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Money management can be a sensitive topic. But it’s one worth addressing, especially for retirees facing changes in their financial situation. Even with a pension and retirement funds, budgeting for this new phase of life can be overwhelming. As such, the healthy financial habits we establish during our working years will continue to be important as we get older—perhaps even more so.
Folks of retirement age deserve to enjoy the fruits of their labors—and establishing a few basic money habits will help you do just that. Here are five manageable steps to launch you or a loved one toward financial wellness.
At some point, even the most organized among us have missed a bill payment or two. And as our ability to remember multiple due dates diminishes, staying on top of bills can get even harder. Tack on vision loss and other physical challenges, and the advantage of automatic banking for older adults becomes abundantly clear.
That said, we also understand that many older adults are used to writing checks and may be wary of online banking. So if you’re reluctant to use the internet for paying bills, we get it. But the truth is, once you set up automatic payments you won’t need to think about it again. Which means you can spend that extra mental energy carrying your trivia team to victory, or just catching up on TV. (Hey, it’s your retirement—no judgment here!)
Set yourself up for success with automatic banking that does the work for you. You can schedule deposits and withdrawals while avoiding late fees, damaged credit, and interrupted services. Just make sure to establish a buffer in your checking account to ensure you don’t incur any overdraft fees. It’s also a good idea to automate regular deposits into a savings account to keep your savings growing.
Healthcare isn’t cheap, but it’s one of the most important things to save for. Medicare can help, but it doesn’t pay for everything. To cover all of your bases, it’s smart to set aside an emergency fund for health expenses, if you can.
You may also want to consider getting Medicare Supplement Insurance (“Medigap”). Sold by private insurance companies, Medigap can help you pay for things like deductibles and copayments that Medicare alone won’t cover.
If applicable, there are also VA-sponsored benefits for veterans. To be eligible for VA healthcare, veterans must have served at least two years or sustained a service-related disability. Dependents may be eligible for coverage as well under the Civilian Health and Medical Program of the Department of Veteran Affairs (CHAMPVA).
Most of us are happy to help out a family member in need—especially our own children. But it’s impossible to support others if we’re hurting financially ourselves. Before cracking open your wallet to others, you should prioritize your own financial wellness. Think of it as the financial version of putting on your own oxygen mask before helping others.
Of course, this doesn’t mean gift-giving and donations are off the table. You can still help people out (generosity is a big part of being human, after all). But try to do so with healthy boundaries in place that keep your savings secure.
If a lapse in health or a tragic accident leaves you unable to manage your finances, a power of attorney ensures you’re still in control. A power of attorney is a written legal document that authorizes someone you trust to act on your behalf, should you become indisposed. This can be a temporary arrangement (say, after an injury or fall) or it can be a long-term, ongoing thing for people with serious cognitive decline.
If that sounds complicated, rest assured: it’s not. To set up a power of attorney, you just need to take a few simple steps:
1. Choose someone you trust to act as POA. Ideally, this person will be organized and cool under pressure.
2. Complete forms for the state you live in. You can get these online or by contacting a lawyer who specializes in family law in your state.
3. Have the forms reviewed by a lawyer.
4. Sign the forms with your designated agent in the presence of a notary public.
You may never need to use your POA. But if you do, you’ll be relieved to have one in place. Equally important is creating (or updating) your will to ensure all of your assets will be distributed exactly how you want them.
Money management is an ongoing lesson—one that’s never too late to start. Unfortunately, research shows that many older adults struggle with financial literacy, which increases the likelihood they will make poor financial decisions in the future.
Thankfully, you don’t need to be an economics whiz or read volumes of budget reports to embrace financial literacy. The Senate Special Committee on Aging has developed a financial literacy booklet that details many of the concerns faced by the aging population. They offer an extensive list of professional resources for legal planning and accounting. You’ll also find online calculators, guides to enrolling in medicare, and resources for downsizing your home.
At Provision Living, our customized care plans make it possible for residents to thrive in all areas of life: financially, physically, emotionally, and socially. To see what this could look like for you or your loved one, please schedule a chat with one of our care consultants.
Image Credit: Istock Photography
Please note: This article is for general information only. If you have any questions about money management, please seek a qualified financial advisor.
