How To Solve Poverty In Seniors – A Look At Causes And Solutions

Poverty affects every age group, but it is a particularly significant problem for seniors. One of the challenges it that seniors are often on a fixed income. This limits the amount of money they have access too and there is often little potential to earn more.

To make matters worse, seniors often face significant unexpected costs.

In this post, we’re highlighting key causes of poverty in seniors looks like, along with ways to make things better.

Causes of Poverty in Seniors

Poverty can occur for many different reasons. Sometimes people simply face a bad combination of circumstances that they could have done little to prepare for. Even so, there are many preventable causes of poverty too. Being aware of these can help caregivers and seniors to plan for the future, and ensure that they avoid the poverty trap.

The areas below are some of the main preventable causes of poverty. While there are many other potential causes, this list can act as an effective starting point.

1. Healthcare Costs

Healthcare is one of the most unpredictable expenses, as people never know what they’re likely to need. A sudden fall or the diagnosis of a previously unknown condition can lead to substantial unexpected costs.

Having good insurance doesn’t necessarily prevent this from happening.

Insurance basically protects you from the full costs of your healthcare bills, but you often still need to pay some of the costs. The amount you need to pay can often be significant, especially if some treatments were expensive or if some were not covered by insurance.

Some plans also have high deductibles. This means that the patient needs to pay a significant amount themselves before their insurance kicks in.  

The statistics are concerning. One study found that people with Medicare paid an average of around $38,500 for their medical care in the last five years of their life alone.

2. Long-Term Care

Seniors will often need more than visits to the doctor and occasionally the hospital. Ongoing or intermittent long-term care often becomes essential as people age. In many cases, living on one’s own simply isn’t possible.

However, long-term care isn’t covered under Medicare. Most insurance plans don’t support it either. Those that do may not have the coverage that people need or expect.

To make matters worse, long-term care costs can add up quickly.   

3. Housing

Housing is one of the biggest expenses that most people face, especially seniors. For seniors, housing can take up around 34% of their household budget.

While some form of housing is essential, many seniors may be living in a housing situation that is unrealistic for their income level. For example, the senior may be living in the house that they raised their children in. While the decision can be important for sentimental reasons, the house will often be too expensive and/or difficult to maintain.

4. Scams

There are many scams out there and they’re not as easy to avoid as we would like.

In truth, scam artists are clever. They find out what works and they keep focusing on that. They will often tweak and refine their techniques to get the best possible outcomes.

Many scams specifically target seniors, focusing on common needs and desires, while also taking advantage of brain changes that can make seniors vulnerable to scams.

5. Not Planning

Sometimes the problem is as simple as not doing any financial planning. For example, some seniors may not change their spending patterns when they retire – or the changes they do make may not be dramatic enough.

It’s not enough to look at current needs either.

Some seniors may have a good balance of spending versus income – until their situation changes. Such changes can often occur suddenly. For people who don’t plan and have minimal savings, even just the need to replace an appliance can create significant financial challenges.

What Caregivers and Seniors Can Do

Poverty can seem like an overwhelming problem. There can sometimes be ways to get a person away from the problem entirely, such as significantly increasing their income. But, in most cases, the solutions are small rather than large.

This isn’t a bad thing.

Small changes can have large impacts. They often add up in unexpected ways. Besides, small changes are often easier to implement than large ones. The approaches below are all ways that you can reduce the challenges of poverty and help your family member get the most out of their financial situation.

1.  Talk About Finances

The first step is to simply have a conversation (or conversations) about finances. We’ve written an article on doing so before and the exact approaches will vary depending on your situation.

Key steps include starting conversations as early as possible, before there are significant signs of problems, and being respectful. Attempting to railroad your family member will rarely ever work, but they may be open to working with you, especially if you don’t focus on blame and don’t assume that they are incompetent.

If having this type of conversation sounds difficult or impossible, you could look at books on difficult conversations, like the one below:

2. Use a Financial Advisor

Financial advisors offer a powerful way to improve a person’s financial situation. They often have knowledge that you simply won’t, such as extra ways to improve income or approaches that can decrease the bills that a person pays.

When focusing on this area, try to find a financial advisor for seniors. Someone in this position may know more about the specific needs of seniors and the resources that are available.  

3. Find Tax Help

In a similar vein, tax help for seniors can be a way to decrease costs. Some people will be paying more tax than they need to. The right assistance can provide information that you wouldn’t have found on your own.

4. Keep an Eye out for Scams

There are two main ways to protect seniors from scams.

The first is education. Teaching seniors how to use technology, along with the common signs of a scam, can help to keep them safe. After all, many scams do follow similar patterns.

The second area is paying attention as a caregiver. This means keeping an eye out for signs that a senior is being scammed, such as:

• Unexplained changes in financial practices
• Unpaid bills, especially when they are regular bills
• Increases in unsolicited phone calls and sweepstakes-like newsletters. Both can be an indication that the senior is on multiple mailing lists
• Sudden unwillingness to talk about finances, even in trivial areas
• Indications that the senior is stressed or afraid

Looking out for such signs is relevant even if your family member seems fully competent. Even highly intelligent people fall victim to scams from time-to-time. There are also some specific cognition challenges that can make seniors particularly vulnerable to scams.

5. Look for Discounts and Shop Around

There are many senior discounts out there. Some of them are widely advertised, while others aren’t. Discounts are an easy way to decrease costs without changing what a person does or the products that they buy.

Shopping around is also important. Products are sometimes much cheaper in some places than in others, especially if there are discounts to be had. Such approaches can even help to decrease medication costs.

You may also find that some brands are less expensive than others.

