For most people, the answer is either “Probably not,” or “I don’t know.” That’s because the answer depends on factors beyond our control – how long we live, how long we need care, and how much care we need.
For those already struggling to make ends meet or who have little to no savings, managing will be harder as medical and care needs grow. But even for those with a robust nest egg, a few years of long-term care will deplete it. (The payer of last resort is Medicaid.)
Not only is it impossible to calculate what we’ll need, it’s also impossible to figure out how much we’ll have. The value of our assets and investments is subject to forces beyond our control, from insider manipulations to global events. We now know how quickly our homes can lose half their value and that pensions can disappear if companies go out of business or state legislatures vote not to honor them. There are no safe savings options like those stodgy bank accounts earning between 4% and 6% annually that were the norm until sometime in the 1970s.
Many organizations – banks, investment firms, AARP – offer “retirement calculators” to help people assess their financial readiness for retirement. They work best for youngish people with rising salaries and a long time horizon (good candidates for financial products). The calculators are useless for the person who’s already retired because he was laid off at age 59, and whose nest egg has dwindled due to health-related costs. Nor do they factor in the hundreds of thousands of dollars that may be needed for long-term care in the final years of life.
For all but the very rich, economic insecurity has become a given. The “safety net” has big holes and a lottery mentality has spread throughout our economy. Many economic “choices” are already de facto lotteries, like airline tickets, whose costs vary unpredictably depending on when and where you make your purchase and which additional fees are tacked on.
Price variation is particularly striking in the health care arena, as was made clear by a recent publication from the Center for Medicare and Medicaid Services (CMS) that compared prices for common medical procedures around the country. (Time Magazine published an easily read summary by Stephen Brill.) The data showed huge variations in prices charged for the same procedure, often in the same area – differences sometimes as high as $100,000. If you’re responsible for copays tallied by percentage, these differences could limit your treatment choices.
What If You Don’t Have Enough?
If you don’t have enough to support yourself in retirement, you can do three things: work longer, reduce expenses, and seek out sources of assistance.
Senior Jobs
The AARP website and AARP publications talk a lot about jobs for seniors and offer a lot of advice about making yourself more employable, but expecting more than pin money is a pipe dream for most retirees. Employers may value the skills and work ethic that seniors bring to a job, but that doesn’t mean they’re willing to pay more than minimum wage or offer benefits like paid holidays, dental insurance, and sick leave.
Most senior jobs are fine for those who don’t need the money but who enjoy working and/ or having their time structured. For the poor, a minimum wage job, even full-time, won’t cover bare-bone expenses and may result in the wage-earner losing government assistance.
Meanwhile, millions of adults over age 65 can’t afford dental care, hearing aids, or all the medications they need. Since poor oral health, improper medication, and faulty hearing render people less employable, those most in need of income are often the least able to compete for jobs.
Ironically, those most able to keep working in retirement are those who need income least: university professors, judges, politicians, CEOs. Raising the retirement age for Medicare and Social Security may be fine for them, but would be devastating for millions of blue-collar and personal care workers.
Surveys show that high percentages of seniors expect to work longer, but they may not be able to. While the number of seniors working beyond age 65 has gone up over the past two decades, the total percentage of working seniors is less than 15%. (Bureau of Labor Statistics Report) According to a Wall Street Journal article, “some 70% of retirees … stop working before they turn 65,” usually for health reasons.
Pinching Pennies (i.e., cutting expenses)
If your financial style before retirement included pinching pennies, you’re probably doing okay in retirement. If not, ideas for pinching pennies abound.
Google “savings tips for seniors” and you’ll be overwhelmed with suggestions. For starters, there are the National Council on Aging’s Ten Tips, Aginginplace.com’s Seven Tips, and Yahoo.com’s 6 Money-Saving Tips.
Each year the AARP Bulletin publishes a list of 100 ideas for saving money – some ridiculous, some practical – something for everyone. If you’re seriously hurting financially though, they won’t help much.
Government and Community Assistance
Your first stop in seeking assistance is your local Area Agency on Aging. It will put you in touch with most of what’s available in your community. Many city and county governments, civic organizations, non-profits, religious organizations and educational institutions have programs that help seniors maintain their homes and yards and provide other free or low-cost services.
There are programs that help people pay for medical expenses, programs that assist people in paying utility bills and property taxes, and programs supporting nutrition and transportation options. In many cities, AARP provides free assistance in preparing tax returns. (Membership in AARP brings numerous other discounts and services.)
Many stores and entertainment venues offer senior discounts. The federal government offers a $10 lifetime pass to all national parks and federal recreation lands including the Grand Canyon and Yosemite. (National Park Pass, scroll down for information about seniors)
For information and assistance relating to medical conditions, many large and medium-sized cities have branches of national advocacy organizations working to serve people with specific conditions (Alzheimer’s, diabetes, hearing problems). These organizations often provide material assistance as well as emotional support. List of Research and Support Organizations. (See also Staying Independent)
Despite well-publicized problems with government websites, Medicare’s website is fantastically well-organized, easy to understand, and full of good information. For information about assistance with medical expenses, start here.