Senior Finance: No Cost of Living Increase for 2016

usa-dollar-billsSeniors on limited income are likely to feel a huge pinch for 2016, as there will be no cost of living increase (COLA) for 2016 according to the Social Security Administration.

The reason for this decision is continued low inflation in the United States. However, much of this is due to a drop in gas prices in 2015. Expenses that have a much more major impact in many senior’s lives, such as food and medicine did actually increase for 2015. Medical costs in 2015 rose by 3.7% while food costs were up 1.6% and prescription drug costs went up a huge amount – 11%.

These means that while seniors will not be receiving any more funds in their monthly checks, their daily expenses have likely gone up a considerable amount for 2015. This unbalanced situation needs to be addressed by the government, so that the seniors who rely on Social Security checks (over half of all seniors, according to the AARP) will not be harmed more in coming years!

Senior Finance: Important Changes in Social Security for 2015

dollar bills

The Social Security Administration (SSA) recently announced that they will be adjusting payments upwards (COLA) 1.7% for seniors in 2015.  While that only amounts to about $22 more a month for most recipients, over a year it adds up!

Here are some additional important changes to expect for 2015:

The maximum social security benefits payment is also edging up to $2,663. In addition, the wage amount that is subject to SS tax is increasing by $1500 (to $118,500 annually). But workers taking SS benefits early can also earn more without having their monthly payment reduced. In 2015, you’ll be able to earn $15,720, which is $240 more than what you could last year.

Finally, the SSA is returning to sending out paper benefit statements. You’ll get one every five years between the ages of 25 and 60. Expect the benefits statement to arrive approximately three months before your birthday.

Looking for ways to save money? Check out our post on Seven Important Ways for Seniors to Save Money!

AARP Sweepstakes For Seniors

Could you use $50,000? If so, you might want to check out the “Rock Your Finances” sweepstakes by AARP. You can ONLY enter it if you are 45 years of age or older – and there are tons of cool prizes. You can win anything from a $20 Visa gift card up to $50,000 dollars of cold, hard cash. Learn more about this fun sweepstakes here:

And good luck!

Senior Finance: Five Important Tips for Finding a Job After 60

seniorbusinessmanIf you are over sixty and looking for a new job or career, you may feel as if time is definitely against your side. Many seniors suspect employers may be discriminating against them because of their age when they are on the job market, although this is often very difficult to prove. Apparently many employers haven’t gotten the message that seniors are often more reliable and better to hire than younger workers.

Five Tips for Finding A Job After 60

Although you may feel like the odds are against you when on a job search, here are some tips to help improve your odds of getting a job.

1) Network. Seniors often have the most success finding jobs through their church or other local organizations. Let people know at your gym or library that you are looking for work, and connect with old friends and coworkers to see if they know of any employment opportunities. You can also sign up for workshops or classes in the field you are looking for work in.

2) Stay Active. Keep in shape, and let people know that you are healthy and fit to work!

3) Emphasize Your Strengths. During interviews, emphasize that with your age comes maturity and many important life skills. Play up your life experiences and other factors that younger workers will not be able to match you in during the interview process.

4) Make a Great First Impression. Keep in mind that first impressions do count for a lot during the job selection process, and make sure that your hair and dress are kept in tip top shape. Also, meet your interviewers with a firm handshake and always look them in the eyes!

5) Apply for the Right Jobs. There are many jobs and careers where maturity is a valuable asset. This includes jobs in libraries, where knowledge and information is key, and jobs in training – where your previous job experiences (and life experiences as well) will likely make you a much more desirable candidate compared to a younger competitor. Keep this in mind when thinking about what kind of job you would like to obtain.

To learn more about some of the advantages and disadvantages of working as a senior, you may also want to read this article:

Senior Finance: A Senior’s Guide To Making A Will

willAlthough many want to avoid  the topic, it is necessary for everyone with any assets – young or old – to have a will. For those of us who are in our golden years of life, having a completed and updated will is an absolute necessity and here are some helpful tips and advice for making your will.

