AgingOptions Life Plan: Finance

“Will I have enough assets in order to not run out of money before I run out of life?” is top of mind for all of us in the final third of our lives. In answering this, preservation, positioning and passing of accumulated wealth goes beyond traditional estate planning. It calls for all affected family members to be participants in a model that integrates health, housing and elder law considerations.

More Americans are choosing not to retire

Increasingly my conversations with my contemporaries are around retirement, specifically the lack of desire to retire. Some people might consider believing we won’t retire or at least that we won’t retire for years after any official retirement age as pessimistic but at least part of the lack of desire to retire has something to do with the fact that what we do to make a living is what we are interested in doing.  We can all imagine perhaps doing less of what we do or doing something different but we can’t imagine not doing.  That mimics a growing trend in America.  The share of workers over 65 in this country is the highest it’s been for over 50 years.  It’s one of the fastest growing changes in the American workforce.

For the forty decades after World War II, the number of American men 62 or older still in the labor force fell due in part to the advent of Medicare, Social Security and employer-provided pensions. A combination of longer lives and early retirement boosted the number of retirement years from 10.9 years to 19.3 years for men and from 12.5 years to 23.5 years for women according to the Social Security Administration.  That’s changed in the last decade.  According to the Bureau of Labor and Statistics, the employment of workers 65 and older increased over 100 percent between 1977 and 2007.

What’s changed is that Social Security benefits declined because of the gradual increase in the full retirement age (FRA) while at the same time employers became concerned about their own ability to remain competitive while still providing healthy pensions and retiree health benefits and responded by shifting from defined benefit to defined contribution plans. The shift in both public and private benefits to the employee has meant that the employee often no longer has adequate benefits for a longer retirement.  The result is that public officials and financial experts alike encourage people to work longer and delay collecting Social Security benefits.

As might be expected the labor force participation rate (LFPR) has subsequently increased. Men aged 65-69, for instance, increased their LFPR from 8.7 percent to 17.3 percent between 1980 and 2010.  Women took until the 1990s to show a similar trend but they too are showing substantial increases in LFPR although for them, part-time work dominates full-time work.

So, as Paul Solman, a business and economics correspondent asks, “Is retirement as we know it becoming a thing of the past?”

Not necessarily. However, the reason for retiring or not retiring appear to be changing.  According to a PBS survey people over the age of 65 continue to work for a variety of reasons but nearly 70 percent do so because they want to feel useful and productive.  Almost 60 percent do so to have something to do.  Perhaps unsurprisingly, most 65-plus workers are happy with their jobs while their younger contemporaries are much less likely to feel the same way.

Still, you may not be among those happy to continue working or worse you may not feel that you can afford to retire. If you’re 50, can you still plan for retirement?  “Absolutely,” says Julie Price from Julie Price Consulting.  If you have 5, 10 or more years until retirement a financial planner can help you discover whether you’ll be able to afford 3 months each year in a sunnier climate.  But, they can also help you to look at your finances and build a financial plan.  While most financial experts focus on those in their 20s, 30s and 40s the reality is that most people have smaller income levels and higher expenses at those ages so it can still be beneficial to hire a financial planner in your 50s to help you maximize your retirement income.  What’s more they can help you determine whether you really don’t have the ability to retire or if steps now could make retirement possible if that’s your aim. That can give you the option of choosing whether or not you retire instead of making the choice for you.

Finally, if you don’t believe you’ll have enough money to retire, protect the one asset you’re likely to have now while you’re still young—your health. Staying healthy will allow you to continue to work if that’s what you’ll need to do, will prevent your health care costs from spiraling out of control as you age and allow you to stay as independent as possible.  What’s more, your health will make your retirement years, however you spend them, far more enjoyable.

Here’s some stories of inspiring older workers.


The multiple faces of planning for retirement

Retirement is one of the most important things you’ll ever do. Because many of the decisions you make for retirement will affect you for decades, it’s a good idea to approach it with checklist in hand.  Here is a list of things you should do before retiring.

  1. Check to make sure retiring is really what you want to do. A neighbor of mine worked for a company that required retirement at age 60 or after 30 years, whichever came sooner.  Those two dates came at the same time for him and while he’s not actively complaining he potters around his yard looking like he’s lost even after a couple years of retirement.  He probably would have been better off finding another career since remaining at his place of employment wasn’t an option and yet 60 is awfully young to have no purpose (if indeed there is ever a time when it is okay not to have one).  In fact, for many people retirement isn’t something they look forward to and if you’re one of those, finding a way to remain at your current employment or finding a substitute either through volunteering, beginning a business or starting a new career can provide the stimulation to make retirement fun.  In addition, delaying retirement can allow you to continue to add to your 401(k) or at least put off getting disbursements from it, and it can delay your need to begin collecting Social Security so you can maximize those benefits.  If you’re not sure that retirement is for you, some places allow you to cut back without completely leaving the workplace.  In effect, they give you the opportunity to try out retirement without committing to it.
  2. Decide if you can afford it. Some people will reach retirement age and have to retire, either because they are ill or because their spouse is ill.  For everyone else, retirement shouldn’t just be a date on the calendar, it should be when you have the finances and the desire to allow you to do so.  Create a retirement plan and test it by trying to live off what you’ll be receiving in benefits.  Check with Social Security to find out what your benefits will be from them.  Then look at 401(k) plans, pension, savings and other retirement accounts.  From that figure, determine whether you can live on those funds or if you would be better off postponing retirement for a time.  Remember that these funds are likely going to have to fund not just today but a tomorrow that is likely decades down the road.  If you’re healthy now, you may not be at some future date and you should plan around that.  Financial experts project that the average couple will need $250,000 for healthcare costs alone and those costs are above and beyond the costs associated with long-term care.  If you don’t already have a financial planner, hiring one now can make sure you haven’t missed something crucial in your planning and can help keep you on track.
  3. Figure out what your retirement expenses will be. If you’re retirement plan includes traveling, keep that in mind when you’re budgeting for retirement.  The cost of retirement can drop a bit when you are no longer commuting to work or paying for lunches, work attire etc but other costs can rise such as health care costs that are being partially or fully shouldered by an employer now but won’t be in the future.  Be realistic in what you’ll save and what will replace those costs.
  4. Plan for two phases of retirement—when both spouses are living and when only one survives. Some pension and retirement plans die out when the beneficiary dies.  That can mean a substantial cut in income and benefits when one or the other spouse dies.
  5. Revisit your housing situation. When you initially purchased your home it was probably to make sure your kids could go to the best schools or because it was within commuting distance from work.  Now that those original reasons for choosing your home no longer exist, take another look at your current housing choice but look at it with an eye to how much it costs to remain there, whether it fits your current and future lifestyle, whether its location will allow you to pursue new interests and of course whether or not you can comfortably age in it.  Retirement is a good time to reassess your living arrangements and make a change if one is needed.
  6. Look for options for staying busy. You can only sit on the couch and veg for so long.  Then you’ll want to have something to do to stay busy, active and engaged.  Plan accordingly so you’ll have options for doing so.  Spend time seriously contemplating what you would do with an open horizon of time and how that time can be used to fulfill your retirement hopes.

