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Transamerica Survey Says Over One-Third of Seniors Report Declining Financial Health in Retirement

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If retirement is on your horizon, you’ve probably been spending a lot of time wondering how well your finances will hold up once you cut the ties to full-time work. For many retirees, the financial transition to retirement turns out fine. However, that’s not always the case, according to this recent article from Motley Fool. More than one in three retirees report that their financial situation has actually deteriorated since they quit working full time.

Financial Health is Declining, Many Seniors Say

“You’d think that as we got older, we’d do a better job of getting a grip on our finances,” writes Motley Fool. But at some point, new research shows that the “financial trend line” starts to dip in the wrong direction. “While it’s true that many of us will improve in [the financial] arena as we age into our 30s, 40s, 50s, and even 60s, new data from Transamerica suggests that we might regress once retirement kicks in. That’s because 36 percent of today’s seniors say their financial situation has declined since entering retirement.” You’ll find a link to the Transamerica report (all 97 pages of it) here.  The just-released report, which surveyed more than 2,000 retired or semi-retired seniors, is called “A Precarious Existence: How Today’s Retirees Are Financially Faring in Retirement.” We’ve only given the report a cursory glance, but it makes for sobering reading, as this introductory paragraph suggests:

“Today’s retirees are living a financially precarious existence,” says Transamerica. “How did this happen? Some could have been better at saving and planning, while others could have done everything right and still find themselves facing a savings shortfall. When today’s retirees started their working careers decades ago, the retirement landscape was quite different and many assumptions about retirement funding have since changed. Traditional defined benefit plans have all but disappeared amid the proliferation of self-funded 401(k) and similar plans. Life expectancies have increased, and now people have the potential of living longer than in any other time in history. Although inflation rates have been low, housing and healthcare-related costs have sky-rocketed. Government benefits, such as Social Security and Medicare, are under severe financial strain and reforms are imminently needed.”

Three Strategies to Improve Financial Health in Retirement

According to the Motley Fool article, it makes sense that income for many retirees would drop. “Unless you’re willing to work in some capacity during retirement, leaving the workforce generally means moving over to a fixed income. The problem, however, is that life’s expenses often aren’t fixed, and it can be difficult to navigate that glaring disconnect.” So what can you do today to avoid becoming one of the retirees unprepared for a major, unplanned financial adjustment? The article gives three common-sense strategies that will allow you to retire with greater financial security.

  • Understand how much savings you’ll need to retire. This is a highly individual calculation, not a one-size-fits-all formula. “If there were a single magic savings number that guaranteed financial security in retirement, we’d all have a set goal to aim for,” the article says. “But that’s not the way retirement works.” Motley Fool says to start with Social Security and then figure out how much income beyond that you’ll need to generate the recommended 80 percent of pre-retirement income, using the common “4 percent rule” to guesstimate the annual income your nest egg will generate.
  • Map out a retirement budget. This is a critical step, one many retirees overlook in our experience. Developing an accurate budget is imperative, says the article. “That way, you’ll get a clear sense of where your money is going from the start, which could prevent you from overspending early on in retirement and prematurely depleting your nest egg as a result.”
  • Reset expectations as needed. In the words of the Motley Fool, “a big part of doing well financially in retirement is taking stock of the income you have access to and working backward from there, instead of spending first and hoping your savings can support your lifestyle. Once you learn to be happy with a setup that works for your finances, you’ll be better-positioned to preserve your nest egg and avoid stress later in life.”

A Financial Dashboard is Your Best Bet

This kind of proactive thinking doesn’t have to be complicated, and you don’t have to go it alone. Here at AgingOptions we strongly recommend you sit down with a reputable professional planner and develop what we refer to as a financial dashboard. Just like the dashboard on your car, this powerful tool tells you at a glance the status of your finances, allowing you to project onto the future for an accurate prediction of your financial health years from now, and making it easy to adjust your plan as needed. We think it’s the very best way to ensure sound financial health, no matter where you are on the retirement journey. As the Motley Fool article puts it, “Though retirement can be a financially challenging time, you don’t have to resign yourself to an eventual struggle.  Assess your savings needs, map out a budget, and set realistic expectations. With any luck, you’ll avoid the money-related stress so many of today’s seniors are unfortunately facing.”

For those still many years away from retirement, the Motley Fool article brings timely advice. No matter what your circumstances, there’s no time like the present to change course and start making more prudent decisions concerning saving, spending, investing and debt. This is also a terrific reason to join Rajiv Nagaich at an AgingOptions LifePlanning Seminar where you’ll learn invaluable information about how to put all the pieces of your retirement plan together: making sound financial decisions; evaluating your housing options; selecting the right health care coverage; adopting a solid legal strategy; and ensuring that your family will advocate for your wishes as you age.

We offer free, information-packed LifePlanning Seminars in locations throughout the region. For a complete calendar along with simple online registration, visit our Live Events page or give us a call. Whether retirement is years away or you’re already retired – whether you feel well-prepared or overwhelmed – Rajiv has important and insightful answers for you. Age on!

(originally reported at

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