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Basic Finances for Seniors: What You Need to Know

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Basic Finances for Seniors: What You Need to Know

Senior Finance Basics
Why April 15th?

It all started at the beginning of the Civil War. A special “income tax” was introduced into America to help fund the war effort. A decade later, Congress decided income tax was unconstitutional and abolished it.

Thirty years later, Congress changed their collective mind and decided that, actually, income tax was a great idea and added the 16th amendment to the constitution.

For some people, one date in April causes a lot of anxiety and confusion. For others, simple day-to-day finances cause year round stress. With tax season upon us, it’s a good time to look at other areas of financial stress in our lives and especially in the lives of our senior loved ones.

In the past few decades, finances and money management have gotten more complicated. People used to put their money in the bank and that was that. Now, there are a multitude of financial options! Seniors who grew up with a simple financial system have struggled to keep up. Here are a few basic things to keep in mind as your senior loved one navigates the retirement years.

Managing Money: Budgeting and managing cash flow

Cash flow after retirement is not always a fun topic to think about. A generation ago, families cared for their aging parents’ out of their own pockets. Today, cash flow is a little different.

After retirement cash flow varies depending on the situation and lifestyles of the retiree. Some have put their money to work for them, investing in the stock market. Others have had the opportunity to work at a job that offers a 401(k). Still others have planned ahead, opening an IRA (Individual Retirement Account).

Unfortunately, it is no longer considered wise to rely on social security as a permanent income flow. With the amount of seniors retiring and withdrawing social security, the money is projected to run out in about 15 years. If you or someone you love is headed towards retirement with little to no savings, consider alternate forms of cash flow.

Working class Americans are used to receiving a check every other week. Cash flow is different depending on your retirement plan. Often checks are less frequent and smaller than before, but the cost of living is just as much. Talk to a financial advisor before retirement to help manage your cash flow.

Managing Money: Health Care

Another thing to consider during this time are health care costs. Medical bills can be the single highest monthly bill for the American senior. There are several different options to aid seniors who struggle with this financial burden.

Medicare is the most popular and widely marketed health care option. It is a federally sponsored program and offers a variety of plans for those looking for a cheaper insurance option.

Medicaid is a healthcare program formed by a partnership between the federal government and the state. Medicaid is offered to a wider age demographic and is generally considered to have more options than Medicare.

If Medicare and Medicaid seem too limiting, there are also private insurance options, but these can be expensive. Consider also health-sharing ministries like Samaritan’s Ministries that welcome senior members or Medi-Share that works with certain Medicare programs.

Planning for the Future: Long-Term Care

As our seniors age, the financial burden of future long-term care must be considered. Fortunately, with millions of baby boomers retiring, long-term care options have never been more plentiful. For those retirees who need more than just the occasional doctors’ visit, there is anything from companionship services to nursing home care. Find out which one is right for you.

Adult Day Care can be a cheap option. However, for those who wish for a more personalized experience with more diverse options, In-Home Senior Care is a choice more and more people are making. If this is something you would like to consider, click here to get a free quote today.

For others, an assisted living facility or even nursing home care are all expenses that need to be considered. An assisted living facility will not provide the level of medical care that a nursing home can. However, a nursing home is almost double the cost. These are all factors that should be considered when taking on the financial responsibility of long-term care. (1)

Planning for the Future: Life Insurance

When Nick Byrd kicked in the back door, the smoke was so thick his neighbor had only stumbled as far as the hallway. Thinking quickly, Nick scooped Catherine up in his arms and carried her out the back. Thousands of seniors like Catherine will experience disasters this year. Thankfully for every Catherine, there is a Wyatt, Dylan, Seth, and Nick who are willing and prepared to go above and beyond to help their neighbor. Catherine was incredibly grateful to her rescuers and so were her 10 children and 42 grandchildren.
Senior Finance Basics 1
Life insurance is not something we enjoy thinking about. There are as many reasons to get life insurance as there are life insurance companies. With the cost of living getting higher and higher, some seniors still have dependents. Others want to ensure their funeral expenses are taken care of after they are gone.

Whatever the reason, life insurance is a major expense to be factored into a newly retiree’s budget. But which company is the best choice? While the answer is as different as every senior, there are a few questions to ask before signing on the bottom line.

Handling Financial Challenges: The Emergency Fund

As much as everyone knows an emergency fund is a good idea, almost half of Americans do not have one. (2) The cost of living has risen exponentially over the past few decades and saving has become more and more difficult. So, what’s a retired senior to do?

There are a few ways to start saving, even after retirement. The journey of a thousand miles begins with one step. This is true even with small savings. Set aside a small amount every month. After a while, it will begin to add up.

Another way to save a little extra for a rainy day is to start a side hustle. There are many things a capable senior is able to do. Check out this article for ideas on how your senior loved one can change their extra time into money.

Handling Financial Challenges: Tips for Avoiding Scams

Scams cost American seniors 2.9 billion dollars every year. (3) These kinds of scammers are con artists. They will manipulate your senior loved one into making a quick decision sometimes by making promises they never intend to keep or by using threats.

There are a few quick tips to keep in mind when dealing with a scammer. Scammers want you to give up your information right then and there. Never give credit card information, social security numbers, or bank account numbers over the phone. You don’t have to give information out immediately. Talk with someone you trust or look up the information they’ve given you online before you share any personal financial information.

Basic Finance

Finances and money management have gotten more complicated. There are a multitude of decisions to be made. There is often more than one right answer to a question. Choosing the best option for every dilemma can be stressful. Breaking down these options into manageable portions is helpful for those who struggle to keep up.
At Home Care provides expert services and peace of mind. Request a free consultation today.
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