Retirement is a subject of much anticipation for many of us who’ve not yet achieved it. We hope to finally be able to do some of the activities we have either put off or not had enough time for in the past.
More people these days are reaching the age of retirement, including our senior loved ones. 10,000 more people retire each day!
Economic hardship, stock market changes and lower interest rates have left many of us asking – often for both ourselves and our senior loved ones – “have we saved enough money to make our dreams come true or even just to live every day?”
Too many retirees and near-retirees are kicking themselves, realizing that thinking ahead when not yet seniors and making a savings or investment plan at that time would have been a good idea. Regrets won’t help us, of course, and there was always something more pressing on which to spend money in younger years. Hopefully, everyone who began a retirement plan when they were younger is finding their financial planning effective enough to meet their needs in retirement, especially when the recent downturn in the economy may have diminished their earnings. However, if your senior has not saved enough (or any) for retirement, it is not too late to take action now.
Social Security benefits for retirement begin for many at age 67, depending on the year you were born. Many seniors are opting to retire later and can earn a bit more money if they delay their benefits. You can learn more at www.socialsecurity.gov about your individual situation. Hopefully none of our loved ones – especially those (and us) who’ve not yet retired – are relying totally on Social Security benefits, as it is impossible for most to keep their pre-retirement or desired post-retirement lifestyle without additional sources of funds.
Things Your Senior Can Do Now to Help Meet Retirement Needs
- Make a budget and manage debt. Making a personal plan for expenses and income will help prevent overspending and increased debt. Paying off current debt will allow money to be set aside for retirement investment now.
- Estimate how much money will be needed for retirement life, including rent or mortgage, bills, medical care, debt, etc. so that your senior will know how to proceed. While many planners and websites suggest a rule-of-thumb value of 70% of pre-retirement earnings, it’s much better to plan based on a realistic evaluation of one’s own needs.
- Don’t count on using your senior’s home equity to pay for day to day expenses because you can’t count on the value of the home remaining the same.
- Be aware that the average life expectancy may mean your senior loved ones will need more money as they live longer than prior generations. Living to 100 years is not a rare occurrence anymore. A good rule of thumb is to plan for an additional 30 years of life after your retire at age 65, especially for those in good health at that time.
- You may want to offer to help your senior review any investments as they near retirement so that they can be sure that the balance of stocks, bonds, cash and mutual funds is in their favor. While this may be a sensitive subject for an aging parent or grandparent, expectations regarding investments from years past may not serve them well today.
- Plan for an average of 15% of a senior’s income – if not more – to be spent on healthcare. Even with Medicare there are numerous out of pocket expenses and premiums for which your senior will be responsible.
None of us should depend entirely on Social Security and Medicare to get us through our golden years, especially if we wish to live our dreams. Planning now – no matter what one’s age may be now – will help turn dreams into realities!