Elements of a Will

A will provides the names of all beneficiaries to an estate, and will name a guardian or trust when minor children are involved. In general, a beneficiary of an estate will be a friend, family, or a charity.

The first thing that must be done is to name an executor. This is the person who is made responsible to carry out all of the wishes. When naming beneficiaries, it may be necessary to evenly divide the big assets, but make different arrangements for the smaller ones. An executor should be a person who is trusted. This person will be appointed by the probate court after the death and will be expected to sort through all of the estate matters. For instance, this person must settle all outstanding debts along with pay the taxes and funeral costs. It is wise to tell the person who will be named beforehand, in order for this person to have the opportunity to decline. This can be very stressful, especially after the death of a loved one. Certain individuals may wish to select an attorney instead.

A will may have certain exclusions and may not cover all of a person’s possessions. For instance, a bank account with joint access will not be covered. Any retirement plans or life insurance may also be exempt as well. This is often because a policy of this nature makes a person name a beneficiary at the beginning. When a couple has joint accounts, this means that the survivor automatically inherits all of the assets. However, a will may still be necessary or advisable.

Besides having a will, you may also want to consider setting up a revocable living trust, which can help avoid probate and speed up the transfer of assets.

Safeguarding Your Will

A lawyer may also be able to provide storage for the will as well. This is actually one of the safest places to keep a will, since there is no way that it can be tampered with. When consulting a lawyer, it may be necessary to visit the lawyer’s office two times. The first will be for a general discussion about what should be placed into the will. The second visit will be when a person must sign the document. As long as a person stays alive, the will can be changed. It is also possible for a person to construct a will at home without professional guidance.

Keep in mind that a thoughtfully crafted will will save a lot of time, money, and heartbreak for the loved ones who get left behind. It can also provide needed resources and financial security for your loved ones.

Senior Finance: How To Make The Most Of Your Shopping Trips

Shopping is an enjoyable hobby for individuals of all backgrounds and ages.  Whether it is because of the freedom of being able to select one’s own clothing, food, furniture or entertainment or the excitement of spending the money you have worked to earn, everyone seems to love to shop.  However, as people age, the experience often becomes more demanding and less fun than it was in the past.  Individuals sometimes find it more difficult to get around and may no longer enjoy the crowds.  For many seniors, shopping becomes much more challenging.  However it should not be seen as a chore.  It continues to offer a chance to take part in meaningful activities that make the most of your freedom.

Tips For Shopping Trips

1. Wear Sensible Shoes. Always choose comfortable shoes for your trek around the supermarket or favorite place to shop.  Choosing the wrong shoes can cause more pain than carrying heavy bags from on store to the next before heading back to your vehicle.  The neck and back are more vulnerable to problems due to aging, so take care of them if you plan to spend an active day walking and shopping.  No matter what you choose to wear on the rest of your body, be sure you invest in a quality pair of shoes.

2.  Use A Hand Cart. Whether shopping for groceries or other items, you are likely to note many fellow seniors using a mobile basket or hand cart in which they carry their purchases.  Although some rebel against this due to pride, the cart makes great sense.  It is possible to use the cart so items need not be carried around, but it offers a sturdy support that allows you to lean when feeling tired.  Most find a hand cart the most useful tool they take on any shopping trip.

3.  Bargain Hunt. Always take time to find the best price on an item.  Regardless of how good the deal may look, it is possible to find a better price somewhere else.  This can save the shopper money, but also allows the shopper to find other bargains available at stores where they might normally not go to shop.  Set a goal that you find the lowest available price regardless of what you are looking to purchase.

4.  Plan Your Trip In Advance. Try to shop in a logical, and not emotional, way.  Select the starting point of each trip to the stores in advance.  Perhaps you will choose to begin on one side of the street and work your way around to the other shops, ending at the supermarket so fresh foods can be brought home safely.  No mater how you make a plan, having one in hand helps to prevent losing sight of the day’s purpose and wasting unnecessary energy returning to cover ground that has already been visited once during the same day.

