Over the course of their lifetime, people will save money for their life before, during and after retirement. Having funds stowed away for future needs and wants is an important and smart choice, but it doesn't end once loved ones hit their senior years. It's critical for family members to manage their money throughout the duration of their lives. Here are four common mistakes this group should avoid when doing just that:
1. Handling finances on your own
If seniors have taken care of themselves for a large chunk of their lives, it can be challenging to relinquish control. Yet, handling their finances all on their own is an intricate process. Every loved one is different with his or her own knowledge of money management. For those family members who struggle to manage their savings, a financial expert may be a good person to bring on board, according to the Federal Deposit Insurance Corporation.
These partners can advise seniors on their investments and finances, especially as they pertain to future medical and healthcare needs. Just be sure that these aides have the necessary credentials to give the best insight possible.
"Loved ones need to educate seniors about scams."
2. Answering solicitation emails
We all get them. Random messages show up in our email inbox or spam folder, asking for money or claiming to be an unknown relative who needs financial assistance. While some people may know better than to reply, seniors may not be as knowledgeable. Having grown up during a time when internet and email didn't exist, family members may be more trustworthy and willing to help someone in need.
Loved ones need to educate seniors about these scams. Setting up filters to keep these message away from seniors' hands – and wallets – is a good idea. Family members should be sure their parents, aunts and uncles know they can discuss these emails at any time to ensure seniors aren't taken advantage of.
3. Relying on federal aid
There's a common misconception when it come to senior healthcare that Medicare will cover these expenses. That's not the case. Instead, most of these costs will likely be handled out of pocket by older loved ones and their families. Medicaid will kick in, but only when people's income and finances reach a certain point – usually under a specific, government-mandated threshold.
Seniors shouldn't rely on federal aid for assistance with their healthcare costs. They'll need to maintain their savings and ensure they have the finances they'll need for their future medical needs.
4. Spending without a plan
Once people hit retirement, it's easy to lose track of their expenses. This is a slippery slope, however. It's critical for loved ones to have a good idea of where their money goes on a regular basis, whether those are frequent costs or not, according to Forbes. There are a couple of ways to spend funds appropriately without letting this habit get out of hand.
The first, as previously mentioned, is to work with a financial advisor who can provide the insight necessary to use money wisely. For seniors who don't want – or feel they don't need – additional help, a spreadsheet can assist in tracking their funds. Utilizing these tools and resources can aid loved ones in managing their money to the best of their ability.
Keeping track of one's funds is a lifetime responsibility. While it isn't the most fun exercise seniors will partake in, it is one of the most important. Managing their expenses will help family members take care of some of their most crucial costs, including those related to improving overall quality of life. By being cognizant of the mistakes mentioned above, seniors can live their lives in comfort and without headaches.