As you grow older, your financial priorities often change. You may frequently think of issues such as how to maintain your lifestyle and pay for medical expenses on a fixed income. Here are 7 money-management tips for seniors to consider for their retirement years.
1. Hope for the best but plan for the worst. Prepare for the possibility that you may become unable to handle financial affairs on your own. Consider writing down a list of your financial institutions and account numbers and keeping it in a safe place that would be accessible by your loved ones in an emergency. Consulting an attorney may help you decide if you should have a power of attorney (POA), which would allow one or more people you designate to make key decisions on your behalf. Talk to your attorney about whether it would take effect immediately or only in the event you become incapacitated
2. Be careful about creating joint accounts. The person you hold a joint account with has the ability to make transactions, including withdrawing money from a checking or savings account, without your prior approval. Your banker or attorney may be able to help you identify other options, but you should think very carefully about who you give access to your money. Also consider, if your co-owner has debt and cannot pay, it may be possible for the funds in your account may be taken to pay the debt.
3. Stop unsolicited calls and sales offers. In general, you should be wary of anyone who approaches you unexpectedly to say he or she specializes in helping seniors with home improvements, health cures or financial products. Consider being added to the national Do Not Call Registry by calling 1-888-382-1222 or visit www.donotcall.gov. Also review the privacy disclosures that banks and other financial institutions send at least once a year. They explain if you can limit the sharing of your information and how you can do so. You can also opt-out of prescreened credit offers by visiting https://www.optoutprescreen.com/. The Fair Credit Reporting Act provides you the right to Opt-Out of prescreened offers which prevents Credit Reporting agencies from providing your credit file information to companies who may send unsolicited credit or insurance offers.
4. Check for reoccurring charges or subscription services you no longer find useful. Many consumers pay hundreds of dollars each year in fees that get automatically charged to their credit card or bank account on a monthly basis for a subscription or other service they may no longer use. Some may have started as simply as a free trial that was never canceled so closely review your credit card and bank statements to find any charges that you may be able to cancel because they are for products or services you can do without.
5. Review your credit reports even if you don’t plan to apply for a new loan. Mistakes or other errors on your credit reports could make it more costly for you to buy insurance or borrow money. Also monitoring your credit reports is a way to detect identity theft. The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies, Equifax, Experian, and TransUnion, to provide you with a free copy of your credit report, at your request, once every 12 months. You can order your free credit report at www.annualcreditreport.com or by calling 1-877-322-8228.
6. Think very carefully before accepting an offer to “advance” you a portion of your future pension, Social Security or other retirement income. These offers are often similar to payday loans and they likely involve high fees and exceptionally high interest. Unfortunately it is common for consumers to find themselves in need of similar loans in the future to make up for cash shortages caused as you repay the original loan. If you need to borrow money fast, check with your bank and other financial institutions, and compare the products they offer based on the Annual Percentage Rate.
7. Think twice about a reverse mortgage. Remember that a reverse mortgage will eventually have to be paid back with interest. Reverse mortgages allow homeowners age 62 or older to borrow against the equity in their homes without having to make monthly payments as long as they meet the terms of their loan agreement, such as staying current on property taxes. However, the money borrowed plus interest must eventually be repaid, usually when you or your heirs sell the house. Be especial careful about a reverse mortgage in the name of just one spouse. If the spouse with the reverse mortgage passes away the surviving spouse may be forced to move out if that person is not also on the reverse mortgage agreement. For more information about reverse mortgages visit: https://www.consumer.ftc.gov/articles/0192-reverse-mortgages
Ty Strahl is the areas leading senior adviser. Her job is to help you navigate the many aspects of aging and to help seniors who are in transition to find the right solutions for their individual needs.