Setting up a donor-advised fund
- Exploring tax benefits of charitable giving
Delay Social Security
If you can afford to wait:
- Each year you delay taking Social Security (up to age 70) increases your benefit by up to 8%
- This provides a guaranteed return that’s hard to beat elsewhere
Contribute to a Roth IRA
Even in retirement:
- No age limit on Roth IRA contributions
- Tax-free growth and withdrawals
- Less valuable tax deduction matters less if you’re in a lower tax bracket
Upgrade Your Home for Energy Efficiency
Smart home improvements can save money long-term:
- Energy-efficient appliances reduce utility bills
- Improved insulation cuts heating and cooling costs
- Consider solar panels for ongoing savings
Join AARP
For just $16 a year, membership provides:
- Discounts on movies, car rentals, and restaurants
- Access to dental insurance and other benefits
- Resources specifically designed for seniors
Final Thoughts: Balance Safety with Growth
The ideal approach for most seniors combines safe investments with strategic spending cuts. Finding this balance depends on:
- Your current financial situation
- Health considerations
- Family needs
- Personal goals for your retirement years
I always recommend working with a financial advisor who specializes in retirement planning to create a personalized strategy. However, the general principles remain: protect what you have, eliminate unnecessary expenses, and make thoughtful decisions about where your money goes.
Remember, retirement isn’t just about preserving money—it’s about using resources wisely to create the lifestyle you want. Whether that means traveling, spending time with family, pursuing hobbies, or simply enjoying peace of mind, smart financial moves can help make your golden years truly golden.
What changes have you already made to your spending and investing in retirement? Are there other strategies you’ve found helpful? I’d love to hear your experiences in the comments below!
Review your spending and income plan at least once a year
| Money youll need from your savings in the next 12 months | Money youll need from your savings two to four years from now |
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5 EASY Retirement Side Hustles
FAQ
Where should a 70 year old put his money?
When you’re that age, you should have a moderate portfolio with 60% stocks, 20% bonds, and 5% cash or cash investments; when you’re that age, you should have a moderately conservative portfolio with 40% stocks, 20% bonds, and 10% cash or cash investments; and when you’re that age or older, you should have a conservative portfolio with 20% stocks, 20% bonds, and 20% cash or cash investments.
What is the biggest retirement regret among seniors?
A study by Bankrate found that over 37% of older adults say their biggest financial regret is not saving enough for retirement earlier. Even if retirement is years away, the best time to act is today. Review your current savings rate and look for ways to increase it, even modestly.
What is the $1000 a month rule in retirement?
Key Takeaways. The $1,000-a-month rule says you’ll need $240,000 in savings for every $1,000 monthly retirement income you want. This rule uses a 5% annual withdrawal rate and assumes your savings stay invested to grow with inflation.
How to invest $100k at 70 years old?
At 70, your investment strategy should focus on preserving capital while still generating income. This often means shifting from high-risk investments to more stable options, such as bonds or dividend-paying stocks. Diversification remains key to minimizing risk and ensuring a balanced portfolio.
Should seniors invest?
However, with safer investment options and a diverse investment portfolio, seniors can have peace of mind and earn money with minimal risk. For example, safe investing can be a good option for seniors looking to pass down money to family members or pay for long-term care. FYI: Investments should play a part in your overall estate plan.
Why is money management important for older adults?
Money management is essential for helping older adults to age well. Discover tools for budgeting, tips to avoid scams and fraud, and ways to reduce debt and make your money go further. Who Can Help Me Budget My Money? How Much Money Should I Save Each Month? How Much Should You Save for Retirement?.
How do finances affect your life as a senior?
Financial matters affect the lives of all Americans. But, as a senior, finances may play an especially large role in your well-being. After all, at this stage of life, priorities often change. And new realities may influence your spending and saving habits.
Where should retirees put their money?
So, it can be frustrating that there is no standard playbook dictating where retirees should put their money. However, a lack of one-size-fits-all advice is actually a positive. It gives you the freedom to choose from a variety of spending and saving options, shaping your retirement into exactly what you want it to be.
Are your finances affecting your well-being as a senior?
But, as a senior, finances may play an especially large role in your well-being. After all, at this stage of life, priorities often change. And new realities may influence your spending and saving habits. That’s why it’s a good idea to take a step back and make sure you’re on a financial path that truly serves your interests.
What should seniors know about living options?
Lifestyle planning: America’s seniors have a growing number of living options when it comes to their residences and activities. But different options have different costs associated with them. So it’s important to have a realistic idea of what you can afford—both now and in the future.