Those nearing retirement can become prime targets for financial threats that may impact the quality of life during your senior years. Concerns include: outliving savings, maintaining your standard of living, and leaving a legacy for heirs.
Threats that could potentially redefine your retirement include the following:
Healthcare Needs. Increasing healthcare costs are at the forefront of the retirement picture. Congress changes Medicare payouts to health care providers nearly every year, impacting both coverage and the doctors providing care. While Congress focuses on reducing budgets, more facilities are refusing to care for Medicare patients. Seniors must prepare for higher health care costs as they age.
The most pressing health care concerns include:
- Rising premiums and reduced coverage
- Increases in out of pocket expenses
- Skyrocketing prescription drug prices
- Reduced reimbursements limited doctor choice
- Lack of coverage for critical areas like long-term care, hearing, dental, and eye care
- Longer life expectancy increasing costs of care
Housing Needs. Most seniors are not entering retirement mortgage-free, leaving them with ongoing housing costs. Higher debt levels limit funds available for other needs. Existing mortgages in retirement leave seniors at higher risk of foreclosure if income or their health declines before expected.
The average consumer spends nearly 30% of income on housing. In retirement, that percentage can increase significantly because income declines as housing costs are likely to rise. Senior living options are expensive, and financial assistance is often not available. Staying in the existing home may require living accommodations which can be costly. Adding ramps and upgrading bathrooms or showers can keep you in the home longer.
The most pressing housing concerns include:
- Mortgage debt carried into retirement
- Upgrades to the home to accommodate decreased mobility
- Moving to a more affordable home or city, where housing costs are more in line with income
- Maintaining a home along with insurance and tax payments
- Low-cost housing options when mobility and income are both declining
- Maintaining independence and finding services to keep you in the home
Long-term Care Needs. Upscale senior living options are abundant, but out of reach for millions of seniors. Affordable long term care options that provide adequate health care and services are desperately needed. Paying for additional services can drain savings quickly, leaving seniors at risk of running out of money.
The most pressing long-term care concerns include:
- Finding affordable insurance premiums to cover long-term care expenses
- In home care that is both high-quality and affordable, allowing more to remain in their home
- Becoming a burden on family and requiring financial assistance from children
- Affording coverage gaps in Medicare
Transportation Needs grow as the ability to drive declines. Most US cities do not offer adequate public transportation options for seniors. Lack of mobility can leave seniors at home alone, without needed services, for extended periods of time. The ability to get around impacts the quality of life. Trips to the grocery store, bank, and salon can be a challenge if driving privileges are lost. Seniors may not have the ability to walk long distances to bus stops or trains if they are available. Inability to drive often speeds the decline of health as depression and malnutrition become new concerns. The need to rely on family, friends, churches and charities to provide basic needs, is stressful. Increased vulnerability can also lead to costly financial mistakes and the possibilities of being victimized by scams. .
The most pressing transportation concerns include
- Driving as long as possible
- Covering the cost of maintenance, insurance, taxes and registration of a vehicle
- Finding and using alternative forms of transportation when driving is no longer an option
- Fulfilling basic needs like food, banking, and socialization when you are homebound
- Finding adequate services, so you are not a burden on family and neighbors
Cash Flow Needs. Debt in retirement is the new normal for today’s retirees. Debt puts a strain on already tight budgets and reduces funds available for other necessities. Seniors are carrying mortgages, student loans, and credit card debt well into retirement, impacting the quality of life and reducing discretionary income. Savings will not go as far due to higher costs of living, increasing the odds of running out of money. Cash flow issues can lead to major sacrifices for today’s needs. No one should have to choose between paying for medication and eating.
The most pressing cash flow concerns include:
- Reducing housing cost through mortgage elimination
- Reducing or eliminating student loan debt through discharge, income-based repayment options or transferring debt to the student
- Getting credit card debt under control or payoffs or debt management options
- Living within your income for long term sustainability
Investment Return Needs. Seniors frequently move to more conservative investments subjecting them to interest rate risk. That shift also means a reduction in investment returns to levels below inflation, making it more difficult to stretch savings at a time you need it most. Assets must remain relatively liquid which also lowers options and increases reliability on interest and dividend investments.
The most pressing interest rate concerns include:
- Finding safe investments that will outpace inflation
- Reliance on stable investments with guaranteed returns
- Stability of pensions, social security, and other income required to sustain retirement needs
- Low savings rates increase pressure to invest in riskier options that may lead to short-term losses
- Investment advisors may recommend complicated investments which are difficult to understand.
Fraud Protection Needs. Scams and fraud impact seniors more than any other group. They can be more vulnerable and have less time to recover any losses. Scammers prey on their fears making them susceptible to empty promises. Both phone and internet scams are common ways to steal from seniors. Local providers might overcharge for services or pressure them into making unnecessary repairs or purchases.
The most pressing fraud concerns include:
- Fear used to con seniors into buying products or services they do not need
- Loved ones or caregivers stealing money
- Lack of mobility may require the elderly to rely on others to meet basic needs
Financial needs in retirement are unpredictable, making long-term planning a challenge. Retirees must navigate retirement and protect their hard earned money from those who want to separate them from it. Regardless of your financial circumstances, you must take measures to protect your money and use caution when relying on others. Community services are available to help stretch funds.
If you are burdened with high amounts of credit card debt and are struggling to make your payments, or you're just not seeing your balances go down, call Timberline Financial today for a FREE financial analysis. Our team of highly skilled professionals will evaluate your current situation to see if you may qualify for one of our debt relief programs. You don't have to struggle with high interest credit card debt any longer. Call (855) 250-8329 or get in touch with us by sending a message through our website here contact-us.