Tips to Financially Plan for Aging
As people age, it is critical to budget, track investments, simplify finances, and plan for future needs. Making sure money and related legal issues are covered can ensure you make the most of the golden years.
Here is some tips to get you started now
Determine how much you require for retirement days and develop a spending plan
Determine how much you need to maintain your lifestyle in post-retirement days. Consider all investments and savings while calculating. This will help you estimate how much money you should have to cover your monthly expenses after retirement.
Having a plan for your money and limiting expenses in retirement is important. Consider new ways to cut costs, such as by letting your auto insurer know you no longer drive your car to work. Consider continuing to put some of your income into savings, especially for short-term goals such as holiday gifts, because that can help you avoid a large, sudden withdrawal from your retirement investments.
Assess your finances
Before deciding on retirement, it is advisable to assess how much you have in your savings account. Tracking your savings can give you an idea about your eligibility to announce retirement. How much money should you save for retirement? Well, the more, the better. Keep more to balance your lifestyle with inflation.
A few expert formulas regarding savings as per one's age:
· If your age is 30, keeping one year's salary saved is advisable.
· At age 40, you need to save three years' salary.
· When you are at the age of 50, try to keep six times your yearly income.
Seek financial planning help from a pro
An expert can help you to do proper post-retirement financial planning. If you need more confidence about your investments, seek help from a professional to ensure your retirement security.
But FDIC Community Affairs Specialist Ron Jauregui cautioned that “before you follow the advice of a supposed ‘expert’ who claims to have special credentials for advising seniors, research what that title may or may not mean and the advisor’s background.” According to a report by the Consumer Financial Protection Bureau (CFPB), the training, standards and regulatory oversight for more than 50 senior designations used by financial advisors can vary significantly.
Review your credit reports even if you don’t plan to apply for a new loan. Why? Mistakes or other errors on your credit reports could make it more costly for you to buy insurance or borrow money (for example, if your credit card company raises your interest rate on future purchases because of a problem tied to a credit report). And, monitoring your credit reports is a way to detect identity theft. Order your free credit report at least once every 12 months.
Hire a Professional for Specific Guidance and Help
Estate Planning Attorney
An estate planning attorney focuses on legal documents that state who receives your property upon death, often in a way that minimizes taxes. An estate planning attorney also can prepare legal documents that give you authority to make financial or medical decisions on your parents' behalf. Documents such as the durable power of attorney and living will are highly useful — maybe even necessary — to facilitate proper and responsible management of your parents' affairs. This attorney also can help set up a care plan, provided your parents have adequate funds to pay for their own long-term care.
Elder Law Attorney
An alder law attorney also has the expertise to prepare powers of attorney. Living wills and other related documents. Elder law attorneys are particularly versed in legalities of aging issues. An elder law attorneu would be a good person to offer advice if an individual may not have sufficient funds to cover long term care costs.
Financial Planner or Advisor
Turning to a financial planner or adviser to help manage assets can take a heavy load off ones mind. If you have a variety of assets or complex investments that require knowledge from a financial expert, financial planners can help you plan and determine the best strategy moving forward.
Explore Government Programs
Government run programs can help those who financially can not support themselves. Some examples are:
Area Agency on Aging (city or county based elder programs, services and funding sources)
Administration of Aging (legal assistance and health insurance counseling)
Low income Heat Energy Assistance Program (heat, gas and electric bill assistance programs)
State-specific prescription-assistance programs (assistance with prescription drug costs
State-specific prescription-assistance programs (assistance with prescription drug costs)
Examine Reverse Mortgage Carefully
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. If you do get a reverse mortgage and you live in the home with your spouse, some experts suggest that both of you sign the reverse mortgage agreement to ensure that the surviving spouse can continue to live in the home if one dies before the other.
Have a Plan B for your sources of income in retirement
While many American workers say they want to work at least part time during their retirement, less than 20% over the age of 65 are actually working at this time. This places a premium on working ‘the plan’ now — from contributing to a workplace retirement plan to making sure you have appropriate investment choices for your goals — and having a backup plan if your paycheck retires before you do.
Consider Legal Documents that give a Trusted Source and Ability to Act on Your Behalf
Durable Financial Power of Attorney
A financial power of attorney gives someone the legal authority to make financial decisions for you if you cannot. That person is called your agent. The document is called “durable” because it remains in effect even if you become incapacitated. You retain the ability to change it or cancel it as long as you are still able to make decisions. A financial power of attorney differs from a health care power of attorney, which only covers health care decisions. You may want to consult with a lawyer to determine whether a durable financial power of attorney is right for you.
After signing a durable financial power of attorney, you can still manage your money and property as long as you have the ability to make decisions. Also, it is important to remember that you always have the option to change who you choose to act as your appointed representative and the individuals you allow to access your financial information. As you are essentially giving financial decision-making authority to your agent, it is critical that he or she be someone you can trust.
Allows you to set out specific, detailed instructions regarding health and medical treatment in case of becoming incapacitated or be being unable to express your wishes. A living will designates a separate person with the authority to make decisions about your medical and health care per your instructions.
Revisit your insurance policies
You must review your insurance policies to avoid paying for coverage you don't need. If you're paying for comprehensive car insurance coverage, you must consider whether or not your car is mainly in use. If your vehicle is garaged chiefly, there is no need to waste money on comprehensive auto insurance coverage.
Wait as long as possible to claim Social Security benefits
When is the perfect time to start withdrawing Social Security benefits? Well, one can begin receiving Social Security benefits at 62. But, if a person can delay taking these benefits (to between the age of 66 and 67), they can receive a larger monthly check.
Manage your financial obligations
If you've compiled a lot of credit card debts or other financial obligations, start paying these off now. Make sure you refrain from using retirement savings to pay off your liabilities. Try not to take on any new debt at this time.
Invest your money wisely
There are many investment options available. Some people consider simple investments, while others prefer moderate and conservative investment vehicles. Also, to know the investment options in detail, you may need to consult an investment advisor.
Before choosing investment options, make a list of questions to ask an advisor, such as:
1. In what way does investment help you in the future?
2. How can you sell off the asset?
3. How much will the ROI (return on investment) be?
4. What are the risks you can expect?
5. How can you get more information about investments?