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Top 12 Ways of Financial Support for Seniors

Posted on: 04th Nov, 2007 11:59 pm
A stress-free retirement is something most seniors look forward to and flow of cash as and when required can help them achieve it. Be it their day-today expenses, health-care costs or retaining the lifestyle they have maintained so far, there are options that can serve every purpose and help seniors have a relaxed and fun-filled retirement life.

Here's a round-up of the top 12 Ways of Financial Support for Seniors.

1. Social Security

It's a federal benefit offered to qualified individuals who have been paying taxes into Social security while at work. The benefit replaces 40% of a wage earner's monthly income.

2. Supplemental Social Security Income

If social security isn't enough to serve your needs, you can supplement it with an added benefit - the supplemental income. Seniors who are aged 65 or above and disabled persons can avail such benefits.

3. Retirement Plans

Employee sponsored 401k and 403b Plans as well as Traditional IRAs and Roth IRAs are the ones you can contribute to and build up savings for old age. Even if you are 50 years old, you can start contributing but the contribution limit may be higher.

Traditional IRAs, 401k and 403b plans require you to pay tax on withdrawal. At the age of 70 and 1/2 years, you should start taking out a minimum distribution annually.

With a Roth IRA, you can contribute even after 70 and 1/2 using after-tax dollars. And, under certain conditions of distribution, you may not even have to pay taxes on withdrawal.

4. Self-employed Retirement Savings

Aged persons having their own businesses can accumulate savings through the Keogh plan, SEP-IRAs or Simple IRAs.

Contributions to SEP IRAs are higher than that of Traditional IRAs. For Simple IRAs, the contribution is limited to $13,000 for those aged 50 and above and $10,500 for others (in 2007).

5. Long-term Care Insurance

If you are middle aged or 50 years old, then it's the right time for you to purchase such a policy. This insurance policy covers your long term medical costs such as nursing home care, physical rehabilitation and the like. But you need to pay premium and once it stops, you lose the coverage.

6. Medicaid

This is a long term health-insurance program offered jointly by the Federal and State governments. Mostly people having low income and assets can qualify for it. But there are limitations as far as the coverage is concerned and you may get disqualified under certain conditions.

7. Medicare

Unlike Medicaid, Medicare is a short term care Federal program available to anyone aged 65 or even below it if he's disabled. The coverage includes skilled nursing care for limited period, hospice care and others.

8. Reverse Mortgages

This is a financing option for anyone aged 62 or above wherein one can borrow against the equity in his home. Be it renovating your home or paying for long term care insurance premiums or else nursing home costs, a reverse mortgage can help you in all areas.

The best thing is, you need not make monthly payments except under certain circumstances. When the loan term gets over, either the lender takes away your home, sells it and gets back the proceeds with interest or else your heirs pay it off to keep the property intact.

9. Pull out equity

Those who do not qualify for reverse mortgages can take out conventional second mortgage to serve their purposes. It can be either a home equity loan or a home equity line of credit. The latter works similar to that of a credit card; you can thus get cash for immediate purposes. But unlike reverse loans, there are monthly payments and in case you aren't fit and fail to make regular payments, you may possible lose your home.

10. Endowment Insurance Policy:

You can get a good amount of cash from your endowment insurance policy, if you have applied for one earlier at a young age. Such a policy pays out a lump sum amount after a specified number of years or upon death. But you will have to pay more in terms of annual premiums compared to that on other policies.

11. Annuity:

It's an insurance contract which if purchased will give you a series of periodic payments till death or when the term ends. The money used to buy the policy grows tax-deferred until you start getting the payments.

The cash amount becomes variable when the company invests your funds into bonds and other investment options. The best thing is even if you're 50, you can go for it. Know more...

12. Life Settlement Services:

Those in need of immediate cash, that too, in large amount, can take advantage of life settlement services. It's a kind of financing option which allows one to sell his life insurance policy to investors through brokerages. On doing so, the insured can earn more than the cash amount one can get upon cancellation of the policy prior to maturity or before it is payable upon death.

