Debt Can Eat Away At You Over The Years

When I do my workshop on Wills and Estate Planning one of the questions I ask is how can you distribute your assets. The idea of having a will is to help you decide what you want to do with your assets, once you die. I joke and tell people the two best ways to distribute your assets while you are alive is to spend more and to give them away. Most people laugh, but when we get into the more serious part of the workshop, I find that most people want to be in a position to have something to pass on to family or a favourite friend or charity. 

Many of my friends are thinking of the idea of Legacy gifts. One question that is asked often is will my children have to pay off my debts. This is a good question, and one that varies from jurisdiction to jurisdiction, so if you have that question, best to ask an expert in Estate law in your area. If you have debt where I live,  then your executor will have to pay off any debt through your estate, before any legacy or before your beneficiaries receive any money. So it is important to find a way to reduce your debt as a senior.

Over abundance of debt can totally creep up from out of nowhere for many people and when that does occur it can often times be very overwhelming for many. It is so very important for everyone to keep in mind how very important it is to always try and steer clear from too many unwanted debts because all that leads to is stress, stress and more stress, which far too many of us know a little bit about, or maybe even a whole lot about.

If your debt condition is currently driving you up the wall then you already know how devastating it can turn out to be, so make sure even you continue to read throughout this article because you might find it to be very helpful, as well as beneficial to you. Your debt responsibilities will become a priority and you will finally have the opportunity to get yourself and your financial standing on the path that it should be, which is where most of us only dream of ever having it.

It is your responsibility as a senior to start thinking more about the future of yourself and the future of your grandchildren as well, which I am certain most of you already have given thought to. Finding out more about the importance of debt relief will change the way you live your life each and everyday that passes. You will be much more conscious about the different things you are spending your money on, as well as the amount of money you are trying to save each month, if any at all.

Your money should be very helpful to you but if you constantly are finding out that your money seems to be going nowhere except to pay off your monthly debt, whenever you are able to, then perhaps something within your budget could need some improvement, just a little bit. I am hoping that by gathering up enough debt information you will be able to finally get your finances under some sort of control and stop increasing your debt each month.

Debt can be controlled by just making a few small changes in your lifestyle each month and I am not at all talking about anything major that would affect your entertainment each month or fun times with friends. Just slow down and pay closer attention to what is coming out of your wallet and if you can continue this type of responsible behavior over a period of time then you will definitely begin noticing slight changes in the amount of extra money you have each month.

If all else fails, talk to a professional about your current debt condition and there is surely to goodness somebody out there more experienced and knowledgeable than you are, who could really help to turn your world around, by providing you with the same knowledge that they are aware of because of studying it over a period of time throughout life. This knowledge can be a lifesaver and can really brighten the outlook of your future, as well as your children's and grandchildren's future. Good luck.

Some Boomer Humour

 Who says senior citizens don't wear stylish clothes?

During a visit to my doctor, I asked him, "How do you determine whether  or not an older person should be put in an old age home?"

"Well," he said, "we fill up a bathtub, then we offer a teaspoon, a teacup and a bucket to the person to empty the bathtub."

"Oh, I understand," I said. "A normal person would use the bucket because it is bigger than the spoon or the teacup.."

"No," he said. "A normal person would pull the plug. Do you want a bed near the window?"

ARE YOU GOING TO PASS THIS ON.OR DO YOU WANT THE BED NEXT TO MINE?

A short neurological test
 
1- Find the C below. Please do not use any cursor help.

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOCOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOO O

2- If you already found the C, now find the 6 below.

9999999999999999999999999999999999999999999999

99999999999999999999999999999999999999999999999

99999999999999999999999999999999999999999999999

69999999999999999999999999999999999999999999999

99999999999999999999999999999999999999999999999

99999999999999999999999999999999999999999999999

3 - Now find the N below. It's a little more difficult.

