Life, the saying goes, is what happens when you’re making other plans. Never does that sentiment feel more true than when faistced with a sudden loss of income.
Getting a divorce, losing a spouse or partner, being let go from a job, managing a sudden disability or illness — these are challenging changes, especially as you grow older. But the good news is that you are not alone, thanks to the AARP Foundation MySavingsJar™ community.
MySavingsJar has an active community board, where you can connect with folks facing the same money issues you are, so you can swap stories, share tips and get support when managing your money seems overwhelming.
Knowing where to begin will help you take control of the situation, so we’ve rounded up the most common life changes that cause loss of income and some simple steps you can take to get your life back on track.
Laid off? File for Unemployment.
The recent coronavirus outbreak is causing record unemployment across the country. Each state handles unemployment benefits a bit differently, but in general, you can apply through the labor department or unemployment agency in the state where you worked.
Before you call or apply online, be sure to have your employer’s full address and the dates you started and finished working there. Find your state’s unemployment agency’s contact information here.
In addition to what you can receive in state benefits once you’re enrolled in unemployment, you are eligible for an extra $600 per week under the emergency federal compensation under the CARES Act. Check with your local state agency where you filed for unemployment to apply for this benefit, which is available through July 31, 2020.
If you are collecting social security benefits and lost your part-time job, you may still be eligible for unemployment. Learn the latest on applying for benefits, eligibility, additional stimulus benefits.
Getting a divorce? Inventory your finances.
Divorce after age 50 has become so common that it’s often referred to as a “Silver or Gray Divorce.” Of course, divorce is tough at any age, but a late-life divorce often means partners need to split more complicated finances. To be sure you divide everything as fairly as possible, it’s important to look at the entire financial picture.
The first step is to make a complete list of everything you own and owe together. Include your house, cars, and savings and checking accounts. Even though you are divorcing, you may still be eligible to receive your ex-spouse’s social security benefits during retirement, so it’s important to factor that into your equation, too. Find out more here.
You will also want to list any personal and joint credit card debt, personal loans and student loans. Depending on the state where you live, you can be held liable to pay off any jointly held debt. It also may be wise to request free credit reports for you and your spouse so you have an accurate assessment.
For more pointers, read 5 Tips About Late Life Divorce and Your Money.
Lost your spouse? Be sure to ask for help.
Conventional wisdom says that following the death of a spouse, you should avoid making any major decisions, especially when it comes to your finances. Emotionally, there’s a lot to process so you want to give yourself time to adjust to life on your own.
After the funeral, you will be facing some tough financial decisions. The funeral home director can help you get copies of the death certificates you’ll need to put accounts in your name, find out where to file your spouse’s will, and refer you to an estate lawyer, should you need one.
Leaning on friends or family members is also critical, as you may be facing hurdles like putting the phone bill in your name or tracking down a car’s title so you can sell your spouse’s vehicle.
This checklist of what to do after a spouse dies can help you stay organized and delegate some of the tasks to the people in your life who are happy to help lift the burden off you.
Unable to work? Save those medical receipts.
Unexpected or ongoing medical expenses can take a bite out of your income, especially if you are unable to work because of a disability. Save all of your receipts for the medical care you— and your family—receive during the year to see if you can claim them as a deduction and pay less in taxes.
To claim medical expenses, you’ll have to itemize your taxes, which means you list your expenses instead of taking the standard deduction. The Tax Cuts and Job Act doubled the standard deduction to $12,000 for individuals and $24,000 for joint filers. Typical qualifying medical expenses can include copays for doctors visits and prescription drugs, insurance premiums, even wheelchair ramps for your home.
You might be surprised to learn that expenses related to things like dental care, eyeglasses and physical therapy may also qualify. Plus, your spouse and dependent children’s expenses can be included in the total you deduct. Keep a folder handy to drop paper receipts in or create a digital file on your computer for easy tallying at tax time.
With any loss of income, it’s time to reevaluate your budget.
No matter which situation you’re facing, looking over your budget is a good place to start. A budget is simply subtracting how much you spend from how much you make every month. With a loss of income, you’ll want to see where you can cut expenses.
For a free budgeting worksheet and other budgeting ideas, sign up for MySavingsJar below.
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