Financial wellness tips for seniors
Thousands of people begin their retirement journey every day. On average, Americans are living more than two decades past their initial date of retirement: The current average lifespan for an American man is 86, and it's 88 for American women. Of those thousands of new retirees, many of them aren't sure how much money they need to live comfortably after they retire and resort to guesswork to figure out their financial situation. It may seem daunting at first, but it's not hard to get on a good financial track for retirement.
Get Out of Retirement
Retirement doesn't mean you have to stop working completely. Some people prefer to have a job of some sort that gets them out of the house and allows them to meet new people and still bring in some type of income. There are plenty of part-time jobs in retail, hospitality, temping, and even selling your own creations that can give you some extra income.
- Senior Community Service Employment Program: The Department of Labor has created community service and work-based job training opportunities for senior citizens who have little to no income.
Delay Drawing Social Security
Delaying drawing your Social Security benefits after retirement age means that they increase by 8% every year until you reach age 70. For many people, it's a good idea to put off filing for benefits until then.
- Delayed Retirement Benefits: This chart and article from the Social Security Administration explain how much retirement benefits increase if you wait to start using them.
Consider a Reverse Mortgage
If you own a home and have equity in it, you can borrow against that equity and receive a lump sum, line of credit, or a fixed monthly payment.
- How Reverse Mortgages Work: If you don't understand how a reverse mortgage can help you, this page offers a brief rundown of the main points of what a reverse mortgage is and who is eligible for one.
Consider getting rid of things you don't need. If you don't need a big house, consider a condo, apartment, or senior retirement community. Maybe your household only needs one car and you can sell your extra vehicles. Maybe you just want to get rid of furniture or objects you're not using. Sell what you don't need and put the money you make into your savings.
- Downsizing for Retirement: What to Do Before and After You Retire: If you are thinking of downsizing but don't know where to start, this article offers a step-by-step look at what lifestyle you would like after retirement and how you can go about getting there by downsizing.
Keep Up Your 401(k) and Individual Retirement Account Contributions
When you're over 70, you can still contribute to your retirement accounts, such as an IRA or 401(k). Once you turn 72, you'll be required to start taking money out of these accounts every year, but if you're still working, you can keep putting money in, too.
- Required Minimum Distributions: This guide from the IRS goes over when you are required to start taking money out of your retirement accounts.
Consider Social Security Options for Married Couples
If you are married and need to take out Social Security benefits, you can get more money in your pocket now by having the higher earner delay claiming benefits longer. The spouse with lower earnings can claim their full benefits sooner, while the higher earner applies only for spousal benefits until they turn 70. This strategy won't work for everyone, but it can be highly beneficial for some.
- The 66/70 Social Security Strategy for Married Couples: This article from Forbes covers options for Social Security that financial advisors suggest that married couples consider in order to get the most money out of their retirement.
Become a Roommate
Having a roommate offers a lot of benefits, such as a lower cost of living, companionship, less space you personally need to take care of, and help with housework.
- Are Senior Roommates Right for You? Not everybody will benefit from or appreciate being a roommate. Look at the pros and cons of getting a roommate to decide if it's right for you.
Trim Your Lifestyle and Spending
Go over your purchases over the past few months to identify harmful spending habits, such as memberships that go unused, eating out too often, and buying objects that end up taking up space without having any beneficial use. It can be helpful to keep a diary of your spending and make a note whenever you make extravagant purchases so you can cut those purchases out.
- How to Cut Your Expenses: Saving money may be as simple as cutting a few expenses! Check out some suggestions of things you can do to cut down on excess spending to save more money each month.
Move Somewhere With a Lower Cost of Living
Not all locations are created equal. You could save thousands of dollars a year by moving to a new city, state, or country.
- The Most Affordable Places to Retire: If you're thinking about moving out of your current home to a location that costs less to rent or buy and maintain, this article has a list of 25 places you should consider.
Ask Your Loved Ones for Help
If you're struggling financially and have a good relationship with your family, you should sit down and have an honest conversation about your financial situation with them. Your family members may be able to provide assistance that can help you out in a pinch.
- Asking Family for Money: Asking your family for help with money can be a difficult topic to broach. This article includes some tips that may make it easier and even more respectful.
Look Into Public Benefits
Check out local benefits and public programs that can help with care assistance, transportation, bills, food, and more!
- How to Get Free Government Money for Seniors Over 50: There are plenty of different services all over the country that are available to help seniors meet their needs.
Research Debt Reduction Options
Discuss your financial situation with a financial adviser, credit counseling agency, or a bankruptcy lawyer if you believe that your debt is too difficult to manage. These organizations may be able to help you qualify for debt relief options.
- Retired and Looking for Debt Relief? Before deciding to file for bankruptcy, it's always a good idea for senior citizens to learn about all of their financial options to deal with credit card debt, medical debt, and other bills.
Manage Your Debt
Managing debt is a great way to cut lifestyle costs and allows you to have more money to spend now. A reverse mortgage or new mortgage rate could be a viable solution to help manage your debt.
- Dealing With Debt: Find out about common debt problems and how they can be relieved.
Seek Out Bargains and Discounts
Take advantage of coupons, deals, and senior citizen discounts when you go shopping. The savings may seem small at first, but they can really add up over time.
- Senior Discounts: This page includes a list of a large variety of restaurants and shops that feature discounts of some sort for senior citizens that you can take advantage of.
Use Public Transportation
If public transportation is accessible to you, it can be a beneficial option rather than driving your own vehicle. It lessens your environmental footprint, allows you to get some exercise, lets you see new places on the way, and can even reduce the stress in your life, since you don't have to worry about traffic.
