As a person gets older, particularly as their mental state begins to decline, they're often at increased risk for scams and other types of financial abuse. In order to reduce these risks and ensure predators do not prey on you or someone you care about, it's important to understand elder finance issues and all that it entails. Let's take a look at a few of the topics you should know about.
In This Article:Bills & Records ↓
Facility Costs ↓
Financial Plans ↓
Insurance Plans ↓
LTC Reform ↓
Reverse Mortgages ↓
Social Security ↓
VA Benefits ↓
Bills & Records
Keeping accurate track of bills and records can become more difficult as a person gets older—but it's just as important as it ever was, if not more so.
How to Prevent Identity Theft
Seniors are often more vulnerable to fraud and identity theft than other groups of people. If it does happen, you're better equipped to catch it immediately and take steps to get it resolved if you keep thorough and accurate records.
If you're caring for a senior who isn't equipped to deal with their own finances anymore, one important thing to do for them is to look at their credit card and bank statements thoroughly each month to see if there are any dubious charges. Everyone is also legally entitled to four free credit reports every year. By taking advantage of this, you can be alerted sooner to any significant changes to their credit score, which could be an indication that someone else is using their identity.
How to Locate Bills and Records
When a family assumes responsibility of their parents' affairs, it's necessary to gather copies of all significant records, such as their birth certificate, state ID, social security card, marriage certificates, any applicable death certificates (such as for a deceased spouse), tax returns, and military records. These records are necessary for Medicare, social security benefits, and a host of other things. Hopefully, they've kept them filed in a secure place that you can access easily. If not, you'll need to obtain replacements.
Most of these can be obtained by contacting the vital records office of the state where they were born, got married, etc. For military records, contact the military division of the National Personnel Records Center.
How to Locate Citizenship Paperwork
If the senior citizen in question wasn't born in the United States, then you'll also need proof of citizenship for them. If they were born to U.S. citizens, then they'll need a Certificate of Citizenship. If they immigrated to this country and became naturalized citizens, then they'll need a Certificate of Naturalization. In some cases, a valid U.S. passport will also work as proof of citizenship.
Again, hopefully they have this necessary paperwork filed somewhere, but if not, you'll need to go to the United States Citizenship and Immigration Service and fill out Form N-565 to be issued a replacement.
How to Locate Pension and Social Security Benefits
If you or someone you're caring for is supposed to receive a pension from an old job, there's documentation for that too—and losing it can cause more problems than you may realize. While it's not the end of the world, losing your pension documentation can hinder your ability to collect Social Security benefits. Plus, you're missing out on money that you're entitled to. If you have, or think you have, a pension that you're not collecting on, here are some steps to take to find it:
- Contact Your Previous Employer - Unions that are closely tied with your former employer's company may now take control of the pension plan.
- Contact Insurance and Financial Companies - In some cases, the assets contained in a pension plan might be passed on to an insurance company or financial institution.
- Contact the Pension Benefit Guaranty Corporation – If contacting the responsible parties directly doesn't work, the Pension Benefit Guaranty Corporation helps you get the matter sorted out. They're an independent agency of the U.S. government that insures defined benefit pension plans, and can pay you what you're entitled to, even if the pension is lost or cancelled. We'll discuss them more in a later section.
Facility CostsWhat is the Cost of Nursing Homes?
The average cost for a private room in a nursing home in 2016 was $92,000 annually, based on information gathered by Genworth Financial. This works out to about $253 per day—an increase of 1.2 percent from the previous year. Since Medicare-certified nursing facilities make up over 90 percent of facilities around the United States, the following national average costs for Medicare senior care should be taken into account:
- Home Health Care - $693
- Adult Day Care - $1,492
- Assisted Living - $3,600
- Homemaker Services - $3,721
- Home Health Care - $3,812
- Semi-Private Nursing Home - $6.692
- Private Nursing - $7,604
The cost of elder care totally depends on what kind of services an elderly person requires, as well as where they are located. Let's take a look at some averages:
- Continuing Care Retirement - $50-$200 per hour for 20-40 hours' worth of work per week.
- Non-Medical Home Care - Provided by Home Care Aides, this non-medical assistance is priced at $15-$26 per hour based on the 2015 national average.
- Home Health Care - Also offered by Home Health Aides, this type of health care involves the use of medical equipment for monitoring respiration, temperature, pulse, etc. The 2015 national average was $16-$27 per hour.
- Adult Day Care - Centers offering adult day care services provided assistance for $35-$124 per day, based on the 2015 national average.
