Growing older can be a joyful, graceful period of life, especially when the fruits of one’s labor can finally be picked and savored. For many, the ultimate goal is the dream of riding off into the sunset of retirement and relaxation. However, that dream can quickly spiral out of control into a financial nightmare.
Seniors are surrounded by financial risk caused by seismic shifts in the globalized economy, the rapid advancement of technology, the proliferation of bad actors, and unprecedented economic uncertainty.
Additionally, seniors are more likely to lose spouses and close friends in their advanced age, causing further struggles in managing their finances, avoiding debt, and warding off scams and identity theft.
Here are a few of the top financial risks confronting seniors:
It’s common for older couples to divvy up roles and responsibilities with hard and fast lines. For instance, managing finances likely fall onto the plate of one member of the household. So, if an elderly spouse passes away, every aspect of financial management can spin into disarray and confusion. Accessing accounts, paying bills, and understanding the full scope of one’s financial situation all get lost in the shuffle. That’s why elderly couples should consult with financial professionals who can offer valuable guidance and support to the bereaved, overwhelmed, and unaware.
Scams and Identity Theft
Scamming is on the rise, targeting older, unsuspecting people susceptible to false authority and sophisticated schemes. Seniors are typically less computer savvy than younger demographic groups, making navigating the shark-infested waters of financial scamming and identity theft challenging. However, there are protective protocols seniors can implement to counteract scams. Regularly checking accounts for suspicious activity, disengaging from solicitous calls as a rule, and working with financial planners and professionals to bolster financial defenses are all effective strategies.
Reverse mortgages can be a great way for seniors (62 years and older) to establish a line of income or credit from their home equity. These Home Equity Conversion Mortgages (HECM) make sense for some but should still be approached with caution and due diligence. Reverse mortgages can cause seniors to give up equity and future borrowing power and can lead to foreclosure in worst-case scenarios. It’s imperative for seniors to fully understand the terms and conditions of reverse mortgaging their homes before going through with it.
While retiring without debt is the ideal situation for seniors, it rarely works out that way. The average debt held by 65+ seniors is around $105,000, which paints a far different picture than the common expectation of debt-free retirement. Now, with fixed incomes and rising interest rates, seniors can find themselves in a financial pinch late in life. The good news? Credit counseling agencies, budgeting professionals, and other financial consultants can walk seniors through their options and toward greener pastures.
Complicated Banking Products
The mass digitization of daily life continues at a brisk pace, leaving many in its unforgiving wake. The endless sea of applications, tools, accounts, usernames, passwords, and emails can leave seniors’ heads spinning, causing them to disengage altogether. Cryptic line items on account statements can easily avoid detection while subscriptions unwittingly stack up behind the scenes. That’s why seniors must run audits on their financial workflows, mapping out applications, accounts, and subscriptions to get a bird’s eye view of their finances.
Making a Case for Life Settlements
Given all of the risks outlined above, capitalizing on a life settlement may be a wise move for some seniors no longer needing their life insurance policy. With that said, no two financial situations are the same, which is why interested parties should speak to professional life insurance policy appraisers.
Policy Appraisals employs a proprietary appraisal process that uses a mix of current industry pricing methodologies and 30-plus years of experience. We provide a fast and efficient way to identify the secondary market value of existing life insurance policies for life insurance agents and settlement professionals.
Reach out to our team at Policy Appraisals today!