How to manage your money in older age
17th October 2018
Everyone worries about money, regardless of age, but after a lifetime of hard work, stressing about finances isn’t exactly what older people hoped to spend their golden years doing. The truth is, however, that having one’s finances in order is essential and becomes progressively more so as people age. From medical costs and retirement funds to buying stairlifts and paying bills, there’s a lot to consider and not everyone has the monetary know-how to cope properly. The good news is that money woes needn’t plague a person’s senior years. In this guide on how to manage your money in older age, the reader will discover that there are a number of steps people can take to make sure they are in the best financial position possible.
Don’t be afraid to switch
It can be easy to keep things as they are in life. People fall into routines and get comfortable with present circumstances. But to do so to a fault can deprive the individual of a potentially better future. Faith Archer, a journalist and money blogger for the website Much More With Less, states countering the above as her top piece of advice for older people wanting to look after their money, especially when it comes to the world of bills and bank accounts, explaining that looking at what else is out there can reap great benefits:
“Don't be afraid to switch. Citizens Advice reckons people pay a loyalty penalty of £877 a year if they stick with the same suppliers for savings, mobile phones, broadband, home insurance and mortgages. So, don't accept a renewal quote without checking comparison websites to see if you can get a better deal, and check your other bills and direct debits. Then ring your current companies, see if they can cut the costs, and be prepared to go elsewhere if they can't."
Good organisation is truly one of the most beneficial traits one can have in life, helping individuals to cope with multifarious situations and to succeed in all areas of life. Being organised and planning ahead is of utmost importance when it comes to a person’s finances, so older people looking to get a grip of their money would do well to master the art. Thinking about how to manage money in older age should start much earlier than retirement, thinking ahead and about what one might need upon retiring will give the planner a great head start. As an example, organising a supplementary pension plan will prove hugely beneficial.
Also, when getting older, cognitive decline can play a factor, so speaking to family members before such occurrences, putting steps in place so that they can help with money when you are unable, will be an important step to take. Relying purely on pensions won’t be appealing to many, so think about other ways of generating income in older age, such as creating a business or investing in property and stocks. Don’t be myopic, plan ahead now to be financially secure in the future.
Speaking of planning ahead, the Society of Later Life Advisers (SOLLA), who helps those seeking financial advice in later life, offers the following advice: “It’s tempting to put off finding all the paperwork you need to understand your financial position but it’s essential if you want to manage your money well. It will help you to plan ahead and match what you currently have against what you might need by cross-matching your income and assets against your future plans.
“This will be the starting point for looking at any changes you can make to ensure you are making the best use of your money. Importantly too, you should consider making a power of attorney if you don’t have one already so that you can choose someone to continue to make financial decisions for you should you not be able to at some point in the future.”
SOLLA also explain how they can help: “A good review with a later life adviser will help you to work your way through all the considerations you will need to take into account when looking at how to make the best use of your money, including the complex area of care funding should you find yourself needing to fund care for yourself or a family member.”
Create a budget
Having a workable and sensible budget is also key to managing money. With all the expenses that come with getting older, it’s important that the individual knows and understands exactly what capital they have at their disposal and what needs to be spent on a monthly basis. Formulating this into a monthly budget will prove tremendously helpful, allowing the person in question to stay on top of their finances and not to quickly run out of money. In retirement, income isn’t as high as it used to be, which can be a hard adjustment for many as it can mean a change in lifestyle. A budget is therefore essential for help people to come to grips with their financial situation.
Being on top of finances is something that Nick Daws of Pounds and Sense, a financial and money saving blog for over 50s, really champions. Speaking about the subject, Nick offers the following as his main advice for managing money:
“Don't bury your head in the sand where money matters are concerned. Keep a close eye on your income and expenditure, and always be on the lookout for ways you can maximize the former and minimize the latter. Just one example: use a comparison service such as Uswitch.com to see if you could save money on your energy and other utility bills. By switching to cheaper suppliers, you could save hundreds of pounds a year for just an hour or two spent on the computer.”
With a finite income and plenty of expenses, being sensible with one’s money is therefore very important. Living one’s life like there is no bottom to their money will lead to disaster. So, make sure to behave sensibly with money and not blowing through savings can’t be reiterated enough. Also, not being overly generous, while not sounding particularly friendly, is also something to consider. Dishing out cash to grandchildren and charities, or helping out cash-strapped adult children is, of course, a lovely thing to be able to do but is only feasible when the funds are available to do it. Don’t be at financial risk by being too generous with what little money there is available.
Be open to help
Being open to the help of others in managing money will be a great advantage to those in older age. When experiencing cognitive decline or a debilitating illness, keeping control over one’s finances can become an impossible task, not to mention an unwise one. Relinquishing control can be difficult for some but feeling able to reach out to family or asking adult children to take charge of finances will be a true weight off the shoulders.
Additionally, Nick from Pounds and Sense says that not being open to help is one of the most common financial mistakes older people make: “Sometimes with older people pride gets in the way of asking for help and support. That's understandable, and in its way admirable. But for older people (especially those on low incomes) there are various welfare benefits they may be able to apply for - from Pension Credit and Council Tax Reduction to Attendance Allowance and Warm Home Discount. Nobody will come knocking on your door offering them, though! You need to be proactive about researching what you may be eligible for, perhaps using an online service such as www.entitledto.co.uk. Don't then let misguided pride prevent you from applying. This is money set aside by the state for people in your situation and can potentially make later life a lot more comfortable for you.”
Professional financial help should also be considered. Having someone trustworthy and reputable to manage money on your behalf will not only relieve stress but such a person will be able to help make the most of the money available and potentially grow funds via sensible investments. This is advice that comes via Cora Harrison of the helpful financial blog, The Mini Millionaire. Cora says:
“Find a trusted, authorised financial adviser if you have large sums of money. They will help you prepare a will and testament, invest your money wisely etc. However, be sure to thoroughly check their accreditations before proceeding with their assistance.”
Cora also adds a helpful reminder regarding the amount of money present in a savings account: “Be sure to never keep more than £85,000 - the FSCS [Financial Services Compensation Scheme] savings protection amount - with one bank or building society.”
Keep things simple
Life is complicated enough without making things unnecessarily difficult in older age. With all that life throws at a person during the latter stages of life, it’s certainly a good idea to keep things simple, especially in this high-tech age that can be daunting to those unfamiliar with it. This can be achieved by reducing the number of expenses, the number of bank accounts, and investments a person has. In older age, it can be harder to keep on top of all of these different areas, so having just one savings account, for example, and limiting the number of investments one has, can help make things a little more manageable.
Be aware of fraud
Unfortunately, there are people out there looking to take advantage of older people and those unsavvy when it comes to money. Falling into one these traps and becoming a victim of fraud is more and more common, so being aware of the risks is essential. Speak to family and friends before committing to any saving plans or investment plans and for those unfamiliar with the world of finance, taking the above advice and obtaining the services of a financial planner will help to provide security and peace of mind. Be careful and don’t commit to anything rashly or without consulting someone else.
How to manage finances in older age
- Don’t be afraid to switch
- Plan ahead
- Create a budget
- Be sensible
- Be open to help
- Keep things simple
- Be aware of fraud
This news article is from Handicare UK. Articles that appear on this website are for information purposes only.