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You have enough to worry about when preparing your finances for life as a senior. Once you retire, your income will be limited, even if you’ve been saving and investing for decades. You’ll have less money coming in, and more money going out, especially if you have medical issues and nursing home costs. But those are financial responsibilities you’ve likely planned for. What about the costs that crop up unexpectedly? What else can you prepare for? It’s always a good idea to save more than you think you’ll need, especially when you take inflation and longer lifespans into account. Here are a few areas where you may need additional finances to cover everything.
Taxes and Savings
Many seniors wonder how much of their income from Social Security benefits is taxable. Well, the answer varies depending on your situation. It mainly comes down to your filing status and to your overall annual income. Follow the previous link to learn more about how Social Security benefits are taxed.
Besides taxes, you should consider where your money is saved and how much it’s earning for you. Keeping your money safely tucked away in a savings account or two is wise, but you don’t earn a lot of interest on those savings. Investing some money in a mutual fund will guarantee slow, steady growth, earning you more money overall than savings sitting in a bank. But do be aware that some mutual funds are taxable. Keeping all of this in mind, know that your savings will have to cover these taxes in addition to your standard cost of living.
Legal Fees
Whether you see a paralegal to take care of basic paperwork or you visit an elder care attorney to discuss your finances or other issues, those costs add up. You’ll likely need the services of a paralegal or attorney when you draw up a will, make plans for your remaining assets, and set aside funds for end-of-life planning. In addition to those fees, though, situations may arise that require further use of a paralegal or attorney. You may need someone to advise you on how to distribute your finances to cover your costs. You may need a consultation on long-term care planning. You may need someone to discuss nursing home rights with and to file any nursing home claims. In the worst-case scenario, you would want the service of an elder care attorney should you or your significant other encounter malpractice. Saving more than you think you’ll need in this area will give you security.
Other Concerns
Due to the economy, many seniors may help support their children in some way, whether it’s assisting with rent, providing childcare, covering costs of weddings, or even inviting their children to live with them again for some period of time. Such expenses add up quickly, diverting savings into perhaps unplanned-for areas.
Your savings may also need to be directed to various home repairs or renovations, especially if you need to make your home more accessible or if you plan to sell. Bringing a home up to either standard involves a significant investment of money and time.
Ideally, the last quarter of your life should not be spent worrying about finances. But whether due to lack of a financial education, debt, or unexpected expenses earlier in life, the sad truth is that many seniors are not adequately prepared for the costs that arise after retirement. One way to augment your savings is to consider a life settlement, which enables you to sell an existing life insurance policy for a lump sum. If you no longer have a need for your life insurance policy, use our qualification calculator to find out if you’re a candidate for a life settlement. If you have questions about life settlements, visit our website to learn more.
