One of the benefits the elderly deserve is enjoying their time after retirement without financial worry. However, since many seniors live on a fixed income, it can be easy to fall into debt if finances are not managed properly. If your senior loved one needs help getting his or her finances in order, Anchorage senior care experts recommend pinpointing the reasons why and implementing strategies to prevent further debt.
Many seniors are not able to afford items they were once able to purchase when working full-time. Often, they begin to depend on credit cards just to take care of their basic needs. The interest rates and high balances from credit card debt are monthly obligations that can take away your loved one’s discretionary income and considerably extend the payoff date. If you help your loved one create a reasonable budget based on monthly income, this may prevent him or her from relying on credit and falling into debt.
Medical expenses not covered by insurance (e.g. deductibles, copays) and unexpected emergency visits can eat away at your loved one’s income. Also, prescription costs can be a burden if a low-cost or generic version of a medication is not available. However, both proper body maintenance and preventive care can stave off the onslaught of medical bills associated with illness and injury and help keep your loved one out of debt.
By doing freelance, contract, or part-time work (e.g. photography, babysitting, retail, etc.), your loved one’s past due bills may be paid off more quickly. Some seniors may have to check with their retirement plan administrators to see if employment interferes with monthly payments. If so, freelance work or selling used or unused items at flea markets, garage sales, or online may be better options for your loved one to consider.
Instead of applying for a high-interest line of credit or a short-term loan, your loved one should consider a reverse mortgage. Reverse mortgages convert home equity into cash and can be a more cost-effective alternative to using credit to pay down debt. The payment is either received in one lump sum or divided into monthly payments. If your loved one has no plans to move, repayment is not required as long as the property taxes and insurance are paid on time.
Life Insurance Loans
Applying for a cash surrender loan on a life insurance policy is possible. This only works if your loved one has a whole life policy with a built up cash value. If he or she cancels the insurance policy, its value is converted into cash and can be used to reduce debt.
With a little time, discipline, and solid strategies in place, you can help your loved one keep his or her debt as low as possible. For other debt management suggestions, reach out to Home Care Assistance. During a free in-home consultation, our senior care experts would be happy to discuss how having a caregiver in the home can help your loved one reduce expenses, cut unnecessary spending, and keep an eye out for signs of financial hardship. We also offer specialized Alzheimer’s, dementia, and Parkinson’s care in Anchorage for seniors who need more comprehensive care. For more information, call one of our knowledgeable Care Managers today at (907) 770-0907.