Savings tips for seniors

August 9, 2009 7:28:00 AM PDT
During these tough economic times, some seniors have lost their retirement savings or realized they didn't save enough and are now running out of dough. Robert Sagar, president and founder of The Senior Financial Center and author of "Financial Success for Seniors" joined us with tips. Why is it important for seniors/retirees to understand that they're in the preservation and distribution phase of their lives? Not the accumulation phase!
Unlike someone who is 30,40 or even 50 years of age. Their concern is the accumulation of assets and the amount of risk they take is greater. Once someone is retired obviously the risk they want to incur is much less. They make a shift from accumulation to preservation. The issue here is that the senior might still rely on the company, individual or institution that provide advice for them while in the accumulation years of their life. This could eventually harm them.

Why is distributing income necessary and how do you make it work?
When a senior or retiree needs income it is vital to use models that do just that. Here is where many seniors run the risk of out-living their money. "You cannot take income out of moving parts" i.e. stocks, mutual funds, etc. In order to distribute income it must be taken from instruments designed to do that. Case and point, if income is coming out of a basket of products, stocks, bonds, mutual funds etc., and the market goes up and down and income is taken while market is on a down swing it makes it that much more difficult to recoup principal.

How do seniors leave more money to their grandkids?
First we know that we can gift ever year $13,000 to as many people as we choose. My feeling is that if you're healthy and are able to insure your life you can always pass more on to your grandchildren by doing so.

If seniors invest their money, how safe can it really be with the economy the way it is, when they're only receiving 1% interest with the banks?
Banks have what is called "A bankers profit spread." They understand that once they have your money in a CD, you'll keep it there for a long time. With that said, there are so many resources out there to do better. Insurance companies provide an array of different instruments today. However, I believe that we live in such a product centric society that it's not necessarily the product but when you create financial concepts and models your able to do better things with your money reduce taxes and accomplish certain objectives that no one ever brought to your attention.

How do seniors make a trust? Why is it important? How is it different from a will?
You would normally have a trust drafted by a lawyer. It cancels out all the unexpected and does what you want it to do after your demise. A will goes into effect when you die and a trust not only goes into effect when you die but should you become incapacitated as well. Trusts provide for the what- ifs, where a will is black and white and can take time and money to settle.

Contact Info: The Senior Financial Center: 1.800.618.1825 or visit