Many Americans first view retirement as a process of saving enough money and, once that goal is achieved, that they will eventually settle into rest and relaxation later in life.
But new research finds that some challenges can derail the end goal.
According to a recent Edward Jones survey of more than 12,000 North American adults across five generations, nearly half (48%) of today’s retirees say retirement brings more surprises and challenges than they expected. are doing.
The five situations that retirees often face that can significantly jeopardize their well-being, including finances, are the death of a family member or close friend, personal health problems, partner or spouse health problems, financial setbacks, And retirement itself.
Anticipating these challenges may help those planning for retirement to at least include provisions for common financial setbacks.
Lena Haas, head of wealth management advice and solutions at Edward Jones, told Yahoo Finance, “We were like, ‘Okay, let’s dig deep into what retirement means for people today. I’m going to understand,'” he said. “How do they feel overall? What frustrates them? What helps them succeed?”
Here are some important points.
When a family member or close friend dies
The most common disruption was the death of a family member or close friend, cited by 42% of those surveyed. For those who lost a spouse/partner, 77% said it was a highly devastating event.
That’s not surprising, says Haas.
Many couples often make retirement plans together to optimize their savings, she said. A spouse’s death, she noted, can take a big toll on your income, especially if your spouse is still working at the time.
“Sometimes you suddenly find yourself in a situation where your income is not what you expected, but your expenses are the same or more,” Haas said. “So if you own a house and have a mortgage on it, it doesn’t change when someone dies.”
Financial trajectory correction: Retirees should consider working with a financial advisor to plan for the possibility of such events. According to the survey, “27% of retirees and 30% of pre-retirees are currently working with a financial advisor, and 94% of them are confident in their ability to navigate financial transitions after retirement.” It says.
Retirees facing the death of a spouse or partner can also turn to government and social welfare programs to improve their financial security. However, few people do this now. Only 16% of retirees used these services. Of those who did, 88% said they were happier after retirement.
personal health issues
The second most common challenge faced by retirees is personal health issues. 3 out of 10 of her respondents have experienced this, and 45% say such problems are highly devastating.
Haas noted that as the population ages, so does the incidence of long-term illness. Not only do these reduce the quality of life of retirees on a daily basis, health problems can significantly increase health care costs and greatly increase their ability to earn an income.
“Many of these illnesses are essentially chronic diseases that require very meaningful maintenance and are very detrimental not only to people’s physical health but also to their overall financial well-being and well-being with their families. “It’s going to have a big impact,” Haas said.
“It will force people to become less physically active, often forcing people to cut back on or withdraw from work, and forcing health care costs to rise.”
Haas pointed out the impact of health problems on retirees and encouraged retirees to take out additional medical insurance.
Financial trajectory correction:
According to the study, 45% of retirees have additional health insurance coverage to limit out-of-pocket medical costs. 42% of this group said the move significantly improved their lives.
Spouse or partner health problems
Similarly, a spouse’s or partner’s health problems can overlap financially and interfere with the other partner’s ability to earn an income. Just over one in five (21%) of hers mentioned this general disruption, but 42% said it was very disruptive.
“What often happens is that the longer the illness lasts, the higher the health care costs,” Haas said. “Also, perhaps the other spouse has been forced to leave work entirely or partially to become a caretaker. It turns out that there is a direct relationship between the
Women tend to bear this burden disproportionately, which can also undermine their chances of on-time retirement. The study found that 56% of women had to adjust their lifestyle after retirement due to financial constraints, compared to just 41% of men who reported doing the same.
“Women are often the caregivers of family members, spouses, parents, or uncles and aunts with health problems,” Haas said. “Women often leave their careers to provide long-term caregiving, which in turn affects their career trajectory. [and] How quickly can you increase your rewards? ”
Financial trajectory correction:
Investing in long-term care insurance, which covers home care, community services such as adult day care and transportation, and ongoing care in nursing homes and assisted living, reduces financial burdens and allows relatives to turn to professionals for care. You will be able to -I’m taking. But research shows that very few people are getting the news. Only 15% of retirees and only 12% of his pre-retirees reported getting it.
significant financial setbacks
The survey found that one in five retirees is facing significant financial hardship, with inflation and rising costs of living being the most significant shocks. This is followed by medical and dental costs, housing and repair costs, declining investment values, and financial assistance to family and friends.
As a result, about half of retirees cut their daily spending, and three-quarters of Americans cut their spending, the report says.
“They also highlight in an interesting way how thrifty they are, associating frugality with really smart and careful choices rather than some sort of old-fashioned definition of cheap.” Haas said.
Financial trajectory correction: The study showed that retirees can alleviate their financial challenges by reducing debt and increasing savings. About half of retirees said they had reduced their mortgage or debt. Nearly 60% of retirees say doing so has significantly improved their retirement life.
For some retirees, retirement itself can be a major challenge, the report says. For example, the study said that 30% of retirees said they were forced to leave their jobs unexpectedly. Reasons include health problems, unemployment, and family responsibilities including caregiving.
This could be a significant financial setback if you had planned for more years of service in order to save enough for retirement.
Financial trajectory correction: Haas advised retirees to factor unexpected retirement into their financial plans.
“It’s very important to have a scenario and say, ‘Well, I want to work until a certain age. After that, I think I’ll work.'” It is very likely that something will happen that will force you to retire. [are] Are there other adjustments to be made? ”
Dylan Kroll Yahoo Finance reporter and researcher. follow him on twitter @CrollonPatrol.
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