5.  Take Some Breaks. Whether you stop for coffee or other refreshment breaks can be an enjoyable part of the day.  Regular breaks help to restore energy before heading to another set of shops.  If shopping with a friend, this gives you a chance to visit, catch up on important events of life and to have some well earned rest.

Shopping offers a fun way to spend the day if done correctly.  If not, it can be tiring and a real chore, especially for seniors.  Remember also that shopping can offer some exercise, but do it right to avoid the stress associated with shopping.  Be sure that you are patient with yourself and others for the greatest enjoyment of your outing!

Senior Finance: Seven Important Ways for Seniors to Save Money

piggybankAccording to a survey reported by AARP in November 2011, almost 73 percent of the seniors over 50 years of age are trying to save money by significantly reducing their spending. However, in most of the cases, this behavior is not so much the result of any financial crisis but instead from a desire to cut unnecessary consumption and lead a more simple life. In short, simplicity is “in” while overindulgence is “out” for modern seniors.

If you are one of these money savvy seniors looking to save where you can, here are seven important ways you can save money in your golden years.

1. Take Advantage of Senior Discounts

You should inquire whether your favorite store has any senior discount policy. Some of the stores provide about 5-10 percent discount to senior citizens on their purchases any day of the week while others offer about 20 percent discount on the specific senior day of the week, most probably on Wednesday. The stores automatically provide these discounts to anyone who looks old enough to qualify for their discount policy, but you may also ask for the discounts. The most important thing is that you should manage your time according to the policy of the stores so that you can plan your shopping trip to the stores and take advantage of the discounts for which you are qualified as a senior citizen.

2. Examine Your Recurring Expenses

You need to periodically review your spending options to ensure that you are making the right choice and don’t pay more than required on utilities and other recurring expenses. For example, most of the utility companies might have special plans or offers for senior citizens, and you need to ask regarding the offers. You can choose no-contract cell phone plan, which can be very economical. For example, Consumer Cellular provides many economical no-contract voice and data plans that allow you to change your plan any time without any penalty. As you choose not to be locked to any plan, you are not required to compulsorily pay for the services you don’t need. Moreover, the complimentary usage alerts will ensure that you will never exceed your maximum allowance by mistake. The flexible family plans allow the families to share minutes, and you can save additional $20 – $30 per month by choosing any such flexible family plan.

3. Make Lists When Shopping

You should be careful regarding impulsive purchasing behavior and as a safeguard you should make a list of items that you need to purchase while visiting the grocery. You should post a list of required items at home so that other members of the family can take the opportunity to buy these items if they find a good deal. However, you have to keep this list updated.

4. Make Your Home More Energy Efficiency

You can save money on your utility bill by improving the energy efficiency of your home. You should take precautions to switch off the lights while leaving the room, use energy-saving bulbs and unplug the battery chargers and other appliances when not using them. You can also plan an energy audit of your house to replace the power hungry old appliances and invest in weather proofing the house. These precautions can save lots of money in the long run.

5. Be a Smart Shopper

You can still find many ways to save money even if you don’t like collecting coupons. For example, you can buy store brand products instead of branded products. In most of the cases, you can hardly notice any difference in quality while the store brands are cheaper as compared to branded products. You can also buy in bulk to save money. You should keep an eye on sales of goods that you buy regularly. However, you should never buy anything simply for saving money on sales. You are not saving anything if you don’t need them. You should always make the well-informed purchasing decisions by visiting other stores and comparing prices for costly items. You can also compare the prices by researching the prices offered by various retailers through without leaving the comforts of your home.

