Money Advice For Senior Citizens: An Economic Survival Guide

by Jacques Sprenger on June 24, 2009

The 7 trillion loss by the stock market earlier this year includes 5 trillion lost by people over 50. It stands to reason that after a lifetime of saving and investing, the older generation, which of course includes the baby boomers, has more to lose in a downturn than the younger ones. It also stands to reason that they have less time to make up these losses, if they can do it at all.

money advice, senior citizens, economic survival guide

The economic crisis has forced many older citizens to postpone their retirement or to go back to the workforce, a difficult feat in a high unemployment scenario. For those older folks between 50 and 65, the situation is even worse since they haven’t yet qualified for Social Security benefits. So the burning question is: What must these people do in order to safeguard their retirement or recover lost assets? Financial strategy and money advice for those after 50 are naturally quite different from those that apply to the younger generation.

A Double Whammy For The Older Generation

“Older Americans are getting whacked twice,” says the director of the Institute on Assets and Social Policy at Brandeis University, who adds: “Home equity, which is their largest reservoir of wealth and their largest expense, has taken a tremendous hit. Portfolios have taken the same hit as everyone else, but seniors don’t have the same length of time to dig themselves out.” There are many tragic stories circulating about senior citizens being thrown into poverty by the crisis. I have yet to see a specific government program to help them out, although billions of dollars are “wasted” on financial companies who are responsible for the economic crisis.

Money Advice For Senior Citizens: An Economic Survival Guide

So what can senior citizens do at a time like this? Let’s review the basic money advice offered by AARP Magazine. We’re providing the older set the following economic survival guide. The advice is this: act as if you were restarting your (financial) life and apply these basic and valuable strategies:

On Financial Discipline: Examine your budget spreadsheet (if you don’t have one, now is a good time to start). Are the financial categories clearly spelled out? For example, have you opened a section for repetitive and essential expenses, i.e. mortgage, utilities, food, clothing, insurance, etc.)? Learn how to budget your money as a first step.

On Disposable Income: Do you know exactly how much available cash you have at the end of the month after all unavoidable expenses?

On Investments: Are you on top of your 401K, your fixed annuities, your life insurance, your CDs, your brokerage account, etc.? If you are like me, you have been procrastinating and you need a good kick in the rear to get going. Talk to people in the know whom you trust. Ask them for advice and act on it. Just remember to be cautious and aggressive at the same time. Learn how to invest according to your risk profile, age and goals if you haven’t done so already!

On Your Retirement: How have you been planning for retirement? It’s important to know how much you’ll need to retire. If you’ve been caught in this economic downtrend, it may also be necessary for you to adjust your goals accordingly. Can you wait till you are 70 before retiring (health of course is a major factor)? Can you go back to work if necessary? Is there any way to save more by cutting on some expenses? Be careful about the required age to obtain full Social Security benefits: it increases constantly. Check this benefits calculator.

Planning For a Major Personal Crisis: Let’s face it — nobody likes to think negatively. We’ll live forever (almost); there’s just no room to contemplate about serious illness. But, as we know from experience, people over 50 may suddenly suffer a heart attack, discover that they have cancer or face the loss of a loved one. Prolonged illnesses are very costly, especially if you don’t yet qualify for Medicare. The solution? Make sure you have adequate insurance to protect against a major catastrophe. Money may not be a panacea, but it sure helps when a widow is faced with sudden large expenses for hospitals and funerals.

Will Children Be Able to Help?

Parents hate the idea of becoming a burden on their grown up children and yet thousands of elderly couples rely on their offspring every year to solve life’s crisis. Good personal financial planning in these trying times may help prepare for the day when one is no longer able to earn a living or care for oneself. Your children will help as much as they can, but they have their own future to consider, so let’s try to make things easier for them.

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1 Dan December 28, 2010 at 8:46 am

These are good tips. Seniors are getting increasingly comfortable using online resources and I would suggest making sure you take advantage of free software that can help you create and manage budgets or view your investments. Some brokerage firms and banks such as Fidelity, Smith Barney or Bank of America now offer the ability to get a consolidated view of all your investments, including dividends, interest expenses, etc. Using the same tools, you can often now create a budget, or use a third party site like (now owned by Intuit) and there are various other online budgeting websites that are free and can be very helpful to get on top of your financial life.

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