Financial Resources for the Golden Years
By Toni Lynn Davis, Executive Director Green Hill Inc.Seniors are living longer than ever thanks to better health care and better living. It used to be that when retirement came around one had paid off their mortgage and most of their debt, and saved for their ‘Golden Years.’ Yet, living longer means that financial resources may need to last a decade or more than we have planned for. Couple that with record unemployment and the recent financial crisis, many older Americans planning for retirement have seen their savings reduced, while they have had to provide unexpected financial support to adult children and even grandchildren.
As with homeowners of all ages during these trying times, the additional resources needed by working and non-working seniors often come from borrowing against equity in ones home, refinancing, and/or extending the length of their mortgage.
Credit card debt is also a serious issue. One third of seniors are relying on credit cards to cover basic living expenses.
According to data from the Federal Reserve that was analyzed by the Employee Benefit Research Institute (EBRI), senior citizens’ debt increased to $50,000 in 2010, up 83 percent from 2001. Only 24% of homeowners over the age of 62 had mortgage debt in 1992, and 45% in 2010.
The Census Bureau looked at how the total median household debt for Americans 65 years and older doubled between the years 2000 and 2011. The average debt is around $26,000, an increase from $12,702. In the same research by EBRI, it concluded that median credit card debt for seniors older than 75 increased from $838 in 2007 to $1,800 three years later.
So are seniors and Baby Boomers ready for old age with a life expectancy where one in four will live past 90?
The Center for a Secure Retirement asked people ages 55 to 75 how they have planned to handle their retirement income. Their responses were;
• Reduce spending (63 percent)
• Get a part-time job in retirement (41 percent)
• Sell my house (25 percent)
• Give less money to children/ grandchildren (24 percent)
• Don’t plan to do anything (15 percent).
It is important to realize that to do nothing to secure ones finances for retirement is not an option in today’s financial climate. Social Security does not provide full benefits to all at 65 anymore. If you are born between 1943 and 1954 the full retirement age is 66, 67 for those born after 1960.
The Center for Secure Retirement has a few tips;
1. Work as long as you are able.
2.. Delay Social Security benefits as long as you can. Waiting until you’re 70 to collect Social Security could increase your payments by as much as a third.
3. Practice healthy living. Eat right, stay fit and see your doctor regularly.
4. Consider speaking to a professional retirement adviser. Social Security was never meant to be your sole source of retirement income
Seniors may also consider downsizing from their homes or moving into a retirement or assisted living community where home maintenance costs can be reduced or eliminated from their budgets. In these communities, just as at Green Hill, there are often professionals available to help plan and manage resources in an effort to cover all of their immediate and long-term needs.
Reducing monthly expenses, and giving less financial support to family members is also a step in the right direction. It is hard to say no to those that you love but can be necessary to remain in a healthy financial situation so you can be there for them in other ways. If you choose to reside in a long-term care facility choose one like Green Hill Inc. where you are guaranteed ‘care for life’. Your most important step is to get professional financial advice about preparing for your retirement and senior years. It is never to late or too early to begin planning to live a long, healthy and happy life.
See the full report at Centerforasecureretirement.com.