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A Guide to Financial Planning for Seniors

As you grow older, there are many things to look forward to, like retirement, joining your ideal senior living community, and finding activities you enjoy. However, it is important to set yourself up for success through adequate financial planning so you can live your life without the extra stress. 

The National Council on Aging (NCOA) recognizes the financial struggles seniors encounter as they face healthcare expenses, senior living budgeting, and the risk of financial fraud. You should begin your financial planning as soon as possible to ensure that you and your loved ones are well-prepared for the potential challenges that may arise. 

Keep reading to learn more about the factors you should consider as you prepare for a future free of financial burden.

Healthcare Expenses

It’s no secret that getting older often means more time spent with physicians. Healthcare should be a primary focus in your financial planning, as it deals with your overall well-being and can help you avoid added stress as you manage your health. Start by making note of the healthcare costs you can expect to see. 

A study shows that by age 65, seniors in the United States pay an average healthcare cost of $11,300 a year. Some of the things you can expect to pay for your healthcare include:

  • Doctor visits
  • Hospitalizations
  • Long-term care
  • Dental care
  • Vision care
  • Hearing care
  • Co-pays and other out-of-pocket expenses

Although this can seem like a lot, it is important to note that several options are available to seniors to help manage these costs. The primary aid you will receive is through Medicare, which is the federal government health insurance program designated for those who are 65 years of age and older. Medicare has four parts, and each covers different healthcare expenses:

  • Part A: Inpatient hospital care or skilled nursing facility
  • Part B: Doctor visits and preventative services
  • Part C: A and B coverage with added vision, hearing, and dental care
  • Part D: Generic and branded prescription drugs

Based on your current health standing, you can shop for different insurance companies and their offerings to curate the perfect plan for you. However, it’s important to consider that Medicare will not cover all of your medical costs. Along with utilizing discounts offered by insurance companies, you can also partake in preventative care to help lower your need for extensive medical care. Additionally, you can utilize senior community resources that will encourage optimal health or provide free or discounted healthcare services.

Budgeting for Senior Living

As you transition into senior living, you will notice that your budgeting needs may experience a change. In some ways, you may be able to let go of certain expenses that you no longer need. However, you may begin allotting some of these funds toward other senior living expenses, including assisted living, long-term care, and healthcare. 

The average cost of senior living communities can vary from state to state and with the type of community you choose. The different types of retirement communities include:

  • Independent living: This option allows seniors to maintain their independence while living within a community and taking advantage of the amenities and social opportunities. 
  • Assisted living: This option provides seniors with non-medical aid in a home setting.
  • Nursing homes: This option is for seniors who do not require hospitalization but have medical needs that do not allow them to be taken care of at home.
  • Aging in place: Aging in place allows seniors to remain in their homes by making changes to accommodate their needs.
  • Skilled nursing facility: This option provides seniors with extensive medical needs with around-the-clock licensed nursing care and assistance with daily tasks.

Choosing the right retirement community for you is important when it comes to budgeting for senior living. This will ensure that you are utilizing your finances most effectively. It also helps you budget for your healthcare needs, as some senior living communities or their offerings may be covered through health insurance. 

Along with allocating your money toward your needs as a senior, you can also effectively manage your finances by downsizing and taking advantage of senior discounts and perks.  

Avoiding Financial Fraud

In 2022 alone, there were 88,262 complaints of fraud involving adults 60 years and older. Unfortunately, as a senior, you will become a more sought-after target for fraudulent activity, and it’s crucial to adequately prepare and plan against this. 

One of the best ways to avoid being a victim of these scams is to know what to look for. Some of the most common financial scams being used on seniors include:

  • Government impersonation scams: In these scams, scammers will call you claiming to be a member of the Internal Revenue Service (IRS), Social Security Administration, or Medicare. They will often use scare tactics, like threats, to get you to quickly provide them with your personal information.
  • Technical support scams: This scam takes advantage of older adults’ lack of knowledge about cybersecurity and computers by impersonating a technical support group to obtain access to your private computer and files.
  • Grandparent scams: Grandparent scams involve scammers calling you and impersonating your grandchild. They will proceed to ask for funds to be sent and plead with the grandparent to be discreet about it. 

It’s crucial to have systems in place to protect yourself against these scams. If you are unsure of the validity of the person or company calling you, you should not provide your personal information. As you receive calls that are a scam risk, you should promptly block the number so that they no longer have access to you. 

If you suspect that you have been scammed, you should contact your bank and file a police report as soon as possible so that your funds can be recovered and your finances can be re-secured. 

Transitioning Financial Management to Next Generation

Although it can be difficult to let go of the reins on certain aspects of your life as you grow older, you should consider transitioning your financial management to your child or loved one. This is something that you want to do sooner rather than later, as the process can become increasingly difficult the longer you wait. 

By obtaining a power of attorney (POA), your child will be granted the authority to make financial decisions on your behalf. Although you will be granting them authority over your finances, it’s important to remember that you still have a say in where your money goes and how it is managed. 

You can begin this process by gathering and sharing all of the information your child will need to access and manage your finances. This should include bank accounts, investment accounts, debts, insurance policies, recurring bills, birth certificates, deeds, and wills. 

Create an open line of communication with your child to set your expectations and boundaries moving forward. When this is completed and the POA is obtained, you can move forward knowing that your financial situation will be managed as you age.

Estate Planning

Planning for the end of your life can be an uncomfortable task, but it’s important to ensure everything is handled in the way you wish. Additionally, estate planning saves your loved ones from additional stress or worry as they process your passing and celebrate your life.

Your estate includes your home and other real estate properties, vehicles, bank accounts, businesses, investments, life insurance, debt, and any possessions you have. As you go through the process of estate planning, you will be able to decide what happens with your possessions and potentially provide a plan for managing your debt. 

Estate planning for seniors will include the following elements:

  • Will: In your will, you will name the beneficiaries of your estate, detail your wishes regarding your estate, and name the executor of the will. This will ensure that your end-of-life wishes are carried out in a smooth, conflict-free manner.
  • Trust: A trust is an agreement that allows you to give your property to a trustee until it can be claimed by the beneficiary. There are various types of trusts, and you should consult with an estate planner to find which one is best for you.
  • A living will and power of attorney: These legal agreements are put in place to ensure that your estate will be managed if you require aid in decision-making while you’re still alive. Both financial and healthcare POAs should be explored and put into place so that there is less stress when the time comes that you require assistance.

You can seek the help of credible estate planners for all matters related to estate planning or expert financial advice for seniors.

Begin Planning for Your Financial Future

Financial planning is a tedious but necessary task at any age, especially as an older adult transitioning into senior living. As you move forward in your senior financial planning, you should consider healthcare costs, senior living community costs, and estate planning. You should also prepare to protect yourself against fraud and any other potential threat to your assets. 

At SRG Senior Living, we provide the senior money management resources and guidance you need in planning your finances. Explore our communities and offerings to find what is best for you so that you can move forward living a full, stress-free life.