By Brad Stevens
Financial mistakes follow us throughout the entire course of our lives. As soon as you earn your first salary, chances are you won’t know the best way to spend it. Learning how to make financial plans is a difficult challenge that requires a lot of experience. However, it is one thing to make mistakes when you are young, and a whole other thing to make mistakes as a senior. When you reach your golden years, finances became the most important part of your life. Even with that in mind, there are many financial mistakes seniors make. If you are among them, or you know someone who is, carefully read this article. You might find out more than you initially thought you would!
Financial mistakes seniors make
So, what are those pitfalls that elderly citizens usually fall into when it comes to spending money? Well, the harsh truth is that there are many of them. However, the most common ones are:
- not thinking through about retirement costs
- being scammed by scammers
- not understanding Medicare
- issues when getting a retirement house or an apartment
If you are careless, you might make a wrong investment, and lose the hard-earned money that you could otherwise spend on something useful. It is also important to understand that seniors can sometimes be stubborn about their financial decisions.
If you know someone who has these issues, try to approach him or her by offering advice on the issue. Still, you should know that initiating a conversation with a senior can sometimes be difficult. So, arm yourself with patience!
Retirement and care costs
No one can know for sure how long you will need medical care in a retirement home. With that in mind, it is not possible to calculate the cost. However, what you can do is to first find the most affordable retirement home with the satisfying quality of medical care.
The way to do that is to spend some time researching in advance. It is best to review a couple of options, compare prices, and only then bring the final decision.
Once you chose the retirement home that fits your budget, you have to make a financial plan. Since we already established that it is not possible to predict the length of medical care, what you should do is plan for the worst, but hope for the best. That way you will have enough money for the worst-case scenario.
You should know that retirement homes are expensive. An average cost per year can be about $80,000.
Beware of scammers
Senior citizens are susceptible to scams. You wouldn’t believe how easy it is to scam a person who doesn’t suspect anything. It happens even to younger audiences.
The most common ways for a scammer to scam a senior person are:
- banking or wire transfers via a phone call
- credit card frauds
- convenient home improvements or investments
- charity events
- insurance and health products
- contests or games that rely on luck
You should always be on guard for scammers. To help you with that, here are some basic rules to follow:
- A scammer will always look and sound friendly, as though he is offering you help for no apparent reason.
- They may try to instill fear or come up with an urgent situation, so you don’t have enough time to think it through.
- Furthermore, a scammer may use emotions against you in order to make you buy something.
For that reason, never put your trust into free offers that sound too good to be true.
Understand how Medicare functions
Medicare is a federal health insurance program that applies to people above 65 years of age. In some cases, it is possible for young people to become eligible for it, but only if they have a form of disability. Also, people with End-Stage Renal Disease are included in this insurance program.
However, the biggest misconception about it is that it covers the full expenses of long-term care, whether it is a nursing home or an assisted living program. In reality, Medicare covers these expenses only to a certain extent.
In order to avoid financial mistakes seniors make, it is best to understand the types of Medicare insurance:
Medicare Part A, also known as Hospital Insurance, covers for hospital stay expenses.
Medicare Part B, also known as Medical Insurance, covers doctor’s expenses, outpatient care or medical supplies.
Medicare Part D, or prescription drug coverage, covers for original Medicare, some cost plans, private and medical savings accounts plans.
Best is to call an insurance company that is approved by Medicare and get specific details about care and treatment.
Buying a retirement house
One of the biggest financial mistakes NYC seniors make is when purchasing a retirement home. That is a hefty investment that often doesn’t pay out as much as you would think it will. I’m not saying that you shouldn’t buy a home if you have the money, but you should carefully think about the type of house you wish to purchase!
Among the most common things that retirees should think about when buying a house, the most important factors are:
- The cost – affordability is the number one factor when buying a retirement house. Do not go over your budget!
- The size – the house shouldn’t be too big, it will require a lot of effort when cleaning it, and the bills will be higher.
- The layout – always opt for a house without a second floor. You don’t need too many steps in your house.
- The location – your retirement house should be close to a medical facility, grocery store, and a nice park. Think about what your necessities are!
Think smart and save money!
As you can see, there are plenty of financial mistakes seniors make. Try to avoid them as much as you can, carefully plan your retirement, know when to invest money, and how much money to invest.
Brad Stevens is a blogger and a creative writer for DA Moving NYC. In his past, he has worked as a columnist and a news reporter, and he uses his rich life experience to help others with his thoughtful advice. Brad lives with his family in New York.