Growing Old With Your Money
By Anita Ward, President Operation HOPE
My parents, like many other Americans, relied primarily on Social Security for their retirement income. They were raised when the country was still reeling from the Great Depression and money was not a topic for a family discussion. They were unprepared and unaware, and they were not alone.
Many seniors do not possess sophisticated levels of financial literacy, and as they age they face increasingly complex financial demands, especially healthcare. From an already unstable financial position, this population finds itself making decisions about insurance, prescriptions, and Medicare while managing the basic costs of living, like housing, utilities and transportation.
Financial literacy becomes increasingly important with age, but a study by the Consumer Financial Protection Bureau shows that levels of financial literacy drop among seniors, and this happens at a time when they face increasingly important decisions with declining health and fixed incomes. Older adults have no resource for financial literacy and empowerment advice.
This problem is escalating – over 46 million Americans are age 65 or older, and that number is projected to double by 2050. Georgia follows suit. By 2030 the Census Bureau estimates that 20% of Georgians will be 60 or older, and Forbes named Atlanta America’s most rapidly aging city. Financial literacy and preparedness for an aging population is an important issue for Atlanta.
Aging adults face critical decisions: savings needed to live, retirement plans, Social Security benefit choices, end-of-life plans, life insurance, Medicare, Medicare Supplement and Prescription Drug plans, housing, and resources. A couple aged 65 is estimated to need $250,000 just to cover medical expenses after retirement. Without strong financial literacy skills, aging Americans endure financial stress as they face retirement. Within this framework, Operation HOPE offers some advice, and provides free financial counseling to any senior in need of help.
Know where your money is being spent
A budget is the first step in understanding your finances and getting them in order, and it’s a quick way to see where your money is being spent each month. A budget will help you make decisions about expense management and will help you track your living expenses to ensure you don’t burn through your savings too quickly.
Talk to your bank.
Some banks cater to older clients and have age-friendly policies in place. These include using larger print, convenient meetings outside of the bank when necessary and offering financial literacy courses and advice.
Don’t acquire new debt
As a senior citizen, you are a target for less reputable companies who are trying to get you to take on new debt. Don’t fall prey to their solicitations. One example is a reverse mortgage. Maintaining ownership of your home and control of your finances is important to financial stability.
Pay down debt
It is best to pay down your existing debt before retirement. This will contribute to an improved credit score, especially if you make at least the minimum monthly payments on time each month.
Take advantage of utility company budget billing
Budget billing plans offer affordable billing alternatives that charge you a fixed monthly amount. Some utility companies offer senior plans as well.
Put fraud safeguards in place.
Older adults are targets of unscrupulous businesses and are at greater risk for financial fraud. There are safeguard you can put in place: the bank can alert you and your family members if large withdrawals are made from your accounts, your debit card can be assigned to work in only certain locations, and you banker can monitor your credit card accounts for fraudulent activities. Beware people who are trying to separate you from your money, and make protecting your money a priority.
Consider launching a business.
60 is the new 40! Starting a business later in life can be rewarding, and it can add to your income in retirement. AARP and the Small Business Administration have many resources to help seniors achieve their small business goals.
Reach out to nonprofit organizations, like Operation HOPE, who can help you prepare for a financially stress-free retirement.