With our current economic challenges, seniors looking forward to retirement need to be well-informed about their financial needs in coming years. And not only pre-retirees, but individuals like myself, already in retirement, need to be wise to the changing economic environment. The good news is there are trained professionals who keep abreast of changes in the current economy, changes in laws and changes in government programs for seniors. Professionals in this field are equipped to handle everything from help with retirement savings accounts, investment advice, guidance on government programs, estate planning or even new funding options such as reverse mortgages. A little planning prior to retirement will allow you to maintain your current lifestyle; whereas, a lack of planning may require you to live on an extremely tight budget. For those already retired, taking time right now to deal with financial problems instead of waiting for a crisis to happen may be one of the most important decisions you will ever make.
A large number of retired individuals feel that they have planned well for the future only to find that rising medical costs, damage done to investment portfolios (by the current economy) and many other factors have caused them to go into debt. According to an article in USA Today, seniors are racking up debt like never before. Elderly individuals who are in debt live with a constant burden over their heads. Most of these people are on fixed incomes and have no way of paying off credit cards and home equity loans that continue to mount to cover household budget deficits. In order to meet ongoing payments, seniors often forego purchasing medications and skimp on food budgets. They live like hermits — never going out and pinching every penny — in order to pay their obligations.
Most of these people worked hard their entire lives and managed their debt. They never anticipated the rising costs of prescriptions, expensive medical care or depletion of savings by living too long. The good news is there is help for these individuals. Here are just a few examples of some relief options that could be available. There are many more besides these.
Reverse mortgages – A Home Equity Conversion Mortgages (HECMs), also known as a reverse mortgage, is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person’s lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title “reverse mortgage”. For those seniors who are less fortunate financially but own a home, a reverse mortgage can allow them to remain in the home by creating extra income. Of course, this may not be a solution for everyone, but it does warrant some looking into.
Life settlements — A life settlement enables older individuals, businesses and other organizations to sell life insurance policies they currently own – but no longer want or need – for an amount greater than the cash surrender value. In some cases the value can be 2-3 times the cash surrender value. Even some term life insurance policies with a conversion option to permanent coverage can qualify for a life settlement.
Government Programs — Some government programs such as food stamps provide temporary financial help for food. Other programs provide subsidized housing, help with medical expenses, and some provide tax credits. For veterans there is free health care, inexpensive prescriptions and disability income. There is also an Area Agency on Aging that offers individual counseling, legal help, and advice with Medicare costs. The local office can be reached at (360) 337-7068.
For some, living on a fixed income and dealing with debt can be an overwhelming burden. However, there are knowledgeable professionals and debt relief strategies that can assist in easing this burden. The Kitsap Alliance of Resources for Elders (KARE) is a local non-profit 501 (c)(3) organization that provides such assistance and education from its members. For more information contact KARE at www.kare-wa.com .
Carl R. Johnson
Certified Senior Advisor (CSA)®
Community Relations Director
Abiding HomeCare
Silverdale, WA