6. Take Advantage of Free Entertainment Opportunities

You can find lots of low-cost or even free options for spending your weekends. Many local events such as concerts and lectures open to public, sporting events hosted by high schools and colleges, festivals and exhibitions are regularly organized. You can find information regarding the events in local newspapers and websites in their event’s section. You can also choose the libraries as a good source of free entertainment. You can get CDs, DVDs, audio-books and read new authors without the need to buy them. You will also meet many people while you are out there in the community, and some of them might become your close friends.

savingsahead7. Reassess your Gift-Giving Habits

You might need to reconsider your gift giving habits if you rush to the stores for purchasing birthday presents for your loved ones at the very last moment. You might have to pay more than you planned to get something unique that may not end up in exchange. In this situation, you can also choose the safe way to give the impersonal gift card to save money, but that’s not a very good idea.

The fact is, emotional sharing can be a better representation of how much we care for others. So try gifting shared experiences to your loved ones. For example, you can take your grandson to the zoo if he or she loves animals. Similarly, you can take your sister to any concerts if she likes that. However, this shared experience can be costly as well, and you should consider your budget while planning any such event.

What I want to say is that the quality of life is all about shared experiences to be cherished throughout the life rather than costly gifts, which remain stored in the garage for years. However, if you are really planning to present birthday or Christmas gift to your dear ones, you can look for them throughout the year and buy wonderful gifts at highly discounted prices. You can store them in the closet to present at the right moments.


Senior Finance: How Seniors Can Avoid The Stress Of Living With Debt

pensiveseniorlargeAccording to recent Federal Reserve data collected by the Employee Benefit Research Institute, many seniors are in serious financial trouble and are struggling with mounting debt. The debt load of senior citizens has soared in recent years – up an amazing 83% since 2001. Today, according to an article by CNN Money, seniors have over $50,000 in debt on average.

This is definitely not the dream of retirement that many seniors expected.

The reasons as to why senior debt has soared over the past decade are complex, but much of this debt is related to an increase in housing related debt as the housing market has crashed, and health care debt.  And unfortunately, senior debt is even a bigger problem than for those who have substantial debt but are are young, because many seniors cannot afford to pay back debts after they have retired from a full-time job. Thankfully, there are solutions available to seniors who are having trouble paying back the money they owe.

Senior Debt Solutions

Seniors who are unable to pay back the money they owe can visit a debt counselor to find out more about the options that are available to them. Professional debt counselors contact their client’s debtors to set up an affordable monthly payment plan. This can take the pressure off seniors, but it can also lower their credit rating. But seniors who are dealing with financial problems likely want to improve their situation even if it affects their credit score.

However, seniors also need to be careful and make sure that the debt counselors they are consulting are reputable and not looking to profit from them. To start, make sure that you consult with a non-profit counseling service, and preferably one geared toward working primarily with seniors.

There are additional steps that seniors can take to improve their financial situation if they find themselves facing a considerable amount of debt. The first is creating a detailed financial plan that includes all earnings and expenditures. People should keep all of their receipts so they can add up what they spend each month. Seniors should write down what they spend each month on food, medicine, utilities, transportation, entertainment, etc. In most cases, people can spot ways that they can lower their monthly expenses. In order to pay creditors and get out of debt seniors may have to stop buying meals at restaurants or give up certain activities.

Seniors who want to get out of debt can contact their creditors on their own and ask for their account to be frozen. In some cases, credit companies will stop the interest on a loan if the customer agrees to make scheduled monthly payments. Once the payments are made and the debt is eliminated the person can choose to keep the account closed or reinstate it.

Creditors are often willing to do this because they still make a profit. If they need to sell a customer’s debt to a collection agency because they are not receiving payments they will not recover the money owed to them including the interest charges. Seniors should call creditors on their own before they decide to meet with a credit counselor because if they are successful in freezing their accounts it will not damage their credit any further.

In order for seniors to sort out their debts, they need to make wise financial decisions. Sometimes these decisions will need to be made in collaboration with a reputable credit counseling service and also family members. However, not all debt will be easily eliminated through simple financial planning. Mounting medical bills, for example, are often out of individual control. However, even in these situations, actions can be taken to eliminate or reduce the impact this debt has on a person’s life. Seniors should not have to live with the constant stress of financial debt they cannot afford, and seeking financial help will help them learn more about their options.

