Four Payments Middle-Class Retirees Should Automate, Experts Say

Which bills should middle-class retirees place on autopay, and why?

In Prudential Financial’s Retirement Pulse survey, 86% of retirees said they do not feel comfortable spending retirement savings on things that make them happy. The survey pointed to uncertainty and risk as the biggest obstacles to spending, and 42% of respondents said inflation was a concern. That suggests middle-class retirees need to stay especially careful with their money so they do not outlive their savings.

At the same time, retirees also need to manage bills carefully to avoid expensive mistakes. MoneyLion asked financial experts how seniors can set themselves up for better financial stability, or at least avoid preventable errors. Their top four recommendations are below.

1. Insurance

One of the most important bills middle-class retirees may want to automate is insurance.

“Forgetting that a bill is due is understandable, but some companies interpret your lack of payment as harmful neglect,” said Cameron Botes, a tax advisor and founder of BizBud.

This applies to every kind of insurance, including home and auto coverage. You do not want to face an accident or property damage only to discover that you missed an insurance payment weeks earlier.

The biggest risk is that missing a payment more than once, or ignoring a late notice, can lead an insurer to cancel the policy. Being uninsured is illegal in most states and could leave you responsible for damages after an accident. Reinstating coverage after cancellation can also be difficult, since insurers will see the lapse in coverage.

2. Credit Card Payments

“Missing or having a late credit card payment can hit somebody with interest plus the late payment fee, and that could be a penalty rate of close to 30%, and a credit impact that could take a long time to fix as well,” said Eric Pemper, managing member and founder of CuraDebt.

For retirees living on a fixed income, interest charges can pile up quickly and leave little room in the budget. Setting a regular payment schedule can help prevent missed payments and the costly problems that come with them.

3. Property Taxes

The experts also said retirees should consider automatic payments for essential bills such as property taxes. If those taxes go unpaid, the county can place a lien on the home. For retirees with limited income, covering those costs may be difficult, and the shortfall could force them to dip into emergency savings meant for medical bills or other unexpected expenses.

4. Other Bills Connected to Lifestyle

Experts agreed that retirees with fixed incomes should automate any important recurring bill so the payment is made on a set day each month without depending on memory, mail delivery, or a trip to the bank. That could include a wellness club membership or a subscription they value. It can be reassuring to know these important expenses are handled automatically, especially those tied to a retiree's lifestyle.

It is also wise to enable overdraft protection and keep a cushion in the bank account so payments clear and extra bank fees are avoided.

“Setting up automatic payments gives retirees peace of mind and helps them to enjoy their lives,” Botes said. “It allows them to focus their energy on their own well-being and spending time with family instead of worrying if they’ll be able to make it to the bank to pay.”