They call them “the golden years.” You have retired after decades of hard work, with a nest egg you’ve carefully built up during that time. The years after retirement are meant to be enjoyed in peace and security: traveling, enjoying grandchildren, sitting in a rocking chair on the porch with a cool drink in your hand.
Trouble is, in order to enjoy the golden years the way we’ve been led to expect, you need to have enough, well, gold. For an increasing number of seniors, financial ease is no longer part of the picture, and financial struggles are. Let’s take a look at the sources of financial setbacks after retirement, some solutions if you’re already experiencing those setbacks, and options for preventing money problems down the road.
There are a number of things that can cause a previously stable financial situation to become much more unsteady. Some of those are in your control, and many, unfortunately, are not.
One of the biggest financial challenges facing many seniors is medical expenses. According to a major investment company, a couple that retired in 2019 can expect to spend $285,000 on medical expenses for the remainder of their lives. Of course, the better you take care of your health before your retirement years, the less you may spend, but medical expenses remain a significant, and legitimate, worry for most people.
That figure for expected medical expenses, by the way, does not include dental care. 65% of people on Medicare have no dental coverage, yet a large proportion of seniors have gum disease, and about 20% have untreated tooth decay, both of which can lead to tooth loss and more significant dental expenses.
Two can live as cheaply as one, it’s said, and seniors who find themselves widowed or divorced can learn the hard truth of that saying. A Congressional Research Service Report found that about 4.3% of married women live in poverty, but 13.9% of widows and 15.8% of divorced women do. What’s more the rate of divorce among older demographics, so called “grey divorce,” is on the rise.
Our bodies aren’t the only things that require extra help after we’ve lived in them awhile. Many seniors find that their homes are aging right with them, and many can no longer manage to even minor repairs themselves. Major, necessary repairs like replacing a roof or windows or renovating a bathroom to make it more accessible can cost tens of thousands of dollars—a real hit to someone living on a fixed income.
Part of the reason you work and save is to be able to help your family. But sometimes, helping with their financial struggles can contribute to your own. Whether it’s an adult child who has had to move back in with you due to their divorce or job loss, or a grandchild for whom you cosigned on a student loan, be mindful of assisting a loved one can affect your ability to pay for your needs.
Unfortunately, there are many financial scams targeting seniors, and they tend to be effective, especially for seniors who are less familiar with the technology used to perpetrate them. Even savvy seniors can get taken in, however, and many have lost thousands or tens of thousand dollars to unscrupulous crooks.
These are just a few of the many sources of financial stress for seniors. Others include inflation, paying off credit card debt, and stock market volatility that may have shrunk investments. And, of course, there’s the increased need to pay for help with personal care needs or even a nursing home. Now let’s look at some ways to mitigate the effects of these problems.
Whether you’re retired and struggling financially, or looking ahead to retirement and planning for financial health, there are seven things you should be doing.
Whether you’re retired and struggling financially, or looking ahead to retirement and planning for financial health, there are seven things you should be doing. The first three involve taking stock of the situation; the last four involve corrective or preventive measures to improve your situation.
Step one is taking a hard look at your assets and liabilities. What do you have, what do you owe, and where does that leave you? Step two is communicating with your partner, if you have one. You need to get on the same page about your finances, especially if one of you has debt you’ve been keeping secret from the other out of shame.
Step three is to sit down together and analyze both your sources of income, and your spending. If you’re like many people, you may have to track all of your spending for a month or so to understand where the money is going. Regular monthly expenses are easiest to remember, but don’t forget quarterly or occasional expenses, not to mention small impulse purchases that add up fast.
Once you’ve evaluated your assets and liabilities, your income and spending, and discussed these with your spouse or partner, it may be time to make a course correction to improve your future financial health.
The more precise you have been in documenting your income and especially expenditures, the more effective the fourth step will be: setting a budget. To the extent that you have income left over after covering your budgeted expenses, use it to create an emergency fund for the unforeseen expenses that can knock you off track.
Step five is to monitor your credit score going forward, and get an updated report every year. Step six is to make yourself aware of resources that are available to you. Are you eligible for any government benefits that could ease your financial position? This Benefit Finder can help you discover benefits you may qualify for.
Last but not least, step seven: avoid taking on any new debt if you can help it. If you can’t increase your income, you need to figure out how to reduce your expenditures.
If you have questions about avoiding financial difficulties in the future, we invite you to contact our law office to schedule a consultation. A little planning now can help to keep the gold in your golden years.