Spend wisely, seniors have tips for managing money

Spend wisely, seniors have tips for managing money (Alberta Times) Elderly people who rely on pension income must live carefully to avoid health problems...

(Alberta Times)

Elderly people who rely on pension income must live a careful life to avoid financial problems if their health problems arise. The Associated Press interviewed personal finance experts and provided the following suggestions for senior retirees to improve their finances in the new year: 1. Develop a budget. If you don't set a budget, you may still be unable to make ends meet even if you think you've saved enough. A specific financial budget should include your monthly expenses and expected withdrawals from your savings account. Bob Stammers, director of institutional investment education at the nonprofit CFA, said: "The more specific your spending and investment goals are, the more likely you are to achieve financial stability." 2. Pay off debt. If retirees "abuse the freedom to swipe their cards", they will inevitably lead to high credit card debt. New York financial planner Michael Kresh suggests that retirees can use time deposits or flexible investment account funds to repay credit card debt, because deposit interest and investment returns are usually much lower than credit card interest. After paying off the card debt, retirees are usually best to use a credit card and pay off the card debt every month. 3. Invest in dividend stocks. According to data from Bankrate.com, the current average interest rate on savings accounts is less than 1%, the highest interest rate on five-year time deposits is 1.95%, and the interest rate on 10-year Treasury bonds is about 2%. In contrast, dividend-paying blue-chip stocks can provide stable dividends and higher returns over the long term from rising share prices. S&P senior analyst Howard Silverblatt said the average return on dividend stocks in 2011 was 2.1%, while blue-chip stocks such as General Electric (GE) and Pfizer Pharmaceuticals returned about 4%. 4. Make a will. Check and modify wills and financial documents in accordance with the new tax laws. Wills and documents should include a will, a living will, a durable power of attorney, a health-care proxy, etc. You can also search for a reliable financial planner on the National Association of Personal Financial Advisors website (http://findanadvisor.napfa.org/Home.aspx). 5. Charitable donations. Without affecting the tax rate, retirees can donate up to $13,000 to their juniors each year. Michael Dribin, a trust lawyer in Miami, Florida, suggests that seniors can purchase a charitable gift annuity. Not only can they donate to large charities, but they can also receive regular returns throughout their lives. 6. Purchase insurance. According to data from the American Association for Long-Term Care Insurance, about one-fifth of those who buy long-term care insurance are over the age of 65, but the earlier they buy, the lower the premium. For a 65-year-old couple, buying long-term care insurance costs about 4,000 yuan per year, but the premium doubles if you buy it after the age of 70. 7. Keep fit and strong. Amy Ehrlich, a geriatrician at Montefiore Medical Center in New York, said that older people should move their muscles more. Walking, swimming or water aerobics can help increase their vitality. Educational games, reading, and volunteering in schools and clubs can help maintain brain power and mental health.