Financial Literacy for Seniors

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Financial Literacy for Seniors

April is financial literacy month—a great time to brush up on your financial knowledge. The goal is to make informed decisions, plan for the future, spend wisely, and avoid frauds and scams.

What Is Financial Literacy?

Investopedia provides this definition of financial literacy:

“Financial literacy is when you understand the basic concepts of saving, investing, and debt management at a level that gives you a sense of financial well-being. … There are five key components of financial literacy, according to the Financial Literacy and Education Commission: earn, spend, save and invest, borrow, and protect.”

The key here is financial well-being. Money management and financial issues can be quite complicated these days. In addition, many Americans are dealing with debt, and senior citizens are frequently targeted by scammers. Staying financially literate helps you make sound decisions, feel secure, and avoid falling victim to fraud.

Are you managing a senior’s money? Here are some resources from the Consumer Financial Protection Bureau.

What Areas of Financial Literacy Are Most Important for Seniors?

While everyone’s financial situation is a little different, some areas tend to be particularly relevant for seniors.

Settle Important Legal & Tax Issues

Do you have a will and a financial power of attorney? These are some items you may want to address with a legal professional.

Income tax works a little differently after retirement, but you’ll still owe money. Here are some helpful tips to lower your income tax bill. You may want to talk with a professional who can explain the specific laws in your state.

Avoid Scams & Fraud

Sadly, fraud and scams are a growing concern for older adults and the elderly. The perpetrator will often attempt to exploit the victim by using fear or urgency tactics while capitalizing on something they know the victim has, such as life insurance or debt. Here are some of the most common types of scams aimed at seniors:

  • COVID 19 scams
  • Veteran scams
  • Debt collection scams
  • Homeowner scams
  • Life insurance & assisted living scams
  • Identity theft
  • Impersonation of government agencies

You can protect yourself or the senior you care about by recognizing the telltale signs of fraud and scams, such as:

  • Emails or mail from senders you don’t recognize.
  • Suspicious notices in the mail that include handwriting, unprofessional letterheads, and glaring spelling and grammatical errors.
  • Mail asking for money immediately to receive something that will allegedly be sent later.
  • Mail that builds up fear and includes threats for not paying immediately.
  • Phone calls from unknown numbers.
  • Aggressive and pushy phone calls or text messages.

Additionally, you should be suspicious if any of the following occur:

  • You are asked to pay with gift cards, a money transfer, or some other uncommon way.
  • You are contacted unexpectedly by an alleged government agency.
  • You are asked for your credit card or bank account number.
  • You are threatened to be arrested or deported if you don’t pay immediately.
  • You find yourself feeling very fearful and disoriented after the encounter.

Find out where to report scams and fraud.

Consider Debt Management, Mortgages & Downsizing

If you have a lot of debt or a hefty mortgage, it may be a good time to speak with a professional about ways to consolidate debt and whether you should downsize. Be thorough so you understand all the fine details, especially how much you will actually save so you can avoid further debt.

Time for a Budget Refresh

What does retirement look like for you from a financial standpoint? Will you be on a fixed income? Does your spouse still work? Do you have a part-time job? Once these aspects have been considered, look over your expenses and map out a budget to make sure you will be living within your means.

Educate Yourself on Social Security & Medicare

As you enter your golden years it’s important to know how Social Security and Medicare work so you can optimize your benefits. Here are some great resources to learn about eligibility requirements, program specifications, and more:

Tips for Improving Financial Literacy

Do you want to do a little more for your financial literacy? Here are some ideas:

  • Talk to a financial advisor, and ask a lot of questions!
  • Attend a local class, workshop, or webinar at your library or community center.
  • Keep an up-to-date budget, checking it regularly.
  • Read financial magazines or listen to financial radio shows and podcasts.
  • Take an audit of your financial situation: investments, retirement fund, credit cards, debt, mortgage, health insurance, savings, spend accounts, debit cards; everything. If there is an area you feel you can save on or learn more about, explore your options.
  • Explore these tools from the Consumer Financial Protection Bureau to help with planning and debt management for older adults.

If you are considering downsizing or an estate sale as part of your financial transition in retirement, Caring Transitions is here to help!

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