Finances are different after retirement. Weekly paychecks get traded in for monthly Social Security, pension and retirement fund payments. Meanwhile, for those who are traveling or trying out new hobbies, expenses may go from predictable to irregular.
In the face of these financial changes, is it time to switch banks? “When you retire, it’s a good opportunity to reevaluate your financial products and institutions,” says Matt Fellowes, founder and CEO of United Income. Seniors who left their bank accounts on autopilot during their working years now have extra time to consider their options. While not everyone needs a new financial institution after retirement, some could benefit from making a switch.
[See: How to Pay Less Tax on Retirement Account Withdrawals.]
Senior accounts might not be the answer. Some banks have accounts specifically designed for senior customers. These may waive fees or offer additional interest to older individuals. Avoiding fees can be a boon for those living on a limited income. “One of the biggest wasters of finances is unnecessary fees,” says Will Crosswell, market manager for Ardent Credit Union in Oaks, Pennsylvania. But retirees shouldn’t assume a senior account is automatically a better choice than other banking options. Compare the interest rate and fees to accounts that are offered to customers of all ages.
[Read: 5 New Taxes to Watch Out for in Retirement.]
Look for convenient locations and personalized service. Banking innovations such as online banking and mobile deposits aren’t always helpful to older customers. “A lot of the seniors I work with don’t even know how to use a computer,” says Heidi Friedman, an elder law attorney with the firm Becker & Poliakoff in Fort Lauderdale, Florida. Rather than technological features, convenient locations are a top priority for many seniors. Those who will be traveling or splitting time between two homes may need to switch to a national institution with numerous locations if they want to do all their banking in a branch.
However, someone who will be staying in one location may be better served by a smaller institution that offers a more personalized experience. “Smaller banks have more concierge services,” Friedman says. Smaller institutions can offer a more intimate atmosphere where people can easily talk to a real person about their accounts and other financial matters. “As members, they can come in for a free [financial] consultation at any time,” Crosswell says about Ardent Credit Union.
[Read: Year-End Retirement Planning Deadlines for 2017.]
Don’t overlook fraud and account security. Seniors may like to have a personal connection with a banker, but they need to be careful. Not everyone has their best interests at heart. The situation gets even worse for seniors who develop a mild cognitive impairment. “That population is particularly vulnerable to fraud as they get older,” Fellowes says.
To keep their money safe, seniors may be inclined to make one of their children a joint owner on bank accounts. Friedman warns against doing so because that child could go into bankruptcy, have an accident or otherwise be liable for damages, and money in a joint account could be legally tapped to pay those obligations.
Still, it is crucial for seniors to have someone watching over their finances, particularly as they age. Friedman suggests naming a durable power of attorney. That person can monitor for potential fraud without actually being an account owner. Although a child may be the logical choice as a power of attorney, a better option may be a geriatric care manager, other relative or friend, if a child is known for making questionable decisions.
There’s no reason seniors have to change banks after retirement, but they also shouldn’t overlook the opportunity to see if their money could be better kept elsewhere. “When people feel more like a number and less of a person, it might be time to change,” Crosswell says.
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Do You Need to Change Your Bank After You Retire? originally appeared on usnews.com
