A Guide to Finance For Seniors

A Guide To Finance For Seniors

Good money management is crucial for people of all ages and phases of life. Our financial demands as older adults, as well as our spending and saving habits, change, and it can be terrifying to consider living on a fixed income.

There are many different ways to be prepared and secure financially. This guide will give you an overview of the different aspects involved in financial planning for seniors, from useful stats and first steps to getting your finances in order to where to get help and answering some of the FAQS that people have regarding senior financial matters.

Statistics About Senior Finances

Before we proceed to the different aspects of financial planning for seniors, here are some statistics about senior finances that you should know to get a glimpse of its state and an idea of where you should focus when planning for your finances.

  • With incomes below 200% of the federal poverty limit, approximately 15 million seniors 65 and older live in insecurity.
  • Due to salary discrimination and having to take time off work to care, older women are more likely than men to live in poverty.
  • 16.1 million older persons who receive Social Security benefits live above the Federal Poverty Level.
  • The unemployment rate for people over 65 rose to its highest annual rate of 7.5% in 2020. People 65 and older made up about 24% of the civilian labor force in May 2022.
  • In 2017, almost half of the persons between the ages of 55 and 66 lacked personal retirement savings. In comparison to 47% of men in the same age range, about 50% of women (55 to 66) had no personal retirement funds.
  • In 2016, 61% of households with a head of home who was 65 years or older had debt. Senior-led families had a median debt of $31,050.1
  • Sixty-eight percent of seniors 65 and older who were asked in 2021 stated a pension was their primary source of income, compared to 93% who said Social Security was.
  • The typical couple 65 years and older would require $315,000 in after-tax savings to cover health costs in retirement.
  • Thirty percent of the 9.7 million senior citizens with mortgage and home equity line of credit debt have monthly payments higher than one-fourth of their income.
  • Adults 55 and above spend $16,219 annually on average on housing-related costs or 33% of their annual budget.

The Importance Of Financial Planning For Seniors

Financial issues impact every American’s life. However, your financial situation could be particularly important to your well-being as a senior. After all, priorities frequently shift at this stage of life. Additionally, new facts could affect the way you spend and save money. For this reason, it’s a good idea to step back and ensure your financial path genuinely suits your interests. You’ll have an easier time obtaining the lifestyle—and other goals—you want if you manage your money wisely.

The better your senior years will be, the more informed you are about your financial situation and possibilities. Making your money work for you is yours to do. Whether employed by choice or necessity, retired, contemplating retirement, or working now, that holds.

The First Step To Getting Senior Parent’s Finances In Order

  • Collect your parents’ private information and list their storage locations.
  • List every financial and investment account in detail (including household utilities, credit card accounts, and mortgage or rental information).
  • Gather all of the bank and investment accounts’ statements and paperwork.
  • Make a routine for paying all your payments, including your mortgage, phone, property taxes, and homeowners’ insurance.
  • Start sending in payments on time under the payment plan.
  • If your parents have a safe deposit box, do an inventory of it (and bring along a witness).
  • Find any living trusts, powers of attorney, or other legal documents.
  • Check to see whether their legal documents need to be updated.
  • Choose whether to enlist the help of experts, such as lawyers, financial planners, or consultants, to help with your parent’s finances or legal paperwork.
  • With or without the help of a financial advisor or consultant, reevaluate your parents’ investments and make any necessary updates to reflect their current requirements and circumstances.
  • Think about if you need to take over the guardianship of your parents.

The Basics Of Senior Financial Matters

Financial Documents

Collecting older adults’ financial records and information is one of the most crucial steps in senior financial planning. It may be essential for prompt, effective, and less expensive care. For instance, seniors asking for specific benefits must demonstrate their financial needs and thoroughly prove their financial history.

Imagine a family member cannot find crucial records, such as bank account details or tax filings. In that situation, it can result in a senior’s care being delayed or even a denial of insurance like Medicaid or veteran’s benefits.