- Care Planning and Management - A Geriatric Care Manager (GCM) would usually charge Communities (CCRCs) - Somebody who lives in this type of residents for skilled nursing/independent living/assisted living would pay $60,000-$120,000 as an entrance fee, followed by a monthly maintenance cost of $400-$2,500.
- Senior Living/Assisted Living - Social/recreational activities and basic health services were priced at $3,600 per month as of 2015. However, prices vary per state and so, the state averages varied from $2,525-$5,745.
This nonprofit organization is dedicated to improving long-term financial quality of life for women. The institute aims to assist females in finding investment solutions that work for their healthcare needs.
PrimePlus Services/AICPA Eldercare
These professional services are both customizable and unique. Elder planning services of this kind will come in handy for anyone who is transitioning in some way, whether it involves launching a business, planning for retirement, or something else.
This is a long-term investment that an insurance company will issue as a way of protecting your finances. Your contributions will reduce the risk of outliving income. First, you purchase an annuity and contribute money to it, while you have a steady income. Then, in your retirement, you receive regular payments on what you've contributed, which will theoretically last the rest of your life.Life Insurance
You may think that buying life insurance in your 60s is futile. After all, the older you get, the higher risk you are. But there are certain policies you can still obtain, which cater to seniors and don't require a medical exam.
In particular, you may want to look into term life insurance policies, which pay out if you die within a specified period of time—usually 10, 15, or 20 years, depending on your age when you purchase it. Shop around and gather as many quotes as possible to find affordable coverage options that meet your needs.LTC Insurance
Long-term care insurance, better known as LTC or LTCI, is a type of insurance product sold in the United State, as well as Canada and the United Kingdom. Included in coverage is personal/adult day care services, nursing home care, and home health care for ages 65 or above.Viaticals
When life insurance is converted to fund elder care, it will be considered a viatical settlement. This type of life settlement is the perfect solution for assisting an elderly person living at home. It can also be used to fund long-term care expenses, medical expenses, or bills. Approximately 60-90 percent of the policy's face value can be netted by the policyholder, who will receive payments in one lump sum.
Organizations Working Towards LTC Reform
The older you get, the more help you need with various facets of your regular routine. And the longer you live, the more likely you are to require long term care, such as in a hospital or nursing home. This can include medical care, as well as help with day to day tasks.
Of course, this costs money, and many people who need these services don't have enough to pay for them. You can buy LTC insurance, as discussed above, but even that isn't always practical. That's where LTC reform comes in. There are a number of organizations, both public and private, around the country, and around the world, dedicated to helping people get the care they need, such as…
- The Florida Council on Aging
- National Academy on an Aging Society
- American Society on Aging
- Canada National Advisory Council on Aging
- Global Action on Aging
- Age Concern of England
- And many others
MedicaidAcademy of Florida Elder Law Attorneys (AFELA)
This non-profit association works with older clients in the state of Florida. Founded back in 1993, the AFELA is a law firm that assists seniors in dealing with payments/affairs for long-term Medicaid care.Georgia Association of Community Care Providers (GACCP)
The members working at GACCP provide a single/several types of services, including home delivered meals, personal support services, emergency response system, and alternative living services. The association operates on a Code of Ethics to ensure the Medicaid services are of the highest standard.Department of Human Services of Hawaii
The mission of this organization is to provide elderly individuals with efficient programs, benefits, and services in a timely manner. Benefit fraud, neglect, and abuse reports are three things that can be dealt with by the department.Alaska Department of Health and Social Services
Senior and disabilities services are offered through the Alaska Department of Health and Social Services. As the primary public program for long-term care and health financing, elderly individuals can rely on this department for public assistance with Medicaid.
A Health Maintenance Organization (HMO) is different to original Medicare in the sense that in an HMO, a co-payment (fixed amount) is paid for services. Health care cannot be provided from just any healthcare provider, doctor, or hospital with HMO plans. Instead, the care must be received from health care professionals operating within the network.Medicare Reform
Although the budget has been cut for Medicare reform, people receiving Medicare are not affected in terms of the benefits they receive. The budget agreement will cut Medicare savings by $100 billion over the next five years. The downside is that $15 billion in premiums will be collected from recipients over the next five years.Medigap
This type of additional health insurance can be acquired from a private company. Medigap covers health care costs that would not be covered by the original plan, including deductibles and copayments.
