3 Budget Cuts Middle-Class Retirees Are Making Just To Stay Afloat in 2025

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It’s more challenging than ever to make ends meet, and no one knows this better than middle-class retirees. Prices are going up, and those on a fixed income are feeling the pinch.

Social Security benefits do go up each year, but they may not keep up with inflation. In 2024, the Social Security cost-of-living adjustment was 2.5%. The annual inflation rate for that year was 2.9%, according to the U.S. Inflation Calculator, and the same rate is projected for 2025. The Social Security Administration announced the 2026 COLA at 2.8%.

With inflation outpacing the increase in Social Security benefits, middle-class retirees are looking for ways to cut back so they can make ends meet. Here are three budget cuts middle-class retirees are making just to stay afloat in 2025.

Discretionary Spending

Middle-class retirees are examining their budgets to see where they can cut back on costs that aren’t absolutely necessary. These kinds of expenses can include things like vacations, dining out and gifts.

AARP says retirees should stop spending on these things:

• New clothes and accessories: You don’t need dress shirts or designer bags if you’re not going to the office anymore. Wear what you have or buy second-hand.
• Expensive gifts: You don’t need to stop indulging your grandchildren, but do be mindful of what you give and how much you spend.
• Collectibles: You may have more time to add to your collections in retirement, but beware of also spending more money on them. Your children and grandchildren aren’t going to want your collection of Precious Memories figurines, so consider trading to get new pieces instead of buying.
• Warehouse club memberships: You probably don’t need a pallet of macaroni and cheese anymore, so cancel that annual wholesale club membership.
• Books: Your local library has books, magazines and even the daily newspaper — all for free! Plus, a trip to the library gets you out of the house and socializing with others.
• Travel: You don’t have to stop traveling entirely, but you can go at off-peak times, now that you don’t have to consider your work schedule.
• A second car: Retired couples can save money by only keeping one car. In addition to the cost of the vehicle, you’ll save on insurance and maintenance.
• Cellphone plans: If you still have adult kids on your cellphone plan, it’s time to cut them loose. Let them get their own plans, and switch to a senior-friendly carrier if you like.
• Garden centers: If gardening is your passion and you’ve been looking forward to doing more of it in retirement, don’t despair. You don’t have to give it up, but consider less expensive sources to buy your plants and flowers. Home improvement chains offer plants at a discount, and flowers from grocery stores are often equal in quality to those from the florist.
• Property maintenance services: Now that you have more time, you may be able to mow your own grass, shovel your own snow, and clean your own windows, rather than paying someone for these tasks.

Reviewing your household spending may give you some insight into where you can cut back.

Paying Off Debt

Debt-free is the best way to go into retirement, but not everyone is able to pull that off.

A recent AARP survey found that 42% of adults aged 65 to 74, and 35% of those over 75, carry credit card debt. Some retirees use credit cards for basic living expenses they can’t otherwise cover, while others say that health care expenses have contributed to their credit card debt.

Paying off your credit cards — and then paying any balance every month to avoid interest charges — can save you a lot of money over time. With credit card interest rates approaching 30% APR, the best time to get your credit card balances down to zero is before you retire. But if you’re still paying off credit cards in retirement, it’s a good idea to prioritize paying off these balances completely.

Downsizing

Housing costs continue to rise, and many middle-class retirees are struggling to keep up. According to a report from the Harvard Joint Center for Housing Studies, 41% of American homeowners aged 65 to 79 still had a mortgage on their home in 2022, up from 24% in 1989.

For all homeowners, even those whose homes are paid off, taxes and insurance costs are increasing. And the cost of repairs and renovations continues to climb.

One way for middle-class retirees to combat these increasing costs is to downsize their homes. This can mean buying a smaller home in the same community or moving to a smaller home in a community that has a lower cost of living. If the kids are grown and flown, a smaller home can mean lower costs all around.

Cutting costs where you can may be critical in retirement, so don’t wait to take some of these measures to bring down your spending.

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