Seniors & Savings

1. Seniors & Savings The National Economics Department Financial Freedom Campaign NAACP

2. Spotlight on Seniors • While 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.

3. Tips to Simplify Your Life • 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

4. Tips to Simplify Your Life • 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.

5. 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.

6. How to Simplify Your Life IV. 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.

7. Maximizing your Income Taking advantage of community resources can cut expenses and help you save money The 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)

8. AVOIDING SCAMS • Protecting your assets • Never reveal your bank account numbers or other personal information to someone who calls you on the phone • Neverallow 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 • Neversign contracts that have any blank lines in them. Someone may later add clauses that could harm you • Neverarrange for a home loan until you’ve had a knowledgeable third party review the contract.

9. AVOIDING 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!

10. 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

11. 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

12. 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 youowe 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.

13. 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)

14. 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

15. Resources • National Council on Aging www.ncoa.org/ • Understanding Reverse Mortgages www.aarp.org/revmort • Loan Modification Scam Alert www.loanscamalert.org/