Half of adults aged 65 and over who live alone don't have the money to cover their basic needs, according to recent research from the University of Massachusetts Boston. And nearly a quarter of households with two adults 65 and over are also lacking the financial resources to pay for necessities.
This means a staggering number of seniors will spend their later years struggling financially rather than enjoying life.
For these current retirees, cutting costs of living and exploring options to increase income are essential. For those who are still working, these statistics should serve as an important wake-up call to step up savings rates to avoid a similar fate.
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What to do if you're retired and can't afford the basics?
If you've left work and are struggling to afford your basic needs, there are a few options to consider:
- Return to work. If you can work full-time or part-time, a paycheck will provide immediate financial relief. You can also use some of your salary to save for when you're older and work becomes impossible. Earning income could affect your Social Security benefits if you haven't yet reached full retirement age, but while you may see a reduction in benefits now if you earn too much, you'll get back the money later in the form of larger Social Security checks.
- Downsize: If you have an expensive home, consider moving somewhere cheaper. You could lower your rent or mortgage payment and potentially cash in on the equity in your home.
- Consider a reverse mortgage: If you own a home and don't want to leave it, it's still possible to access cash from it with a reverse mortgage. There are pros and cons to this option, though, so do your research carefully.
- Move to a lower cost of living area: Some places are far cheaper for retirees than others.
- Explore financial assistance options: If you have a low income, you could potentially qualify for government benefits such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP), or Supplemental Security Income (SSI).
Taking action to increase your income or reduce the amount of money you need will make your life a lot easier if you're struggling to afford the basics.
How to make sure you can cover your costs as a senior
If you aren't yet retired, you still have the chance to make sure you don't struggle after leaving the workforce. Some of the steps you should consider taking today include the following:
- Increase your retirement account contributions: Aim to contribute around 15% of income to retirement saving plans each year. While it may take time to work up to this, the sooner you reach this contribution level, the more likely it is you'll have money you need as a senior.
- Aggressively pay down your debts: If you still owe money as a retiree, this could eat into your budget and affect your ability to cover your costs.
- Begin saving for healthcare: Medical care costs are some of the biggest expenses many older Americans face. Having dedicated funds set aside for them can help you to stay out of financial trouble.
The younger you are when you start saving and the more you save throughout your working life, the less chance you'll face the serious financial hardship so many older Americans are currently dealing with.
Seniors in America are struggling
It's troubling that so many seniors are having such a hard time. But there are things most people can do to improve their situation.
Whether you're still working and have time to save, or are already a retiree and need to look into moving or applying for benefits, now is a good time to act.
