How to help a retiree manage a fixed income
Sadly, for many people who are 59 years and above, retirement doesn't always turn out so well. If you are caregiving someone that has only a set amount of money to retain our life style (also known as fixed income), it might be very challenging living comfortably when old but all is not lost! Given below are some proven methods to make every cent count and ensure the elderly individual you are caregiving for can make the most of their retirement.
Maximize your retiree’s money
One great way of helping your retiree understand their spending is to break down the living expenditures into different classes. There are three main areas where most of your retiree's income goes:
- The essentials
- The extras
- Getting out of debt
1. The essentials
Minimize fixed costs
Do you know that fixed expenses such as groceries, rent, and bills make up your retiree's essential needs? To reduce money spent on basic items, check out the tips below.
Look for cheaper rent
It is advisable to move houses to less costly rental premises and if that is not possible, find out if your retiree is eligible for a housing program to assist senior citizens. In addition, your retiree may be able to share a house with a family member or a close friend and split the rent.
Find stores with sales and those that provide coupon opportunities. Buying groceries on discount can also significantly reduce your costs over time. That said, buying perishables in bulk as a retiree often does not make fiscal sense unless you can store that for a period of time. Show your retiree sites such as Coupons.com that provide various coupons to help reduce their grocery costs.
2. The extras: lessening variable expenses
When you are helping maximize your retiree’s income, you may want to to reduce additional variable costs such as entertainment, clothes and transport expenses especially when you are unable to make significant headway on their fixed costs such as rent or utilities.
Work with your retiree to search for a second-hand clothing store that stocks good quality clothing. Also, you can never go wrong with a capsule wardrobe style for the retiree's wardrobe. A capsule wardrobe is wardrobe of essential items that can be paired together and won’t go out of style. It is in your best interest to schedule shopping for clothes at the end of the season's sales when you can get great offers.
It would be a pretty good idea to kill two birds with the same stone and drop into the grocers when your retiree is going for a day out. In addition, they can use discounts that some transportation services give senior people.
Do away with cable television and look for a less costly option. There are less expensive alternatives when your retiree want to have fun, for instance, he/she can visit renowned sites like the town hall.
3. Reducing the costs of the retiree's debts
With your retiree’s tight budget, making payments for debts owed can be a real uphill task. As a caregiver assisting folks who have debt, you should be aware of these methods:
1. Debt "snowball" method
This debt repayment method advocates dealing with the minor debts first. Make a list of all the debts that your retiree has in ascending order. Then every month after they have paid all the necessary expenses, not forgetting each debt's minimum amount, channel the remaining amount to the smallest debt. After they have finalized paying that debt, deal with the next debt in line until they have exhausted the list.
2. Debt "avalanche" method
This approach recommends that your retiree first take care of the debt with the steepest interest rate. Make a list of all their debts in order of the least interest rate to the highest.
Then start from the top, paying off the debts that have a higher rate and work their way down. Despite this strategy being hard to maintain at first, with time, they’ll start saving lots of money.
3. Debt “savvy” method
The Savvy debt payoff method is a specific approach that combines both the snowball and avalanche method. By combining both methods, the Savvy method allows your retiree to reap the psychological benefits of the snowball method, but it also provides interest savings that the Avalanche provides.
4. Other methods
In case your retiree are at an advanced age and are disabled, there are specific regulations and plans that might assist their with the debt. For example, there are limitations though for garnishments. Federal law requires that twice the amount they are receiving monthly in disability income remains exempt from wage garnishment.
Planning for the retiree's future
It doesn't matter if your retiree is 85 years old or 55. What is crucial is to keep the future in mind. Let’s go through some things that will help them plan for their future.
Work with a budget
Even as we tackle issues of reducing spending and how to live on less money, it is vital to keep some money for a rainy day. Having money saved somewhere that they can use when they want but they don't have to actually need to use it is one of the best feelings ever.
You can begin by deducting all your retiree expenses from their assured earnings every month and find out what remains. Then, put a certain amount of money every month and try to maintain the savings challenge. The amount can range from $10 to as high as they can manage. Help the retiree budget for those unexpected expenses that may arise.
Hire a money coach
The world of finance can be intimidating especially if you don't have some professional guidance. Find some financial experts with a broad knowledge of financial matters and learn from them.
Whether it is the retiree's family member, a colleague or even a professional financial advisor, it is fine as long as they get invaluable financial advice. But make sure that they settle for a coach whose personal finances are commendable and with the willingness to teach them.
Lastly, help the retiree understand that saving isn’t about forbidding themselves from a celebration that they might deserve. After all, you have worked hard, reduced expenses and stuck to budgets, all to save money and there is no harm in acknowledging the steps you have achieved.
Ben Tejes is a writer for Ascend and Saved by the Cents that provides financial tips and resources to help people achieve financial freedom. His passion to help seniors specifically with their finances resulted in seeing elderly folks struggle with debt as they enter their golden years. In his free time, he likes to go on adventures with his wife and two young daughters exploring the bay area.