The 6 Essential Financial Steps Every Senior Needs to Take

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As a senior or as the caregiver of a senior, a healthy financial plan is essential. As we are now living longer through our retirement years, the importance of retirement funds continues to expand. According to the National Council on Aging, over 23,000,000 Americans over the age of 60 are “financially insecure.” This is due to a number of reasons including the economic recession of the last decade, poor credit, a lack of savings and debt. Below are the 6 steps you need to employ today for a financial security during retirement.

  1. Step 1:  Thorough Analysis of Current Financial Status

It is essential that you know your current financial status. Take the time to complete an inventory of all of your accounts including: checking, savings, life insurance and investments. In addition, if you are not already drawing Social Security, inquire as to the amount you will be receiving. It is also important to have an inventory of high-value personal items including jewelry, artwork, collectibles and antiques. Once this is complete, you have the information you need to move forward.

  1. Step 2:  Set Goals

Carefully consider what your financial and lifestyle goals are for the future. Are you planning to downsize? Or perhaps, you want to upsize. Do you need to consider purchasing long-term health insurance? Do you want to take annual trips?  It is important to ask yourself and your partner these questions and more to understand how the money you have will be spent.

  1. Step 3:  Budget

Ideally, your monthly expenses should not exceed the income you are receiving. Consider your Social Security payments, any retirement payments and interest from investments as income. This leaves your savings for other expenses as they arise. If your monthly expenses do exceed your income, it is wise to consider downsizing.

  1. Step 4:  Downsize if Necessary

One of the biggest mistakes individuals make, is not downsizing early enough. Do not wait until your savings is depleted to lower your monthly expenses. Perhaps downsizing will include selling real estate to purchase a smaller, more budget-friendly home or selling off some of your high-valued collectibles. The goal is to get your expenses lower than your income so you can live more comfortably.

  1. Step 5:  Develop an Estate Plan

An estate plan helps to ensure that both you and your partner are taken care of in the event of an illness or death. It also helps to cement the goals of your estate providing the blueprint your heirs need. A good estate plan should include a living will, POA, medical POA and a will.

  1. Step 6:  Consult with an Accountant

An accountant can help you devise the right budget, help with your state and federal taxes, prepare your estate plan and guide you in the best direction for your long-term financial goals. Through an initial consultation, you can learn where financial opportunities and your liabilities intersect, while setting goals and setting forth a plan for your future. It is never too late to change your financial situation in retirement. The sooner you act, the better.

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