Financial health plays a crucial role in the quality of life for aging Seniors. How we spend these years depends, in a large part, on the financial foundation we lay during our active employment years. Although many people find their resources dwindling as they move into retirement, and find Social Security inadequate to cover all our expenses, there are several steps that you can take to effectively finance your golden years.
Annuities
If you have a reasonably sized nest egg prior to retirement, you can invest a portion of it in an annuity that upon retirement will provide you with a guaranteed income for the remainder of your life. The size of the payment depends on the amount invested and the age at which you begin receiving payments. The longer you wait to start receiving payments the larger those payments will be.
In years past, standard annuities had a major drawback i.e. if you died shortly after starting to receive payments your heirs lost the value of the remainder of the money in the annuity. Some of the risk to your heirs could be mitigated by combining a life insurance policy with the annuity. On the other hand, if you lived past the average life expectancy you came out ahead financially. Modern day annuities have a variety of options available to eliminate the financial risk of dying young by giving you distribution options that preserves the principal for your heirs.
If you didn’t sock away enough to buy an annuity all is not lost… there are other options you can pursue. For instance if you own a home.
House Rich Cash Poor
If you own your own home you have several options available:
- Downsizing – If you live in a larger home than you need, you may consider selling or renting the house and moving to a smaller home, condominium, or apartment. Living in a smaller unit may help you reduce expenses and make it easier and less expensive to navigate and care for your environment, as well as facilitate the services of a home health care worker or visiting nurse.
- Shared Household –Similar to downsizing, families with an aging loved one can have their elder relative move in with them, or vice versa. A combined household reduces expenses for both the family and the elder, in addition to providing oversight and care for the older relative. Although this situation may not work for everyone, it has worked for many families for generations.
- Renting out a Room – Out-going Seniors in good health might enjoy having visitors and picking up some extra cash to boot by renting to strangers on a short term basis thorough a service like AirBnB. Another option might be to invite a elderly friend to share your house which provides companionship for both in addition to reducing both their individual expenses.
- Elder Home Care – Hiring home health caregivers to visit elderly people in their homes to monitor their condition, and provide important health or housekeeping services can be much cheaper than moving to an assisted living facility or Nursing home. This allows the elder to remain at home instead of being institutionalized, and the home environment provides greater comfort, independance and stability for many older people who are eligible for this type of service. Many facilities like Queen City Home Care, for instance, will provide a free in Home Assessment to help you discover your loved one’s precise needs… whether that is home-care, skilled nursing options, assisted living facilities or a nursing home placement.
- Reverse Mortgage- Senior citizens who own their homes may also benefit from getting a reverse mortgage. In this case, a lender appraises the property and buys it for an agreed upon monthly payment to the senior homeowner during his or her tenure in the home. Once they pass away, the lender takes possession of the home. This provides a guaranteed payment for life similar to an annuity while allowing the homeowner to remain in the home. Not everyone is eligible for, or will benefit from this type of financial plan, but it may be worth looking into.
An older parent’s financial savings and investments do not have to be depleted during the retirement years. In some cases, options like these can help to preserve the elder’s autonomy and well-being, while keeping them as independent as possible. Discuss these options with your loved one before making decisions about long-term care.
