Your Comprehensive Guide to Financial Planning for Seniors

Your Comprehensive Guide to Financial Planning for Seniors

Your Comprehensive Guide to Financial Planning for Seniors

Chances are you’ve probably heard the popular saying “money can’t buy happiness” before.

We agree with it to a certain extent.

At its core, it is meant to remind people to avoid materialism because the truly important things in life can’t be bought. Things like health, love, family, friends, and time.

On the other end of the spectrum is a popular remix of this quote floating around the internet that says, “Money can’t buy happiness, but it can buy a sports car/house/motorcycle/dream vacation (input your favorite material thing in life) and I’ve never seen a sad person with  (stated item)”

While both these quotes bring up valid points, we believe famous writer and philosopher Ayn Rand put it best when she said:

Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. –Ayn Rand

The fact of the matter is, while some things in life are priceless, money can and does provide us with the ability to buy things and experiences that enrich our lives and bring us happiness. We just can’t let it control our lives.

A good way to make sure your elderly loved one’s money is working for them and not vice-versa is to have a solid financial plan. This includes planning for current and future living expenses.

Since October is National Financial Planning Month, we thought it would be a great time to discuss 10 Financial Planning Tips and Tricks for Seniors.

However, before we start exploring the tips, let’s discuss how to begin the financial planning conversation with your senior loved one.

We know that starting the conversation regarding financial planning can be tough, but the longer you wait, the tougher it will be. Here are a couple of good ways you can ease your elderly loved one into the conversation:

  1. Tell an anecdote
  2. Enlist the help of siblings
  3. Beat around the bush
  4. Start lending them small things

Ok, now that that is out of the way, let’s discuss the Financial Planning Tips and Tricks for Seniors.

Map Out Expenses

Before you can build a comprehensive financial plan, you need to know what you are working with. Start by mapping out all of your senior’s expenses on a weekly, monthly, and even annual basis. We recommend using Google Sheets so that it can be accessed remotely through Google Drive. This expense sheet should include monthly bills and when they need to be paid as well as monthly income.

Build Your Budget

Once you have mapped out your senior’s expenses it is time to build their budget. An important step is developing a plan to pay their bills that maximizes their cash flow efficiency. In addition to budgeting for monthly bills, your senior’s budget should include line item allocations for food, transportation, health, entertainment, and miscellaneous expenditures.

Control Credit Card Debt

Credit cards can be incredibly useful tools, but they can also be very dangerous. As credit usage increases, it may be difficult for your senior to pay off the balance. If it appears that your senior may be having trouble controlling their credit card usage, you should recommend the use of a debit card instead.

Save, Save, Save

Did we say save? Saving for the future is an important part of financial planning. We recommend setting aside a specific amount each month. In addition, if they have extra funds at the end of an expense period, they should put it in a savings account for future use.

Think About Future Health Expenditures

The ugly truth about aging is that our health often declines, and as we all know, healthcare expenditures can be quite costly. When your senior is financially planning for the future, they will need to have a plan in place for health-related expenses. You should also help them choose an ideal insurance plan. Once chosen, they should consider when to pay insurance premiums. Most plans offer monthly installments which are often easier to pay rather than an annual lump sum.

Where Will They Live?

Another critical step in financial planning is considering future living expenses. Will your loved one stay where they are or move to an apartment or retirement community? If they own their house outright, they still need to consider the expense of maintenance and annual property taxes.

Don’t Forget About Transportation

For seniors who live in areas that have minimal public transportation, taking into account monthly vehicle expenses is important. As most things mechanical, vehicles will break down and they will need to have the money to either fix it or replace it. In addition, many vehicle insurance premiums increase for senior drivers

Watch for Fraud

As unfortunate as it is, senior citizens are particularly vulnerable to financial fraud and scams. The best way to prevent this is to help educate your senior about the danger of scams and to help them stay vigilant. Many financial institutions provide authorized account holders with alerts when a significant sum of money is withdrawn from the account. We also recommend placing your senior’s phone number on national Do Not Call lists.

It’s Ok to Say No

Whether it is a friend or family member urging a senior to go on vacation or requesting financial assistance, your senior loved one needs to know that it is ok to tell them no. Especially if saying yes could put your senior in a vulnerable financial situation.

Enlist the Help of a Professional

If you are still feeling uncomfortable with having the talk, enlisting a professional to help can be the best route. Feel free to contact us, and we can help you find an elderly financial planning professional in your area.