Financial Concerns of Older Adults

 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.

 

Below is a description of eight key topics that were discussed:

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.