Many older adults find their retirement income is lower than their former salary. They said goodbye to annual raises or bonuses that could offset impulsive spending when they left the work world. With the inflation rate at a 40-year high in 2022, it’s important for retirees on a fixed income to budget carefully. Following are budget tips for seniors and ways to help aging parents manage their finances.
Tips on Managing Finances for Seniors
Most of the financial advice for seniors is the same as for any age. However, older adults should also implement processes to allow an adult child to help with bill payments eventually.
1.Track Income and Expenses
Look at all your monthly expenses, including:
- Out-of-pocket health costs
- Medicare premiums
- Rent or mortgage
- Property taxes. Find out if yours will increase. Be sure to apply for a property tax exemption for homeowners over 65 if your state allows it.
See if there are places you can cut costs.
2.Create a Budget Calendar
Make a budget calendar to track your income and expenses and the dates for deposits and bill payments. Writing the information on an actual calendar page helps you plan your expenses and remember due dates. It also allows you to make spending adjustments to stay on budget for the month. At the end of the month, subtract your total expenses from your income to see what is left. That amount is your discretionary income.
3. Research and Invest
If you’d like to earn income through investing, study the basics of investing and work with a trusted financial advisor. One option to consider is an annuity. You purchase this savings instrument with one lump sum or a series of payments. Your savings grow tax-deferred. Annuities provide a steady income stream, but choosing one that meets your goals is important. Older adults generally prefer immediate annuities because they pay out within 12 months of purchase.
Save money on various activities, from shopping to dining, travel, and movies. Check out this list of senior discounts or ask about savings wherever you do business.
The time may come when you handle your finances less efficiently. If you have an adult child or trusted friend, consider making them your power of attorney. You could also give them access to your bank accounts if they need to pay bills for you.
Assisting A Parent With Finances
Some older adults develop problems managing their finances. This is one symptom of dementia. A senior adult who forgets to pay bills can incur late fees, get dropped from insurance, or potentially lose a home to foreclosure.
Signs a Parent Needs Help to Pay Bills
Even if your parents don’t discuss finances with you, there are signs you may need to help them with bills.
- Messages from creditors
- People calling to ask for favors or loans
- Charitable organizations asking for repeated donations
- Bills from collection agencies
- Stacks of unopened mail
- Excessive or unusual spending patterns
Discussing Money with Aging Parents
Start a conversation with your parents. It could be something general, like the advice they’d give a young person, or you could share your financial planning process. Ask your parents if they need any help with bills. If they agree, begin gradually and increase your support over time. As a first step, you could set up automatic payments and put controls against overspending.
Managing Finances for Seniors
The financial advice for retired seniors is like that for someone of any age. Know your income and the amount you’re spending each month. Look for ways to cut costs and don’t forget to ask for discounts. Older adults should enlist the help of an adult child or friend and set up a financial power of attorney. That way, the support structures are in place if the older adult gets sick or needs help to pay bills.