FDIC Financial Education for Senior Citizens
Retirement isn't just shuffleboard and early-bird dinner specials. It means opening a fresh chapter of life, with new challenges and adventures. With a longer life expectancy, one retirement challenge is how to pay for it. All of this adds up to the need for seniors to pay more attention to their finances and investments to make sure they last through retirement. "You really need a strategy to make sure savings last," said Lee Bowman, National Coordinator of Community Affairs at the FDIC.
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To formulate that strategy, retirees need to chat with financial advisors and loved ones about maintaining their financial well-being. But the other component is education. Peoples' finances change when they retire, so they need to think about them differently. That's where the FDIC's Money Smart program comes in. Its modules can help show Money Smart students how they can afford retirement and manage their investments.
"The investment vehicle for one person may be different from one's neighbors," noted Thomas E. Stokes, the FDIC's Community Affairs Officer in Atlanta. "Each of us has different needs, so you must enter that into the equation. Much like purchasing a car, some of us need sedans while others may need a utility vehicle," Stokes pointed out. "In deciding which investment product to use, such as an annuity, you must be an informed purchaser who does comparison shopping." The "Pay Yourself First" section of the Money Smart program teaches retirees ways to save money and the differences between types of savings and investment accounts.
Also important to retirees is the need to protect their money and their credit. Both the "Keep it Safe" and "To Your Credit" modules of Money Smart discuss how to avoid identity theft. The "To Your Credit" module also deals with credit repair (including a checklist of questions to ask when trying to select a credit counseling agency) and credit repair scams.
An efficient way to protect retirees' funds is through direct deposits into a reputable financial institution. "Whether the payments are retirement, Social Security or other benefits, direct deposit is extremely important," said Stokes. "It is easy for thieves to intercept your check – usually at your mailbox." Direct deposit is a positive step toward reducing such theft. Direct deposit is dealt with in the "Bank on It" module as well as in the "Check It Out" section.
It is also important to know what your credit rating is and how to protect it. The Fair and Accurate Credit Transactions Act (FACTA) entitles a person to request a free report from the three reporting agencies by calling 1-877-322-8228 or going to
www.annualcreditreport.com. "It is one of the few times you will have to give out your Social Security number and other personal information when it is not a scam," Stokes noted. The "To Your Credit" module deals with these credit issues.
Financial awareness deals not only with the day-to-day issues, but decisions that will affect retirees' heirs. Take reverse mortgages, for example. They are covered in the "Your Own Home" section of the course. Stokes points out that "reverse mortgages may provide much needed funds, but just be aware of the future impact on your heirs, whether they are your children or others. You do not repay the principal and interest on a reverse mortgage unless you move or sell the home or die, but because the debt has to be repaid, your heirs will get a reduced inheritance or perhaps no inheritance."
Another useful tool for financial educators as well as retirees is the Fall 2005 issue of the quarterly newsletter FDIC Consumer News, a special edition entitled "Fiscal Fitness for Older Americans: Stretching Your Savings and Shaping Up Your Financial Strategies." It is available online at
www.fdic.gov/consumers/consumer/news/cnfall05. The publication may be reprinted without advance permission. In addition, the FDIC offers this special report at the above Web site in a PDF version that looks just like the printed newsletter and can be easily reproduced in any quantity. The back page was intentionally left blank so that an organization could add its name, logo, a special message and/or self-mailing information.
