How To Budget on a Fixed Income
Stretching your dollars while living on a fixed income can be challenging. We share tips, discounts and aid programs to help you manage your money.
A fixed income generally refers to income received by older adults who no longer collect a regular paycheck from full-time work. Instead, these seniors depend mostly or entirely on fixed payments from Social Security, pensions and retirement savings.
While Social Security payments increase with inflation, there is generally little change in the monthly income amount. That can make living on a fixed income difficult when inflation eats into buying power.
Key Takeaways for Budgeting on a Fixed Income
- Comparing your fixed income to your essential expenses is the first step to creating your budget.
- Tackling debt while building your emergency savings for unexpected events remains a top priority, even in retirement.
- Government resources for older adults can help you save on fixed expenses, such as health care, medication and housing.
- Discounts and aid programs may help you save on other expenses, such as groceries, travel and utilities.
- BECU offers members financial coaching for budgeting, debt management, fixed incomes and more.
Manage Your Fixed Income and Essential Expenses
When you're on a fixed income, you first need a clear understanding of your finances. BECU members can access the Financial Health Check for personalized help in creating a budget that tracks their monthly spending.
Your total monthly income sources might come from:
- Social Security benefits
- Investment income
- Savings account funds
- Pensions
- Retirement accounts such as a 401(k), traditional IRA or Roth IRA
- Additional income streams such as part-time jobs
Fixed Expenses
Your monthly budget could be going toward both predictable and changing expenses.
Predictable expenses could include:
- Mortgage payments or rent
- Monthly debt payments on a car or personal loan
- Cell phone
- Internet
- Streaming services
Variable Expenses
Variable or changing expenses can add more stress to your budget. These could include:
- Utilities
- Groceries
- Pet care and food
- Transportation
After creating your budget, you can make necessary adjustments and align it with your monthly spending. Budgeting apps can help. For example, BECU members can use BECU Money Manager to review budgets and monthly expenses and then adjust, add or remove budget items.
Make Your Debt Payments on Time
More than 62% of older adult households carry debt. This represents a significant increase — 44% higher, compared with 30 years ago, according to a 2021 Congressional Research Service report. Existing debt might come from:
- Home loans
- Car loans
- Credit cards
- Medical bills
- Personal loans
Taking steps to reduce your debt can help you enjoy a less stressful retirement. Once you've paid down your debt, a larger portion of your fixed income is available to cover living costs. You also won't be paying as much in interest on credit cards and other debts.
Build Your Emergency Fund
Creating a fixed-income budget that adapts to inflation and rising costs can be challenging. Saving money in an emergency fund, can create a cushion for those unexpected expenses.
If you can stash more money in your bank account, you won't have to rely as heavily on credit cards, loans and other sources of credit. If you receive extra income from part-time work or a large tax refund, try to put a portion of that money into your savings account. Or try to save a little every month.
Trim Your Housing Costs
Depending on where you live, you may qualify for property-tax relief if you own your home. According to the King County Assessor, only one in 100 eligible seniors and disabled persons are enrolled. To qualify, you must be 60 or older, or retired due to a physical disability and meet income restrictions.
As a renter, you still feel those taxes hit your wallet with rent hikes. A roommate can help reduce monthly living expenses. If a roommate isn't an option, consider moving to a more affordable neighborhood.
In some cases, you can also stabilize payments with a payment plan. Some utilities can create fixed payment plans based on a monthly average of the past year's use. For example, if gas utility payments change every month, making budgeting unpredictable, the new payment can help smooth out amounts over time to a consistent payment.
Examine Your Transportation Needs
Suppose you need transportation to and from appointments, a part-time job, visiting family, or other commitments. In that case, reduce expenses by trimming your transportation costs:
- Eliminate a car payment by purchasing a less expensive car.
- Swap a fuel-hungry vehicle for a fuel-efficient car.
- Opt for a car-sharing program.
- Shop around for auto insurance.
- Research public transportation options that could work for you.
Every dollar freed up can be allocated to other essentials, helping you stay on budget. Public transportation programs may even shuttle older adults and people with disabilities to and from hot meal programs, doctor's appointments and other appointments and services.
Manage Health Care Spending
The most effective way to reduce medical costs is through prevention. Individuals who take preventative measures, such as doctor visits and following recommended regimens, can save hundreds, if not thousands, of dollars. For example, getting your flu vaccine can help avoid costly diagnostic tests, doctor visits and hospital bills.
Many preventive tests are 100% covered with no out-of-pocket costs if you're on Medicare, Medicare Advantage, or most health insurance plans.
Additionally, Medicare Part D Extra Help is available to those who qualify due to limited income or other financial resources. This program helps you pay medication costs.
Seek Food Resources
If you're having trouble affording food, consider exploring nearby resources that offer free meals and fresh groceries. The National Coalition On Aging's BenefitsCheckUp tool suggests benefits programs to help pay for health care, medicine, food, utilities and more.
Some programs even help you keep up with inflation. For example, in 2025, many older adults enrolled in the Supplemental Nutrition Assistance Program saw a small increase in their monthly benefits. SNAP benefits even doubled at some farmers' markets.
Other ideas to save on grocery shopping on a fixed income from the National Coalition on Aging:
- Search online recipe sites.
- Invest in gardening if you love the outdoors and have access to green space or a public gardening patch.
- Look for coupons and weekly deals at your favorite grocery stores — many now offer apps to ease the shopping experience.
- Join a store membership or loyalty program to earn future discounts on your purchases.
- Try more store brands for flavor, quality and grocery savings.
- Shop online to stick to a grocery shopping list and budget and pick up groceries curbside to skip delivery fees.
Look for Senior Discounts
Whether you prefer to be called retired, senior or older adult, there's likely a discount program for you. Other programs may more broadly apply to people living on a low monthly income.
Before drastically cutting spending, particularly on necessities, research your options. Use the BenefitsCheckUp tool to find discounts on offer for:
- Housing, utilities and energy
- Travel (including an annual Senior pass for U.S. National Parks)
- Disability services
- Health and medication
For example, the Age Friendly Seattle program could save you up to $240 annually on local restaurants, services, museums, arts performances and more. To qualify, you must be 60 or older, or an adult with a disability.
Monitor Your Progress
After setting your budget and adjusting your monthly expenses, try out your new budget for a month. Then review your spending. If you've spent more than you planned, you may need to make further adjustments to your budget.
Use the tools that work best for you, whether that's a mobile app, spreadsheet or pencil and paper. Use your budget to stay on track, so your income supports you long term.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized financial, tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation when making financial, legal, tax, investment, or any other business and professional decisions that affect you and/or your business.
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Lora Shinn
Contributor