A common savings guideline is to save 10% to 20% of your monthly income, but that amount may not be realistic if you live on a fixed or limited income. The right savings goal is one you can manage consistently—even if you start with just a few dollars each month.

With the cost of food, housing, health care, and other basic expenses continuing to rise, finding extra money isn’t always easy. But it’s never too late to begin.

“Start with small steps,” advised Jen Teague, Director for Health Coverage and Benefits at NCOA. “It’s easy to feel overwhelmed by the idea but remember: anything you can set aside is a good thing.”

Whether you’re currently employed and trying to save for retirement—or out of the workforce and want to build an emergency fund—a practical monthly savings goal can help you prepare for the unexpected. Here are some general guidelines and tips for choosing an amount that works for your budget.

Checklist: How to Start Saving Money

Why is it important to save money?

Saving money helps you prepare for surprise expenses, avoid taking on debt, and work toward financial goals. Even a small amount set aside regularly can help you feel more secure about the future.

Charles, 74 (we changed his name to protect his privacy) lives in an apartment with a monthly cost that already stretched his limited budget. When his landlord recently raised the rent, Charles grew anxious. Even after asking his children for a little extra money—something he really didn’t want to do—the math simply didn’t add up. His Social Security check left no financial cushion for unexpected life events like this. He could pay the increased rent, but wouldn’t have money for food, utilities, and other basic necessities. And what would he do next year if his landlord upped the amount again?

“Across the United States, millions of older adults like Charles find themselves in a similar situation right now,” Teague explained.

"Our nation’s badly frayed safety net continues to fail people who don’t have extra money to save for retirement—and who now rely heavily on their Social Security paycheck to cover their basic living costs,” Teague said.

Fortunately, as Charles learned, there are ways to save money even when your budget is stretched thin. We’ll get to that a little further down.

How much money should I save each month?

The best way to answer the question is first to sit down and write a list of your income and non-discretionary expenses—the things you need to pay. When you do that, you know exactly what you have to work with.

Try using a simple budget calendar, which helps you see and get a handle on your finances in a straightforward way. Using your own personal bottom line as a guide, you then can see whether one or more of the following suggestions works for you.

If you like benchmarks, it may help to know the current averages by age group, according to the most recent data published by the Federal Reserve:¹

• 55–64: $57,800
• 65–74: $60,400
• 75 and over: $55,600

These figures represent dollars kept in liquid accounts including checking, savings, money market, and some prepaid debit cards.

Keep in mind, however, that they also may have little to do with your own financial reality. T

What is the 70/30 rule?

This common guideline is easy to follow, at least in principle:

• Live on no more than 70% of your income
• Save 30% of your income

Let’s say you collect the average monthly Social Security benefit for a retired person, which is $2,031.74 as of July 2026. Ideally, according to the 70/30 formula, you should save around $610 each month.

“Of course, when you live on a fixed income, putting this amount of money aside can seem impossible,” Teague said. “So instead, think of this guideline as way to prioritize your budget and practice good financial habits.”

In other words, the rule still can help guide your spending decisions: Is this purchase something I need? Or is it something I want? Try personalizing the rule to fit your situation more closely. Could you make 95/5 work instead?

What expenses can I cut to save money?

If your budget is tight, reducing what you spend can be a good way to save money. And some of these savings hide in plain sight. For example, many cell phone providers offer service discounts for older adults. You just need to ask. Taking advantage of senior discounts—like those offered through the Lifeline Program—can save you 5%, 10%, or even more on products and services you already buy.

Another strategy is to explore benefits programs that can help you save money. Millions of people miss out on public and private benefits programs simply because they don’t know about them, don’t believe they’re eligible, or aren’t sure how to apply.

That’s what Charles learned. And he’s tremendously grateful for the life-saving support he discovered, thanks to his local Benefits Enrollment Center (BEC). These community-based centers and their caring, professional staff help Medicare-eligible people—including older adults with low incomes and younger adults with disabilities—find and apply for crucial financial assistance programs.

With help from his benefits counselor, Charles signed up for SNAP (formerly known as Food Stamps), a Medicare Savings Program (MSP), and the Low-Income Home Energy Assistance Program (LIHEAP). Together, these programs will save Charles hundreds of dollars each month!

“When you qualify for and enroll in these programs, you keep more money in your pocket,” Teague said. “Consider it a different type of savings plan—one that you’ve earned and absolutely deserve.”

Frequently asked questions (FAQ)

How can I find help paying for food, housing, or utilities?
NCOA’s BenefitsCheckUp® is a free, online tool that connects millions of older adults with financial assistance programs that can help pay for health care, medicine, food, utilities, and more. Visit today to explore a variety savings opportunities for you or someone you know.

Is it too late to start saving for retirement?
No. It’s never too late to start saving for retirement. Even if you plan to leave the working world soon—or you’ve already retired—setting aside what you can may help you cover future expenses and rely less on credit. If you’re still working, you may also be able to make catch-up contributions to certain retirement accounts (like a 401(k)).

How can I make saving money a habit?
Choose a realistic, manageable amount and set it aside every payday or month. Consider scheduling an automatic transfer to a separate savings account—this “set it and forget it” approach saves you the trouble of remembering to put money aside. Starting small and saving consistently can make the habit easier to maintain.

How can I start saving money?
Look at your income and expenses to find an amount you can comfortably save. Then set a specific goal, such as building an emergency fund, and regularly move money into a separate account. Even a few dollars at a time can add up.

How much should I have in an emergency fund?
A common goal for an emergency fund is enough to cover three to six months of essential expenses. But that may be tricky if you live on a limited or fixed income. So start with a smaller goal (such as $500 or one month of expenses), and build from there.

The bottom line

“The biggest takeaway is that the idea of saving money should make you feel empowered, not ashamed,” Teague said. “Any savings is good savings. While it may be interesting to know how much money other people have in the bank, it’s not always helpful. No two situations are the same. Try to avoid comparing yourself to an arbitrary average and instead focus on what’s reasonable for you right now.”

Sources

1. Aditya Aladangady, et al. Changes in U.S. Family Finances from 2019 to 2022: Evidence from the Survey of Consumer Finances. Board of Governors of the Federal Reserve System. October 18, 2023. Found on the internet at https://www.federalreserve.gov/econres/scfindex.htm