Living Longer......deteriorating health.....medical expenses
Aging generally means several things. Living longer, living in good health, helping your children and grandchildren, living off of less money and unfortunately, deteriorating health.
More and more people are having to work longer in order to pay for their later years.
To start with, people will stop working and start living off of funds that were created during their working life. Such funds as government pension plans, personal pension plans, government subsidies, company pension plans.
There may be other ways of creating funds such as selling a home and moving into a less expensive home, selling off other valuables such as artwork, coin or stamp collections, cars and other valuables.
Unfortunately, most people just have the pension funds they get. Most people don't have a big enough house to move out of or valuable collectibles. But if the right pensions have been created, life can be pretty good when aging. The trick is to plan well ahead for your retirement then aging will at least not be a financial burden.
Hopefully, your later years will be in good health. You can still afford your home, have a car, and travel. If your home and vehicle are paid off then they say you will generally need about 70% of your working income. If you rent or still have vehicle payments then it will cost more. It will likely take some adjustments though making the transition to having less income.
But for most of us, aging is a case of the body getting more aches and pains.
Basically, it all comes down to being able to afford the regular things in life plus affording two things: increasing expenses related to health issues and to live longer in general.
- Pills
- special supplements
- surgery
- stronger glasses
- hearing aids
- more dental work
- a care-home.
People are living longer so they will need to pay for these items for a longer period of time. Instead of paying for maybe 15- 20 years you know have to pay for 25 years.
You can pay for a medical and dental plan but they usually cost hundreds a month and you still have to pay a deductible.
People in the lower incomes will be hard hit as they usually wind up with poor personal pensions and poor company pensions if they get a company pension at all. Self-employed people have to create their own pensions as well.
You need to plan to:
- make less money in your old age
- collect as much pension funds as possible
- be debt free when finally retiring
- pay out more to keep your general health good
- plan to live to a higher age
- expect to need to go into a care home
Mortgage-free Home
One of the great ways is to have a nice home that is paid off. That way the home can be sold and move into a less expensive home and pocket the profit. Those of us who don't want to sell may use a line of credit or a reverse mortgage. If your home is paid off, the bank will loan you funds that can be spent then your home can be sold and the loan (mortgage) can be repaid. Just make sure that the loan if very small and the property can easily pay off the loan. While reverse mortgages can provide funds to live off, these loans may have many special clauses in them the can create financial difficulties as well. Any reverse mortgage should be looked at in great detail and checked out on the internet and/or with some specialists to make sure they will really fulfill your needs. Reverse Mortgages should also be considered a last resort to garner needed funds.
Company Pension Plans
Take advantage of any company pension plans. Most company pension plans come as a plan that matches your own input so put in as much as possible. Other company pension plans may require you to put a certain amount of your income into a plan. The company simply lets you use their payroll system to put funds into a pension plan. Of course, many countries have national pension plans that require workers to pay a percent of their income into the country run pension plan. Many countries also create personal pension plans that workers are allowed to put funds into with some sort of tax breaks. Take advantage of as many plans that can be afforded as they will make life in old age more financially stable.
Debt Free
Try to be as debt free as possible when retiring. This is not a time to be creating debt. Make sure your home is paid off, car is in good shape and you don't need a new car unless you save up the money, don't allow credit cards to get out of hand.
Research Health Care and Homes
Know what your options are for health care (medical and dental) including care homes. Knowing this means budgeting for it. There will be less financial surprises this way.
Adjust Work Life to Life Expectancy
People will have to work longer then before to save more to live longer. It is becoming more of a fact of life now. Smart planning also needs to include other ways to create funds. Plan in another 5 years of work to cover your longer life expectancy.