The National Economics Department

Financial Freedom Campaign NAACP

Seniors & Savings

Spotlight on SeniorsWhile everyone could use some extra help

getting their financial affairs in order, this may be especially true for senior citizens who may face special challenges and decisions involving money management later in life.

This presentation is meant to serve as a resource for the elderly in our communities.

Tips to Simplify Your Life

I. Using technology to increase convenience and minimize risk

Have your Social Security Benefits, Pension Payments, and other Income automatically deposited into your bank account every month

Authorize your mortgage payments, utility bills, insurance premiums, and other recurring charges to be automatically deducted from your account

Telephone banking allows you to use your touch-tone phone to confirm that checks or deposits have been cleared, to get your balance, or to transfer money

Also consider online banking and bill pay which is equally as convenient and secure or an account that combines various into one account

Tips to Simplify Your Life

II. Update Your Will and Other Legal Documents

– Some matters may be handled as part of your will.– Others may involve having or updating one of the

following:• a “durable power of attorney” (authorizing someone to

handle your finances, property or other personal matters if you become mentally or physically incapacitated),

• a “living will” (instructions about future medical care if you become ill and are unable to communicate your wishes)

• a “health care power of attorney” (designating a family member to make decisions about medical treatment.)

– You may want to hire an attorney specializing in elder law or estate planning.

Tips to Simplify Your Life

III. Carefully Discard of Old Account Info

- Determine when it is appropriate for you to throw away financial documents.

- Shred any document that contains a Social Security number, bank account number or other personal or financial information.

- Dispose of proof of old bank land brokerage accounts, life insurance policies and other assets you no longer own or clearly mark them as being sold or cashed in.

How to Sim

plify Your LifeIV. Organize and Protect Your Documents

- Make sure that Social Security, Company Pension records and other personal and financial papers are in a safe place and easy to get to.

- For most important documents, such as wills, passports and birth certificates, seal them in airtight and waterproof containers to prevent water damage.

- Consider renting a safety deposit box at your bank for certain papers that could be difficult or impossible to replace such as birth certificates and originals of important contracts.

Taking advantage of community resources can cut expenses and help you save moneyThe following is a list of programs for which you may qualify:

•Rental Assistance for low income seniors- visit HUD.gov•Low Income Energy Assistance Programs•Prescription Drug Assistance Programs•Supplemental Nutrition Assistance Programs (formerly food stamps)

Maxim

izing your Income

AVOIDIN

G SCAMS

Protecting your assets• Never reveal your bank account numbers or other

personal information to someone who calls you on the phone• Never allow strangers to come into your home and take

information about you and your assets• Never assume that a stranger who says he/she

represents a deserving organization will use the money you give him for a good purpose• Never assign power of attorney to people that you don’t

know very well• Never sign contracts that have any blank lines in them.

Someone may later add clauses that could harm you• Never arrange for a home loan until you’ve had a

knowledgeable third party review the contract.

AVOIDIN

G SCAMS

Reverse Mortgages otherwise known as Equity Conversion Scams are on the most common types of mortgage FRAUD that seniors tend to fall prey to!

Reverse Mortgages

A Reverse Mortgage is a home loan that you do not have to pay back for as long as you live in your home.

It can be paid to you in one lump sum, as a regular monthly income, or at the times and in the amounts you want.

The loan and interest are repaid only when you sell your home, permanently move away or die

Reverse Mortgages Cont.

Eligible Homeowners: All homeowners must be at least 62 years old At least one owner must live in the house most of

the year

Eligible Homes: Single family, one- unit dwelling Two-to-four unit, owner-occupied dwelling Some Condominiums, planned unit

developments of manufactured homes NOTE: Cooperative and most mobile homes are not

eligible

Reverse Mortgages Cont.

How do Reverse Mortgages Work?

Most Require no repayment for as long as you live in your home

They are repaid in full when the last living borrower dies, sells the home or permanently moves away

Because you make no monthly payments, the amount you owe grows larger over time.

You continue to own the home, so you must pay the property taxes, insurance , and repairs. If you fail to pay these, the lender can use the loan to make payments or require you to pay the loan in full.

Reverse Mortgages Cont.

Costs of Reverse Mortgages The costs for loans from banks and mortgage

companies usually include the following: Application fee Insurance Origination fee Monthly service fee Closing costs Interest

These costs are usually added to the loan balance (what you owe)

Reverse Mortgages

Pros: Basically a cash advance on

your home equity The amount you can

borrow is based on interest rates, your age, and the value of your home ( there are no credit or income requirements)

Lenders aren’t allowed to close on a federally insured reverse mortgage until borrowers meet with a HUD approved counselor.

Cons: Easy to fall prey to

misleading marketing practices and fraud

YOU MUST keep up with your property taxes and insurance bills – OR YOU COULD LOOSE YOUR HOME!

The up front costs are high (Generally $10-$15k) and these fees are added to the amount you can borrow

The younger you are when you take our a reverse mortgage, the longer compound interest will grow and the more you owe

Resources

• National Council on Aging www.ncoa.org/• Understanding Reverse Mortgages

www.aarp.org/revmort• Loan Modification Scam Alert www.loanscam

alert.org/