Last fall, I participated in a group discussion among personal finance content creators (e.g., authors, speakers, bloggers, and podcasters) attending the FinCon 2021 conference. Our topic: financial concerns of older adults. The consensus was there is no “one size fits all” content. Personal finance messages need to be customized for specific older adult audiences.
Adequate Health Insurance-
Health issues are a big drain on even the best laid financial plans because
“the greatest wealth is health.” Older adults worry about health care costs and
how much their health insurance will cover. Managing chronic conditions, such
as diabetes, over a lifetime can, especially, be expensive. A local SHIP (called
SHINE in some states) State
Health Insurance Assistance Program office can help
older adults compare Medicare supplement policies. The Extra Help
program can help those with limited incomes and resources to pay for
prescription drugs.
Use of Time-
Some older adults miss the daily structure and socialization that work provided
and become bored, even depressed. Suddenly, they have about 2,500 hours of free
time available when they exit the labor force. The key to avoiding this situation
is to identify one or more “big rocks” that take up 6-8 hours each day. As I
wrote in my book, Flipping a Switch,
examples of “big rocks” include working, volunteering, blogging, care-giving,
and socializing.
Too Much Togetherness-
Some couples decide to retire simultaneously while others leave their jobs at
different times. Unfortunately, some spouses feel compelled to retire because
their spouse keeps “bugging them.” This can cause resentment and can especially
disadvantage women who are often younger and have shorter work histories than
male spouses. This Wall Street Journal article
has some good insights about assessing retirement readiness.
Inadequate Savings-
Many older adults are afraid of a big gap between their Social Security benefit
and other income versus the amount of money they need to live on monthly to
retire comfortably. Others are afraid of running out of money during their
remaining lifetime. The best way to address these concerns is to plug some
numbers into a retirement savings calculator,
such as the Retirement Calculator from the FINRA Investor Education
Foundation, and see where they fall. Strategies to close the gap include
increasing income, reducing expenses, or doing both.
Shame About Savings
Shortfalls- Some older adults are experiencing shame and
embarrassment about their lack of retirement savings. This is especially true
if their adult children are regular savers and the parents fear they may need
to “lean” on their family in the future. Many are afraid to look at their
numbers and just plan to keep working indefinitely because they know they don’t
have enough. Again, calculators or a financial counselor or coach
may be able to assist.
Skepticism About Social
Security- Some of the content creators reported hearing doubts
expressed about the long-term sustainability of Social Security and people
viewing it as “gravy” that they can’t count on. Indeed there is cause for
concern as the Social Security trust fund is projected to be depleted by 2033,
with just 76% of benefits able to be paid at that time. This potential
“haircut” speaks to the need to have multiple streams of income available in
later life.
Gray Divorces-
Two types of divorces in later life were discussed: 1. the kind where couples have
grown apart and 2. the kind where one
spouse with health or long-term care issues and major expenses does not want to
drain the finances of the other. Women tend to fare more poorly after divorces
than men due to lower average earnings and retirement benefits. This helpful article from Kiplinger
encourages readers to treat a gray divorce like what it is: a business deal.
Need for Flexibility and
Resilience- One content creator noted “There are many things
that come up in life and you have to be willing to adapt.” Another advised “Plan
for good and bad times because it is going to rain sometimes.” A third
participant noted that “present choices affect your future options.” Resiliency resources
don’t just include financial assets such as savings and insurance.
Relationships (social capital) and skills (human capital) also foster
resilience.
For more
information about older adult finances, review this Consumer Financial Protection Bureau
(CFPB) website.
This post provides
general personal finance information and does not address all the variables
that apply to an individual’s unique situation. It does not endorse specific
products or services and should not be construed as legal or financial advice.
If professional assistance is required, the services of a competent
professional should be sought.