Achieving Better Finances: What Every Senior & Elderly American Should Think About
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Financial matters affect the lives of all Americans. But, as a senior, finances may play an especially large role in your well-being. After all, at this stage of life, priorities often change. And new realities may influence your spending and saving habits. That's why it's a good idea to take a step back and make sure you're on a financial path that truly serves your interests. By managing your money well, you'll have an easier time achieving the lifestyle—and other goals—you want.
And isn't that the whole point? The more you know about your financial affairs and the options available to you, the brighter your senior years are likely to be. You get to make your money work for you. That's true whether you're currently retired, planning to retire, or working by choice or out of necessity.
But, of course, it's important to remember that sustaining healthy finances as a senior or elderly individual often requires taking some special factors into consideration. For example, your goals for the immediate and more distant future are probably very different from what they were a few decades ago. You also may have close relatives who want to help you, who need financial assistance of their own, or who may inherit your assets. Plus, you can't ignore your health care needs or the fact that protecting your money becomes increasingly important as you age.
It may seem like a lot to think about. But you can do this. Here are some things to consider:
Setting Your Goals
Are you happy with your current lifestyle and overall situation? Do you hope for something better? Either way, narrowing down your goals is important. After all, you can't get where you want to go if you aren't even sure about where that is. So take the time to really hone in on what your future wants and needs may be.
Consider all aspects of your life—from your health to your living arrangements to your relationships. What do you hope to accomplish? What do you hope to sustain or improve upon? What do you hope to leave behind for your heirs? Be honest. Be realistic. And be specific. Remember to consider fun things like your hobbies, leisure activities, and potential travel.
Also, keep in mind that, as you age, you may need elderly care or assistance with certain aspects of everyday living. Do your goals reflect that possibility and take into account how you'd like to be cared for in the event that you experience health challenges?
Map out a vision of what you want for the rest of your life. Doing so can help you avoid some of the pitfalls that other seniors experience. (For example, did you know that, according to the National Council on Aging (NCOA), about one-third of Americans over the age of 60 are considered economically insecure?) By re-establishing your goals (and reviewing them on a frequent basis), you'll create a more solid foundation from which to build greater financial security and life satisfaction.
Short- & Long-Term Planning
Here's where some of your goals may start coming into sharper focus. As you take your current situation into account and start thinking about future possibilities, it may become apparent that you need to engage in more thoughtful and detailed planning. Establishing smart strategies—based on your goals and special circumstances—is vital for good money management. Otherwise, you risk greatly underestimating how much money you'll actually need going forward. Consider important aspects such as the following (based on guidance from sources like AARP, Suze Orman, and the Consumer Financial Protection Bureau).
Budgeting & Cash Flow Management
Creating a comprehensive spending plan is one of the most important actions you can take, especially if you're retired and living on a fixed income. Without a realistic budget that's based on your unique situation, it becomes all too easy to get into financial trouble. Every dollar counts. So take the following aspects into consideration as you develop your budget (based on advice from sources like NCOA, Suze Orman, and the AARP Foundation.
Remember: The goal is to have your income cover all of your expenses. If your total expenses outweigh your income, then you'll need to find ways to either increase your income or reduce your expenses. The alternative is going deeper into debt, which is a recipe for trouble—especially when you're a senior on a fixed income.
Thankfully, seniors and elderly Americans often have more ways to reduce their expenses than younger people do. For example, many restaurants, retailers, fitness centers, and entertainment venues offer senior discounts. In addition, free cell phone plans are available in some states for seniors above a certain age. And some towns and cities offer programs for seniors that can help them legally reduce their property taxes.
During your senior or elderly years, managing your finances can feel a little daunting. That's true even if you're lucky enough to escape some of the cognitive decline that is a normal part of aging. So, sometimes, the best thing you can do is ask for help. It's nothing that you have to feel embarrassed about. But it is vital that you identify people you can trust. Options to consider include:
Avoiding Scams & Elder Abuse
Unfortunately, financial scammers often perceive older adults and elderly Americans as easy targets. So it's critical to stay vigilant. Even if you don't have a lot of money in the bank, fraudsters still might target you and try to steal your personal information or whatever money you do have.
Financial criminals often prey on seniors because they know that many older adults experience a decline in their cognitive abilities. In addition, some seniors are extra-vulnerable to fraud because of mental illness or physical or social isolation. Frequently, they are also reluctant to report financial crimes to the police because they feel embarrassed about having been swindled.
Scammers use all kinds of different strategies to fool seniors into giving them money or valuable personal information. For example, according to NCOA and Nolo, some of the most commonly used strategies include:
- Pretending to be a grandchild (online or over the phone) who urgently needs money
- Offering bogus prizes or deals as part of a fraudulent telemarketing scheme
- Using fake emails or online pop-up windows to con people into providing personal financial information
- Creating pyramid investment schemes or overly complex financial products to swindle people
- Selling counterfeit prescription drugs or bogus "anti-aging" products
- Posing as a Medicare or Social Security representative
- Pretending to be someone from a utility company
Those strategies are just the tip of the iceberg. So stay aware of the risk, and always remain skeptical. It's wise to never buy anything from—or give information to—people who call you, email you, or show up at your door unexpectedly.
What if you're worried that an elderly parent or other loved one is being victimized in this way? Watch out for warning signs such as:
- Stacks of sweepstakes mailings or unopened bills
- Over-hyping an investment's benefits without much attention to its risks
- Cognitive difficulties, such as with simple math
- Appearing afraid, confused, or disheveled (if that isn't normal for him or her)
- Sudden or out-of-the-ordinary changes in bank accounts
Of course, it's also important to recognize that some seniors are financially victimized by their own relatives or caregivers. In fact, family members commit almost 60 percent of all elder abuse that gets reported. Most commonly, it is the adult children of elderly parents who commit financial abuse. However, some elderly Americans are also vulnerable to fraud by other family members such as their grandchildren, nephews, nieces, cousins, and so on.
Don't let anyone take advantage of your trust.
You deserve to have your finances work toward your own best interests.