- Older Adults and Transportation: Accessible transportation services are critical needs for the elderly and disabled, and many communities have realized this, so there are often community-run services as well as public transit options.
Vacation for Less
Vacations don't have to be expensive. You can check out day trips and destinations near your hometown, use home-sharing services instead of hotels, or book your trip in the off season to save money.
- How to Travel on a Budget: This guide has a list of tips for traveling on a budget that goes over when to travel, how to pack, how to deal with different accommodations, and more.
Consider Government and Nonprofit Assistance
A variety of government and nonprofit programs make it their mission to help seniors get by after retirement. Check out senior services in your city to see who you can talk to and what you may qualify for.
- Elder Care Directory: Read about federal government programs devoted to helping seniors.
It sounds obvious, but staying healthy is one of the easiest ways to save money. Preventative care is usually covered by insurance, so you can catch problems before they become issues that require a hospital stay and thousands of dollars in expenses. Doing a few minutes of exercise every day and eating well can also help your body tremendously.
- Health Tips for Older Adults: Health changes as you grow older, and you may have to adjust your lifestyle for healthy aging. This page offers tips for healthy eating and physical activity.
Learn How to Sell Online
You can make some quick cash by getting rid of things you don't need online. Thanks to online marketplaces like eBay and OfferUp, you can sell your things quickly and easily.
- A Senior's Guide to Selling Items Online: Selling your unwanted items online is a great way to make money.
Plan Wisely for Entertainment Needs
It's great to be able to go out and have fun, but entertainment isn't a necessity. There are plenty of free entertainment options in your community that you can take advantage of to get out of your house while still enjoying yourself. You can also get involved in a hobby that doesn't cost a lot, such as yoga or reading.
- Six Great Entertainment Ideas for Seniors on a Budget: Find budget-friendly activities to keep you busy during your retirement.
Understand How Much You're Spending
Keep a log of how much you're spending, especially if you primarily use cash, in order to get an accurate view of your expenses.
- Use a Spending Log to Track Your Budget: Tracking your daily spending can be a great way to cut down on unnecessary spending. This page goes over everything you need to know about getting started with a spending log.
Budget for Now and the Future
Even after you retire, it's still important that you allot money for savings in your budget to build a solid emergency fund. A good emergency fund covers three months of your expenses.
- How to Make a Retirement Budget: This article covers the importance of putting together a retirement budget, how it can be achieved, and the ways you can be better about budgeting even after retirement.
Reduce Your Debt
Whenever you find a way to save money, you should put the money you save toward your debt so you can get rid of it as soon as possible. Debt can cause a lot of stress and can continuously build on itself thanks to interest, so it's imperative to get rid of it as soon as possible.
- Getting Out of Debt: There are a variety of ways to get your debt under control, and this page offers some helpful tips for those looking for ways to manage their situation.
Consider Guaranteed Income
Work with a financial planner to set up guaranteed income through a tool like an income annuity, so you can generate income while you aren't working.
- Retirees With a Guaranteed Income Are Happier: This article covers the myths and truths surrounding retirement and how beneficial it can be to create guaranteed income in order to minimize financial stress.
Plan for Your Taxes
Even when you aren't working, you need to keep in mind that you will still owe taxes, so you need to ensure that you set aside money accordingly.
- Seven Ways to Plan for Next Year's Taxes Now: A bit of preparation now can keep you from being blindsided come tax season.
Don't make as many risky investments now as you were able to when you first started working and investing. But that doesn't mean you shouldn't invest at all. Take advantage of catch-up contributions to IRAs and 401(k)s.
- Pension or Settlement Income Streams: The U.S. Securities and Exchange Commission discusses structured settlements and investing for seniors.
Maximize Credit Card Points
If you have a credit card, research the perks that your card offers, such as cash back or travel points, and take advantage of them. You can also sign up for a new credit card with a bonus offer that pertains to your interests.
- How to Make the Most of Credit Card Rewards: This article and video discuss how you can understand the ins and outs of rewards points for credit cards to capitalize on their benefits.
Additional Financial Information for Seniors
- A Guide for Seniors: Protect Yourself From Investment Fraud: This document from the Office of Investor Education and Advocacy covers everything seniors need to know to make sound investments later in life in order to avoid being scammed and potentially losing large amounts of money.
- Learn About Federal and State Financial Assistance: AARP has compiled a list of benefits available in every state as well as resources for paying for food, utilities, and medicine that you or another older adult in your life may be eligible for.
- Becoming ResourceFULL: Savvy Saving Seniors Financial Education: This financial education toolkit from the National Council on Aging covers budgeting tips, the benefits of having a bank account, and what you need to do to apply for benefits.
- Planning Your Social Security Claiming Age: Are you thinking about when you should start claiming Social Security? It's important to decide when you want to start using it because that will affect your lifetime income. This tool can help you decide!
- The Ultimate Guide to Senior Finance: Fiscal Fitness for the Over-50 Crowd: This article covers a variety of financial topics, such as Social Security, budgeting, health care, insurance, taxes, wills, trusts, and more.
- A Guide to Finance for Seniors: Good money management is an essential skill in life. Starting early can be especially beneficial, but it's never too late to start using good habits.
- Financial Tips for Seniors: This document covers a variety of tips seniors may find beneficial when it comes to their finances, such as steering clear of scam artists, protecting your finances, borrowing money, helping relatives, and FDIC insurance.
- Mortgage Calculators: If you're still paying off your house, use the calculators here to plan out your financial strategy. You can also look for refinancing options.
- Elderly Assistance Programs: If you or a loved one is in need of financial assistance, there are a variety of charities and social service organizations that can help.
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