Dealing with financial challenges
Living on a fixed income, coping with rising expenses, and dealing with debt can be a tremendous burden on older adults. This article discusses some of the most common challenges faced by older adults, and offers advice for how to help them cope with these difficulties.
Living on a fixed income, coping with rising expenses, and dealing with debt can be a tremendous burden on older adults. Medical bills can add massive amounts of debt—and stress—to an older person’s life. It’s the third largest expense for seniors, after housing and transportation. Unlike those more predictable expenditures, though, medical expenses can change drastically over the years. Major medical procedures, deteriorating health, and long-term illnesses can have a dramatic impact on the amount of money going out.
To help alleviate some of this pressure, it’s often possible to negotiate with medical providers and come up with a payment plan that works for everyone. In fact, many times medical providers will cancel or significantly reduce charges if the patient is making a good faith effort to pay off expenses. The right Medicare plan, too, can have a big impact on medical costs.
In recent years, inflation has raised the cost of just about every kind of good and service. Some costs have jumped by almost ten percent, and Social Security payments aren’t always keeping up with these costs.1 Paying for groceries, gas, and transportation can consume a lot more than it did just a few years ago. Housing costs, too, have risen, especially for renters.
To help allay some of these rising costs, it’s a good idea to perform an in-depth budget review and cut any unnecessary expenses. It’s also worth holding off on major purchases when possible.
More than 2 million Americans over the age of 60 have co-signed private student loans for their children.2 In fact, the fastest growing group of student loan borrowers is seniors. Unlike most other types of debt, student loans cannot be forgiven by the debtee filing for bankruptcy. This could create a significant financial burden for older people on fixed incomes.
Although it may not be possible to eliminate student loan debt, it may be possible to negotiate a lower monthly payment. Especially for lower-income borrowers, an income-driven repayment plan could lower the cost owed each month and make the payments manageable.
Credit card or mortgage debt taken on to help out a family member or to supplement monthly expenses can add up and become worrisome. Many older adults find mounting credit card debt their greatest concern.
The most important first step to take is to restrict additional credit card charges. If a person is consistently placing regular, expected charges on a credit card, this may be a sign that their income is insufficient to cover their expenses. Work with them to reduce extraneous charges, slim down the monthly budget, and prevent further debt from growing.
Financial challenges after the death of a spouse or partner
Many couples have an arrangement where one spouse or partner takes care of financial matters like bill payments, mortgage, and utilities. This person may track the money and make sure all payments are made on time. If the person who takes care of financial matters dies, their spouse or partner may struggle when trying to catch up on bills and finances. They may not even be sure where to find the necessary documentation.
In order to help out, remember to be patient with the older person and understand that it might take time for them to get back on track. Gather all of the information you can into one place, and begin sorting through it together. Enlist the help of any family members, friends, or financial professionals who might have information on the accounts.
This may also be the right time to establish new and healthy financial habits. Setting up regular appointments to check in on budgeting and bill payment, as well as to monitor changes in finances, can help ease the burden of stress caused by these new duties.
It might also be a good idea to bring on a daily money manager, at least for a short time. Nonprofits dedicated to helping older adults might also be able to assist with budgeting and daily money management, at little or no cost to them.
Getting financial assistance
Getting help from a financial expert
Getting out of debt
Stretching your money