Financial Sages Weigh In On What Seniors Should Be Doing With Their Money

There’s a lot of advice out there from financial experts about what seniors should do with their money. And there should be, after all, from a financial perspective, going into senior life can be one of the most challenging times. You have to think about your investment portfolio, your maturing annuities, how you’ll finance life in retirement, how you’ll pass on your wealth in the future, and the money you should be putting aside for healthcare.

Because of all these complexities, we’ve put together a curated list of financial advisors and experts, giving their opinions on what seniors should do with their finances. Let’s take a look.

Don’t Overallocate Stocks

Bob Klosterman is a senior partner at a wealth management company. Over recent years he’s seen an investing trend among seniors away from bonds and CDs to stocks, thanks to the low rates of interest in the bonds market. Because retirees should be saving for the long term, Klosterman doesn’t think that this is a good idea. Bonds tend to go up in value no matter what, whereas stocks jump and bounce around all over the place, making returns unpredictable. Back in 2008, millions of retirees lost vast amounts of wealth, primarily because they had bet on the stock market, and their bets hadn’t paid off.

As Klosterman points out, a market decline of just 20 percent means that it has to rise by more than 33 percent to just break even. If you do invest in the stock market, Klosterman’s advice is to keep some money in cash so you can ride out the storm should there be another crash in the market.

Think About Life Insurance

Life insurance is a financial tool that people can use to make sure that their families continue to be looked after once they’re gone. Essentially, you pay the life insurance company and they agree to pay out upon your death a certain sum of money to family members. Getting life insurance without the exam, however, can be difficult. Insurance companies want to know whether you are in good health, or whether your health is failing you. According to Chris Walter of Policy Genius, having a life insurance plan alongside your will is essential for making sure that your family is well looked after when you’re gone. Your children should know where the plan is and how to activate it, should the worst happen.

Get A Medical Improvement Plan

One of the biggest concerns for seniors right now, according to Whitney Lee, an analyst at a finance firm, is the rising costs of health care. Health care costs are now double what they are in most developed countries and still rising fast, despite attempts to curtail prices. At the moment some health care is available to seniors through Medicare, Lee points out, although the amount of cover that seniors qualify for is usually very limited. She suggests that seniors look into Medical improvement plans which don’t cost any additional money up front. These plans are mostly helpful for seniors who require ongoing cardiovascular care, people who have diabetes or those who have chronic illnesses that typically push up the price of their bills. The great thing about these plans, Lee says, is that they cover the costs of some of the most expensive and long-running medical conditions.

Balance Your Portfolio

Thanks to the fact that seniors are living longer into retirement than any generation that came before them means that planning is now more important than ever, according to Eric Nelson, chief financial officer at a wealth management company. Nelson says that elderly people will need more long term investments to provide a longer period of income while in retirement. He suggests using two particular approaches to accomplish this. The first is to put a substantial proportion of assets into low-risk assets. This includes things like government bonds, gold and physical plant. These assets should be short-term, says Nelson, to protect investors against sudden crashes in the stock market, allowing them to get at their money in case of an emergency. The second tactic, he recommends, is to maintain a lifelong commitment to nurturing a broad base of global stocks using index funds. Although the market is prone to crashing, Nelson points out that the stock market has a track record of producing real returns on investments over the long term.

It’s important that seniors regularly review their financial position and make sure that their portfolios are working for them. There are various pension income calculators and tools online that allow you to see how much income you are likely to receive as a result of your various pension plans and investments.