Senior Finance: How To Determine If You Are Ready For Retirement

piggybankEntering The “Retirement Zone”: Is This The Right Time For You To Retire?

If you are contemplating retiring sometime within the next five years, you are now considered to be in the “retirement zone.” This time period is very important, since you will have a number of critical choices to consider and whatever you do now will have long-term consequences. The “retirement zone” is a transition period during which your mindset will shift from accumulating retirement funds to choosing how to distribute assets and drawing on the wealth you have accumulated. It is chaotic and confusing for many people, but it does not have to be that way.

A thorough understanding of the issues you face and the long-lasting effects of your decisions is key to making everything go smoothly as you enter retirement.

  • Tip: You are still in the “retirement zone” if you have retired recently. Some of the choices you have made can be re-evaluated if you feel it is necessary to make changes in light of your current circumstances.

Are you really ready for retirement?

You need to serious ask yourself if you are really ready to retire. This is not always the easiest question to answer because there are actually two aspects you need to consider. The first is if you can afford to retire on a financial level and have the lifestyle you want. But the other main consideration – often not considered fully by those in the retirement zone – is how prepared you are on an emotional level to begin this new phase of life.

Retiring before you are absolutely sure you are ready, both emotionally and financially, can strain even the best retirement plan.

  • Tip: You will not always find the “right” time to retire. However, there is certainly a wrong time to retire. For instance, you may not be emotionally ready for retirement even of you have reached a certain age of 62 – 70 or so. Retiring on age alone does not mean you are emotionally ready for that step. Postponing the date, as a matter of fact, can help with the financial part of the equation. If you feel emotionally ready but the finances are coming up short, reconsider if your plans are actually realistic. Evaluate what it would mean financially if you postpone the date, and then make an informed decision.

Financial Readiness: Start with the basics

If you have not yet projected the amount of annual income you will need during retirement, take some time to do it now. Start with all the basic costs such as housing, food, health care, transportation and long-term care. You may also want to consider difference scenarios, such as needing to move to an assisted living or constant care facility at some point down the road. If your plans include travel, estimate an annual amount for that. Also include any commitments to other family members or gifts you want to give, in your calculations. Make your plan as detailed as possible so that you will have no surprises later. If you do not retire immediately, update your calculations at least yearly to account for inflation or other changes.

Estimate any benefits you will have from a traditional pension from employment and from Social Security. Next, compare that figure with the projected amount you will need in retirement. Depending on the difference between the two amounts, you may need to supplement with personal savings. Now is the time to determine if your savings will be sufficient to cover the gap and help provide the income you need in retirement years.

When should you retire?

You need to consider the decision as to when you will retire from every possible angle and situation. Your age when you retire will have a huge  impact on your overall plan. The timing makes a difference because the earlier you retire, the longer your savings will need to stretch, since you will need to start using all your funds sooner. Also, if you retire too early, you will give up prime earning years, during which you could make a substantial addition to your savings toward your later years. Those extra earnings for even a few years can make a great difference!

Inflation will have a greater potential to decrease your purchasing power when you have a longer retirement period for which to plan. That means when you retire early, it is even more important to adjust your overall plan to account for inflation.

At age 62, you can begin to receive early Social Security benefits. However, taking early benefits will reduce your monthly amount and you would receive 20 to 30 percent less than you would have at 65 to 67, depending on the year of your birth. Consider all options and do what makes the most financial sense to you. If you retire early, your benefits may be reduced but you may receive them longer.

If you have a traditional pension plan from an employer, find out if early retirement will have any negative effects on the plan. Retiring early may affect your plan because benefits generally accrue faster in the final employment years. That means that leaving your employment early may reduce your monthly benefits. Be sure you thoroughly understand your payout options and how benefits are calculated.