Here’s a long list of other things to do to plan and prepare for retirement.


Not purchasing health coverage can cost you

The average silver level health care plan costs between $200 and $300. At $2,400 to $3,600 for annual premiums, those numbers far exceed the penalty portion of the Affordable Care Act.  So, many Americans chose not to purchase health insurance this year.  Under the Act, people who do not purchase insurance will be on the hook to the IRS by April 15, 2015.  The amount of the penalty can be either $95 or 1 percent of your household income, whichever is higher.  For this first year, there is a cap of $285 per family but that cap rises steeply over the next few years (in 2016, the cap will be $695 up to a maximum family amount of $2,085).  The percentage also rises from this year’s 1 percent to 2.5 percent n 2016.

Some religious groups, those who will be uncovered for three months or less, members of Indian tribes, illegal immigrants, people on Medicare and prisoners are not subject to the penalty. (go to for an expanded list) As the law ages, the IRS will have an increasingly easier time identifying those people who opt out of the program.  For more information on how opting out will affect your tax return, go here or if you are interested in a calculator to figure out the penalty for not having health insurance, go here.

Recognizing the out-of-pocket costs of caregiving

Are you prepared for caregiving costs? The cost of providing care for yourself can be quite staggering but what many people don’t include in their financial planning is the cost of providing care for family members other than a spouse.  A survey by found that almost half of all caregivers shell out $5,000 a year for medications, medical bills, in-home care or other costs associated with a loved one’s care.  The survey also found that about 7 percent of caregivers were shelling out $50,000 a year.

Those costs can include insurance premiums and fees not covered by insurance such as high deductibles, co-pays, dental care and hearing aids. According to a study in the Journal of General Internal Medicine, in the last five years of life, Medicare recipients paid an average of nearly $40,000 during the time-frame from 2002-2008 for out-of-pocket medical costs.

The survey found that half of users say they spend $500 or more on pharmacies. Other costs such as communal living and in-home care costs can also bust the budgets of family members.  This is one example of how not having a family meeting to discuss these issues can bite you over time.

Yet another reason to have that conversation is that adult children are often unaware that their family members have access to resources that could provide relief from cutting into their own assets to pay for care. Geriatric managers, Elder Law Attorneys, and Financial Planners provide professional experience to help you navigate retirement planning.  Their experience can help save time and cut costs.  Just for starters, they’ll know options for paying for and providing care and tax breaks caregivers are eligible for.  Beyond that, they can help diffuse family situations so that the family can concentrate on the loved one.

And finally, when caregivers concentrate solely on their loved ones, they often neglect their own life, often sacrificing their own retirement benefits and healthcare to their own detriment in order to provide for someone else.

Getting a late start on retirement savings doesn’t mean you can’t win the race

Saving for retirement can be a daunting task.  There are student loans, the cost of raising children, the mortgage on your house, health emergencies…the list can seem to be endless.  Click here to see the long list of reasons we don’t save.  If you’re like most Americans, you don’t have enough retirement savings socked away to last the possible decades of life you’ll live after retirement.  However, even those in their 50s can still manage to overcome at least some of that shortage by taking a multi-prong approach according to the Wall Street Journal.  It can be daunting to think about saving 15 to 20 percent and for many people even considering it is a non starter.  Instead consider increasing your savings rate, postponing your retirement for a few years and holding off on collecting Social Security benefits.  While it may not be able to make up the entire shortfall, you’ll get closer to the goal in smaller, more palatable bites.

Here are some more tips on how to save for retirement even if you start late.  Even if you are in your 50s, you still have time for the magical compounded interest.  No matter whose article you read though, you’re going to have to start sacrificing.  Either by spending less, earning more (and potentially that means a second job) or putting off retirement or some combination of the three.

Start by finding some idea about how much you’ll need to retire, there’s a mountain of calculators available, doing some research about what it will take to get there and putting some action into play rather than sitting on your hands.  Eventually, you’ll get there.  Here’s a great list of steps and tools to get you started.

Finally, don’t do it yourself.  Hire a professional to help you work smarter not harder on achieving your goals.