Financial Challenges for Seniors in Retirement

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In a prior blog post, we discussed the importance of discussing financial matters with the family. When it comes to retirement lifestyle needs, it’s important to take heed of potential pitfalls as well. There are a number of challenges which could impact seniors’ financial security.

Greater generational wealth, increased life expectancy, and technological innovations all have exercised a heavy hand on the retirement planning process. Now there are more years for which seniors should plan financially. But what are some of the challenges which can impact retirement security?

Let’s take a closer look at some of these potential pitfalls below.

Financial Challenges for Seniors in Retirement

Social Security issues - More than half of aged couples rely upon Social Security for at least 50% of their income, according to the 2015 Social Security Fact Sheet. Furthermore, 47% of unmarried seniors rely upon Social Security for at least 90% of their retirement income. It’s reported the Old-Age, Survivors, and Disability Insurance Trust of Social Security can face insolvency issues by 2033.

By 2033, the OASDI will have used its remaining cash reserves. As a result, the Social Security Administration won’t be able to sustain current levels of benefit payouts. Seniors could face as much of a 23% haircut on their benefits at that point.

Inadequate retirement savings - In a 2014 study by, over 33.3% of surveyed American workers didn’t have any money saved for retirement. The rate was particularly high among seniors: 14% reported they didn’t have any retirement funds saved. Likewise, the Boston College Center for Retirement Research presents similarly troubling data. According to the center’s National Retirement Risk Index, as of 2013 over 50% of American households don’t have sufficient retirement funds so they can maintain their standard of living in retirement.

Having no retirement plan in place will lead to ongoing stress and financial uncertainty. Shortcuts won’t help over the long haul. The importance of being prepared for retirement can’t be overstated.

Limited employment opportunities - Many seniors plan to stay employed in retirement. But in reality, ample employment opportunities may not always be readily available. Older workers are more likely to be retained by companies. But in the current job market, it often takes aged workers longer to find a job after they’ve become unemployed.

At present, many businesses are opting for younger workers on account of their lower wage demands. Another factor which can impact seniors’ employment opportunities is health. If an aged worker has ongoing health issues, it can impact their performance or even ability to stay employed.

Rising healthcare costs – One of the biggest challenges for seniors is increasing healthcare expenses. Current data shows healthcare costs climbing at a rate of 5-7% per year, on average. If someone or their partner has chronic medical issues, it can greatly impact their retirement lifestyle.

According to HealthView Services, a healthy couple aged 65 that is retiring this year will have around $395,000 in total healthcare expenses for their remaining lifespan. It’s important to be knowledgeable about what Medicare does and doesn’t cover – for instance, Medicare coverage doesn’t carry over to long-term care needs.

Potential for financial shortfalls – The stock market may offer great returns. But it also comes with the risk for losses. For seniors, a heavy reliance upon equities for income can be a great gamble in retirement. The recent stock market downturn illustrates this.

From that standpoint, your financial portfolio should be carefully allocated. If too much of it is in risky investments, it can take years to regain losses. Be sure your financial portfolio and its allocations are suited to your current stage in life.

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Author: Super User

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