09/21/2023
In a series on the three major reasons seniors do not thrive in retirement, we will explore the touchy subjects of Income, Independence, and Health.
The reason I am exploring these topics, is from my accumulated experiences in speaking to seniors in retirement who are looking for help navigating their immediate and future concerns about money. Let's talk about the symptoms of the average Needs-Based customer referrals I have interviewed for a Reverse Mortgage quote.
These are seniors who, while experiencing an ongoing measure of financial distress, will oftentimes resort to the following lifestyle changes as their primary tactics to survive in place:
1) High-cost events in the lives of these seniors are often tackled with high-cost borrowing strategies; personal loans, credit cards, high-interest HELOC and HEL mortgages, etc. which can drain a senior of vital month-to-month living resources. Banks, and private finance companies are all too eager to provide credit lines to seniors who have little or no income aside from social security.
2) Cutting back on food and shelter needs to the bare sustainable levels. I have had potential customers deprive themselves of adequate nutrition on an ongoing basis, and more than one has sickened and passed as a result of this all-too-common measure of cost-cutting. This is not an outlier example that happens in the back woods somewhere. This is an everyday situation happening in urban and suburban communities where you may live.
3) Restricting daily activities to television watching, reading and any small activities they can afford through the local senior centers they are involved with.
It saddens me to hear how bad things have gotten. Seniors who previously had vital, active lives with purpose and hope, suddenly find themselves in these types of circumstances where to make do with less and hunker down is required just to keep themselves afloat. They feel vulnerable and powerless to change their situation, or to put themselves in a better position to move forward.
These seniors drift into very unhealthy living, suffering from depression, and the inevitable health impacts that depression brings with it. They have little confidence in making decisions, and seem to drift from one quick solution to another without making any real positive movement forward. They tend not to trust those professionals who are trying to help them, out of concerns of cost, or credibility; instead relying upon unhelpful resources of information: predatory family members, indigent children, pastors, and similarly situated friends.
If they are homeowners, they seem to be dug in on the idea of passing free and clear homes to their children, while the home falls down around their ears. Legacy is a powerful motivator, especially in the eyes of a parent who is struggling themselves. They want to make good for the kids, and the grandchildren, perhaps leave them a financial windfall as a result of their unfortunate circumstance.
To be transparent, I do fund reverse mortgage products in my career. However, I do not believe that these products are the right solution for everyone, and in many cases may cause further harm to a senior who has lost the measure of self-discipline that allowed them to thrive, purchase, and maintain that home earlier in life.
I am doing this to illustrate the difficulties that some seniors experience in retirement for the purposes of helping to educate those who are looking at a post-career transition, to take a serious look at their retirement planning, and NOT leave the details up to the fates to decide.
The feeling of having enough, is not a good reason to neglect the numbers and imagine that everything will work out on it's own. Even those who have an investment portfolio of a million dollars or more, are highly encouraged to meet regularly with their investment advisor or wealth management advisor, to keep up with the numbers and be open to a change in strategy to help you outperform your own expectations. A million dollars used to be a mark of extreme success in the 1970s and 1980's. Today it is the price of a modest starter home in Los Angeles.
In the next segment we will discuss health, and the realistic costs that a turn in health can have on your retirement outlook. Money and health go hand-in-hand. A modest health emergency won't sink the ship, however, lack of planning will leave most seniors completely vulnerable to chance if a larger health emergency becomes a chronic issue that impacts the family and the household. Will Long Term Care be affordable? Will a whole-life policy provide enough protection for the couple, or will you still be vulnerable? Can you even afford Long Term Care insurance?
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