The landscape of retirement has changed. Gone are the days of one-size-fits-all financial planning. Today’s older adults are active and energetic while technology has changed dramatically in their lifetime.
Strategies to keep your money safe include sound financial planning, preparing for unexpected health care costs and staying vigilant to avoid loss of money to scammers.
None of us knows what the future holds for our health. Purchasing a long-term care insurance policy helps pay for the cost of care whether a person receives care at home or at assisted living or skilled nursing facilities, said Alona Anspach, managing director at Sheridan Road Financial in Northbrook. Self-funding this type of care leaves your investment assets vulnerable to depletion.
There are two caveats, she says.
• Buy the policy when you are young and healthy. Most consider this type of coverage between the ages of 50 and 70. The insurance companies will not offer you a policy once you develop medical conditions.
• Protect against a policy lapse by adding a trusted family member or friend to receive a policy lapse notice if the senior forgets to pay the premium. The insurance company gives an extra 30 days after the notice goes out to collect the premiums, thus saving this important coverage.
Jim Platania Sr.
In addition, seniors should have a durable power of attorney in place in case they should become medically incompetent during their lifetimes, says Jim Platania Sr., founder of Platania Financial in Arlington Heights. This remains in force even after one becomes mentally incapacitated and ends automatically when one should die or revokes it by notifying the attorney-in-fact in writing, he said.
There are also financial aspects to think about when trying to protect your retirement savings.
Zachary A. Larson
“One of the most important planning strategies to utilize is to segment funds,” said Zachary A. Larson, founding partner of IntentGen Financial Partners in Naperville. “Most people think in terms of a ‘rainy day’ fund for emergencies, but when you’re retired, it’s all mostly accessible money so you don’t need as much in pure savings,” he said.
It’s even more important, though, to segment dollars that you know you’ll need and make sure you plan ahead to get them out of the market and to work with your accountant to monitor marginal tax brackets and Medicare income limits (large withdrawals can make you pay more for Medicare), Larson said.
Keep in mind that financial institutions and government agencies will never ask for your personal details or password in an email, said Michelle Johnson, vice president at Byline Bank. “Make sure you change your passwords often and avoid using the same password for multiple accounts,” she said, adding that you can use a free password service like Dashlane.com, which will encrypt and securely store all your passwords for you.
Johnson also suggests to closely monitor bank and credit card statements.
“You should also check your credit reports at least once a year. Many credit card companies also offer the ability to check your score more
frequently. If you see a significant drop in your score, you should check the full report,” she said.
A little precaution and financial education can go a long way for seniors wanting to keep their money safe, suburban financial experts agree.
The internet presents one of the greatest risks. Most seniors are now online. As of 2018, nearly 66 percent of Americans 65 and older were internet users, according to a Pew Research Center survey. That number is growing as the internet provides a way to read news, stay in touch with family, get medical information, shop and renew prescriptions.
Some seniors are also going online to meet new friends, find old friends and participate in online dating. Like all powerful tools, the internet and mobile technologies come with some risks, said Anspach of Sheridan Road Financial.
“The frequency of scamming seniors is well documented in the media and at financial institutions,” she said.
Jim Platania Jr.
Caution is key. Watch out for unsolicited phone calls or emails that ask for money, regardless of how good of a reason the caller gives, says Jim Platania Jr. of Platania Financial.
Often, scammers have you believe that a family member owes money that needs to be paid immediately. A popular email or telephone scam is “Grandma, I need money for bail,” Platania said. The caller will say it’s urgent and may ask you to keep it secret. Scammers are good at pretending to be someone they’re not and they’ll use information from social media sites to make them appear more credible, he added.
Another pervasive type has a scammer poses as a relative traveling outside of the country in desperate straits needing money, Anspach said. “I personally have known two people who sent $10,000 to that supposed relative in trouble,” she said. It’s money forever lost made more painful by shame victims often experience.
Another popular scam is someone offering to fix your computer once you’ve clicked on a “look alike” website for many of the top sites, such as Amazon, Anspach said. “They take over your computer and charge you to ‘fix’ it. That scheme has huge financial consequences associated with it, she added.
While experts agree there are probably no foolproof ways to avoid all these scams, Anspach recommends that seniors ask for the person’s name and phone number so he or she can pass it to the specialist who handles those matters. Usually, a scammer will then hang up. Another option is to add an inexpensive identity theft coverage to your homeowner’s or renter’s policies that reimburses the cost of repair people who help navigate these problems.
Be careful of online dating scams, warns Jim Platania Sr. “Many people in search of companionship may lose their sense of judgment only to find out they have been scammed.”
Online dating is popular but be careful of entering into a relationship that leaves you heartbroken and with a financial loss, he warns.