I'm a Retirement Planner: 5 Once-a-Year Purchases Smart Retirees Time Carefully To Save Hundreds
For retirees living on fixed incomes, stretching every dollar can make a difference to a budget, and one way to make money go further is to time certain purchases every year. From insurance premiums to household essentials, knowing when to shop and when to renegotiate can help free up money for other expenses.
Here are five smart purchases for retirees to buy and review annually, according to finance experts.
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1. Auto and Homeowners Insurance
When to shop: Before your policy renews
Insurance is a must-have, but it’s not cheap and letting it automatically renew is a big no-no, said Steve Sexton, CEO of Sexton Advisory Group. He recommended shopping around a month or two before the policy ends.
“Even saving $20 to $30 a month on your auto or homeowners insurance adds up to $240 or $360 a year,” he explained.
Retirees who don’t drive much might also qualify for lower-mileage discounts. Bundling home and auto insurance is another way to potentially cut costs, said Nathan Weller, insurance advisor with Insurpedia.
“You may also be eligible for discounts, for example, if you have a home and automobile insurance policy with the same insurer or if you have a security system,” he said.
However, retirees should compare coverage, deductibles and exclusions before switching policies.
2. Medicare Prescription Drug Coverage
When to shop: Oct. 15 through Dec. 7
Medicare prescription drug plans and Medicare Advantage plans can change their premiums, covered medications and provider networks each year. Reviewing coverage during the annual enrollment period can help retirees avoid paying more than necessary.
“One of the biggest mistakes I see retirees make is sticking with the same Medicare plan year after year without looking at what's changed,” Sexton said.
Weller agreed and also recommended reviewing plans annually: “The plan you selected last year could be more expensive or less comprehensive this year.”
Comparing plans could save money for retirees over the following year. Weller recommended evaluating total costs rather than focusing solely on monthly premiums.
3. Major Household Appliances
When to shop: Memorial Day, Labor Day and Black Friday sales
Paying full price for an appliance can really hurt a bank account, but the good news is there are plenty of sales throughout the year to take advantage of.
Sexton advised taking stock of appliances that may need replacing in the coming year and timing purchases around sales rather than waiting until something breaks.
“A 20% discount on a $1,500 refrigerator, for example, saves $300,” he said.
Planning ahead can also give retirees more time to compare models, check for energy efficiency and consider delivery and installation costs, which can add to the final price.
4. Winter Clothing and Household Items
When to shop: January and March
Shopping off-season can help retirees save on household linens and winter clothing.
“January is often a popular time to buy household items like blankets, bed sheets, towels and other linen products,” said Daniel Gleich, Madison Trust Company's former CEO and current board member and shareholder. “During this month, these items may be less expensive due in part to white sales.”
March can also be a good time to shop for cold-weather clothing. Gleich said retailers tend to reduce prices on coats and heavy sweaters to make room for spring inventory. Timing these purchases accordingly “can potentially save retirees hundreds of dollars,” Gleich added.
5. Annual Phone Plans
When to shop: Before renewing a mobile plan
A cellphone is an obvious part of daily life, but retirees who don’t use much data could be overpaying for their monthly service. Gleich recommended comparing annual prepaid phone plans with monthly options to see whether paying up-front makes financial sense.
“Wireless carriers may also allow customers to purchase their phone plan as a prepaid annual service,” he said. “This option may be favorable for retirees who do not use as much mobile data as their plan provides.”
Gleich also offered an example of the potential savings: “A monthly plan that normally costs $60 could be reduced drastically when turned into a $250 annual payment. When crunching the numbers, this could save $470 per year.”
Retirees should check data limits, coverage, fees and cancellation terms before switching.
Timing purchases around seasonal sales can help retirees save, but recurring expenses deserve just as much attention. Reviewing insurance, Medicare coverage and phone plans each year may uncover savings without requiring much of a lifestyle change.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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