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    A Finance Guide for mature adults


    Read this guide for information about financial products and services that mature adults should know.

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    Could we all agree that money management is essential at all ages, but as we become mature adults and our income becomes more fixed, spending habits and savings patterns change.

    This guide talks about having financial security and being prepared for retirement, which could come in many forms, including essential financial topics for aging adults.

    We cover ways to cash in on tax credits, deductions, and senior discounts. We also cover Social Security, building your retirement portfolio, and ensuring your will and trust are in order.

    Social Security

    Are you currently receiving Social Security, or are you planning for it? Did you know approximately 65 million Americans receive payments annually?

    You are likely wondering how Social Security will affect your overall financial picture? Well, you shouldn't expect it to cover all of your expenses when you retire.

    To create the Social Security Administration's free, my Social Security account is free; anyone over 18 can sign-up to view and manage their benefits. Creating an account gives you access to your benefits, benefits calculators, and customer support. Also, signing up early can prevent scammers from creating an account using your Social Security number.

    Estimating Your Social Security Payments

    By using these free tools from the Social Security Administration (SSA), you can estimate our payments. By calling the toll-free phone number 800-772-1213, or if you're deaf, you can use the toll-free TTY number at 800-325-0778, you can speak to an SSA administration representative.

    What Are Your Social Security Benefit Options?

    It's necessary to know and understand the many Social Security benefits and how you and your family members are eligible to receive them. Benefit options include:

    • Social security Spousal benefits
    • Social Security survivors benefits
    • Social Security Disability Insurance (SSDI) benefits

    Use Direct Deposit to Keep Your Social Security Safe

    Avoid sitting around waiting on the post office to deliver your check, get it direct deposited to your account, and save a trip to the bank. Getting an electronic funds transfer is much faster and easier, not to mention convenient. There is no risk of your check being stolen or lost by getting your payments directly deposited.

    Retirement Planning

    When thinking about retirement, you should consider how much you're on track to have in retirement and what that equals to as monthly income. Consider these expenses when you create your financial retirement plan.

    • Housing
    • Healthcare
    • Auto and Life insurance
    • Taxes
    • Utilities
    • Groceries and personal care
    • Transportation
    • Outstanding debt
    • Home improvements and maintenance
    • Travel and leisure

    If you have old debts that will follow you into retirement, know that there are options. Check out our page with credit repair companies and debt consolidation companies to compare.

    If you are worried about debt and considering filing bankruptcy, read our post about why most seniors don't need to file for bankruptcy.

    Retirement Accounts

    Your retirement accounts represent a portion of your assets and play a role in your overall plan, ensuring you retire comfortably.

    According to the Federal Reserve Boards' latest Survey of Consumer Finances, the average net worth of Americans aged 55 to 64 is $220,500.

    Some common accounts are:

    • 401(b)
    • 403(b)
    • 457(b)
    • Thrift Savings Plan (TSP)
    • Traditional and Roth IRA
    • Pensions

    As you age, you should take advantage of your employer matching your contribution; as a mature adult, you should max out any tax-advantaged accounts like 401(k), IRA's, or HSA's.

    How to Plan for Insurance and Medical Expenses?

    Do you worry about having enough savings to cover a major illness or hospitalization? You are in good company; according to The National Institute on Aging, many older adults and caregivers worry about the cost of medical care, including long-term care.

    These costs can equate to a large chunk of a senior‘s income, even if you think you have enough saved up.

    Healthcare is confusing; what's covered, what's not, and who pays for what can leave you surprised when an emergency arises. You should be educated about Medicare and know that you have to pay for many things out of pocket.

    You can avoid this by planning for your financial future. Industry experts estimate that a couple needs $295,000 to fund their healthcare expenses when they retire, and most people aren't prepared for this, but as you plan, consider these types of insurance that can relieve some burden.

    How to Cover Your Expenses with these 14 Insurance Options

    Tax Credits and Deductions for Seniors

    Understanding tax credits and deductions are essential to know since mature adults face many costly out-of-pocket expenses, and your health and medical needs expand; some of these can relieve some tax burden on you.

    Health Care Tax Deductions

    According to the IRS, if you itemize your health care deductions, you may be able to deduct expenses paid for medical and dental care for yourself, your spouse, and your dependents. In addition, you should check with your tax person before filing your tax return if you are eligible for any tax credits or tax deductions.

