Once upon a time, older folks looked to retire with only three sources of income: savings account, pensions, and Social Security. Since many financial markets have taken a hit, many seniors are looking at a less than expected financial retirement future.
All is not gloom and doom!
Here are five money management tips that can help add a little more money to your pocket:
- Consider working again. If you have retired and are collecting Social security, working another job can help with any financial issues. The National Council on Aging offers a Jobsource tool that can help you assess your interests, find training, and look for a job according to your financial picture. Those age 55-plus with limited or no income should also consider the Senior Community Service Employment Program (SCSEP) which offers training and community service on a part-time basis that can lead to another full-time career.
- Hold off on collecting Social Security. Don’t be so quick to collect Social Security (SS). The longer you put off collecting SS, the higher your benefit amount. Today, the average retirement age is around 66. If you put the brake on your retirement until about age 70 or later, you will see a significant Social Security check amount. Remember to choose a retirement age based on your circumstances so you’ll have enough Social Security income to complement your other sources of retirement income.
- Look for available benefit programs. There are programs that can help you pay for medical care, prescriptions, food, utilities and more. Find out if you are eligible for a little financial assistance. Depending on your income, there are over 2,500 benefit programs that can help you stay afloat and they are just waiting to hear from you! Check out the Benefits CheckUp sponsored by the National Council on Aging to learn about the programs that can help you hold on to your money. www.benefitscheckup.org.
- Tap into your home. If you own a house, tapping into your home equity might be something to consider if you need money. You can take out a home equity loan, a home equity line of credit (HELOC) or a reverse mortgage.
Home equity loan is another name for a second mortgage which gives you a lump sum amount of money but comes with a fixed schedule of repayments. A home equity is a good idea if you want to do some fixing around the house or if you want to bundle your debts and pay them off.
A HELOC works almost like a credit card, allowing you to withdraw funds up to your credit limit. But even though you may have access to funds, it’s important to remember to borrow only what you need. HELOCs are pretty much used for home improvement projects, which can increase the overall value of your home. But they can be used for other large expenses too, like paying for your child or grandchild’s college tuition or settling a huge debt. Some lenders may charge fees to open a HELOC. Make sure you have all the details to determine whether a HELOC is right for you.
A reverse mortgage converts equity in your home into cash. You can receive a large amount of money all at once, establish a line of credit to draw on as you please, or get paid in monthly installments. You can choose to pay it back the same as you would any loan. And if you have chosen monthly disbursements, you could continue to collect those for the rest of your life (as long as you stay put in your home). You must be age 62 or older, and own most of your primary residence (the home you live in). If you have an outstanding mortgage on the house, it should be a smaller amount relative to the home’s value (less than 50%). You will still be required to pay property tax & insurance.
- Look to relatives for financial help. Don’t be afraid to ask your relatives for financial assistance especially when it comes to paying off debts that came out of necessity like medical bills for example.