Retirement: It’s Not As Simple As It Used To Be

15 May Retirement: It’s Not As Simple As It Used To Be

via Forbes

Today’s seniors face a lot of challenges. While we’re living long past retirement, our money doesn’t always stretch as far as it should. Health issues further complicate matters. Chronic or catastrophic health conditions affect 92% of people over 60.


The recession was a huge bump in the road for baby boomers approaching retirement. When the economy went south, millions of people lost retirement money they had spent their lives saving. More than $2 trillion in retirement savings, gone, leaving even those retiring seniors who had a solid financial plan wondering how they would survive.

A 2016 Transamerica Center for Retirement Studies® (TCRS) survey put the state of retirement in alarming perspective. Fifty-one percent of workers are afraid they will outlive their savings. Baby boomers approaching retirement have only $147,000 (estimated median) saved for the coming years.

Imagine a husband and wife retiring at 65 and living to be 85; $147,000 sounds like a lot until you divide it by 20 years, and realize it’s $612.50 per month. Even if you could accurately predict the return on the bulk of your savings, and the stock market skyrocketed as you withdrew the smallest possible amount, you could be in real trouble over the long run. Nearly half of workers are planning to keep working past age 65, and 11.5% don’t plan to retire at all.

How Did We Get Here?

As conceived, 401(k) accounts were intended to be extra savings, a measure to supplement pension plans and Social Security and let employees retire in comfort. But employers jumped on it as a way to cut expenses and replaced their pension plans with self-funded 401(k) plans (paywall). Pension plans were phased out, leaving people entirely responsible for their own retirement savings, aside from the barely subsistence-level pittance doled out by Social Security.

Twenty years ago, much of the workforce could retire in confidence with a steady pension and benefits. Today, the number of workers with a pension plan is closer to 10%.

Sounds pretty grim, doesn’t it? That’s the situation too many seniors face: a potentially long life of abject poverty and chronic health conditions they can’t afford. How can they make ends meet? For seniors who haven’t saved enough, the answer may lie in rethinking their options.

Harnessing New Ideas

The idea of applying an unconventional approach to retirement planning was the vision behind The Golden Opportunity Network. Founder Stephen Terrell aimed to use his decades of experience to present a new approach to retirees facing complex financial issues. “We take a holistic approach to our clients’ futures,” says Terrell. “We look at every possible angle to improve the lives of seniors during their golden years and apply solutions that might not be immediately apparent, like cashing in an old insurance policy or arranging a reverse mortgage.”

Whole Life Insurance And Reverse Mortgages

For two decades following World War II, whole life insurance was the most popular insurance investment. Low-cost premiums and general prosperity, coupled with the huge baby boom, made life insurance a bigger priority in the minds of people with lingering insecurity from the Great Depression. Baby Boomers who kept up the premiums throughout their lives may have a substantial amount available to borrow against or cash in.

Reverse mortgages can also be a financial lifesaver to people over the age of 62 who have built equity in their homes. Seniors struggling to make ends meet who take out a reverse mortgage stop making house payments and get cash back from their equity, either in a bulk disbursement, monthly payments or a line of credit.

While there are definite drawbacks , reverse mortgages can ease financial burdens and allow seniors to remain in their homes for the remainder of their lives as long as they pay insurance and taxes and continue to live in the home. When the homeowner dies, surviving family members can buy the home back with a traditional mortgage, or the bank takes possession.

Trading Down

Selling a large home and using the money to buy a smaller home or apartment is another good strategy, especially if the home has plenty of equity and real estate values are high. While it may be painful to sell the home where they raised a family, what’s important now is money in the bank. If seniors can bank enough money to pay their bills for several years, this can be a sound financial decision.

Finding Old 401(k) And Pension Plans

According to a 2008 Bureau of Labor and Statistics (BLS) survey, most baby boomers had changed jobs 10 times by the time they hit 42, and finding old pension and 401(k) plans can be tricky. Companies change hands, merge or go out of business, but the money may still be available. The Pension Benefit Guaranty Corporation is a federal agency where you can search for pension plans guaranteed by the agency. You can also check the National Registry of Unclaimed Retirement Benefits.

Explore Government Benefits

Melanie Haiken, senior editor for Caring.com, suggests checking into veterans benefits and writes that you will have to be persistent and assertive to collect. Veterans who served more than 90 days of active duty with one day during wartime may be eligible for “aid and attendance” payments, and their spouses may qualify as well. The Senior Veterans Service Alliance reports that so few veterans are aware of this benefit that only 5.4% of eligible veterans collect.

AARP recommends exploring the government resources available at Eldercare.gov, Benefits.gov, and the National Council on Aging’s BenefitsCheckup.org, to find help you may not be aware of.

Dealing with your own finances is complicated and confusing. With so many possible considerations, an experienced planner with your interests in mind may be your best option for a comfortable retirement, especially if you’re faced with unforeseen obstacles.

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