Are you worried about these financial challenges?… Maybe you should be!
As we journey through life, one of our ultimate goals usually involves our golden years of retirement. But, in the dreams of leisure and relaxation, retirees may face shadows of financial challenges in the coming years.
Imagine yourself stepping into retirement only to wrestle with unexpected obstacles threatening your financial equilibrium. According to experts, in the next five years, retirees will likely face many challenges, ranging from inflation woes to healthcare costs.
With economic uncertainty looming over our heads, navigating these gloomy waters with caution and preparation is imperative.
That’s why Easy Seniors Club has decided to shed light on 9 financial challenges that retirees are bound to confront in the coming years, providing insight and awareness to help in these tumultuous times.
Financial challenge: Healthcare costs
One of the most critical areas to watch, according to experts, is long-term care and healthcare expenses. These costs have been steadily rising in recent years, outpacing general inflation rates for a while now, and there’s no sign of this trend reversing, said a financial advisor and owner of Principal Preservation Services.
He said that many middle-class families might find themselves unprepared for the financial stress of long-term care, whether for themselves or loved ones. The best way to get ahead of this is by integrating healthcare planning into a comprehensive retirement strategy.
Without the appropriate planning, the affordability of necessary long-term care services could become a considerable challenge, potentially draining retirement savings much faster than you planned.
Financial challenge: Emergency savings
To provide ourselves with a certain degree of financial security, we should have emergency savings to safeguard ourselves in case of an illness or some other type of catastrophe.
Most middle-class families don’t have at least six months of emergency savings, though, and some working people don’t have any savings at all. As you can imagine, this catastrophically affects their golden years.
A survey found that only about one out of four households have six months of money saved up for emergencies. And many of these individuals are in the higher income groups. Another one-fourth don’t have an emergency savings at all.
And the remaining households have a small to average amount of savings but not enough to cover six months of expenses.
Financial challenge: New vehicle
A finance expert with Clearsurance, says that the middle class won’t be able to afford a new vehicle in the not-so-distant future. Car prices have increased dramatically in the past couple of years and will likely continue to become even more expensive.
Things like autonomous technology, safety features, and EV batteries greatly contribute to those rising prices.
Financial challenge: Safe investments for retirees
According to financial experts, the notion of “safe” investments can also easily change. Traditionally, the way it works is that bonds and fixed income have been seen as cornerstones of a retiree’s portfolio, providing both stability and income.
But, with interest rates at all-time lows and inflation on the rise, the real returns of these investments might not end up keeping pace with inflation. This dark truth poses a high risk to the preservation of purchasing power for many middle-class families, including retirees.
So, it’s become increasingly vital to explore diversified investment techniques that can offer both protection and growth against inflation, ensuring that retirement savings can support your goals and lifestyle.
Financial challenge: Extended family trips
The habit of extended family trips, especially overseas, will probably increasingly be something the middle class can’t afford in the next couple of years,” says the CEO of CoinLedger.
If we stop to think about it, in many ways, the traditional family vacation has fallen to the wayside over the last few decades due to a number of factors, including inflation and then Covid, to name a few.
But with the middle-class income not going nearly as far as it used to, the money that could previously have been used for trips will probably be going to things like housing and other essential necessities.
Financial challenge: Real estate
With the way things are shaping up, a mortgage or buying a new home might be something the middle class won’t be able to afford in the next five years, according to the CEO of Credit Summit.
Especially in certain high-demand areas of the country, it’s still pretty difficult to have an offer accepted on a home. Unless you’re bidding way over the asking price, offering in cash, waiving key aspects of the inspection and sale, and so on.
Many realtors suspect that it will be more and more out of reach for the average middle-class citizen. And speaking of owning property, according to David Brillant, a tax, trust and estate lawyer at Brillant Law Firm in California, he also believes that real estate is an area to watch closely.
With the recent adjustments in property tax laws, including those prompted by Proposition 19 in California, and the potential changes to the unified credit against estate and gift taxes, there’s a real worry that owning and passing down property will become increasingly difficult for the middle class.
Financial challenge: Eliminating debt
Here are a couple of debt statistics from Debt.org that may shock you: Over 160 million Americans have credit cards. The average person with a credit card has at least three cards. On average, each home with a credit card has over $15,000 in credit card debt.
Not only do we have enormous amounts of credit card debt, but we also have mortgages, cars, student loans, and medical debts. This debt is growing faster than our income, and many middle-class individuals have trouble getting by.
Money-Zine evaluated income and debt growth over the past couple of decades and found that in 1980, the consumer credit per individual was $1,540, which made up 7.3% of the average household income of $21,100.
In 2013, that debt was $9,800 a person, which was 13.5% of the average household income of $72,600. This means debt has increased 70% faster than income between 1980 and 2013. Where would you guess we stand now?
Financial challenge: Leisure and travel
For those trying to get a general idea of the next five years, another aspect to consider is leisure and travel in your golden years. For many people, the yearning to explore and enjoy leisurely recreation forms a central part of their overall retirement dream.
But, with increasing costs and inflationary pressures affecting everything from airfare to accommodations and dining, what was once considered an attainable goal for the middle class can soon become a luxury.
This shift could lead to critical adjustments in retirement planning, emphasizing the need to build a stronger savings strategy to accommodate higher costs of leisure and travel.
Financial challenge: Dental work
The US Department of Health and Human Services says that our country spends approximately $64 billion a year on oral health care. A mere 4% is paid by Government programs.
Roughly 108 million people in the US don’t have ANY dental coverage, and even those who are covered might have some trouble getting the care they require, the department reports. Frequently, individuals will buy medical coverage and forget about dental because it’s so costly.
Also, dental insurance might only cover 50% of the more pricey procedures, like bridges and crowns. This leaves those who have insurance with considerable co-payments.
In most cases, middle-class earners will delay or even refrain from some of these procedures in an effort to save some extra cash. According to the CDC, nearly one in four adults between the ages of 20 and 64 have untreated dental caries like infections or cavities.
Have you faced any of these financial challenges? Be sure to share your thoughts with us in the comments section below!
And if you found this article helpful, Easy Seniors Club also recommends reading: 5 Alarming Social Security Reduction Factors You MUST Know About
Regarding Dental Care, it sometimes feels like practitioners do not have agreed upon costs. For example, getting fillings for 3 cavitiesd that my 8 year old granddaughter had to have taken care of cost her father approx. $300 each and he has dental insurance. My son is a polie sargent so he does make a decent salary BUT $300 is HIS out of pocket COST (after insurance is rediculous! If standards were put into effect, the cost would, I believe, be way less.
If good dentists were affiliated with dental clinics, I would recommend that possibility to him! But, we know that clinics do not always have excellent dentists on staff since they can make so much more in private practice.
I wonder if some political candidates might consider this serious enough to take up as an issue on a federal basis?