Changes in spending, reverse mortgages, can help older Americans weather inflation
FARMINGTON HILLS, MI (May 13, 2022) — Each year in May, Older Americans Month celebrates older Americans and their contributions and heightens awareness about issues related to age and aging. In the U.S. today, there are more than 54 million residents ages 65 and older, many of whom are on fixed incomes with limited savings, for whom the current financial landscape is taking a toll.
A 2020 NIRS study found that 40% of Americans rely solely on Social Security for their retirement income. And, four out of 10 older Americans cite debt (medical, housing, credit card, even student loans) as a current priority.
So, what happens when inflation – currently at a 40-year high – strikes those on a fixed income, causing higher prices for food, gas, utilities, healthcare, and housing?
Kristen Holt, CEO of GreenPath Financial Wellness, a nonprofit that provides financial counseling and debt management resources, says there are some things all individuals can do to stretch an already tight monthly budget.
Take a critical look at spending. Questions individuals should ask: are you actively retired or have healthcare expenses replaced your discretionary spending? Are you able to take care of the essentials — housing, medicine, food, utilities? While social security payments are adjusted each year for inflation, cost of living adjustments (COLA) – the highest since 1982 – may not be enough to offset increasing costs such as Medicare Part B healthcare premiums. Now might be the time to revisit, postpone or curb large purchases, travel, or other discretionary expenses.
Shop smart at the grocery store. It’s important to plan your meals and grocery list. Many stores now offer grocery pick-up as an option, giving you control over your purchase list, allowing you to know your total before you go, and limiting in-store temptations. Stocking up on staples and using coupons can also help you save money. Purchasing less meat and visiting local farmer’s markets during the summer months can reduce your overall spending while maintaining variety in your menu.
Leverage available federal, state, and local assistance. Programs such as 211.org, food banks, and other local services are designed to help those in need. In addition, the National Council of Aging’s “You Gave, Now Save” guide can help you find public and private benefits for seniors related to healthcare, prescriptions, food, housing, utilities, tax and legal support, and more.
Downsize or consider a reverse mortgage. The two most significant expenses for seniors are healthcare and housing. It may be the time to sell your home, purchase a smaller house, or relocate to a less expensive area. Downsizing allows you to not only cut the cost of your mortgage or rent, but also lower utility costs, property taxes, and insurance. A reverse mortgage — which allows people over the age of 62 to borrow against their homes — is also an option. GreenPath has seen interest in reverse mortgages nearly double in the first two months of 2022, said Holt. With this option, seniors can choose to take funds in a lump sum, line of credit, or through structured monthly payments. It can be a sensible option for seniors with sufficient income to cover basic expenses, including property taxes and insurance, who want to stay in their homes.
Holt stresses the importance of checking on older family members, friends, and neighbors. If you or someone you know feels overwhelmed with monthly expenses or debt, is concerned about losing your home, or is unsure how to manage your finances, it’s important to seek help.
Non-profit organizations such as GreenPath provide free financial counseling sessions and can take a holistic view of your finances and help you make a plan tailored to your situation. Contact GreenPath at 866-648-8122 or visit www.greenpath.org.
About GreenPath Financial Wellness
As one of the largest financial counseling agencies in the nation, GreenPath Financial Wellness has assisted millions of people with debt and credit management, student loans, homeownership and foreclosure prevention. Headquartered in Michigan, GreenPath and its affiliates work directly with individuals, banks, credit unions and employer partners across the U.S. from more than 33 locations and through phone access and online tools. GreenPath is a member of the National Foundation for Credit Counseling, Michigan Diversity Council, Texas Diversity Council, and is accredited by the Council on Accreditation. To learn more, visit www.greenpath.org or call 866-648-8122. Follow the nonprofit on Facebook and Instagram @greenpathfinancial and on Twitter @GreenPath.