The generation known for rock ‘n roll, free love and flower power is close to or already in retirement. Baby boomers — those born between 1946 and 1964 — will be between the ages of 51 and 70 in 2016.
If you’re a baby boomer living on a tight budget or fixed income, saving money matters more than ever. Here are 20 things that baby boomers can save money on in 2016.
1. Use Health Savings Accounts
A health savings account allows you to contribute pre-tax dollars into an account that can only be used for qualified medical expenses. The funds roll over from year to year if they are not spent. Moreover, those unspent funds will grow tax-free, allowing you to develop a cushion for most medical expenses during retirement.
2. Buy Long-Term Insurance Premiums
In order to deduct medical expenses on your taxes, those expenses must exceed 10 percent of your income. Purchasing long-term insurance is one way to help meet that threshold because the premiums are typically tax deductible. People over the age of 61 can deduct up to $3,900. For those earning $50,000 per year, that deduction could push you over the limit when combined with other medical expenses.
3. Tap Free Tax Help
If you pay an accountant to file your taxes each year, consider taking advantage of the Tax Counseling for the Elderly program, which provides free tax preparation help for those age 60 and older. Considering that the average cost for a tax preparation service is $273, using the program is an easy way to save.
4. Claim Dependent Care Tax Break
If you’re taking care of grandchildren full time, or you’re supporting them financially, you might be able to claim them as dependents on your tax return. Talk with a tax advisor to learn about deductions for which you may qualify.
5. Take Tax Deduction for Dependent Parents
Perhaps it’s not your grandchildren but your elderly parents for whom you’re caring. With people living longer, many older adults are moving in with their adult children for financial or health reasons. As a taxpayer, you may be able to claim your parents as dependents in addition to your own children.
According to IRS requirements, you must have provided more than half of your parents’ support during the tax year in order to claim them as dependents. You would calculate the fair market value of the room your parents occupy in your home, as well as the cost of food, utilities, medical bills and general living expenses that you pay on their behalf. There are other qualifications to consider as well.
6. Offer to Research Tuition Assistance
If you are struggling to make ends meet and can’t afford to help your child pay for college expenses, then offer assistance in other ways. For example, help them find scholarships and grants. Contribute to the cost of their college textbooks. If they’re older and have children of their own, offer to babysit free of charge while they attend class. Try to avoid taking out a Parent Plus or Direct Loan for your student if you’re not in a position to do so.
7. Shop for Deals
Whether you’re in the market for a new pair of shoes or a personal loan, it’s always best to comparison shop to find the best deal. Doing your homework by comparing loan terms, fees and interest rates can save you thousands of dollars over the life of the loan. Likewise, comparison shopping for the smaller things in life can also save you substantial money over the course of your lifetime.
Related: 35 Secrets to Saving Money in 2016
8. Avoid Bank Fees
Consumers incur bank fees for using out-of-network ATM machines, overdrafts and for falling below the required minimum daily balance. Avoid these fees by finding a bank that suits your money management style. For example, some banks allow you to withdraw money from any ATM and will reimburse the fee charged by the other bank. Some offer free checking or no minimum balance. With careful planning, bank fees can be avoided.
9. Exercise Outside
Smoking, consuming too much sugar or saturated fat, and failing to exercise are all unhealthy habits that can lead to chronic medical conditions and rising health care costs. To help trim your waistline and your medical expenses, adopt a healthy lifestyle. Quit smoking, cut down or eliminate meat from your diet and start exercising daily.
You don’t have to join a gym to get a good workout. Exercise at home or walk outside. A recent study found that walking 20 to 25 minutes as part of your daily routine can add seven years to your life.
10. Eat at Home
Not only does cooking and eating at home save money, you’ll also benefit from the healthy ingredients you choose for recipes. Consider eating more vegetables, beans, whole grains, nuts, fruit and other power-packed ingredients. Dining at home rather than in restaurants can save you hundreds of dollars a year.
11. Drink Less
Americans on average spend 1 percent of their income on alcohol, USA Today reported. Save money by curbing or eliminating your alcoholic beverage intake. If eliminating spirits altogether isn’t something you want to do, then find deals or promotions to save money on those purchases.
12. Use Costco for Entertainment
If you have a Costco membership, you can save money on restaurants and movie tickets. Costco often sells $100 worth of restaurant gift cards for $79.99, a deal that’s especially popular around the holidays. You can also pick up a four-pack of discounted movie tickets to AMC, Regal and Cinemark theaters.
13. Make Your Home Energy Efficient
By making your home energy efficient, you can cut your energy bill by 20 to 30 percent. Consider caulking windows and doors to retain heat, switching to energy-saving light bulbs, changing the air filters often, and using Energy Star appliances.
14. Stay with Family or Friends When Traveling
Baby boomers reportedly took an average of four to five trips in 2015, and most trips were within the U.S. When traveling, consider staying with relatives and friends instead of booking a pricey hotel room. Not only will you save money, you’ll also get to spend quality time with loved ones.
15. Negotiate Your Bills
Try negotiating with service providers to see if you can snag a deal on your cable and internet plan, your cell phone package, your lawn care service and other bills. You might qualify for a senior discount or get a special promotion the company is offering. It never hurts to ask for a discount.
16. Purchase a National Park Pass
People aged 62 and older can purchase a National Park Pass for just $10 per year. The pass provides admission to more than 2,000 national parks and federal recreation sites. Older pass holders might also qualify for discounts on camping and other amenities. If you’re looking for affordable vacation destinations, purchasing a National Park Pass can set you on your way.
17. Keep Your Credit Score High
It’s in your best interest to pay your bills on time and maintain a high credit score. If you need a loan in your later years, the interest rate will be determined by your credit score. So having excellent credit, with a score of 740 and above, will qualify you for the best rates, saving you potentially thousands of dollars over the life of your loan.
18. Pay Off Credit Card Debt
The average baby boomer has more than $8000 in credit card debt. Assuming an interest rate of 15 percent, baby boomers could be spending more than $100 per month in interest alone. By paying down your credit card debt, or switching to a 0 percent interest credit card, you could save more than $1,000 per year. Making purchases with cash, rather than with credit cards, could also boost your bottom line.
19. Ask for the Senior Discount
When shopping, dining or going to the movies, always ask for a senior discount. Typically, this discount is reserved for those age 55 and older. Kohl’s, for example, offers people aged 55 and older a 15 percent discount every Wednesday in store. Boston Market, Chili’s, Dairy Queen and Subway also offer these types of discounts.
20. Pick Up a Side Job
If you’re nearing retirement or are already in retirement and need some extra cash, consider picking up a side job. You could do contract or freelance work for your former employer, work part time at one of your favorite stores. You can also start a side business from the comfort of your home.