Financial Literacy Tips for Seniors

Financial Literacy Tips for Seniors

In simple terms, Financial Literacy is knowing about your money. More particularly, it is the understanding of where your money is going and from where it is coming. Things like budgeting, investing, consolidation, asset management, and personal finance management come under the purview of financial literacy. 

In the end, the motive of being financially literate is to have financial stability. Financial stability is achieved when there is a balance in the scales. In old age, gaining financial stability is much more critical than for someone who is still working or in college. And there are several reasons for this:

  • CNBC reported that the Senate Special Committee on Aging had found that a total of $2.9 billion are looted from seniors by a wide gamut of frauds. 
  • In 2018, impersonating an IRS officer was the topmost exploitative scam targeting the seniors. 
  • The National Council on Aging has observed that the seniors are soft targets for Charity scams and Investment Schemes frauds. 

When all this is heartbreaking and exploitative, at Cedar Life Settlements, we believe educating our seniors to achieve Financial Literacy. In this excerpt, we will be discussing the tips to achieve financial literacy for seniors.

Financial Literacy for Seniors Tips

Precautionary or Defensive Tips

Precautionary Tips are about making smart decisions that bolster your finances and strengthen your investment options. 

  • Simplify your Assets Portfolio: A smart thing to do is simplify your assets. If you have a spread-out retirement investment plan, then it is healthier to consolidate them and let a single institution to manage them. It will help you gain a better understanding of the risks and benefits associated with them.
  • Vetting your Financial Advisor: Always vet your financial advisor before you let him/her manage your assets. The Federal Deposit Insurance Corporation or FDIC recommends that you run a background check on the potential advisor before moving things forward. 

Check the designation of your advisor and understand what it means, what is their work profile, what all they can manage for you. For instance, there Chartered Financial Analyst, Certified Fund Specialist, Certified Investment Management Analyst, and many more. 

If someone contacts you and addresses oneself with a technical term, make sure to conduct some research and know what it means. 

  • Learn about your Finances: Even if you can learn about one concept every week, do it. The key is to comprehend the meaning of simple financial terms and how they work or how they can influence your investment decisions. This way, if you are negotiating a deal with your financial advisor, he/she cannot confuse you with some technical verbatim. 

Proactive or Offensive Tips

Apart from the precautionary tips aimed at financial literacy for seniors, you also need to be one step ahead and follow these proactive tips. These measures will help you gain control of your expenses. 

  • Start Budgeting your Money: One of the key areas of Financial Literacy is learning to create and manage your own budget. Understand the parameters of creating a budget and how to keep track of your expenses. This will help you limit your daily expenditure and invest smartly. There are a lot of things that you need to take care of in old age. A well-planned budget will surely decrease financial stress.  For instance, there are medical expenses, debt, mortgages, insurance, and credit card payments, etc. 
  • Mortgage and Debt Management: Another milestone of achieving financial literacy for seniors in knowing how to pay off your debt without imposing a risk to your existing investment portfolio. The Consumer Financial Protection Bureau also states that paying off a house mortgage is the biggest expenditure for seniors after retirement. If you can, try to clear off the mortgage debt before retirement. This will give you more liquidity after retirement, and you can manage your expenses optimally. 
  • Effective Planning for Retirement: As a senior citizen, your earnings after retirement can be lesser than what you used to earn before retirement. In that case, relying on pensions, social security benefits, and other annuities may not be able to replace the pre-existing level of stability. 

One way to plan effectively is to know the amount of retirement income that you will get. Once you know that, it will be much easier to manage and do budgeting. Along with this, you must also know about where to invest your money. Investing in stocks, bonds, shares, and other avenues should never be done without proper guidance. Your financial advisor can help you in making such decisions. 

  • Insurance Policy: As you age, your life insurance premium increases. As a result, you may start to feel a financial crunch leading to financial instability. To combat this, you can look at a life insurance settlement.

The right time to sell your insurance policy is subject to various conditions. Some people sell it to get cash for some treatment (in which case, we recommend going for viatical settlement). Others choose to sell their life insurance policy to earn more leeway in their retirement plan and enjoy a life they had imagined. 

However, the formal guidelines state that you can only sell your life insurance policy after 65 years of age. 

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