For Seniors: Quick Tips for Protecting Your Finances—Part 1
As many consumers get older, they often face issues such as how to maintain their lifestyle and pay for medical expenses on a fixed income for years into the future. Here are banking and other money-management tips for seniors to consider for their retirement years.
Getting Help
Decide if you need financial help from an expert, and then choose wisely. A financial advisor could help answer questions such as how quickly to take money from savings and how to invest in your later years. But FDIC Community Affairs Specialist Ron Jauregui cautions that "before you follow the advice of a supposed 'expert' who claims to have special credentials for advising seniors, research what that title may or may not mean and the advisor's background." The training, standards, and regulatory oversight for more than 50 senior designations used by financial advisors can vary significantly.
Prepare for the possibility that you may become unable to handle your finances. Consider writing down a list of your financial institutions and account numbers and keeping it in a safe place that would be accessible by your loved ones in an emergency. An attorney can help you decide if you should have a legal document known as a power of attorney (POA), which would allow one or more people you designate to make key decisions with as much or as little of your financial or personal life as you choose.
Note that a durable POA takes effect when you sign it and remains effective if you become incapacitated, while a springing POA generally becomes effective only if and when you have been declared incapacitated. The laws governing POAs vary from state to state, so consider consulting with an attorney who is knowledgeable about such matters.
You can also add a co-owner to a deposit account, but that person has the ability to conduct transactions, including withdrawing money from a checking or savings account, without your prior approval. Your banker or attorney may be able to help you identify other possible alternatives, but you must still think carefully about whom you give access to your money. Also, if your co-owner owes a debt and cannot pay it, the funds in your account may be taken to pay the debt.
Spending Money
Develop a spending plan for your retirement. Having a plan for your money and limiting expenses in retirement is important. Consider new ways to cut costs, such as by letting your auto insurer know you no longer drive your car to work. "Consider continuing to put some of your income into savings, especially for short-term goals such as holiday gifts, because that can help you avoid a large, sudden withdrawal from your retirement investments," added Luke W. Reynolds, chief of the FDIC's Outreach and Program Development Section.
Consider limiting the mail and phone calls you receive from marketers. Unsolicited offers from unfamiliar companies can result in you overspending your budget or paying for shoddy merchandise or service from vendors who don't stand behind their products. Consider being added to the national Do Not Call Registry (call 1-888-382-1222 or visit https://www.donotcall.gov/). Also review the privacy disclosures that banks and other financial companies you do business with send at least once a year. They explain if and how you can limit certain sharing of your information.
"To protect yourself in general, be wary if someone approaches you unexpectedly to say he or she specializes in helping seniors with home improvements, health cures, or financial products. Don't let anyone make you think you need a good or service that you didn't need before," Reynolds said.
U.S. Federal Deposit Insurance Corporation. (Updated 2014, February 14). For seniors: 15 quick tips for protecting your finances. Retrieved November 8, 2016, from http://www.fdic.gov/