13 Ways to Stick to Your Retirement Budget in 2026

How to save more and spend less in the new year

Bruce Horovitz and Daniel Bortz,

AARP

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Published January 05, 2026

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Chris Gash

For retirees on fixed incomes, setting and sticking to a budget has never been more critical. Even though income is limited, many expenses are not. Health costs, for example, can be wildly unpredictable for people over 65. Rising prices of consumer goods is also putting pressure on older adults' wallets.

If the past is any predictor of the future, there’s lots of budgeting work to be done. When asked what financial challenges they faced in 2024, 28 percent of Gen Xers (ages 44 to 59) and 14 percent of boomers (ages 60 to 78) said they took on debt, and 19 percent of Gen Xers and 13 percent of boomers said they depleted their savings, according to a survey by Credit Karma, a consumer financial platform.

What to do? First and foremost, craft a budget for 2026. “It may sound obvious, but everything else is based on that,” says Courtney Alev, a consumer financial advocate at Credit Karma. “Setting a budget can help you avoid a lot of financial mistakes and bad habits.”

Here are 13 retirement budget-setting tips for 2026.

1. Estimate your income

It’s impossible to set a budget without knowing precisely how much money you have coming in, says Trent Graham, program performance and quality assurance specialist at Greenpath Financial Wellness, a nonprofit organization that provides free budget consultations to those in need of assistance. To do this, you trace and project all sources of where your cash will come from over the next year. This includes Social Security payments, pension payments, any work income and income from investments.

2. Calculate your expenses

The best way to do this is to go through your bank and credit card statements and categorize your expenses like housing, utilities, groceries, health care and discretionary spending such as eating out and travel, Graham says.

3. Use a budget checkup tool

The National Council on Aging offers an online budget checkup tool that's specifically designed for adults 65 and older, says Genevieve Waterman, an aging services program specialist at the Administration for Community Living, part of the U.S. Department of Health and Human Services. AARP’s budget calculator is also a great budgeting tool; no membership is required.

4. Use a benefits checkup tool

Regardless of your financial situation, it’s smart for older folks to educate themselves about any benefits for which they might qualify, Waterman says. You can research your benefits by using the council’s free online tool, BenefitsCheckUp. Americans leave more than $16 billion in government benefits for which they qualify on the table every year, she says. For example, she says, the tool can help users find local programs that provide financial assistance to older adults who are struggling to pay their property taxes.

5. Set and stick to a spending limit

Alev advises that after you have figured out all of your essential costs, you add up to 20 percent for things that include unexpected costs, savings and paying down existing debt. She generally recommends a budget that designates 50 percent toward essentials, 30 percent for “wants” and 20 percent for unexpected costs.

6. Limit credit card debt

More than half of Gen Xers (ages 45 to 60) and over 2 in 5 boomers (ages 61 to 79) carry a credit card balance from month to month, according to a Bankrate study. Interest can add up quickly, with the average credit card rate clocking in at 23.96 percent in December 2025, according to a LendingTree study of over 200 credit cards.

The biggest financial trap that older Americans typically get into is using their credit cards as supplemental income, Graham says. “If you use your credit card, make certain you have the funds available to pay it off at the end of the month,” he says.

7. Put bills on autopay

To avoid missing any bill payments and harming your credit score, consider putting your recurring bills on autopay, Alev recommends. This includes utility and Internet bills, as well as bills for auto, home and life insurance. Virtually every bank has a customer service line that can walk you through how to set up autopay, she says. Set up the autopay for at least five days prior to the bill’s due date, she suggests.

8. Freeze your credit

With so many financial scams targeting older Americans, many financial experts recommend placing a hold, or "freeze", on your credit with each of the three major credit bureaus: Equifax, Experian and TransUnion. A freeze will stop fraudsters from opening credit cards or other credit accounts in your name, Alev says, safeguarding your credit score.

A security freeze doesn’t completely block access to your credit history. Your existing lenders can still access it, and so can employers, landlords and insurance companies if you’re seeking a job, trying to rent an apartment or applying for a new insurance policy.

9. Plan for unexpected health care costs

Unexpected health care costs are where most older Americans fail in setting up annual budgets, Graham says. So it’s critical to have ample emergency funds put away specifically for health care costs, he says.

10. Trim your subscription services

Review what subscription services you are paying for monthly and then determine which ones you are actually using and which ones you can drop, Alev says. This includes everything from streaming services to gym memberships to newspapers and magazines. According to a 2024 YouGov survey, more than half of U.S. adults are paying for subscriptions they don’t use.

11. Review your insurance policies

The National Council on Aging encourages older consumers to review their insurance plans annually. Many insurance providers offer "senior" discounts, as well as “paperless” discounts for enrolling in online billing, Waterman says. It's also worth shopping around to compare quotes, she adds.

12. Order takeout less often

Americans order delivery 3.7 times a month on average, spending roughly $1,566 annually. Depending on your habits, reducing how frequently you order in could help lower your expenses significantly. “A couple of extra food deliveries per month can almost double your food budget,” Alev says.

13. Leverage “senior” discount programs

Older folks pass up potentially hundreds of dollars in savings every year by failing to take advantage of discounts for older consumers. Many grocery chains offer them, Waterman says. For example, on Thursdays, through its Club 60 program, Harris Teeter offers VIC card members age 60 and older discounts of 5 percent. A number of major retailers, such as Kohl's, Michaels and PetSmart, also offer discounts to older customers.

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Bruce Horovitz is a contributing writer who covers personal finance and caregiving. He previously wrote for The Los Angeles Times and USA Today. Horovitz regularly writes for The New York Times, The Wall Street Journal, The Washington Post, Investor’s Business Daily, AARP The Magazine, AARP Bulletin, Kaiser Health News and PBS’s Next Avenue.

Daniel Bortz is a personal finance editor at AARP, where he writes and edits money content for the website, from saving and budgeting to building wealth and money management skills. His work has been published by the New York Times, Washington Post, Consumer Reports, Entrepreneur, Kiplinger, Newsweek, Money and other national publications.