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The Financial Health of Aging Seniors

The Financial Health of Aging Seniors

With our current economic challenges, those of us looking forward to retirement need to be well-informed about our financial needs in coming years. And not only pre-retirees, but individuals already in retirement need to be wise to the changing economic environment. The good news is there are trained professionals who keep abreast of changes in the current economy, changes in laws and changes in government programs for the elderly. Professionals in this field are equipped to handle everything from help with retirement savings accounts, investments advice, guidance on government programs, estate planning or even new funding options such as reverse mortgages. For those already retired, taking time right now to deal with financial problems instead of waiting for a crisis to happen is well advised.

A large number of retired individuals feel that they have planned well for the future only to find that rising medical costs, damage done to investment portfolios (by the current economy) and many other factors have caused them to go into debt. Elderly individuals who are in debt live with a constant burden over their heads. Most of these people are on fixed incomes and have no way of paying off credit cards and home equity loans that continue to mount to cover household budget deficits. In order to meet ongoing payments, seniors often forego purchasing medications and skimp on food budgets. They live like hermits-never going out and pinching every penny-in order to pay their obligations.

Most of these people worked hard their entire lives and managed their debt. They never anticipated the rising costs of prescriptions, expensive medical care or depletion of savings by living too long. Here are just a few examples of some relief options that could be available. There are many more besides these.

Reverse mortgages - A home Equity conversion Mortgages (HECMs), also known as a reverse mortgage, is a risk-free way of tapping into home equity without creating monthly payments without requiring the money to be paid back during a person's lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title "reverse mortgage". For those seniors who are less fortunate financially but own a home, a reverse mortgage can allow them to remain in the home by creating extra income. These are quite costly, so should only be used for vital needs. They are especially appropriate for a person who wants to remain at home, but do not have the income to afford the monthly costs to stay at home.

Life settlements - A life settlement enables older individuals, businesses and other organizations to sell life insurance policies they currently own - but no longer want or need - for an amount greater than the cash surrender value. In some cases the value can be 2-3 times the cash surrender value. Even some term life insurance policies with a conversion option to permanent coverage can qualify for a life settlement.

Government Programs - Some government programs such as food stamps provide temporary financial help for food. Other programs provide subsidized housing, help with medical expenses and provide tax credits. For some veterans there is free health care, inexpensive prescriptions and disability income. Aid and Attendance is a program that can pay for home care for a wartime veteran, including care given by a child. Area agencies on aging offer individual counseling, legal help and advice with Medicare costs.

For some, living on a fixed income and dealing with debt can be an overwhelming burden. There are knowledgeable professionals and debt relief strategies that can assist in easing this burden. The National Care Planning Council keeps a list of financial advisers and attorneys who specialize in this area of planning at www.longtermcarelink.net. It is especially important to plan ahead, because some of the programs for health care at home have conflicting rules, and in trying to satisfy one set of rules may be disqualifying for another set of rules. For example, the Veterans Administration counts a joint bank account between a parent and child as one half the balance, but Medicaid counts it all.

Attorneys Stephen O. and Halley C. Allaire are partners in the law firm of Allaire Elder Law.
Attorneys Stephen O. and Halley C. Allaire are members of the National Academy of Elder Law. Attorneys, Inc.
Allaire Elder Law is a highly respected, and highly rated law firm with offices in Bristol, CT.
We can be contacted by phone at (860) 259-1500 or by email.

If you have a question, send a written note to us and we may use your question in a future column.

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