Financial Assistance for Senior Citizens
One of the best things about aging is the wisdom you accrue over the years.
One of the worst things? The debt you are bound to accrue.
According to a 2016 study done by the Employee Benefit Research Institute, nearly half of families with heads-of-households over 75 reported having debt. That is a 60% increase in a decade, and a lot of seniors are in need of debt relief.
Paying back debt was not part of the vacation plan when you imagined your golden years, but one-third of Americans over the age of 55 have less than $10,000 in savings for retirement. For them, life-long debt is more than likely.
However, you are never too old or wise for some frugal financial advice, which is what you’ll need to get the most out of retirement.
Social Security Income
Retirement benefits from Social Security will cover only one-third of your living expenses. Social Security was never meant to be your sole source of retirement income.
According to the Bureau of Labor Statistics, the average retiree over the age of 65 spends over $46,000 a year or almost $4,000 a month. The average Social Security retirement benefit for 2019 is $1,461 a month, or $17,532 a year.
That’s a pretty substantial gap. What the average person gets in benefits will cover the cost of housing, which the BLSBLA charts at $15,838 a year, and not much else.
Other forms of Social Security can also bolster your income, such as:
- Supplemental Security Income is available for seniors over the age of 65 with disabilities and limited resources.
- Social Security Disability Insurance is for anyone suffering from a disability who has worked in jobs covered by Social Security.
- Survivor Benefits are benefits paid to the widows or survivors of a worker who has died. The benefits can be paid to a spouse, child, or parent.
Government Programs for the Elderly
Use government programs to bridge the gap between your expenses and income. There are senior specific government programs available at the local, state, and federal levels.
Three of your major expenses after retirement will be housing, food and healthcare.
Here are just some of the programs available to seniors nationwide that can help cut those costs.
The U.S Department of Energy’s Weatherization Assistance Program modifies the appliances in your home to make them more energy efficient. The average household saves $283 a year on energy.
Preference for eligibility is given to people over the age of 60, and families with one or more members with a disability.
Utilities and general maintenance are things you’ll have to deal with even if you’ve paid off your mortgage.
The section 504 Home Repair Program provides a grant of up to $7,500 to senior homeowners to repair damages that are deemed hazardous to safety and health.
If you’re having trouble with rent, look into the Housing Choice Vouchers Program. Formerly known as Section 8, this program provides subsidies to low-income families and the elderly to help pay for rent.
You don’t need to be a sage to know that seniors spend more on healthcare than any other age group. But just how much they spend often comes as a surprise.
Approximately 40% of retirees report that their health care expenses in retirement are higher than they expected, according to the Retirement Confidence Survey done by the Employee Benefit Research Institute.
Retirees over the age of 75 spend 15% of their budget on healthcare. Here are a few programs designed to aid seniors with the cost of healthcare:
Medicare is the primary healthcare subsidy for seniors and it comes in three parts.
Part A, which covers hospital stays, is free if you have paid Social Security for at least 10 years.
Part B covers outpatient services, like doctor visits and rehabilitation. The premium for part B is $135 a month, with a deductible of $185 a year. After meeting the deductible you’ll usually pay 20% of the Medicare approved amount for most outpatient services.
Part D covers the costs of your prescriptions. The monthly premium for Medicare Part D in 2019 is $33.19.
If you’re struggling to pay your premiums, you may qualify for a Medicare savings programs.
If you qualify for Social Security and have limited resources, here are a few savings programs that can help:
- Qualified Medicare Beneficiary (QMB) Program
- Specified Low-Income Medicare Beneficiary (SLMB) Program
- Qualifying Individual (QI) Program
- Qualified Disabled and Working Individuals (QDWI) Program
The limit in countable resources for QMB, SLMB and QI is $7,731. The limit for QDWI is $4,000.
Countable resources include money in a checking or savings account, stocks and bonds. They do not include your home or personal belongings.
About 20% of Medicare enrollees are also enrolled in Medicaid. Medicaid is a health care plan for seniors with very limited financial resources. Eligibility varies by state, but if you qualify for SSI, you should also qualify for Medicaid.
While the BLS shows on average you’ll be spending less on food when you retire than any other time in your life, you’ll still need to eat. Here are some programs designed to help seniors pay for food:
The Supplemental Nutrition Assistance Program, better known as SNAP, helps low-income seniors with groceries by providing monthly stipends. To qualify you must show proof of limited income and resources. The maximum gross monthly income is 130% of the federal poverty level, which is $1,353.