If you intend to use your 401k before age 55 or your traditional IRA before 59-1/2, you may be charged a 10% penalty over and above any income tax you owe. That usually includes disability payments as well. Also consider how you will use your personal savings, as you may want to use your savings first before withdrawing from your IRA or 401k. Once you reach age 70-1/2, you must take a minimum distribution from an employer-sponsored plan or from any traditional IRA you may have, whether or not you need the funds for your living expenses.

You will be eligible for Medicare once you turn 65. If you retire before that age and have no health insurance benefits from your former employer or your spouse’s plan, you will need to pay for health care out-of-pocket until you reach 65.

Emotional Readiness: Are you emotionally prepared for retirement?

Your retirement plan is actually to make it possible for you to do the things you enjoy doing for as long as you can. But that would mean that you know what you want to spend your time on. Many people do not even think beyond the idea that retiring will be similar to going on an extended vacation, which is our reward for working hard all our lives. It actually may work out that way, at least for the first few weeks or months. In reality, though, your employment demanded your attention and time for most of your days. When you do not have the job anymore, you suddenly find yourself with free time on your hands. This is why you not only need a financial plan for retirement, but you also need to consider how you will keep yourself occupied with meaningful activity.

What would you like to do?

Spend a bit of time thinking about how you would spend an average week. Consider if you want to pursue a hobby or travel, or choose something from the following ideas:

  • Volunteering – You have unique interests and skills that you can share with your community. Day-care centers, community and senior centers, hospitals, nursing homes and tutoring programs are places where your services would be welcomed.
  • Go back to school – Your retired years can be just perfect for gaining more knowledge in your field, pursuing a degree, or learning something entirely different. Many universities and colleges offer special programs and reduced rates for retirees. You could take classes in cooking, gardening, photography or start to learn another language.
  • Start a business or a new career – You may find this is the perfect time to try a new career or open a business of your own that you always wanted. If you plan ahead you will overcome the following problems that many people experience when they attempt to transition into a new lifestyle without a plan:

Consider Potential Emotional Pitfalls

You should also consider whether you are at risk any of these potential (and common) emotional pitfalls.

  • Loss of identity – Many people see their profession as their identity. If your success in your career has given you your feelings of self-worth and affirmed who you are, then giving it up can be unsettling on all levels.
  • Loss of structure – A certain amount of structure in your life is provided by your every day job schedule. You most likely have also formed relationships with coworkers that are important to you. When all that is taken away, you may realize you need to find something to fill your unmet emotional needs
  • Fear of mortality – Rather than seeing these years as a new beginning, some people only see it as the “beginning of the end.” The mental shift from saving for later years to using up accumulated wealth can greatly increase these feelings.
  • Marital discord – Consider whether your spouse will agree with how you want to spend your time when you retire. Many married couples find the transition a bit difficult, especially in the beginning. It is important to discuss your ideas with your spouse as soon as possible when you plan to retire. Consider the effect, both negative and positive, your retirement will have on your marriage and your roles.

Should You Continue To Work Instead?

For non-financial as well as financial reasons, many people choose to continue working after retirement. The greatest benefits of continuing to work is that you will earn money and use less of your savings, which will make your money last longer. Others continue working to stay physically and mentally active and for personal fulfillment. They also enjoy having coworkers and the social benefits of interacting with other people.

If you are considering continuing to work after retiring, be sure you know how working will affect certain aspects, including whether your new employer provide affordable health care. If the answer is yes, this would be a very valuable benefit.

You also need to determine if working after retiring from your main job will mean you can delay receiving Social Security benefits. If it will, then you may receive increased benefits in later years. If you choose to continue receiving Social Security benefits while you work part time, for instance, be sure you understand how it will affect your benefit overall. Generally speaking, $1 will be withheld from your benefits for every $2 you earn. Contact the Social Security office for clarification.

  • Cautionary Tip: Many people who plan to work during retirement discover that they are prevented by health problems or inability to find a job. Keep in mind that continuing to work after retiring is not a guarantee. Therefore, try to have a plan that will cover your basic living expenses to ensure your needs will be met and you can enjoy the retired years you have been looking forward to for so long!