Swapping brands won’t always work, as there is often a significant quality difference between products. Still, that isn’t always the case. Some of the time, the less expensive brand is just as good.

6. Decrease Expenses

Reducing costs is an important way to improve a person’s financial situation. There are many ways to do so, including the following:

• Have a spending account. It’s often useful to know how much money is available for spending and how much is allocated to bills. Having a seperate account for spending can help in this area. The process often decreases spending too, as we become more hesitant to spend money when there is little left in an account.
• Get rid of the car. Driving is often important for independence, but cars are expensive. Seniors who live in an easy-to-navigate neighborhood may be able to forgo the car altogether – focusing on alternatives like biking, walking and public transport. Alternatively, households with multiple cars may be able to get rid of one.
• Lower the power bill. Steps like relying on blankets rather than heaters and avoiding air conditioners can all help to decrease the electric bill.
• Use annual payment methods. If possible, paying for a service annually is a good money saver. Companies often provide discounts for doing so. However, this is only worthwhile if you can plan effectively and always have the money when it is needed.
• Buy things second hand. Many items, like clothing, books and DVDs, are expensive new and easy to find second-hand.
• Look into assistance programs. There are various programs that can offer financial assistance, such as the Supplemental Nutrition Assistance Program (SNAP). Some programs exist on the federal level, while others are local only. These programs are seriously worth researching, as they can make a large difference to a family’s financial situation.  
• Consider needs versus wants. It’s worth seriously evaluating what a person needs versus what they want. Sometimes we end up paying for a service simply because we always have – without realizing that we could easily do without it. The process of evaluating and re-considering choices can be a powerful way to cut down bills.

Once again, you can turn to books for advice too, like the one below:

7. Downsize

Seniors often live in larger homes than they need. This is especially common when the house was the place that they raised their family. Leaving such an environment can be difficult.

Yet, living in a large house can be expensive. There may be a mortgage to worry about, while the house will also cost more to heat and cool. Maintenance can be expensive too, as there are more things that can break.

Large houses can even be dangerous in some situations. Keeping the place clean and tidy may be more than the senior can safely do, especially if they have significant physical limitations.

Downsizing is a good way to decrease the financial and practical pressure of housing. Many seniors do thrive in smaller living spaces, including those who didn’t like the idea initially.

There are also many affordable housing options for seniors. Finding the right one can take time and effort, as can the application process. Even so, making such a transition is powerful from the financial perspective.

Focusing on minimalism at the same time can be helpful, as this gives seniors a way to decrease their possessions without stress.

8. Consolidate and Repay Any Debt (+ Avoid More!)

Getting out of debt isn’t always easy, especially for people who have little money. Even so, prioritizing debt repayment is critical.

One way to do so is debt consolidation. This can take multiple individual debts and lump them together. The process can make the debt easier to pay off and reduce the risk of fees for missed payments.

Just make sure that you read the fine print for any such plan. Debt consolidation isn’t useful if it makes your debt more difficult to manage.

It’s also important to avoid debt.

A particularly relevant way that seniors get into debt is through mail order catalogs and some online catalogs. These often provide credit that can be used for purchasing and/or the chance to pay off the purchase price over time.

The idea can be a good way to buy Christmas presents and the like, but it’s very easy to spend too much or to make purchases too often.

Some Words of Caution

Money is often a loaded subject. This is particularly true in the context of caregiving. Many seniors won’t appreciate what feels like an intrusion into their personal affairs. They might feel like you’re treating them like a child or that you have no right to be involved in their finances.

Treading carefully is important. Plan how you are going to talk to the senior about their finances. How can you do so in a constructive manner? It’s often good to focus on the idea that you want to help them, rather than suggesting that you want to control them in some manner.

There are some other important aspects too:

Be Reasonable

Taking a heavy handed approach in this type of situation is rarely effective. No adult is going to like the idea of their finances being monitored and controlled. Some practices, like providing an ‘allowance’, may make the senior feel that they are being treated like a child.

This makes it important to consider your approaches carefully.

Remember that hardly anyone is as good with their finances as they would like to be. Most of us make some impulse purchases even when we are trying to be careful about money.

Besides, having treats from time-to-time is important for mental health. It’s important to find ways to work these into the budget.

Have Respect

People have different financial priorities and there’s nothing wrong with this. For example, you might find that your family member spends money on something that you consider trivial and easily removed from the budget. Yet, that same thing may have strong emotional significance for them.

This is a key reason for involving the senior in each step of the financial planning process. You don’t just need to ask for their opinions, you also need to respect those opinions. After all, you’re working with somebody else’s finances. At the end of the day, they’re the ones with authority and they’re the ones who need to live with the decisions that are made.

Unless the senior is mentally incompentent, there is no reason to shut them out of the process. Doing so is likely to damage the relationship between you and your family member – and offer few financial advantages.

Know Your Limitations

Finally, it’s important to remember that you won’t always be right. In some cases, there may not be a right answer. In other cases, your family member may simply know more than you.

After all, seniors have a considerable amount of experience. They have lived a life that involved significant financial responsibility. Many will still have all of the skills and the knowledge that they need. Perhaps all you need to do is give them a nudge in the right direction. Sometimes you might not even need to do that.

Final Thoughts

Honestly, we could talk about finances and poverty all day. There is so much information out there and many people struggle to find good solutions for themselves and for their families.

While simple solutions may be difficult to come by, this post has highlighted a variety of individual steps that can be taken and areas that can be considered. Such approaches can sometimes have large impacts, making life much easier and ensuring that all needs are met.

It’s also simply important to take your time.

Don’t rush into financial decisions for yourself or for your loved one. Research the available options, talk to your family member and work together to find the best solutions. Doing so is the best possible way to improve the situation in the long-term.