If you tried to evaluate how well the economy is doing simply by looking at the Dow Jones or the overall employment rate, you might conclude that everyone is happy and secure here in the USA. But if you consider individual households, the picture is considerably less clear, according to financial writer Richard Eisenberg. We just reviewed his recent article here on the NextAvenue website and it confirms that many American adults, especially retirees, are experiencing some fundamental financial insecurity. Eisenberg calls these “three big financial pain points,” and together they highlight the need for some honest financial planning.
Several Surveys Reveal “Big Financial Pain Points”
For this article, Eisenberg studied several major financial surveys recently published by the likes of Bank of America, Wells Fargo, and American Family Insurance. “If you look only at the nation’s low, 3.7 percent unemployment rate, it would be easy to assume that the economy’s humming and that Americans are feeling great about their finances,” he writes. “But after reviewing five recent notable surveys, I believe many people are actually feeling three big financial pain points now.” Eisenberg begins with a statistic from the Bank of America Workplace Benefits Report revealing that a bit over half (55 percent) of all retirement plan participants rate their financial wellness as good or excellent. That’s good, but it represents a drop from 61 percent a year ago, and that decline, Eisenberg suggests, might mean there are a few storm clouds on the economic horizon.
In his NextAvenue article, he lists the three biggest “pain points” revealed in his analysis of recent surveys. As we review these, we think you’ll agree that each represents an area in which retirees are particularly vulnerable.
Biggest Financial Pain Points: Caregiving, Health Care, Savings
- Pain Point No. 1: Caregiving and Family Assistance. “The financial — and sometimes emotional — stress faced by family caregivers and by parents assisting their grown children came up repeatedly in the Bank of America survey,” as well as surveys from Wells Fargo and American Family Insurance, Eisenberg writes. In the Wells Fargo survey, nearly half of respondents said they had provided financial assistance to a parent, an adult child or a grandchild in the past year, spending an average of $10,000. This does not count college expenses. One Wells Fargo executive called that number “amazing” and added that spending that much assisting family members has a direct impact on one’s ability to save for retirement. Apart from the financial cost, caregiving means a huge cost in time away from work, as we’ve written about before here on the AgingOptions blog (most recently in this post from a few weeks ago). The Bank of America survey showed that the number of workers who are serving as caregivers for adult family members is significantly underestimated by employers because many of these workers are reluctant to tell their boss that their parents need periodic help. As Kevin Crain, managing director and head of workplace solutions for Bank of America, told NextAvenue, “We need to get more employees to feel comfortable about stepping forward,” creating what Eisenberg calls “a workplace culture where employees are encouraged to talk about their caregiving responsibilities.”
- Pain Point No. 2: Health Costs. According to Eisenberg, health costs are “a serious stressor for millions of Americans,” and that certainly includes retirees. When Bank of America surveyed employees, they found average annual out-of-pocket spending (including premiums) of nearly $7,700. Over half of surveyed employees have skipped or postponed medical appointments or procedures due to cost. “Even in economic good times, a meaningful percentage of Americans are not going to the doctor or getting their needed medications,” one researcher from the American Family Insurance study told Eisenberg. “In the past, we called these ‘measures of economic crisis.’” Two years ago a Commonwealth Fund study showed that about one-quarter of U.S. seniors had skipped at least one doctor’s appointment or avoided filling a prescription because they couldn’t afford it. With studies showing that lifetime medical costs for a couple retiring today could easily approach $300,000, the danger of under-insured seniors unable to afford Medicare co-pays and deductibles is likely to increase, surveys suggest.
- Pain Point No. 3: Not Enough Savings, Too Much Debt. The ominous truth is that many Americans are woefully unprepared for a financial crisis, let alone retirement. “It hardly seems worth repeating how little many Americans have in emergency savings and retirement savings,” says Eisenberg. He quotes one recent survey from the Clever Real Estate website revealing that nearly one-third of boomers have no emergency savings funds at all. Another survey showed that the average boomer is carrying a debt load of more than $28,000. The average baby boomer has about $137,000 saved for retirement, which means that a significant number have far less – in fact, some surveys show that roughly a third have no retirement funds whatsoever.
One Antidote to Financial Pain: The Right Planning Tools
The point of articles like this one from NextAvenue should be to grab our attention and cause us to take action. Our recommendation will sound familiar to regular readers of our AgingOptions blog or listeners to our radio program, but it bears repeating: we urge you to sit down with a qualified, objective financial planner and ask him or her to prepare a financial dashboard for you. This powerful tool will allow you to evaluate your current and future financial health and make critical adjustments to your saving and spending plans. In the same way that you would never drive your car without a properly functioning set of gauges, you don’t want to embark on your retirement journey without a financial dashboard to guide you. Contact us and let us refer you to a qualified professional who can help you.
Remember, however, that there’s far more to planning for retirement than money. People heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. Financial preparedness also involves your medical needs and your housing status, two areas of retirement that can quite suddenly knock your financial plan off course. But finances, health care and housing aren’t the end of the story for retirement planning. Are you adequately prepared legally for the realities of retirement and estate planning? And does your family understand and support your plans for the future as you age? These critical elements also belong in the retirement mix.
The best way we know of to successfully blend all these facets together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. We invite you to join the thousands who have discovered the power of LifePlanning by attending a free LifePlanning Seminar at a location near you. Invest just a few hours and you’ll come away with your eyes opened to a brand-new way to think about retirement. You’ll find a calendar of upcoming seminars here on our Live Events page – then you can register online or give us a call. Make certain your retirement planning is truly comprehensive and complete: come discover the power of an AgingOptions LifePlan. Age on!
(originally reported at www.nextavenue.org)