Living on a Fixed Income? 12 Tips for Enjoying a Frugal Retirement

A retired couple enjoy a ride on a scooter.
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Adjusting to a fixed income in retirement can be a challenge — especially if you’re living off less money.

Just because you stopped working doesn’t mean you stop paying bills and buying groceries. If you’re planning vacations or trips to the golf course, those are extra costs to budget for too.

“You could easily spend more money [in retirement] because you have more time you want to enjoy,” Droucelle Ramage, a self-described frugal retiree, told The Penny Hoarder.

Ramage said shopping at thrift stores, attending free community events and choosing community acupuncture rather than going to a pricy private practice has helped her keep expenses low.

Volunteering at her church and local senior center has kept Ramage busy without spending money. When she travels, she’s able to get free flights — a benefit of working for American Airlines for over 20 years.

Knowing how to cut costs is key to having a frugal retirement you can enjoy.

12 Ways to Save Money in Retirement

1. Get a Roommate or Two

Loneliness in retirement can have a negative effect on your health and quality of life. Not only will live-in company help you feel less alone, but you’ll reduce housing costs.

If you live alone, try sharing a place with a friend or family member or consider living with other retirees to save money.

2. Downsize to a Smaller Space

Maybe your idea of a frugal retirement doesn’t include sharing your living space. You can cut costs by moving to a smaller home instead.

A smaller house, tiny house or RV has several financial benefits. You’ll pay less in rent or mortgage. Your utility bills will go down. You’ll have less home maintenance and repairs to worry about.

And when you downsize, you can sell all that furniture you don’t need for extra cash.

If you’re struggling to find an affordable place to live, check out this guide to housing for low-income seniors.

3. Rent Out Your Kids’ Old Rooms

If you don’t want to sell the family home or get long-term roommates, you can make money off your empty nest by turning unused space into short-term rentals.

Your kids can get their rooms back when they visit for the holidays — or you could make them pay the daily rate.

This guide on how to become an Airbnb host will get you started.

4. Cut the Cost of Groceries

Slashing your grocery spending is a high-impact way to help you have a frugal retirement.

Clip coupons, find ways to reduce food waste, buy generic products, start a garden and shop at stores that boast low prices, like Aldi or Trader Joe’s.

There are also ways to spend less on produce — like joining a community-supported agriculture program — to help you eat healthy for less.

Bonus: When you feel like eating out, read up on these 25 ways to save money at restaurants.

Need to slash your food budget? We have 324 money-saving tips for a lean wallet.

5. Save Money on Health Care

Health care costs will likely be your biggest expense in retirement.

At age 65, you become eligible for Medicare. It’s not free — the standard Part B premium alone is $170.10 per month in 2022.

But you can still have a frugal retirement without compromising your health. Here’s how to save money on eyeglasses and vision costs, score affordable hearing aids and find free dental for seniors on Medicare.

Have questions about Medicare? Or wondering if a different plan could save you money?

The State Health Insurance Assistance Program, or SHIP, is a national network of trained nonprofit volunteers who provide one-on-one counseling and education to Medicare beneficiaries.

The best part: All SHIP services are free. You can find the number for your state here.

Use prescription drug cards and apps like GoodRx to save money if you’re an early retiree who’s not eligible for Medicare yet.

Exercise is another important part of health. A cheap gym membership or a home gym  that costs under $100 can help boost your wellness.

A retiree stretches during an exercise class.
Felice Drouin stretches during an exercise class at the Sunshine Center. Chris Zuppa/The Penny Hoarder

6. Find Low-Cost Entertainment and Ways to Stay Social

Keep busy in retirement without emptying your wallet.

Fill your social calendar up by volunteering with your favorite nonprofit, hosting potluck dinners with friends or starting a murder mystery book club. Check out free offerings at your library, like sign language classes or museum passes.

Turn to this list of 100 free things to do when boredom hits.

Volunteering is a great way to give back without spending money. It might even come with neat perks, like free entry to a play when you usher at a theater.

7. Save Money on That Bucket List Trip

You can have a frugal retirement and travel. It just requires some smart planning and perhaps a bit of compromise — like avoiding the peak tourist season or driving instead of flying.

These travel tips will help you keep costs low.

8. Take Advantage of Discounts

Don’t be shy about sharing your age when it’ll result in sweet discounts.

Dozens of companies — from retailers and restaurants to airlines and hotels — offer lower prices for seniors. Some offer discounts to customers as young as 50.

9. Continue Your Education for Free

All across the country, there are opportunities for seniors to take free or cheap college courses. Be a lifelong learner and take a class in a subject you’ve always wanted to know more about.

10. Shop Secondhand

Instead of strolling through the mall for a new outfit or home decor piece, try thrift stores, consignment shops or online sellers to score deals.

Pro Tip

Check out these 20 clever ways to save money on clothes.

11. Sell Unused Things

You know that china set that’s been collecting dust? Stop telling yourself you’ll pass it down to your kids. Get cash for your dishes instead, along with all the other unused items lying around the house.

Organize a garage sale if you prefer to sell in person. Or go the digital route and sell your stuff online on sites like eBay and lesser-known online flea markets.

12. Pay Off Lingering Debt

The rewards are twofold when you become debt free sooner rather than later. You’ll pay less in overall interest when you pay off your debt early. You’ll also free up more cash once you no longer have that monthly financial obligation.

Paying more than the minimum, negotiating a lower interest rate and making biweekly payments can help you lower your debt load. Here are additional helpful tips on paying off student loans and eliminating credit card debt in retirement.

Nicole Dow is a former writer at The Penny Hoarder. Rachel Christian, a senior writer at The Penny Hoarder, contributed to this story.