No doubt, there are various options of financial solution for seniors but they need to understand their requirements and choose the one that best fits into their situation.
awesome post, another one worth printing off. thank you
Posted on: 05th Nov, 2007 05:53 pm
Really a nice post. If we conduct a good retirement policy then that will give us a happy and peaceful retired life.
Posted on: 05th Nov, 2007 09:29 pm
I was really impressed by this one, this writer should be applauded, clap, clap, clap. Great job on breaking it down, giving so many options and putting it into plain english.
Posted on: 06th Nov, 2007 03:36 am
Wow, there are really a lot of options to choose from when working towards your retirement. I need to kown them all to fully advise my senior citizen clients.
Posted on: 06th Nov, 2007 05:19 am
I agree with you Jessica. After all, who doesn't want a stress-free retired life?

It's good that there are wide range of financing options for seniors. Besides, medicaid and medicare and the usual long term care insurance, there are community based programs too.

However, reverse mortgages are indeed an affordable financing option for seniors and with time, it's getting even more popular. Even the government has taken steps to promote reverse mortgages so that more and more seniors can get the benefit out of it instead of increasing the state's burden of paying for senior healthcare programs like Medicaid and the like.
Posted on: 08th Nov, 2007 03:58 am
I don't know enough about retirement, I have mine at work and just assume that it will be enough, along with social security and a veteran's pension, I see alot of people in my same boat doing ok, that reverse mortgage seems scary to me, but it is just because I don't know enough about it. Not old enough to even think about it yet.
Posted on: 08th Nov, 2007 04:49 pm
Hello Jbarto,

It is always wise to plan for the future, specially for the golden years. By the way, which retirement plan have you opted for?
Posted on: 10th Nov, 2007 03:29 am

This is really a great post. I really did not know before that there are so many options available for us after the retirement. May be it is because I have not yet reached that age and have not thought about it. But surely it is always better if we plain before the time passes by. I would like to know more about Endowment Insurance Policy and Life Settlement Services.

Posted on: 13th Nov, 2007 12:52 am
Jessica, i am a lady of 65 years and have health problems. I am being supported by my daughter but you know it's like a burden on her, after all she has to support her family. I didn't know there were so many options to help me survive. thanks for putting the details here. I do have life insurance but i never knew i could encash it before i die. And the reverse mortage i guess is an helpful tool for people like me. I feel like giving a sigh of relief that can now myself look out for funds and don't have to rely on others.
Posted on: 15th Nov, 2007 04:36 am
Hi Chelsea,

It's great if you have got some help from the information I've given. If you have any queries on financial issues, please feel free to have a talk with me here.

Regarding financial tools, the reverse mortgage is indeed an excellent tool. However, there are several options for financial support but what you need to do is, choose the right option for you depending upon your situation. That's all and you'll find things working the way you wanted.

Have a great retirement life :)


Posted on: 16th Nov, 2007 02:02 am
Plenty of financial options there for seniors!

Retirement plans are something which one should opt for when he starts working for an employer and not at a later age in life. He needs to consider his financial situation, tax consequences and then decide upon the retirement plan that best suits him.

Long term care insurance programs are good no doubt but the premiums are quite high, so you need to check that out with your insurance company. I know a few of my relatives who have opted for long term insurance and are paying quite high enough premiums!

I've even found my uncle paying for the premiums using a reverse mortgage. Well, that I believe is a waste of the reverse mortgage proceeds as you could utilize it to pay for other major expenses and purchases. I think Medicaid is even better than a long term care insurance and reverse mortgages are even better.

I was not aware of life settlement services Jessica. Thanks for highlighting such services. It helps if you have a number of least you can decide upon the one you prefer. But if you have limited options, how do you even have no choice but to opt for the one that's available.

Good luck to all seniors
Posted on: 19th Nov, 2007 04:37 am
Awesome post, I pulled it and printed it off and have given it to a few seniors I know.

What great information on medicaid, sometimes the information being put out is really hard for older folks to understand.

I often wondered how the reverse mortgage works, short, sweet explanation that gives me a clear picture.

thanks for a great post, look forward to reading more threads that you have written, going on the hunt now.
Posted on: 03rd Dec, 2007 12:44 pm
Yeah Jbarto, even i printed this stuff for my granny.
Posted on: 11th Dec, 2007 02:07 am
I think you did a great job on this post there is so much information there and it is put out there in plain english, easy to understand and follow, this is a printable post that would be good to post at our senior center, great information for younger people to, we all end up there someday.
Posted on: 21st Jan, 2008 01:05 pm
thanks so much for the post. I really enjoyed and i thought it was really helpful:)
Posted on: 05th Mar, 2008 06:17 am
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