Financial Stress Coping Guide for Seniors
Financial stress peaks in the 40s when adults typically have a range of colliding pressures placed upon them – families, mortgages, loans and so on. 45% of people in their 40s suffer from financial stress. However, while it declines as we get older, it remains high with 31% of people over 50 stressed, and 19% of those over 70. For those over 50 and especially those over 60, financial pressures produce unique situations not found in younger age groups – income drops with retirement and financial options become more limited; especially long term ones such as mortgages. Creating a successful coping strategy for financial stress among older citizens requires knowing the causes, the consequences, and finding coping methods that work for you. This guide aims to outline these basic points.
The Causes of Financial Stress
Each case is different, every person’s situation is unique, but together there are common patterns in terms of sources of financial stress. In the U.S. the largest two are produced by cashflow issues and health. According to the Federal Reserve 51% of financial stress in those aged over 40 came from job losses and reduced wages – naturally this number drops as people get older to just 24.6% for those over 70. Healthcare costs came second, here’s the full list:
- Job Loss/Reduction – 51%
- Healthcare – 29.5%
- Other – 21.6%
- Unpaid Taxes – 12.7%
- Divorce/separation – 8.2%
- Bankruptcy – 6.7%
- Foreclosure notices – 5.7%
For those over 60, wage reduction falls to 44.2% while healthcare rises to 36.3%. Interestingly, divorce, unpaid taxes, and bankruptcy peak for people in their 40s, while foreclosures peak for those over 70. Along with loneliness and poor health, these are the leading causes of stress in older adults.
Long and Short Term Consequences
Stress, regardless of its cause, will manifest itself in different ways depending on the person. Some common signs of stress include:
- Chest pain and rapid heartbeats
- Low energy
- Susceptibility to colds and infections
- Loss of desire
- Upset stomachs
The American Institute of Stress has created a comprehensive list of 50 symptoms which also include teeth grinding, forgetfulness, nervous habits, defensiveness, and anxiety. Over a long period of time this can lead to serious problems for the heart and blood vessels, meaning strokes and heart attacks are far more likely, while a weakened immune system opens the body up to infections.
In terms of behavioral consequences, stress drives people toward less healthy lifestyle habits whether it is alcoholism, smoking, drug taking, or consuming unhealthy food. Surveys have concluded a strong correlation between older adults suffering from stress and increases in these activities. It must be noted that in terms of smoking and alcohol consumption, both increase more often among men than women.
Needless to say, it is vital to find better ways of coping with financial stress than destructive patterns. While these patterns are destructive no matter the age, their effect on older adults is increased as the body is less able to adapt and repair itself. This means that long term effects are heightened and made more likely should nothing be done about the situation.
Coping Strategies for Stress
The solution to these problems can be broken down into two areas – first, dealing with stress and how it affects the mind and body, then second, dealing with the financial situation itself (see below). There are hundreds of websites, organizations, counselors and psychologists offering different advice on how to deal with stress. All are vying for your custom and it can be difficult to know what to do. The most important first step is to understand yourself and what has helped you cope in the past from a psychological point of view be it meditation or going for a long walk. Here are some methods to consider:
You might have to cut back on expenses, but make sure your diet is filled with good, healthy food including fresh vegetables and fruit. A well balanced diet keeps your body healthy and helps breed positivity.
Working out and doing things is good for the soul. While this is more limited for seniors, it is possible to get out more, go for a walk or get some fresh air.
Even if it’s black humor, find amusing aspects, or try ‘positive reframing’ of setbacks. It does not hurt to watch a few favourite comedies either.
Practice calming techniques such as long walks, meditation, massages, spas, whatever helps you calm down but isn’t destructive.
Whether professional, or from family, it helps to be able to talk about the problem and get comfort from loved ones.
Whether it is making a list of the positives in your life or listing successes in your path to better finances, make sure you keep the positivity flowing as even a little can breed more over time.
If in doubt, seek professional advice from your medical practitioner and also from counselors and psychologists who will do their best to find out which coping strategy works best for you. We are all unique people and there’s no one size fits all solution.
Taking Steps to Solve the Financial Issues
The second part needs to start with a problem-focused de-stressing strategy. This can be broken down into 4 basic stages and is a strategy implemented by most organizations and companies when dealing with their own financial or other problems:
1. Analyze the situation – find out all of the financials including income, expenditure, liabilities, future potential changes etc…
2. Draw up a Plan of Action – this can include limits on spending, means of increasing income, lifestyle changes etc..
3. Implement the plan – keep to it as much as possible.
4. Review the plan – is it working? Has the situation changed? What’s not working? Once you’ve worked this out, make changes and return to stage 3. Review regularly.
This might not work for everyone however. For many people understanding the entire financial situation is the first step in solving the problem even if at the time it feels like it’s creating more stress. Without awareness of the situation, it will become more difficult. The plan should focus on the situation as it is without major changes. You might not see how this helps, but then you can research other financial solutions, some of which are specific to senior citizens. Here are some strategies to consider:
Maintain a careful budget with new, more realistic goals. This not only helps make nesteggs last longer, but may free up more money to pay off debts and reduce your burdens.
Consider New Income Streams
What can you do to grow your income? Can you get a new job, start a business, offer consulting – after all, you have 40+ years experience, and so on. There is plenty of help out there for seniors wanting to start their own businesses.
Cutback on Generosity
Might sound harsh, but if you’re struggling for money, it’s not good for your health to keep giving money to the kids or grandkids. Protect your money if things are tight.
Moving to a smaller property means you will be able to raise money from splitting the difference in values, this may pay off the debt and provide you with additional income over a sustained period. Selling up and moving in with the family is also an option if they are open to it.
It’s important to protect yourself from cognitive decline which can set in in the 60s and keeps going. It’s good to attend courses and keep the brain active with puzzles and other activities.
Throughout their lives, you’ve been there for your children. It’s hard to do, but it is good to ask them for financial help.
Specific to elder citizens over the age of 62, the reverse mortgage requires at least 40% equity in the home. The equity is then freed up and the financial company will pay the homeowner monthly installments which reduce the equity, but provide the owner with a steady income to deal with other financial pressures. Read more here or calculate how much you can receive.
Talk to Your Bank
Many banks have specific policies and services for seniors. Not only that, they want to work with you for your best future (and theirs). This means they will help you roadmap the best possible future and will offer plans and deals to make it workable.
Do consider expert advice when dealing with stressful financial issues. Most companies and lenders want to create a sensible roadmap for getting their money back, so work with them and other agencies to make it realistic without causing too much stress and anxiety. Follow some of the simple advice above and get professional support wherever possible.
How Do You Cope?, UCLA
Insights into the Financial Experiences of Older Adults: A Forum Briefing Paper, The Board of Governors of the Federal Reserve System
Nauert, Rick, Money Stress May Drive Older Adults to Alcohol, Smoking, Psych Central
Palmer, Kimberly, 11 Money Tips for Older Adults, US News – Money
Stress Effects, American Institute of Stress
Trick Your Stress: Coping Strategies, Centre for Studies on Human Stress (CSHS)
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