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Managing Finances in Uncertain Times: A Plan for Senior Adults

Senior couple

A global health crisis, unexpected medical diagnosis, catastrophic weather event, or national economic downturn can quickly undo your upcoming retirement plans. Your first instinct might be to delay retirement or revise your investment portfolio. While you may need to take these actions, there are other options.

In addition to using the checklists below to help manage your finances during uncertain times, seniors should also visit the following websites to determine how their benefits might be impacted during times of financial uncertainty.

The Official U.S. Government Site for Medicare

Social Security Administration

Internal Revenue Service

Budget Refresh Checklist

Creating a budget lays the groundwork for successful money management regardless of the state of the economy. Use this checklist to help create or improve your current budgeting process and achieve your financial goals now and in the future.

  • Select a system to track income and expenses. This can be a mobile app, an online spreadsheet, or a pencil and paper. At a minimum, the system must include a place to input income along with fixed and variable expenses.
  • Calculate your take-home pay from all available sources. This includes income from a traditional employer and side gigs.
  • Gather last month's billing statements for easy reference. Input the required payment and due dates for all of your fixed expenses, e.g., mortgage or rent, cell phone, student loan, etc., into your chosen budget tracking system.
  • Refer to the last three months of bank statements and receipts to average and record how much is spent in each variable expense category, e.g., groceries, car gas, entertainment, etc.
  • Your budgeting tool may be able to tell you with one click whether you're overspending or have surplus income.
  • If you're committed to a manual process, simply calculate where you stand by adding your variable and fixed expenses together and subtracting the total from your income.

Are you spending less than you earn? Congratulations! You have surplus income. Deposit the excess money in a dedicated savings account you only touch in an emergency. Money in this account can help you pay your bills if you experience a job loss or have a necessary expense that would otherwise wreck your budget.

Is the amount you're spending equal to or more than your income? Apply the suggestions in the Expense Reduction Checklist below to create surplus income.

If you lose your income...
Contact your state and local government offices for assistance. This may include filing for unemployment and securing alternative health benefits.

Expense Reduction Checklist

If your budget leaves you with little to no surplus income each month, it's time to trim expenses.

  • Review your fixed costs. Housing costs will probably be your largest fixed expense and bring the biggest relief to your budget. Are you able to make alternate living arrangements, such as moving in with family? Can you move to a smaller home or find a roommate to share expenses?
  • Review your variable expenses. Eliminate entertainment expenses and choose free entertainment. Obtain a community library card and borrow eBooks, eAudiobooks, and music at no cost.
  • Explore your options. Contact creditors and lenders to determine if you can secure a reduced interest rate on loans or transfer balances to a lower-interest rate account. They may also be willing to temporarily waive fees or allow you to skip debt payments, without penalty, if you explain your financial situation.

If you're a homeowner still earning an income, you may be able to refinance your mortgage. A low-interest rate refinance can mean lower monthly mortgage payments. Contact the Credit Union of Colorado at 800-444-4816 to see if you qualify.

  • Plan meals. Use websites and mobile apps like Supercook, which allow you to plan meals based on what's already in your pantry.
  • Shop around for lower cost services. You might find less expensive cell service or car insurance with just a phone call.
  • Schedule automatic payments for fixed expenses using your financial institution's online banking or mobile app. This will help ensure bills are paid on time and can help you avoid late fees.

If you're a homeowner still earning an income...

You may qualify for a home equity line of credit (HELOC). This loan allows you to use checks and a VISA credit card tied to your account to access cash, as you need it. Contact the Credit Union of Colorado at 800-444-4816 to see if you qualify.

  • Contact creditors to adjust due dates if it becomes difficult to pay bills on time.
  • Avoid making changes to your investment portfolio based on emotion or the 24/7 news cycle. Speak with a trusted financial planner regarding your investments. They may be in a better position to provide expert guidance on how the current situation will affect your retirement planning.

If you're a homeowner with a small (or zero) mortgage loan balance...

You might want to consider a reverse mortgage. Reserved for seniors 62 years of age or older, this type of mortgage loan is similar to a HELOC in that it requires your home as collateral. A home equity conversion mortgage (HECM) is one of the most common types of reverse mortgages.

HECMs may be more expensive than a traditional HELOC, but you do not need to repay the loan until you sell your home, move, or die. Due to the rules and costs associated with reverse mortgages, seniors should first carefully review other options before applying for a HECM. It's best to discuss your situation with a qualified professional. Find a HUD-approved HECM counselor by visiting the U.S. Department of Housing and Urban Development's (HUD) website or by calling 800-569-4287.

How to Avoid Scams Checklist

Scammers are always looking for victims. During times of economic uncertainty, they work overtime to take advantage of people's fears.

  • Stay alert to potential fraud by:
  • Hanging up on robocalls.
  • Ignoring emails and texts from unknown sources.
  • Visiting official governmental sites for up-to-date information on changes to your benefits or other disaster relief programs.

For more information on how to protect your accounts visit the Security Resources page.

Article by: Tracy Scott