Still No Plan? Knowing What You Need To Know Whenever You Retire!

May was Older Americans Month and this year’s theme, “Age My Way!” highlighted a much needed takeaway by learning from older Americans what they wish they’d known to prepare for their post-work lives. First, 78% of those recently surveyed wish they had saved more.

Many also regret not creating a plan for how they wanted to spend their retired years and what it would cost to fund that life. Fewer than 1 out of 5 retirees made such a plan (18%). Also as surveyed, three out of four people age 50 plus know they want to age in place—aka, living independently in their homes and communities for as long as possible after they retire from work. So how can you make sure you can do that when there are a lot of unknowns when planning the future. Research has shown that people who are successfully aging in place have four major ways to make it happen, namely:

1) Know your sources of income ahead of time: Sources range from “secure income”— such as Social Security benefits and traditional pensions—to lump-sum income, such as workplace savings and investment accounts. The latter requires knowing what taxes are involved and when and how to draw down those funds – remember RMD’s – Required Minimum Distributions. So, even if retirement is years away, learn about the system and how to claim Social Security so you get the most out of your benefit. That action will vary depending on the age you apply and whether you decide to receive your own worker benefit or a spouse’s, if eligible. Start by registering for an SSA account.

If you have lost track of a retirement account you had with a previous employer, Make sure you know how to find it.

Have you neglected to fund an ‘emergency’ account for unexpected expenses? Start now—even if you are paying off debt – everyone needs a flexible account – start small but start soon. One advantage is not having to draw down from your retirement accounts when the markets tank – think 2022!

Every day our nonprofit office receives calls from women who are unhappily surprised by rules they were not aware of after learning that they will not receive a spouse’s retirement benefit leaving them with an unexpected financial shortfall. Remember, both spouses in a couple need to familiarize themselves with all these financials. And women, single or married, need to make sure they know what to know. About 67% of women 85 plus live alone, and will need more income since women tend to live longer.

2) Understand your healthcare costs—and the ways to pay for them: These costs can vary hugely, but many people underestimate potential costs. Average lifetime medical expenses for couples 65 plus are $315,000—that’s out-of-pocket, beyond what Medicare Part A, B and D cover. Medicare doesn’t, for instance, cover most long-term care, such as nursing home stays or home health workers who come to your home. Once you’re aware of such costs, you may decide to purchase a newer version of long-term care insurance — but research it first.

3) Realize there’s a network of support out there for you, but know what you will need to pay for it: As you reach an advanced age – or if you or your spouse decline in health earlier than expected — you will likely need others to help. The Administration for Community Living (ACL)’s Eldercare Index for services exists to provide Americans with help with needs like medical transportation and caregiving—and how to do so within your zip code. You or perhaps a caregiver can access help through the U.S. Administration on Aging’s local Network of Area Agencies on Aging.

You should also have all your important documents in order and legal agreements drawn up, so that a designated person or persons can act on your behalf in regard to your finances and wishes for medical care. These resources become essential if, of course, your physical or mental health declines.

And in case you aren’t familiar with the costs of caregiving now is a good time to point out that if an adult family member lives nearby and will likely step up and become your caregiver, it’s vital for the whole family to realize how much that job may demand. It’s estimated that 53 million Americans are caregivers, and that on average they spend $7,242 of their own money each year on the person they’re caring for. That’s not counting lost wages and retirement income if they need to step back from their own job. Families can learn about ways to fairly compensate the caregiver among them, often by drawing up a Personal Care Agreement (PCA).

If your expenses become too great — or if you weren’t able to save as much as you had hoped – you may have further options, such as downsizing to a smaller home, or considering a reverse mortgage line of credit, so consider the pros and cons. But with a plan in place adapting to the various stages of aging will be easier to handle for everyone involved.

4) Have a network of unpaid support (i.e., family or friends): One of the reasons people want to age in place is to stay connected to the community they’ve known and to the multiple programs designed to support independence. Typical programs include benefits counseling, meals transportation resources and assistance navigating Medicare and Medicaid. Fortunately, you can also stay connected virtually as well as in-person.

Now that you have a clearer picture of the consequences of aging, if you are too young to retire, why don’t you check in with older family members – your parents, an aunt or uncle who lives on their own – to make sure they too understand the big picture issues and have the necessary directives and paperwork that will help it go smoothly. Ask them, ‘Where do you want to be living as you age, and do you have a plan worked out to help you get there?’