Between caregiving, market volatility and health issues, some retirees are living on the edge. Here are some ways to protect yourself.
This article is reprinted with permission from NextAvenue.org.
Dolly Olds, a 61-year-old freelance writer and graphic designer, says she spent nearly all of her savings on renovating her New York City apartment. In an emergency, she says she would consider selling it and retiring outside the United States, possibly in a country like Costa Rica.
But she also cares for her 89-year-old mother, who lives about 30 minutes away on Manhattan’s Upper West Side. Olds sees that her mother’s health is deteriorating and she worries that she too will have health problems as she gets older.
“Ideally, I’d like to wait until I’m 70 to receive Social Security, which is when I’ll have the most money,” says Olds. “But I’m also panicking that politicians will be upset that I’m working so hard to get more freelance work.”
Lack of funds for retirement
Given the growing number of older Americans who are not fully covered by Medicare and are projected to face health problems that could deplete their savings, Olds’ view on waiting for Social Security collection Concerns are valid.
The number of Americans over the age of 75 is expected to more than double by 2040, according to Boston College’s Retirement Research Center. Retirees risk depleting their savings and investments as physical and mental health problems become more pronounced with age, warns.
Read: Many retirees can’t wait until age 70 to receive Social Security benefits, but this strategy makes it possible
Olds purchased a one-bedroom apartment in 1994 when he began freelancing full-time. Over the past two years, she’s spent about $65,000 on apartment upgrades. This includes a new kitchen, bedroom ceiling repairs, upgraded bathrooms, and a complete repaint.
This also increased her grocery bills and monthly upkeep, so she experienced credit card debt for the first time. “I’m not going to sell my apartment and go out on the town with a tin cup, but I don’t want to do that.”
On the other side of the country, Sasha Patterson says she didn’t choose to retire. Her circumstances drove her to it.
Patterson, 62, quit her job in New Jersey in 2018 and moved to cross-country with her husband, Paul Seaver, also 62. At the time, Patterson was working for the Center for American Women’s Politics (CAWP) at the Eagleton Institute. She has a PhD in Political Science from Rutgers University where she has been for 20 years.
“I wasn’t growing at work and my status was stagnant,” she says. Her husband lost her job as a landscaper in 2016, so they jointly decided to move to the West Coast, where her home was less expensive. They sold their Maplewood, New Jersey home and moved closer to Seattle.
Patterson says he wants to do similar work to what he did at CAWP. She made her connections at the University of Puget Sound. She attended her February 2020 conference to continue networking and inquire about consulting work, but the COVID-19 pandemic shut down the country just weeks later. By the time the U.S. eased quarantine restrictions about a year later, there were no vacancies for Patterson.
See: ‘Working longer isn’t a realistic cure for retirement anxiety.’ It’s time to get realistic about how much you actually work
where is your job?
Disappointed but not yet discouraged, Patterson continued to apply for jobs but received no response.
Patterson recently started receiving a pension from Rutgers and her husband started receiving Social Security benefits. Additionally, they have her Roth IRA and some savings from selling their home in New Jersey, which they put on the certificate of deposit.
You can survive on a tight budget, but emergencies come at a cost, Patterson said. When a new roof was needed, Patterson and her husband borrowed her $12,000 from relatives.
“I live without a safety net, but I’m hoping to get through it until I start receiving Social Security when I’m 70,” says Patterson. Still, she says the biggest benefit of living in Washington is the state’s Medicaid program. Called Apple Health, it offers free or low-cost insurance to those who meet the eligibility requirements.
“We can’t afford a new car, and it will be difficult to cope with another home-related expense, but at least we won’t have to worry about medical care,” adds Patterson.
dip postponed his departure
Despite their different economic circumstances, Patterson and Bob Polans face common fears about retiring in 2023.
CPA and financial planner Polans, 70, offers advice to soon-to-retire people. I am also planning to retire at the end of the year. Polans, who works for Armanino LLP in Philadelphia, postponed retirement last year, citing the stock market decline and the uncertainty that 2023 will bring for him.
“Among professionals with specialized skills, such as lawyers, accountants and investment advisors, there is a tendency to continue working part-time after retirement to maintain some degree of engagement in their careers and generate additional income. says Polans. He added that he may continue to work several hours a week even after he officially retires at the end of this year.
Polans recommends that soon-to-be retirees build up cash reserves and hold on to their investments during market downturns. When it comes to investing, Polans suggests finding the best way to withdraw from your IRA, 401(k), and other tax deferred accounts given your tax liability.
Read more: Worried about retirement? 6 ideas to break the deadlock
He also advises finding strategies to balance withdrawals from savings and retirement accounts to minimize the impact of income taxes in retirement. He adds that it’s hard to plan for health issues, especially after retirement.
“You can’t keep working unless you’re healthy enough to do it,” says Polans.
One way to prepare for potential health problems in retirement is to purchase long-term care insurance, says George Nushanian, 51, a financial advisor and CFP in the Northridge section of Los Angeles. It’s expensive, but unexpected medical bills can lead to bankruptcy, he says.
See: Do you need $3 million to retire?
Three Categories of Retirees
“We found that people fall into three categories,” says Polans. “One is wealthy individuals who have amassed enough assets to be ‘self-insured’ and can afford to pay such costs when they arise.
“On the other end of the spectrum there are people who can’t afford insurance of any kind. Budgets can’t afford it,” he continues.
“Medium-sized people have a variety of options for planning for unexpected medical expenses, including strategies and products that are not traditional long-term care insurance,” he adds.
There are government programs for those who cannot afford long-term care insurance. “For example, in California, Medi-Cal may pay for long-term nursing home and home care if you can’t afford to pay for a nursing home,” he says. “But these strategies need to be put in place before the need arises, so planning is key.”
Carmen Cusido holds a BA from Rutgers University and a Master’s degree from the Columbia School of Journalism. Her work has appeared in Newsweek, Oprah Daily, Refinery29, Health, NBC, CNN, NPR, Cosmopolitan, and other publications.
This article is reprinted with permission from NextAvenue.org. (c) 2023 Twin Cities Public Television, Inc. All rights reserved.
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