The number of people with over a million dollars in retirement savings has just hit an all time high!
Fidelity has just reported that almost 200,000 people have over 1 million dollars in their retirement account.
This is reassuring news! So much of the news on retirement savings focuses on the number of aging Americans that are on track to outlive their savings.
It is true that many older Americans woefully underfunded their retirement and now fear outliving their money.
A 2018 survey by PWC shows that over ⅓ of baby boomers have saved less than $50,000 for retirement.
Five Reasons Older Adults Go Broke
In our work providing daily money management services to older adults, there are five main reasons that older adults outlive their money:
- They live longer than they ever expected.The good news is we’re all living longer! The bad news is that many older adults never expected to live so long. They watched their parents and grandparents die in their 60s and 70s and assumed they would too. Their savings reflect this assumption.
Experts recommend that we all plan for a 30-year retirement. It might be too late for today’s older adults, but hopefully younger adults will make different decisions.
- They did not downsize soon enough.Holding on to the family home with its high maintenance costs and expenses can ruin an older adult’s financial situation. Many want to stay in their own home, to have a place for the extended family to gather, and to not say good-bye to the wonderful memories.
Moving to a smaller home or even to a cheaper state may make better financial sense for retirees.
- They spend too much money.If you’ve been following me for a while, you know that we are huge fans of saving money. For all of our clients, we examine every bill and grab every bit of savings we can. Paying for unnecessary services, subscriptions, and fees? We find and eliminate those expenses. Experiencing high prescription drug costs? We find a better Medicare Part D plan. Paying too much for assisted living care? We find a cheaper alternative.
Many older adults are not taking advantage of potential savings and are spending too much money unnecessarily.
- They get scammed. Older adults are vulnerable to financial exploitation, and they lose about $36.5 billion each year to scammers! Being a savvy consumer and having help overseeing financial transactions can protect older adults from scams.
Some of our clients have lost thousands of dollars before getting help.
- They get the wrong disease.An older adult dealing with dementia, Parkinson’s, ALS, or other progressive, debilitating diseases face extremely high long-term care costs. These diseases rob them of their independence and eventually require the constant assistance of another person for supervision or help with everyday activities such as bathing, dressing, and toileting. Medicare does not help pay for the care required to live with these diseases.
Having a disease like heart or kidney failure, though, comes with some support and benefits from Medicare. Medicare will spend hundreds of thousands of dollars on surgeries, dialysis, and other acute medical interventions; they spend nothing on custodial care. Those older adults living with the “wrong” disease face higher out-of-pocket expenses.
The fear of outliving their savings is a real worry for many older adults. The new numbers on current workers’ retirement savings is hopeful. Perhaps working-age Americans are taking heed as they learn about the struggle in old age.
The daily money managers at Senior Partners are committed to helping each of our clients not outlive their money. We help them find savings, make smart money decisions, and stretch their resources for as long as possible. To learn more about our services, please contact Senior Partners at (678) 278-8410 or schedule your free consultation here.