MMMMMMMMMMMMMMMMMMMMMMMMMMMMNM M

MMMMMMMMMMMMMMMMMMMMMMMMMMMMMM M

MMMMMMMMMMMMMMMMMMMMMMMMMMMMMM M

MMMMMMMMMMMMMMMMMMMMMMMMMMMMMM M

MMMMMMMMMMMMMMMMMMMMMMMMMMMMMM M

  

This is NOT a joke. If you were able to pass these 3 tests, you can cancel your annual visit to your neurologist. Your brain is great and you're far from having a close relationship with Alzheimer. 

Congratulations!  

Oh, one more test Find the 44th USA President.

Well, congratulations, you're not colour blind either!

Did You Know?

SENIOR CITIZENS ARE THE NATION'S LEADING CARRIERS OF AIDS!

HEARING AIDS

BAND-AIDS

ROLL AIDS

WALKING AIDS

MEDICAL AIDS

GOVERNMENT AIDS

and MOST OF ALL,

MONETARY AIDS TO THEIR KIDS!

To which group do you belong?

According to a study there are five spending groups of retirees’. Entrepreneurs who are ready for this shift, who understand it and cater to the consumer groups will be very successful. Those who don’t pay attention will not do well.

Group 1: Just Getting By

Consumers in this group spend more than 45% of their total expenditure on housing and bills.

Socio-demographic characteristics:

•       Median age 70;

•       More likely to be headed by a non-white, single, widowed or divorced person;

•       More likely to be a renter, either private or social, than an outright homeowner;

•       More likely to be on low income and not receiving income from investments;

•       Furthermore, consumers in this group are disproportionately more likely to live in urban areas

Issues/risks:

Older consumers belonging to this group are less likely to have a family safety net, are more likely to be renters and tend to be concentrated in cities. As a result, as the group name suggests, individuals may struggle to afford day to day essential spending and cannot afford non-essential spending on recreation and holidays. Some individuals in this group are at particular risk in the event of rising rental costs or energy prices.

Group 2: Frugal Foodies

Consumers in this group spend more than 27.5% of their total expenditure on food and non-alcoholic drinks, and over 13% on furnishings and other household equipment (nearly twice the average).

Socio-demographic characteristics:

•       Median age 70;

•       More likely to be a woman;

•       More likely to be on low income, and not have private pensions or income from investments.

Issues/risks:

This group under-consume throughout their lifetime relative to all the other groups identified. Despite having a relatively low equivalised household income they consume a lower proportion of their income than any other group. For this group, longevity insurance may be a solution, but perhaps those in this group are less aware of the options out there and end up under-consuming as a result

Group 3: Prudent Families (1 in 3 families)

Consumers in this group are consistent savers; they spread their expenditure quite evenly on all items, except for restaurants and hotels, which they seem to enjoy more than other groups.

Socio-demographic characteristics:

•       Median age 61;

•       More likely to be a woman, part of a couple and living in a larger household;

•       Have relatively high household income, likely to have private pensions and income from investments.

Issues/risks:

“Prudent Families” are doing well. The only issue they might be facing is

under-consuming, in that they could attain a higher standard of living given their means. However, consumers in this group also spend a lot more money on health than other groups do, and therefore some may be saving because they pre-empt declining health conditions. Having a larger than average family size, “Prudent Families” may also be saving in order to leave a bequest.

Group 4: Extravagant Couples

The “Extravagant Couples” like to enjoy their life and spend nearly 40% of their total expenditure on recreational goods and services.

Socio-demographic characteristics:

•       Median age 65;

•       More likely to be part of a couple, but living in a smaller household;

•       High household income, having income from investments;

•       More likely to own their home outright;

Issues/risks:

“Extravagant Couples” are not savers until very late in life so, despite having relatively high income for most of their lives, there is a potential risk that they could run out of money in later years. For this group, financial advice is likely to be particularly beneficial to ensure that they have the means of meeting their rather more extravagant retirement needs.