    Tax Credits

    1. Health care credits
    2. Family and dependent credits
    3. Income and savings credits
    4. Homeowner credits
    5. Education credits

    Tax Deductions

    • Health care deductions
    • Investment-related deductions
    • Work-related deductions
    • Itemized deductions
    • Education deductions

    If your income is low and you struggle to pay your bills, there could be ways to eliminate or reduce your taxes significantly.

    Ways for Mature Adults to Save Money

    Be sure to take advantage of senior discounts, they are increasing, and many businesses are offering them. Look for and ask for these kinds of discounts:

    • Prescription discount cards like GoodRX or America's Pharmacy
    • Free or low-cost dental care
    • Affordable medical alert systems
    • Low-cost internet and communication services, including Verizon and T-mobile.
    • Free and discounted hearing aids
    • Transportation discounts – Air, Bus or Train
    • Retail discounts
    • Grocery and restaurant savings
    • Hotel and rental care
    • Discounts on homeowners insurance or vision care.

    Some Important Milestones for Mature Adults

    As we get older, we should consider certain age-related financial milestones. For example – when you can initiate retirement contribution, catch up, enroll in Medicare and take social security, these are all things you have to consider in your 50s, 60s, and 70s that can stabilize your income for retirement.

    Housing Expenses

    Your retirement housing costs are a topic to think about; either you can spend $30,000 on home modifications so you can age at home or pay $300,000 in housing in a retirement community. Take a look at some options and related expenses.

    Five Retirement Housing Options You Can Explore

    1. Aging in place
    2. Independent living retirement communities
    3. Assisted living retirement communities
    4. Continuing care retirement communities
    5. Nursing homes

    Reverse Mortgages

    A reverse mortgage is an option for older adults regardless of whether you plan to age-in-place or buy another property.

    What is a Reverse Mortgage?

    When you're a homeowner, the equity you have in your home is a large portion of your retirement assets; mature adults age 62 and older can take out a loan against your home's equity.

    They differ from traditional mortgages because the loan payments are deferred; for example, your reverse mortgage payments are made after you sell the home or die.

    Remember that a reverse mortgage isn't for everyone; consult with your family and other advisors to help you determine if using your home equity is a good strategy for your situation.

    The Home Equity Conversion Mortgage (HECM) is a reverse mortgage program from the U.S. Department of Housing and Urban Development (HUD) designed for homeowners aged 62 and older. Since most seniors live on a fixed income, getting a reverse mortgage makes sense; they can enjoy their equity while using the income to supplement social security, pensions, 401(k)s, and other retirement assets.

    People don't know that you can use a reverse mortgage to purchase a new home that better suits your lifestyle and mobility.

    The HECM and HECM represent 90% of all reverse mortgages, but they are not the only option; other private lenders offer proprietary reverse mortgages; this might be a better choice if you'd like a higher loan amount or lower upfront costs. But remember that proprietary mortgages are not FHA-insured.

    Misconceptions about Reverse Mortgages

    A reverse mortgage is not free money; as reported by Consumer Financial Protection Bureau, the homeowners or their heirs will have to repay the debt. The interest has been accruing, so it will need to be refinanced or sold.

    How to Avoid Reverse Mortgage Scams

    According to the Federal Bureau of Investigation (FBI), Mature adults are often the target of scams, including free homes, investment opportunities, and foreclosure and refinance assistance. A way to protect consumers is by requiring a meeting with the HUD-approved housing counselor; the counselors are trained to help older adults understand how reverse mortgages work and any other options available.

    Will and Estate Planning Must-Haves

    Most older adults put off estate planning even though it's one of the most critical parts of financial planning. So even though it's a complex subject, you must decide what will happen to your belongings and estate when you're gone.

    A research study by Age Wave and Merrill Lynch, Leaving a Legacy: A Last Gift to Loved Ones, found that:

    • Nearly half of Americans over 55 do not have a will.
    • For those who have a will, an estimated 23 percent of them are not up-to-date.
    • Only 18 percent of Americans have all three essentials in order (will and/trust, healthcare directive, and durable power of attorney.)

    To make sure your end-of-life financial affairs are in order, make sure these three aspects are in order:

    • Create a will or trust and name all beneficiaries while detailing how your assets will be distributed
    • Write a health care directive (living will), usually written before surgery or if you are diagnosed with a terminal disease.
    • Assign a durable power of attorney (POA) to help protect your health and safety.
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