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We help you understand the four key concerns in effective personal finance and money management that seniors need to know for a comfortable retirement.
The right strategy for effective money management is never set in stone. If your strategy doesn’t evolve with your financial needs, then you won’t be able to do the best you can for yourself and your family. And one of the biggest financial changes you’ll face during your adult life will be the transition from full-time employment into retirement as a senior.
The information below can help you understand the four biggest concerns you’re going to face with your money during retirement and what you can do to be successful. If you have questions or you’re struggling to overcome challenges with debt, we can connect you with the solutions you need to achieve stability and reach your goals. Call us or complete a help request form to tell us what you need.
By far, the biggest concern seniors have during retirement is the cost of healthcare services. As you get older, your healthcare costs naturally increase. At the same time, as you transition from your career into retirement, you lose your employer’s insurance benefits and move to private insurance and Medicare.
Make sure you have an accurate understanding of the healthcare costs you can face and the kind of support you’ll have. Make sure you understand your policies thoroughly and ask questions. For instance, in some cases the cost for continuing care after something like stroke will only be covered by Medicare if the patient is showing documented improvement. This means you won’t be covered for in home care or physical therapy if your condition is permanent – and that’s a problem.
You also need to have a plan for what you want to do IF you have to transition from complete independence to supportive care. Don’t just assume you’ll stay self-sufficient, because you’ll have bigger problems if you have to make adjustments after a healthcare issue has already occurred. Whether your plan is to move in with your children or relatives, pay for in-home care or move into a retirement or assisted living community, make sure your insurance and savings can support that plan.
You also need to take steps to establish your wishes for care if you are incapacitated or unable to voice decisions for yourself. Having detailed directions for long-term care and notarized documents to establish medical power of attorney and finance power of attorney (which can be the same person or two different people) is imperative. Make sure everything is clear and documented and that the POA that you choose understands your wishes.
Over the decades that we work, most of us get used to earning regular paychecks. We get into budgeting and spending habits based on the idea that the next installment of money will be here by X-date. We also get comfortable with the idea that if we need more money, we can simply do more work to get it.
But once you retire, income won’t come from paychecks – it will come from benefit payouts, Social Security, asset dividends. And if you don’t have enough money, you may or may not be able to take on a job to get the extra you need, depending on your health and situation.
Fact: Data shows you will need at least 75% of your employed yearly income to support your lifestyle during retirement.
This usually means you need to be even better with budgeting than you were when you were working. Here are some tips to help you manage income and cash flow effectively:
Debt can be a big problem in retirement because more debt means higher bills – which doesn’t really work when your income is lower. So you need to be vigilant to keep debt minimized both just-prior and during retirement.
Here are some things to know:
One major concern you’re going to have in your golden years is the legacy you leave. In addition to establishing power of attorney (POA) to make decisions if you’re incapacitated, you also need to establish a will and set up your finances for what happens once you’re gone.
A signed, witnessed will is necessary to keep your spouse, children and relatives from fighting over your estate. You should also discuss your estate plan and POA decisions with everyone involved. This is one of the hardest conversations to start with your kids in adulthood… but it’s even harder for them to start it, so you need to be the one to make sure the discussion happens.
Here are some things to know about your estate:
Article last modified on August 7, 2019. Published by Debt.com, LLC