PensionsThe Problem with Pensions
Pensions have become less common in recent years than they used to be. As an incentive to work at a particular company, many employers will set aside a retirement account for their employees, funded and managed by the company. Some unions provide this for their members as well.
Unfortunately, many employers later find that they are unable to fulfill the monetary obligations that they agreed to. Especially when the economy is less stable, employer-funded pensions are often more of a luxury. Instead, more and more common is the 401(k). Workers set aside money for their retirement out of their own pocket, which is deducted from each paycheck, up to a certain amount per year.Pension Benefit Guaranty Corporation
As we discussed earlier, the PBGC is an independent agency of the U.S. government, with the responsibility of making sure people get the pensions they're entitled to. They provide pension insurance, so that if an employer no longer has the means to fulfill their obligations, the PBGC will cover the pension, which you can receive as either an annuity or a lump sum.
If you think you're entitled to a pension, but aren't sure, if it's insured by PBGC, they can help you find it. A search engine on their site allows you to look for your pension by your name, or by the company's name or address.
Reverse MortgagesWhat are Reverse Mortgages?
Many retirees whose homes are paid off, but who are on a fixed income, choose to supplement their finances with a reverse mortgage. In this arrangement, a person aged 62 or older can take out a loan based on the equity in their home, but defer repayment until later. This can be after they've sold the property, or even after their death.
Once you've taken out the loan, there are several options for receiving the money. You can take it all at once, as a single, lump sum. You can receive small, monthly payments as a supplement to your existing income. You can use the money as a line of credit. Or you can do some combination of these options.Pros and Cons of a Reverse Mortgage
A reverse mortgage can be a tremendous benefit, but it's not without problems. If you're having trouble getting by on your fixed income, it can give you the extra you need, with flexibility in how you receive that money. However, even though you're not making payments, interest is still accruing, and continues to build up every month. And since this isn't offset by regular mortgage payments, the amount you owe can continue growing, to the point that when the time does come for you or your loved ones to pay it off, the loan amount exceeds the actual value of your home.
This doesn't mean that a reverse mortgage can't be a viable option in certain circumstances. But it does mean that you should make sure to find an honest, reputable lender who will work to find the plan that's right for you, and preventing you from ending up owing an arm and a leg down the road. The way to do this is to go through the National Reverse Mortgage Lenders Association. A nonprofit organization, they can help you find a reputable reverse mortgage lender to help meet your needs.
Social Security in the Modern Age
The original purpose of social security was to provide retirees, along with those whose disabilities prevent them from working, with a living wage. A portion of each paycheck goes towards the social security fund, and when you reach retirement age, you can collect benefits. You can collect partial benefits beginning at age 62, or full benefits at age 66.
Unfortunately, social security isn't enough to provide a living wage for most people today. Cost of living increases don't reflect the actual cost of living, and since more money is being paid out than is coming in, many experts worry that the fund will be depleted within a couple of decades.
Therefore, social security in the modern age shouldn't be relied on as a complete income replacement, but rather as a supplement, alongside other income streams, such as a 401(k) or pension plan.
AICPA Eldercare/PrimePlus Services
Taxes are an important part of anyone's finances. It's no different for the elderly. Even if they're not working a regular job anymore, they still have income that needs to be declared, such as the earnings from an IRA or a 401(k). Often, this income is exempt from taxes while you're saving it up, but once you start collecting it, it must be declared, along with social security benefits, pensions, and any other income you may have.
Unfortunately, as people get older, they may find it increasingly difficult to file their taxes properly—particularly since the forms for retirement income are different from what they got used to filing during their working lives.
The simplest solution is to look into the AICPA's (American Institute of Certified Public Accountants) Eldercare and Prime Plus services. They provide CPAs to seniors to help them with a variety of financial issues, including taxes, along with end of life costs and other facets of eldercare, to make sure that you're not left out in the cold.
U.S. Veterans Benefits Administration
If you've served in the military, then you may be entitled to certain VA benefits, including a pension, as well as disability benefits, health care, life insurance, and more. The U.S. Veterans Benefits Administration helps those who served their country, as well as the families of those who served, to obtain benefits and services that might be difficult to get otherwise.
If you think you're entitled to specific benefits, check their website to see how to apply for them. You can also search to see if there's a VA center in your area, which can provide you with a variety of medical and social services for a much lower cost than you would pay elsewhere.
Financial concerns can be a bit tricky as you get older—but they don't have to be. There are plenty of options and organizations that can help you remain financially solvent and keep your affairs in order.