5 Money Management Tips for Seniors in Retirement

As our loved ones age, there might come a time when you feel obligated to step in and assist them with their finances. This could be due to witnessing money mismanagement or a sudden change in health or circumstance. Regardless of the reason, there may come a time when seniors need support with money management to ensure they are safe, happy, and financially healthy in the future.

Who Helps Older People With Finances?

Typically, adult children assist family members with their finances. Sometimes, seniors utilize a money manager or investment advisor to support their money management.

What Should an Elderly Person Do With Their Money?

It’s hard to say exactly, as everyone has a unique living and health situation. However, saving as much as possible for retirement and potential health care in the future is advisable. Make a retirement financial plan to ensure you can comfortably enjoy your golden years.

Understanding how your loved one handles their money is critical before assisting them. Once you’ve identified their financial situation, you can start with these essential money management tips!

Tip 1: Financial Literacy Is Key

Financial literacy is one of the first steps to helping your parents or loved ones manage their money. Understanding fundamental financial skills could assist you or your loved one properly save, track, pay bills, invest, write checks, avoid financial scams, and budget.

If you don’t feel knowledgeable enough in this area, enrolling yourself or your loved one in a senior financial literacy program is a great way to get started. If you decide to help your loved one with their money management, they must still understand what you’re doing or planning to do. Either way, knowing as much as possible about the subject will only set you up for success in the future.

Check your local community centers, senior organizations, colleges, or universities for possible financial literacy programs in your area.

Tip 2: Retirement Planning

Retirement planning is essential for money management. Start by setting aside monthly funds into a retirement savings account and plan your retirement income accordingly. A retirement plan typically goes hand in hand with a detailed retirement budget to ensure finances are handled correctly. If your loved one isn’t managing their retirement properly, it may be time for you to step in.

If you plan to manage your mom and dad’s finances, you may face some alarming discoveries. Past bankruptcy or bad credit can be healed over time with the granted opportunity to save for retirement through a second-chance bank account. Opening up a separate bank account for a loved one in this situation allows them to save specifically to cover the debt. Typically, these second-chance bank accounts are accessible online and enable you to monitor their transactions electronically with ease.

Tip 3: Find a Daily Money Manager or Money Management Program

Giving up responsibility and releasing it to someone entirely is challenging for everyone, regardless of age. Try to empathize and understand that seniors may feel a loss of control when faced with financial struggles.

If managing your loved one’s funds is beyond your capacity, you can outsource using Daily money management programs, also known as DMMs.

Daily money management (DMM) programs offer personal financial assistance to older Americans who can no longer manage their finances. Whether they need monthly reminders to pay bills, budget, prepare tax returns, or if someone needs extensive financial help – these programs can alleviate a lot of stress and make a world of difference.

A daily money management program could look different to everyone—

as no two financial situations are the same. These programs typically support older individuals who:

• forget to pay bills and lose account of critical financial documents
• cannot access the bank easily
• cannot physically write checks or find paying bills difficult due to pain, arthritis, or other health problems
• cannot manage their money properly
• cannot do tax returns
• are susceptible to scams or fraud.

Individuals can obtain daily money management programs and services in several ways. Government and non-profit elder assistance agencies mainly offer these types of programs. Some for-profit companies even offer daily money managers to seniors for a fee.

Do your research and due diligence when outsourcing money management through a money management program.

Tip 4: Protect Your Finances

Unfortunately, seniors are the number one target for fraud or financial scams today. Far too many older adults are prey for fraud because con artists tend to believe this age demographic has plenty of money in the bank. However, be weary because even low-income older adults are at risk.

Here are a few tips to avoid potential financial abuse and scams so you can prevent or help your loved one protect their finances:

• Do not do business or buy from any unknown company, especially if they call or email you out of the blue.
• Always request written materials about any offer or charity.
• Do not send your credit card information via email. If a company or medical practitioner requests it, either bring it in person or provide it over the phone to a reliable source.
• Pay with a credit card whenever you can. Credit card companies can freeze fraudulent charges or flag suspicious charges.
• If a person or “company” requests payment in Bitcoin, cryptocurrency, gift cards, etc., it is most likely a scam.
• If a person or “company” impersonates or claims you have missed bill payments, owe money or must pay the IRS (or CRA in Canada), do not pay them. Investigate the situation by calling the company they claim to be, or find the legitimate phone numbers for the IRS or the CRA instead to follow up.
• Do not give anyone your bank information or social security over the phone, text, or email.
• Make sure your financial passwords are different from your email and everyday passwords. Keep your passwords safe. If you forget your usernames and passwords, keep them on file physically in a safe place—using good old-fashioned pen and paper.
• Avoid feeling pressured into making purchases, signing contracts, or committing funds. These decisions are yours and yours alone.
• Take your time making financial decisions.
• Only share your financial documents and information with a trusted advisor, money manager, or trusted relative (power of attorney).
• Let your children, grandchildren, or a friend know if you have a bad feeling about something. They will most likely be able to help.

Tip 5: Stay Organized

Whether you record expenses using the shoebox method or track them on an app, stay on top of your finances by having an organizational system that works best for you.

If you’re helping your senior parents with money management, then it is essential to ask where they keep financial records. After reviewing their financial documents, such as bank statements, bills, sources of income, loans, debts, insurance, and other forms, you will feel more equipped to assist and better understand their financial health. It is crucial to ensure that these financial documents are safe and accessible for you both – so you can help them to the best of your ability.

Work with your loved one to review their financial well-being and current budget, then discuss if they should make any adjustments.

TIP: If your loved one suffers from cognitive disorders or memory loss or cannot track their budget, simplify this process using a notebook or planner to record expenses. 

Setting up automatic bill payments is another great way to help someone stay on top of their finances and prevent them from accumulating late fees. It will also avoid the guessing game seniors face regarding remembering their payment vs. if they forgot.

Tip 6: Legal Protection

If your loved one would like you to make financial decisions on their behalf, setting yourself up legally as their fiduciary is an excellent idea. You can do this in multiple ways: becoming the trustee of their assets, power of attorney, or by court appointment or government fiduciaries.

Contact a legal advisor who can guide you if you need help securing your financial affairs.

What Happens to Senior Citizens When They Run Out of Money?

In the U.S.A., many states will pay for a nursing home for up to 100 days through Medicaid. However, many seniors who can no longer afford their living accommodations or end up defaulting on regular bill payments turn to relatives. This situation can be pretty challenging and traumatic for many older adults.

Live at home for longer by setting up a FREE Caring Consult™ with Nurse Next Door to build a senior long-term care plan catered to your needs and budget.

Give us a call toll-free at +1(877) 588-8609 to get started!