Keep track of these important financial documents:

  • List of all bank accounts
  • Pension documents, 401(k) information, and annuity contracts
  • Tax returns
  • Savings bonds, stock certificates, or brokerage accounts
  • Business partnership and corporate operating agreements. Your elderly parents may have corporation operating or business partnership agreements if they operate a firm. It’s crucial to keep hold of these records for quick access should issues develop.
  • Deeds to all properties
  • Vehicle titles
  • Documentation of loans and debts, including all credit accounts
  • Power of attorney. An elderly parent might appoint a person or people to represent them in all financial and legal concerns by naming them in a power of attorney (POA), a legal document. A durable power of attorney (DPOA), which can specify your loved one’s financial expectations, will stay in effect should your elderly parent become incapable, but a conventional POA will expire.

Social Security

Social Security is a program led by the federal government. The program uses taxes in a trust fund to pay payments to qualifying individuals. A Social Security number is required when applying for jobs.

It is a crucial component of senior financial planning because it offers a base of income on which workers can construct their retirement plans. Additionally, it offers crucial social insurance protection to families who lost their primary earner and workers who become disabled.

Other advantages that come with Social Security are:

  • It doesn’t diminish or deny benefits to those whose income or assets reach a specified level, which supports private pensions and individual saving.
  • It offers a higher yearly payout per dollar invested than private retirement annuities since its risk pool is not restricted to people who anticipate living a long time, no money is lost through lump sum payouts or bequests, and its administrative expenses are significantly lower.
  • Due to its universality, Social Security will always have strong public and political support.

Retirement Accounts

Retirement plans or accounts allow you to invest now for financial security when you retire. 

According to the Federal Reserve Board’s latest Survey of Consumer Finances, Americans aged 55 to 64 have a median net worth of $212,500. Liabilities, such as debt, are subtracted from assets to determine your net worth.

Your assets include some of the money in your retirement accounts. They are essential to making sure you can retire in comfort. Typical accounts comprise:

  • 401(k)
  • 403(b)
  • 457(b)
  • Thrift Savings Plan (TSP)
  • Traditional and Roth IRA
  • Pensions

Older folks are advised to initially take advantage of company matches from their companies to get the most out of these accounts and their retirement funds. Seniors should next fund all tax-advantaged accounts, such as 401(k)s, IRAs, and HSAs, to the maximum.

Tax Credits and Deductions

It’s more crucial than ever for retirees over 65 to make the most of the tax breaks offered to them. That is especially true if your salary is fixed. After all, some of you must use your retirement funds to supplement your long-term financial needs.

It’s more said than done to keep your money in retirement, though. Retirees must be particularly aware of their tax situation because they frequently miss important possibilities to save money on taxes.

Some of the tax credits and reductions that seniors should know about are:

  • Medical Expense Deductions
  • Business Deductions
  • Qualified Charitable Distributions
  • Charitable Contributions
  • Mortgage Interest
  • Sale of Home
  • Retirement Plan Contributions
  • Credit for the elderly or disabled

Things To Consider To Achieve Better Finances In Seniors

It’s crucial to keep in mind that maintaining sound finances as a senior or older adult frequently necessitates taking into account some unique aspects. For instance, your objectives now are substantially different from what they were a few decades ago, both for the near and long term.

Additionally, you can have close family members who wish to support you, need money for themselves, or stand to inherit your possessions. You must respect your healthcare requirements, and as you get older, saving money becomes more and more crucial.

There is a lot to consider. But you can manage this. Other factors to think about are as follows:

  • Your various goals
  • Short- and long-term planning
  • Budgeting and managing your cash flow
  • Getting help
  • Avoiding scams and elder abuse

What Are Involved In Financial Planning for Older People?

Making The Most Of Your Retirement Money

Most seniors rely on Social Security as their primary source of income, and being on a fixed income can be stressful. Hence, it’s important to find ways to make the most of this money, so you don’t come up short at the end of each month. From creating a budget, prioritizing spending, and finding frugal ways to live, you must look into every nook and cranny of saving and stretching your money.

How To Protect Your Assets As A Senior

It never hurts to start planning to preserve your assets should you or your husband need long-term care because old age may be fairly expensive and comes with charges that vary based on your needs.

Nursing facilities can frequently cost more than $100,000 per year, and if you’re like most individuals, Medicaid will be required to cover these expenses. Before deciding if you are eligible for Medicaid, they examine your assets. You want to protect your assets as much as possible from these expenses, and you can do so with some advance forethought and preparing important documents including your will or delegating power of attorney.

