Finance for Seniors

For many people, retirement isn’t an easy transition. Aging can be a challenge, and the financial burdens that come with it can weigh down even the healthiest of people. In many cases, retirees have family members who help them through the aging process. There’s a support system in place for when you need medical assistance or can’t live on your own anymore.

Solo agers, however, don’t have the same family ties that many retirees do. Traditional family life isn’t always for everyone, and that’s okay! It just means that, if you’re a solo ager, you have to think ahead and do some more planning for your own retirement.

The American workplace is changing. In today’s world, more and more people are turning to less traditional work schedules, and even working remotely for their employers. Part of this shifting landscape is the rise of the gig economy. Right now, 36% of Americans participate in the gig economy either through a primary or secondary job - and those numbers are growing each year.

Have you considered working during retirement? For many retirees, working full or part-time for a portion of their retirement years can have financial and emotional benefits. Let’s take a closer look at how working during retirement could positively impact you, and how to determine whether it’s a good fit for your lifestyle.

Raindrops

The last thing we want to think about after a loved one passes away is identity theft. No - I’m not talking about someone stealing your identity. I’m talking about someone stealing the identity of your recently deceased loved one.

It’s upsetting to think that someone out there would actively be taking advantage of vulnerable families who have just lost a spouse, a parent, or child. Unfortunately, it happens to approximately 800,000 people each year. Identity thieves troll through obituaries and Facebook notifications and strike quickly while grieving family members are still getting the deceased’s estate in order.

If an elderly family member was experiencing financial abuse, would you know it? In 2016, Allianz Life Insurance Company of North America completed a Safeguarding Our Seniors Study and found that 40 percent of seniors experience financial abuse more than once. Victims of elder financial abuse lose on average $36,000. Consumer Reports estimates that Americans lose up to $30 billion a year to elder financial abuse. Many of these crimes go unreported, because victims are ashamed or unable to speak up for themselves.

Purchasing a new home at any stage in life brings up various financial considerations and opportunities, but for retirees considering buying a home, there are some extra things to think about.

Many older adults will require long-term care at some point during their lives. Long-term care is defined as requiring assistance with at least two “activities of daily living” (eating, bathing, toileting, dressing, continence or transferring from a bed to a chair) that lasts at least 90 days, or a need for substantial assistance due to severe cognitive impairment. According to a report by the U.S. Department of Health and Human Services, “more than 6 million older Americans are thought to have a high need for long-term care. Yet fewer than 10 percent of older adults have purchased long-term care insurance because it’s expensive.” So how do you get long-term care without breaking the bank?

Are you debating whether or not you should add Medicare Supplement or Medicare Advantage into your traditional Medicare coverage? Traditional Medicare (Part A and Part B) covers many healthcare expenses. However, it doesn’t cover everything, like vision, dental, prescription drugs and overseas emergency health coverage. Even the services Medicare does cover can add up in out-of-pocket expenses due to copayments and deductible fees. Because of this, many Medicare recipients enroll in Medicare plans to cover the gap in coverage.  

Are you planning out your retirement strategy but are puzzled about required minimum distributions (RMDs) and what they mean for you? If so, the good news is you’re not alone. The bad news is that failure to set a proper RMD withdrawal strategy can result in significant tax penalties.

RMDs are annual distributions required from a tax-deferred retirement account once you reach the age of 70 ½ years old. (Note that you can take withdrawals of any amount without penalty once you reach age 59 ½.)  They are also required if you inherit an IRA or 401(k) type account at any age. Distributions are subject to income tax, since they were saved “tax-deferred” during your working years. A key component of your retirement planning is taking required minimum distributions from your retirement accounts. But there are rules that govern when you must start taking withdrawals and the minimum amount you must withdraw from specific retirement accounts. Below are some tips you should know about RMDs:

You’ve spent your entire career saving and planning for a long and happy retirement. You’re counting on your Social Security benefits to represent a significant portion of your assets upon retirement. The question is, when should you begin claiming Social Security in order to maximize your benefits? Let’s review some of the basic Social Security claiming strategies so you can take full advantage of your benefits.

Last time, we discussed the various reasons affluent retirees are being overly cautious in spending their savings and fully enjoying their retirement life. Reasons ranged from concern over the financial stability of the US economy to emotional responses that prevent retirees from spending. All of them lean towards retirees not taking advantage of living life to the fullest at a period of their lives when they have both the time and resources to enjoy it.

Tips for Spending During Retirement

How do we address this? How do retirees overcome their fear of spending down their life-savings? We have a few tips that should help, so that you can relax and enjoy your well-deserved golden years without depleting your resources.

After years of being focused on managing personal finances to ensure they have the resources available during retirement to sustain their lifestyle, there is a new trend growing in America. Instead of kicking back and enjoying spending their life savings, affluent retirees are cutting back and being frugal.

A Vanguard study estimates that affluent retirees spend only 60 percent of the money they withdraw for retirement. They are spending the majority on routine expenses (mortgage, household transportation, etc.) or discretionary expenses (medical, entertainment, credit cards).

Summertime is the time when many of us think about vacations. But maybe you’re retired and vacations just haven’t lived up to your expectations. Is something missing? If so, you might want to consider a volunteer vacation.

It’s a testament to human compassion that so many retirees are choosing to use their vacation time to volunteer nationally and internationally. But these unique options are about more than that. Retirees aren’t just looking to sit back and relax on vacations these days. More and more retirees are opting to immerse themselves into local cultures and do something meaningful. And if planned correctly, volunteer vacations, like other forms of giving, can also mesh with a solid, retirement financial plan.  

Life transitions can be complicated, which is why we decided to write a series on how they affect finances and financial planning. This series will look at three major life transitions: retirement, entrepreneurship and career change. Each one is a process, with specific strategies that have been used to make the transitions a success.

Retiring is a major life event. There is no one path to follow in order to ensure a perfect retirement. However, planning and focus have been shown to make a difference when preparing for and entering such a challenging transition.

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