Life after age 60 can revolve around retirement – but that’s not the only financial struggle that’s likely to come up.
Many older consumers also have problems navigating debt payments, understanding their loans and recovering from financial scams, among other issues, according to a new report from the Consumer Financial Protection Bureau (CFPB). The federal consumer watchdog analyzed the complaints it has received from people 62 and older since the bureau was created in 2011 to highlight some of the most common issues.
Here’s what they found, along with some feedback from Cindy B. Stevens BS, PDMM, CSA of Personal Financial Solutions on what people can do if they face these situations.
1) Just like the younger generation, many of the older generation struggle with debt.
Some seniors are carrying more debt into retirement after years of helping or supporting children and grandchildren, instead of saving for their own retirement. Learning to say “No” is sometimes a very difficult thing to learn. The move to fixed income can generally make it more difficult for retirees to cope with debt payments and to continue to support a younger generation that perhaps is not out of the house by the time retirement age rolls around.
Some Seniors turned to credit cards after facing an unexpected financial shock, such as a large medical bill, the CFPB report found. Others may still be paying off their mortgages, student loans or spending on grandchildren. It can be difficult to not buy every item they want for their family. Spending from a predetermined cash allowance instead of using credit cards helps to set a budget limit when purchasing gifts. With credit cards, if consumers think they may start to fall behind on payments, they should contact their lenders to see if their loans can be adjusted. A daily money manager or credit counselor may also be able to help them come up with a budget or make suggestions to consolidate credit cards within the banks the Seniors already bank with.
2) They face complications with reverse mortgages.
Reverse mortgages — in a nutshell — are loans that allow an owner to tap into the equity in their homes and delay repayments until he or she dies or sells the house. Homeowners taking out reverse mortgages are generally still required to pay property taxes and homeowner’s insurance. Some reverse agents will create “set aside” accounts with funds from the closing equity set aside to pay the annual tax and insurance bills. People who fall behind on those payments may be at risk of facing foreclosure and losing their homes. This situation can come up for seniors who struggle to keep up with monthly bills if the income they receive from the reverse mortgage is less than what they expected, or if the set aside is not created during the mortgage processing procedures. There are steps to follow to use those set aside funds which are the homeowner’s responsibility to follow but they are not that difficult to follow.
3) Some Seniors have difficulty recovering from scams or identity theft.
Seniors frequently filed complaints if they had a hard time correcting errors on their credit report or disputing unauthorized purchases on their credit cards, according to the CFPB report. Many consumers said in the complaints that they weren’t sure about which steps they should take to find a solution. Consumers should check their statements regularly to scan for unusual charges and catch fraud early, says Cindy Stevens. Obtaining free credit reports 3 times a year on a regular basis is a great habit to get into and keep. These can be obtained from AnnualCreditReport.com.
4) There’s confusion over banking products and fees.
Many of the complaints filed by older consumers were related to confusing charges on their bank and credit card statements. In some cases, consumers spotted subscriptions or services that they don’t remember signing up for, a sign that they may have been enrolled in unwanted add-on services when opening an account. Other times, consumers had a hard time understanding how interest charges worked on their credit cards, according to the report. The findings are a reminder that consumers should check their statements regularly to look for unusual charges and to make sure that their cards are not being used by others who may have copied the number and are using it online.
5) There are challenges managing finances after the death of a spouse.
The loss of a spouse can create financial challenges for the surviving wife or husband, particularly if that person was not used to managing the finances. Many of the older consumers filing complaints with the CFPB said they had difficulty gaining access to certain assets, such as savings accounts, even after providing the necessary documents. Some people who had taken out reverse mortgages also had trouble staying in their homes if the agreement was in the deceased spouse’s name, according to the report. Some people may need to seek the guidance of a financial professional who can help them create a budget and learn the skills they need to independently move forward. Having separate credit cards where each spouse is the primary on their own account is a good idea. This way, after the other spouse passes, the spouse who is remaining will still have a working credit card which shouldn’t be revoked due to the passing of the primary cardholder. Also having both spouses on all utility bills can make the transition easier during an emotional time of passing.
Having a real, unemotional discussion with responsible family members, preferably the future Personal Representative (current name for previously called Executor/Executrix) about updating Wills, Medical directives, Durable Power of Attorney and Medical Power of Attorney papers. Ensuring all financial holdings have current beneficiary designations and are generating distribution of required minimum distributions, if they are required, is a must for the Senior community. This discussion should include creating a list of all financial institutions where the Senior has holdings, insurance policies, safe deposit boxes and where originals of important end of life documents are.
To sum it up, getting old is hard!
Getting old and not being prepared for it can really be devastating for the Senior and the loved ones left behind to make sense of everything in the midst of their grief over their loss of a loved one. The knowledge and assistance of professionals trained to assist in daily money management can be a God send for those trying to relax into their golden years or those who woke up one day and can’t figure out things got so complicated. For assistance in finding a Daily Money Manager in your area, click here for the American Association of Daily Money Managers website. There you can search by zip code for a professional in your area.
Written by Jonnelle Marte, published in The Washington Post June 2, 2017 with clarifications and updates by Cindy B Stevens BS, PDMM®, CSA® of Personal Financial Solutions.