Common Financial Issues For Seniors

Seniors can experience financial difficulties, too. The struggle of retirees in debt is similar to one in the United States, marked by rising debt, declining assets, ongoing budgeting issues, and the prevalence of elder financial exploitation.

Older adults who struggle with money negatively affect their physical and mental health and relationships because of blame and regret for past mistakes. Families and seniors must be aware of these frequent financial worries and mistakes to know what to avoid and what to plan for.

The Common Expenses Every Senior Should Know

Along with money concerns, seniors should be cautious of the typical retirement costs, including housing, transportation, long-term care, and hospitalization. Understanding these costs can help you better prepare financially for retirement.

The Role Of Families In Older Loved Ones’ Financial Planning

Families’ responsibilities during their senior parents’ golden years, particularly those of the children, can include unexpected duties like handling their finances.

According to research, ninety-two percent of family carers manage finances on behalf of their loved ones. The caregivers’ participation in their elderly parents’ finances is anticipated to increase over time. They manage invested assets, handle insurance claims, file taxes, and pay bills from their care recipient’s accounts.

So if you’re caring for elderly parents, it’s important to be prepared to take on at least some financial caregiver responsibilities.

Financial Planning For Seniors: Where To Get Professional Help

Estate planning attorney

An estate planning lawyer concentrates on the legal paperwork that specifies who will inherit your property after your death, frequently in a way that reduces taxes. A lawyer who specializes in estate planning can also draft the legal paperwork that provides you with parental decision-making authority. The living will and durable power of attorney are very helpful, if not necessary, in facilitating the proper and responsible management of your parent’s affairs. If your parents have enough money to cover their long-term care, this attorney can also assist in setting up a care plan.

Elder law attorney

An elder law attorney is qualified to draft living wills, powers of attorney, and other relevant papers. Attorneys who specialize in elder law are particularly knowledgeable about the legal ramifications of common aging issues like caregiving, assisted living, and in-home care. If you think your parents might not have enough money to pay for your long-term living expenses, consider asking this lawyer for advice. An elder law attorney can assist in coming up with novel, acceptable ways to pay the expenses.

A financial planner or adviser

If your parents are wealthy, enlisting the assistance of a financial planner or consultant to handle their assets might relieve your stress. Your parents might own a wide range of assets or sophisticated investments that require understanding a monetary professional. The professional can assist in deciding the suitable investment risk level based on your parents’ situation.

Government programs

If your parents are financially stretched, consider tapping into government programs for the elderly. Numerous resources exist, including:

  • Area Agency on Aging – for the city- or county-based elder programs, services, and funding sources
  • Administration on Aging – for legal assistance and health insurance counseling
  • Low-Income Heat Energy Assistance Program – for heat, gas, and electricity bills payment assistance
  • State-specific Telephone Assistance Program – for phone service payment assistance
  • State-specific prescription assistance programs – for assistance with prescription drug costs


The basic needs of the elderly such as health care, safety, adequate housing, food, and clothing, come with many costs, which is why it’s important to be financially prepared for your golden years.

It is crucial to set goals and plan, even though planning for your finances can be challenging at times. Small savings add up, especially if you plan to retire before age 65.

Suppose you don’t feel confident in planning for your retirement. In that case, you can work with your local senior citizens’ organization to gain access to financial help or with a financial advisor who could offer you great advice and help manage your assets. 

And for family members who find themselves in the role of financial caregiver and feel overwhelmed with the responsibility, remember to take it one step at a time, use the many resources available, and know that managing their finances is another way to take care of those you love.


How can children know it’s time to gain legal control over their elderly loved one’s assets?

Senior parents may indicate that they require assistance from their family in handling their finances when they have mountains of unread mail, forget to show up for appointments, or fail to complete an income tax return.

What does a durable power of attorney for finances accomplish?

If you cannot decide for yourself, someone else can manage your finances and medical care. This is possible with a durable power of attorney. States have different laws regulating durable powers of attorney. A durable power of attorney must be used to appoint a trustworthy person as your representative.

What legal documents should elderly parents have prepared?

Parents should draft a durable power of attorney for finances, in which they’ll have to designate someone as their agent or proxy to formally permit someone else to access their bank accounts.