While some retirees work part-time to boost their savings and income, most need to manage their expenses to make sure their money lasts and to be able to afford the pleasures they have waited for during their working years. The Federal Deposit Insurance Corporation (FDIC) offers tips for money management at every life stage.
Here are five suggestions for retirees to make the most of your money:
- Streamline your finances. Everyone receiving government benefits, including Social Security, will need to sign up for direct deposit of their benefits by March 1, 2013, when the federal government will stop mailing checks. You can sign up now at www.GoDirect.org for Social Security payments and any other government payments you receive. At the same time, you can use your bank's services for online banking and bill-paying, set up automatic payments for recurring bills or sign up for email alerts to remind you to make your payments or to let you know if your funds are getting low.
- Look for senior services. Many financial institutions have special accounts for seniors, often starting with services for people as young as age 50. You can get discounts on bank fees, find out about events and special accounts to meet your needs.
- Investigate the benefits of part-time work. Plenty of seniors find that they miss the extra camaraderie and extra income of work and opt to take on a part-time job or perhaps start a business or a new career. While the income can be helpful and may allow you to delay tapping into your retirement funds, make sure you check on the consequences of working when it comes to your Social Security benefits, an employer's retirement plan, or pension benefits. There's a chance that some of those sources of income could be reduced if you start working.
- Don't overuse your credit card. While a credit card can be a necessity to pay for airline tickets or online purchases, you need to watch out for overspending more than ever when you are on a fixed income. Don't get caught in the trap of paying heavy interest charges every month or damaging your credit score by carrying too much debt or making your payments late.
- Consider a reverse mortgage. If you are a homeowner older than 62, consider the pros and cons of a reverse mortgage. A reverse mortgage allows you to borrow the equity in your home in the form of a line of credit, a lump sum or a monthly income, and is repaid when you sell the home, move or pass away. You qualify for a reverse mortgage based on your age and your home equity rather than your income or credit, so even if you have a low credit score you can be approved as long as you have enough value in your property. You will need to keep paying your home insurance premiums and your property taxes, so make sure you have budgeted for those expenses. In addition, you will have to pay some upfront costs for the reverse mortgage that can be added in to the loan amount. Consult with a reverse mortgage counselor to find out if this is a good financial move for your needs.
If you have been smart enough with your money to reach retirement age with savings and the ability to slow down your work pace, keep your money management skills working for you so you can continue to enjoy your senior years.
Michele Lerner
Michele Lerner, author of "HOMEBUYING: Tough Times, First Time, Any Time", has been writing about personal finance and real estate for more than two decades for a variety of publications and websites including Investopedia, Insurance.com, HSH.com, SavingsAccount.com, National Real Estate Investor magazine, The Washington Times, Urban Land magazine, NAREIT's REIT magazine and numerous Realtor associations.
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