Another important program to help the elderly with food costs is the Seniors Farmers Market Nutrition Program (SFMNP). The SFMNP provides low-income seniors with coupon booklets to be used at participating farmers markets and food stands. These coupons are to be used for fresh and organic produce. You cannot use them for canned or dried goods.
But if canned yams are more to your liking, The Emergency Food Assistance Program (TEFAP) can help. TEFAP provides a variety of foods to low-income households, like canned and fresh fruits and vegetables, along with meat and dairy products.
If you qualify for SNAP, there’s a good chance you qualify for TEFAP, but you should contact your state distributing agency to be sure.
A job can add some extra income while also alleviating some of the boredom you may be experiencing since retiring.
According to a Stanford study titled, “The Power of Working Longer,” only three months of additional work generates the same increase in retirement income as 30 years of saving an additional 1% of earnings.
This means that it may be easier to work a little longer than to save a little more.
For retirees looking to re-enter the workforce, the Senior Community Service Program (SCSEP) pays anyone over the age of 55 minimum wage to work at government or community agencies.
SCSEP provides training for a variety of jobs from teacher’s aide to computer technician. You can even use the skills you acquired during your work life to pursue other career opportunities.
To apply, visit Careeronestop.org. They can connect you with your local SCSEP office so you can get started on training.
Senior Citizen Financial Planning
Social Security experts recommend living on 70% of your pre-retirement income. So, if you earned $50,000 a year when working, you should be comfortable living on $35,000 a year.
In reality, how much you should save for retirement depends on your lifestyle.
This is how much of your total income you should be spending on housing, transportation, food and healthcare, according to the Bureau of Labor Statistics Annual Expenditure Report.
- Housing – 32.4%
- Transportation – 17.1%
- Food – 12.9%
- Healthcare – 12.2%
These are the four greatest expenses for people over the age of 65. After the age of 75, healthcare costs eclipse transportation, taking up 15.6% of your income, while transportation drops to 13.9%.
To be clear, these are only averages. How much each person spends on each category will vary. You shouldn’t set aside 17% of your budget for transportation if you live walking distance from your usual haunts. Nor should you throw budgeting to the wind for a European vacation just because you really want to see the Eiffel Tower.
If balancing your budget proves too daunting, consider working with a reputable financial advisor or nonprofit credit counseling organization. A credit counselor can review your debts and expenses to help you reach a level of financial stability.
Managing your debts is important no matter what stage of life you’re in. The father of western wisdom, Socrates, said it best with his last words:
“Crito, we owe a rooster to Asclepius. Please, don’t forget to pay the debt.”
Bents Dulcio writes with a humble, field-level view on personal finance. He learned how to cut financial corners while acquiring a B.S. degree in Political Science at Florida State University. Bents has experience with student loans, affordable housing, budgeting to include an auto loan and other personal finance matters that greet all Millennials when they graduate. He has a prodigious appetite for reading, which he helps feed with writing from Scottish philosopher Adam Smith, the “Father of Capitalism.” Bents writing also has been published by JPMorgan Chase, TheSimpleDollar and Interest.com.
- Bronshtein, G, Scott, J, Shoven, J, Slavov, S. (October 2017). The Power of Working Longer. Retrieved from: https://siepr.stanford.edu/system/files/John%20Shoven%20-%20The%20Power%20of%20Working%20Longer.pdf
- Copeland, C. (March 19, 2018). EBRI Research Finds that Despite Some Signs of Recent Improvement, Debt of the Elderly Remains Higher than for Prior Generations. Retrieved from: https://www.ebri.org/docs/default-source/ebri-press-release/pr-1204-debt-19mar18.pdf?sfvrsn=733a342f_2
- Foster, Ann. (March 2016). A closer look at the spending patterns of older Americans. Retrieved from: https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm
- Huddleston, Cameron. (January 16, 2019). Survey Finds 42% of Americans Will Retire Broke — Here’s Why. Retrieved from: https://www.gobankingrates.com/retirement/planning/why-americans-will-retire-broke/
- NA. (April 24, 2018). Retirement Confidence Survey. Retrieved from: https://www.ebri.org/docs/default-source/rcs/1_2018rcs_report_v5mgachecked.pdf?sfvrsn=e2e9302f_2