Preparing for retirement, especially for those over the age of 50, can seem like a daunting task. Add this to the fact that only 60% of this age group knows the difference between an IRA and a 401(k), and the need for education intensifies. What makes matters a little more complex is that there are unknown expenses that very few prepare for. We take a look at a few of these and also some ways to get around them.
Taking Financial Burdens Into Retirement
Many seniors expect to be debt-free by the time they enter retirement, however, the opposite is often true. Studies show that many seniors carry their credit card debt well into their golden years, where Americans over the age of 65 carry credit card debt averaging $6,351. What makes this debt even more alarming, is the fact that social security payments are less than half this amount.
Another worrisome statistic is the number of retirees that enter this phase of life with a ticking time bomb that is now referred to as a mortgage. Instead of seeing mortgages being paid off, the period of 2001 to 2013 saw an increase in housing debt of 8% in the age group over 55. Instead of enjoying this period, more seniors are worried about maintaining their mortgage repayments than before.
To avoid this, it’s important to use the working years to pay off the debt. Downscale well before retirement in order to absorb fees and costs.
Holding Onto the Family Home
Apart from the debt, holding on to the family home could have other implications as well. For instance, the maintenance and upkeep of the property can become hard to manage. Also, living at home may force seclusion.
Assisted living is a good option for retirees, as they are able to live in a community setting. Residents still have as much privacy as they need, with the added benefit of friends and assistance nearby. The cost of assisted living can be steep; however, if saved for, then the cost is well worth the effort due to the emotional and physical support retirees receive.
Life as a retiree can be daunting and with the added costs of living, it makes sense to make wise financial decisions early on in life. This will undoubtedly add to the quality of life in retirement. As will good health and the investment in skills that can boost income during the golden years.