The 5 Biggest Financial Challenges Faced by Individuals over 60 in Retirement
Thanks to better living standards, advances in medical care, and better nutrition, a lot of people are able to live longer. Most people view retirement as a time to relax, travel more, visit family, and even take up new hobbies. Unfortunately, that’s not always the case. The methods of planning and saving for retirement that were used by past generations, no longer work for today’s elders.
Plus, the economic world has changed greatly since this generation of senior citizens first started planning for this new phase of their lives. This has led to far too many retirees facing financial problems that hinder them from retiring comfortably. These financial challenges include:
Rising Healthcare Costs
Healthcare costs tend to increase with age, plus the costs of diagnostics, drugs and medical devices also continue to rise. A lot of people think Medicare can cater to all of their medical costs. Unfortunately, Medicare doesn’t cover all medical costs; more so the plan requires seniors to pay for their monthly Part B and Part D premiums. These high out-of-pocket costs have denied some senior citizens the right to fast, quality healthcare.
More and more individuals are finding themselves with unpaid debts that are carried into their retirement. Many senior citizens are still paying mortgages and even student loans — either their own or co-signed loans for their children or grandchildren.
Considering most retirees have a fixed income, it’s generally difficult for them to cope with debt payment. This has pushed most of them to turn to credit cards, which is just even more debt. If you think you may start to fall behind on payments, contact your lenders to see if your loans can be adjusted. And, if you have a life insurance policy, you may consider selling it, a lot of people don’t know that’s possible. Although as explained here, make sure you understand exactly what type of policy you have because that affects the potential payout you can receive.
Unfavorable Jobs Market
Individuals over 60 with little or no retirement savings have no option but to go back to work. Unfortunately, the job market isn’t all that welcoming. For starters, most employers aren’t willing to offer the part-time working arrangements that retirees need and favor.
Secondly, the rise of high-tech jobs means seniors would have to be retrained for most of today’s jobs, which companies aren’t willing to do.
Lastly, although there are laws prohibiting it age discrimination still exists in the workplace; as many employers don’t think older people are capable of working as effectively or efficiently.
Social Security Problems
Social Security benefits are associated with one’s earnings before retirement, which means, the higher the earnings, the higher the benefits. As a result, income inequality continues even after retirement; even though, it’s more logical for people who earned lower wages to make up for it by getting higher benefits.
This paradox shows a wider problem involving Social Security. While it may be beneficial to many older individuals, it remains inadequate as most people rely on it to make up a certain percentage of their income in retirement.
Distrust of the Stock Market
The great recession provided an opportunity for long-term investors to purchase stocks at attractively lower prices. However, for most senior citizens, this period is a reminder of how volatile the stock market is. This goes against their general risk-averse nature. Even though the stock market is bouncing bark, most of them have chosen to stick to low-yielding fixed-income investments.