The news and the corresponding statistics don’t look promising as far as future retirements are concerned. Many workers are currently living paycheck to paycheck and not even half of all adults would be able to cover an unexpected $1,000 expense. “With debt and living expenses on the rise in much of the country, the importance of setting financial goals, such as saving for retirement and sticking to those goals — has never been greater.” (click here for related article)
It is true many workers will have a lot of catching up to do in retirement given their current savings. Forty percent of workers report that the total value of their household savings and investments, excluding the value of their primary home and any workplace savings plans, is less than $25,000. This includes 19% who say they have less than $1,000 in savings. (click here for related article)
The worst statistics are for America’s middles class. In 10 years, more than half of middle-income Americans age 75 or older will not be able to afford to pay for yearly assisted living rent or medical expenses, according to a study published Wednesday in Health Affairs. Most middle class seniors may be unable to afford basic living expenses by the year 2029 (click here for related article) That’s 10 years away!
By 2029, more than half of the middle-income seniors will have annual financial resources of $60,000 or less, even if the equity in their homes is included. Projections put the average annual assisted living and medical expenses cost in 10 years at $62,000, meaning that a majority of the middle-income seniors then will not be able to afford an assisted living facility.
If you were to ask me for my opinion, based on my own experiences and the fellow retirees I meet most days, I’d have to agree with these startling statistics: I see an impending doom and gloom for many, many future middle-class retirees. No. We’re not going to make it. Unless we make some changes now!
“The low-income retiree has been taken care of by tax subsidies, while the high-income cohort is largely self-sufficient. But the middle-income seniors have no protections” Many retirees, me included, retire too heavily on Social Security (click here for related article) And I am one of the lucky ones: I have the three legged retirement stool to depend on: a pension, investment income and Social Security.
But because I see things like this, makes me quiver when I think of my financial future:
I see extraordinary price increases in almost every single thing I either need or want to buy with absolutely no end in sight. This includes medical expenses, drug expenses, housing costs, utility bills, all insurance premiums, taxes, future vehicle expenditures and most importantly the rising costs of food and groceries. I am astounded at the exorbitant fees I have been forced to pay now that I have settled into a fixed income routine. How do people on fixed income survive?
Technically, my family retirement really won’t start till hubby turns 65 in under three years. I realistically can’t see our savings tiding us over into our retirement years. We will eventually be forced to sell our home and downsize considerably just to continue to make our ends meet.
So, YES! I do see an impending retirement crisis looming because if I can feel it, so can all of you. It’s there. We need to recognize it and start to form a strategy on how we are going to meet the new financial challenges of our retirement futures.
Currently, hubby and I have given up on some of our retirement dreams. Owning two homes is totally out of the question. Florida turned out to be more expensive to us than living in upstate New York actually is. I just wish it weren’t so cold up north. We still can RV in Florida for the winter but it has to be in state and national parks. I’ve stopped joining photography clubs because I don’t have the funds to keep up with the ever changing digital technology nor do I have the financial resources to enter competitions. I’ve downsized to water coloring and have found equal satisfaction in my new hobby when compared to photography. Plus, my wallet is intact.
My husband’s dream was to get back involved in sailing but truthfully, even if someone gave hubs a sailboat for free, we couldn’t afford the upkeep nor the launching nor mooring. Even day sailing costs money. Money that we can never earmark for sailing. Hubby has since taken up ham radio. He studied, got his license, accepted some hand-me-down ham radio equipment from his friends and is quite content to speaking to people all over the world, thanks to his new ham radio hobby.
We’ve totally given up meals out (this was a very hard habit for me to break!) We’re doing more DIY projects around the house. We’ve been forgoing hiring contractors or any assistants for any endeavor. Hubs is back fixing and maintaining our cars. I’m cleaning more, gardening more, cooking more and complaining more (LOL!) Technically, we’re only in to this ‘forced’ fixed income living since March 2019, when hubs turned 62. If he had collected Social Security like he wanted to at 62, this is what our lifestyle would have become. Instead, we’re waiting till hubs turns 65 so as to collect more in his Social Security benefit. In the meantime, we have voluntarily chosen to live like this had we been on a fixed income. And people, it’s super, super hard!
You can read all the articles you want regarding retirement. But until you actually live in retirement and realize all the retirement challenges that await, you have no idea what you’re in for. Retirement, to me, was something that lurked far off in the distant background. It was never a reality. Sure, we saved for it. We thought about it. We planed about how we’d live, what we would do, how we would spend our time and yes, spend our money. Yet until you are actually in the throes of an honest-to-goodness retirement, you (meaning ‘me) have absolutely no idea what anyone was talking about.
Life may be short but retirement is longer.
My advice? Same as it always was: buy a house no later than age 35, live in it for like forever (make sure it can grow with your upcoming changing lifestyle without expensive remodeling), never ever borrow out your precious equity, do all the maintenance and repairs yourself (watch You Tube videos). Then, when you are 65 you’ll have a paid-for home (based on a 30 year mortgage). Stay as clear out of debt as humanely possible. Buy used cars for cash or very low loans and hold onto the cars for at least 10 years. Make your kids pay or borrow for their own college educations, make them save their money and pay for their own weddings. Yeah, you may feel guilty if you don’t pay (and pay and pay) but trust me. When you’re old and feeble your kids will have their own lives. They aren’t coming to help you nor save you. Worry about yourself. Your kids can fend for themselves.
Lastly: save, save, save, save. It’s an awful feeling to be in the throes of retirement only to think back on all your foolish financial mistakes (buying new cars, mortgaging homes you couldn’t afford, taking those exotic BUT super expensive vacations, buying stuff you can’t even remember now of owning, student debt, not contributing to a 401K plan that had an employer match your investments….you get the idea) I’ve always been a frugalista and I always watched our bottom line. But a couple of times out there, I made some financial boo boos and I feel that pinch every once in a while.
Hey! You can’t go backwards but you can certainly go forward. If there’s anything hubs and I have done right, it is this house we are living in. A gift from God, no doubt. We’ve cared for it well and it will one day care for us as well. For this middle-class couple, our home proved out to be our greatest accomplishment yet towards achieving true retirement goals.
Live well and prosper, my friend. Live well and prosper.