I collect all my tax records in a bucket along with any other documents that I might need for the previous year.
Most old people I know keep their tax records in various piles in various places complete with envelopes. (Why individuals save envelopes, I don’t know.) The main filing place is usually the kitchen table where they are moved around at meal time and frequently fall on the floor. As a result, they can’t find anything when it comes time to file. Remember, a good trash can is invaluable to an old person.
Record keeping is simple for most old people who don’t have a business.
- A bucket in which you throw all relevant bills, bank statements, social security statements, credit card statements, tax refund notices, mortgage statements, etc. NO ENVELOPES!!!
- If you need something, sort through the bucket.
- At the end of the year you take last year’s tax return, or a copy, remove the staple and note all the blanks that contain information. ie social security income received.
- You go through the bucket and paper-clip each item to the relevant part of last year’s tax return. All charitable contributions are paper-clipped to the charitable contributions section; all income 1099 forms are paper clipped to the income section.
- You fill in the current years information in red pen on last year’s return.
- You track down the information for the items that you don’t have documents for. ie a missing 1099.
- You add the items in the bucket that don’t appear on last year’s return if they are relevant.
- You take last year’s tax return with all the documents attached to your tax preparer, or you fill out the new return with the information.
- You put a new label on the bucket, add a copy of the 2017 tax return and forget about it until the end of 2018.
- You file the return and attach last year’s return with the paper-clipped documents attached to your copy of this years return and put it in a safe place in case you are ever audited.
The result is all the information is in one place and you, or your children or guardian, can instantly access whatever is needed for the previous year. If you are audited, everything you need to support your return is attached to your copy. If you die, your heirs can simply go the bucket and get needed information.
“Seventy-Five” may be a senior’s financial tipping point. You have memory lapses, don’t think as clearly and worry more, or worse, don’t worry at all about financial matters. Financial planners are targeting you, beady eyes glistening in the darkness. And, of course, deep down, you are beginning to realize that you don’t trust your own decisions; and, really don’t know whom to trust. Your financial life, like the rest of your life, has become uncertain and confusing.
You need to automate. A few suggestions:
- Direct deposit social security, pensions, dividends, rents and other income.
- Automatic payment of regular bills, using a credit card or your checking account. Pay gas, electricity, water, mortgages, taxes, rent, car payments, insurance, church pledge, long-term care premiums and credit cards on-line. Pay anything you can automatically.
- Have a geriatric mentor. A trusted person (kid) who will receive copies of all financial documents and who can monitor for suspicious activity, receive late or termination notices, and who can generally track your financial old age.
- Periodic alerts:
- Tax filing deadlines – accountant
- Property taxes – mentor, mortgage company, accountant
- Long-term care insurance – mentor – You don’t want to default on this.
- Minimal number of accounts
- One credit card
- One debit card
- One brokerage account
- One bank account
- Index funds
- Cash account
- Contacts – you should have habits that alert people when you don’t participate
- Mail carrier
- Senior Centers
- Regular social get-togethers
- ie “Have you seen the geezer recently?”
- Monthly review of accounts, etc. by mentor or trusted person.
- Hire a property manager if you own rental units; direct deposit of rents and copies of statements to mentor.
The bottom line is that you can change any of these depending on your level of competence and how you feel about dealing with financial matters. The point is that your survival should be automatic if you don’t feel like dealing with it. You should not have to think about the basics; your financial health should be based on checks and balances.
Outsource is a business term whereby certain activities are contracted out to other businesses or individuals. The reason is that the task can be done cheaper, safer or better by another and it allows the outsourcer to focus on its primary task.
This can be applied to old age. At 75, due to physical and mental problems, it may be cheaper, better and safer to have certain tasks outsourced. It may even turn out to be life-saving if you decide to climb a ladder and clean the leaves out of the gutters instead of hiring it done.
At 75 you need to think about what you can outsource and what you can do yourself.
Ten things that you might consider outsourcing:
- Anything that requires a ladder, a stool or standing on the couch to fix.
- Medical advice
- Paying bills – you can outsource with automatic payment plans, an accountant, or a kid.
- Legal advice
- Charitable donations
The list is not complete. You should modify it according to your needs. Old people are stubborn. They think that they are more competent than they are. They think that they can still do things, that they can’t do. The result is that they frequently injure, kill or bankrupt themselves when with a little outsourcing they could continue to live happy, productive lives.
The most important part of outsourcing is KISS. (Keep it simple, stupid.)