Group 5: Transport Lovers

“Transport Lovers” spend a very large proportion, up to 36% of their total expenditure, on transport – including the use of any other costs associated with their own vehicles.

Socio-demographic characteristics:

•       Median age of 61;

•       More likely to be male, part of a couple and living in an average sized

•       household;

•       High household income.

•       More likely to be buying their home with the help of a mortgage than

•       other groups.

Issues/risks:

Given the amount spent on transport right across the life-course, consumers in this group are likely to be spending money on their own cars, rather than public transport which older people may get concessions on. A potential risk for them is that health problems and disability in older age might prevent them from travelling as much as they might like to the detriment of their quality of life. Despite having high income, they do not spend as much of their income as the “Extravagant Couples”, and indeed consistently save during retirement

People in retirement save more and consume less

An interesting study (pdf file) out of Britain, shows that most people in retirement end up as net savers. Consumption in retirement starts relatively high and ends low. This pattern is common to both high and low-income groups, is robust to the inclusion of factors other than age and is not simply the result of the time period in which the data was collected. Subsequently, households make substantial savings in later life. Now, of course, not all older people are savers, a significant proportion does not save and hold debt, but the vast majority of older households (77.1%) put something away at the end of the week.

This mirrors the behaviour and attitude of my friends and I. Consumption is something I do, but I am not into buying the latest and greatest or newest of things as I was when I was younger.

The survey data demonstrated that consumption does indeed fall as people age and this is true even after accounting for other factors and time periods. But what type of consumption do older people forego and how does this change during retirement?

The Living Costs and Food Survey collects detailed information on the amount of money households spend across twelve different groups of goods and services. The information was split into two broad categories of essential and non-essential items. In the essentials category are:

•       Food and Non-alcoholic Drinks;

•       Clothing and Footwear;

•       Housing, Water, and Electricity;

•       Health Expenditure;

•       Transport.

In the non-essentials category are:

•       Alcohol and Tobacco;

•       Recreation and Culture;

•       Restaurants and Hotels;

•       Communication;

•       Education;

•       Household Goods and Services;

•       Miscellaneous Goods and Services.

As people get older, they spend an increasingly larger share of their total expenditure on essential goods and services, with a parallel reduction in the share of nonessentials. This has huge implications for business as we are still in the phase where 10,000 Boomers a day are retiring. With their retirement comes a shift in consumption and a change in where entrepreneurs should be looking for the next niche.

The decline in consumption during retirement is explained by reduced spending on non-essential items while expenditure on essential items remains relatively flat. There are both potential positive implications and potential negative ones stemming from this. On a positive note, at least essential spending does not fall by much, the majority are still able to purchase the same quantity of essential goods and services that they were able to before.

If older people do not consume, this can ultimately help exacerbate the economic problems caused by population ageing. According to the consumption smoothing hypothesis, people who are middle-aged are the big savers readying themselves for leaving work, while those of older age consume their accumulated wealth.

However, we know that older people do not always consume as might be expected and this can limit economic output. Excess savings are not always a problem, assuming there are sufficient investment opportunities to put those savings to good use, but if there aren’t sufficient opportunities this can spell economic trouble.

In his analysis of what went wrong in Japan, economist Paul Krugman argued that individual savings were too high relative to the economy’s investment opportunities. More specifically he wrote:

“Japan, like the United States only much more so, is an aging society. Thanks to a declining birth rate and negligible immigration, it faces a steady decline in its working-age population for at least the next several decades while retirees increase. Given this prospect, the country should save heavily to make provision for the future […] and it does. But investment opportunities in Japan are limited, so that businesses will not invest all those savings even at a zero-interest rate. And as anyone who has read John Maynard Keynes can tell you, when desired savings consistently exceed willing investment, the result is a permanent recession.”

The populations of many advanced (and developing) countries are growing older while many of their older people are continuing to save in later life. Unless we a) understand how to convert these savings into investment opportunities or b) stimulate greater consumption amongst older people, it could be argued that countries that don’t do this might experience similar economic