What do you mean by a worry-free life? People equate debt-free living with a worry-free existence. For seniors – especially after retirement – it becomes crucial to organize their finances and arrange their post-retirement lifestyle. Unfortunately, over 40% of senior Americans don’t have anything saved for retirement; they’re bound to survive on social security benefits only.
How much does it amount to for senior citizens? For most older adults, it’s less than $1,500 each month; it isn’t easy and comfortable thriving on such pitiable income. So, here we’ve compiled some financial strategies effective enough to protect the monetary ambitions of a senior citizen. Use the following money-saving methods to maximize your savings and enjoy the golden days of retirement:
1) Track your expenses
While formulating your financial strategy, it’s essential to be realistic and continue monitoring how much you’ve spent. Unless you track your expenses, budgeting won’t benefit your retirement plans. So, record everything you purchase and then evaluate this list to discover needless expenses.
2) Consider estate planning
Estate planning involves determining how you want your assets to be handled after your death or if you become medically incapacitated. First, you’ll have to create a list of all the assets in your possession. Next, begin preparing an estate plan that’ll contain several documents. Creating this plan protects your family in the event of your passing and ensures that their future is secure. An estate plan may include your Will, trust fund, financial POA (power of attorney), durable POA, and Advanced Healthcare Directive, a.k.a Living Will.
3) Make a Will
How do you wish your money to be spent after your passing? Most people create a Will before death to distribute their assets among legitimate inheritors. But you can also consider setting up a “trust fund” by making someone a trustee who will hold your assets until your heirs – called beneficiaries – come of age. Trust funds offer more privacy than a Will and may also provide some tax benefits.
4) Get an authorized signer
Older adults can secure their bank accounts by designating someone as an authorized signer. A signer won’t have any claim over your assets since s/he doesn’t own your bank account. But a signer does have the authority to make deposits/withdrawals and access information on your behalf.
5) The power of attorney
Giving someone a power of attorney means allowing that person to oversee your financial affairs. Older adults typically assign this responsibility to a reliable person, e.g., family members or close friends. You may even appoint more than one agent, an action recommended by lawyers. So, it ensures that someone is there to look after your assets if you’re temporarily incapacitated.
6) Get enough insurance
Don’t allow a tragic accident to disrupt your retirement ambitions. Optimism is appreciated, but it’s also important to be realistic. Always prepare yourself for an ill-timed death or a long-term disability. Getting enough insurance ensures that your and your partner’s assets remained unharmed during a catastrophic incident. The rising healthcare costs alone are incentives to buy insurance policies.
7) Rethink your budget
Ensure that you and your partner reassess your budget at least once a year with a financial advisor present to guide you. It’ll help you guys make adjustments for activities you’ve planned for the next year (such as going on a cruise!). Never postpone this crucial annual budget assessment.
8) Don’t travel alone
If you’re contemplating a vacation this summer, consider accompanying another couple or friends to split costs on travel expenses. This strategy will make the journey more affordable and enjoyable. You won’t be vacationing alone in the Bahamas. You can save money on gas, meals, residence, and recreational activities during the journey. In addition, this money can increase your savings for emergency events.
9) Consider a medical plan
Rising medical costs can dramatically disrupt your retirement plans, so don’t forget to consider your healthcare expenditures while arranging your finances. Create a plan to combat potential medical expenses. Always be prepared for the worst by finding shelter in healthcare improvement plans tailored for older adults. These plans protect your future from healthcare emergencies.
10) Don’t be a spendthrift
Senior citizens are expected to show some generosity when grandchildren come to visit. But don’t allow your bounteousness to make unnecessary expenditures on your family. A comfortable future requires older adults to limit how much money they should give away to relatives.
11) Cut down on expenses
Experts believe that nonessential expenditures account for over 30% of your monthly income. So, it seems wiser to cancel your subscription to The New Yorker, sell a car you haven’t driven for an eternity, and don’t purchase season tickets to the next game. Try rethinking your buying habits for pruning dispensable expenses. So, this 30% can contribute heavily to your retirement funds.
12) Try downsizing a little
It may disturb you to abandon the house owned by your family for generations since it has several bittersweet memories. But switching to a smaller place of residence seems like a more cost-effective strategy. You’ll save decent money on mortgage, utilities, and insurance while investing the extra cash for emergencies. You can acquire a down payment on a smaller but better house as well.
13) Automate your finances
It’s challenging to manage your wealth and organize your finances efficiently by yourself. So, it’s smarter for senior citizens to automate their finances by having their rent/mortgage/utilities get paid from the bank automatically. Thus, automation allows you to track your cash flow effortlessly.
14) Continue learning
Maturity isn’t a valid excuse to cease educating yourself. Financial literacy benefits everyone; even senior citizens need more information on money management and investment techniques. Do you have to attend college to become a financially informed individual? No. Distance learning has made education more convenient; you can become a financial expert by attending lectures at home.
15) Don’t keep cash at home
It isn’t recommended to keep large amounts of money at home. Carrying cash possesses serious hazards as well, so use debit/credit cards. Using plastic money minimizes your liability if some wrongdoing is perpetrated. Most banks will block transactions that look suspicious. Using plastic money may seem weird to you today, but it’s gradually becoming the “new normal” in the 21st century.
Statistics have revealed that elder financial scam constitutes a $36 billion industry. Experts deduced that between 2.7% to 6.6% of senior citizens lose around $2.9 billion of personal wealth to scammers every year. Do you think only a small percentage of older adults are vulnerable to these dishonest fraudsters? Well, it’s feared that some 37% of senior citizens in the United States are defrauded by scammers.
What’s more disturbing is that many of them aren’t even aware they’ve lost their life savings to a bunch of humbugs! So, don’t allow maturity to stop you from tracking your expenses while continue teaching yourself about finance. Try automating your finances, establish a power of attorney, and shorten every nonessential expenditure. These tricks will help you achieve your financial goals post-retirement.