Financial Planning for Elderly
Planning financially for your retirement is important. Here we provide a guide to help you on your way.
Retirement is like opening a new book. It is filled with endless possibilities and new experiences. However, to truly enjoy this chapter of your life, there’s a critical component we must address: your financial well-being. Without the regular pay-check you have leaned on for years, how do you effectively manage your finances? How do you ensure that your savings, investments, and assets align with your dreams and needs? This guide jumps into these concerns, offering seniors a roadmap to financial clarity and confidence in their later years. As always we recommend that you get professional financial advice, as this only provide some general considerations.
Current Financial Position
Evaluating Assets: Understanding your current assets is the foundation of smart financial planning. This isn’t just your savings account; it’s everything of value you own. Your house, any additional real estate, vehicles, jewellery, and even valuable collections—these all count. Compile a list. Know what they are worth. This gives you a clear picture of what you have to work with, financially speaking.
Assessing Debts: Debts are the other side of the financial coin; mortgages, car loans, credit card balances. Knowing exactly what you owe, and to whom, helps you better allocate resources. Make a list of all your debts, the interest rates on them, and their due dates. Compare this to your assets to understand your true financial standing.
Retirement Income: Understand your income you will earn in retirement. This could be things such as Superannuation, Kiwisaver payouts (one off or drip feed), rental returns (if you own a rental), wages, various other government benefits and many more potential incomes.
Retirement Expenses: Consider all the essential (housing, food, health) and discretionary (travel, cafes, gifts etc) expenses that you are likely to have.
Knowing both your assets and debts gives you a good understanding of your financial net worth. Knowing your income and expenses you can get an understanding of whether you can afford retirement in the way you want to retire. This view allows you to set priorities, build a budget, and make informed choices that fit your lifestyle and future goals.
plan for financial success
1. Prioritise Debt Repayment:
- High-Interest Debts First: Focus on paying off high-interest debts, such as credit card balances. These can erode your savings quickly if left unchecked.
- Consolidate if Possible: Explore options to consolidate debts into a single, lower-interest loan. This can simplify repayments and potentially save money in the long run.
2. Create or Adjust Your Budget:
- Allocate Resources: With a clearer understanding of what’s coming in and what’s owed, allocate funds to essential expenses, like housing, utilities, healthcare, and food.
- Plan for Discretionary Spending: Determine what’s left for non-essentials. This might include travel, entertainment, or gifts for grandchildren. Remember to live within your means.
3. Establish an Emergency Fund:
- Safety Net: If you don’t already have one, set aside funds for unexpected expenses. This will prevent you from accruing more debt in emergencies.
- Determine the Amount: Typically, it’s recommended to have 3-6 months’ worth of expenses in an easily accessible account. Given the uncertainties in senior years, leaning towards a larger fund might be prudent.
4. Review Investment Strategies:
- Risk Tolerance: As seniors, it’s often wise to adopt a more conservative investment strategy to protect your principal. Ensure your investments align with your risk tolerance.
- Income Generation: Shift focus to investments that provide regular income, such as dividends or interest, to supplement your retirement income.
5. Plan for Future Costs:
- Anticipate Large Expenses: This could include healthcare costs, home repairs, or support for family members. Make a plan to address these without significantly impacting your day-to-day living.
- Long-Term Care: Consider the potential need for assisted living or other long-term care facilities. Explore insurance options or set aside funds specifically for this.
We recommend that you contact a financial advisor for planning your retirement. We have listed a number of financial advisors that can help elderly people.