The problems of the elderly in America today are somewhat different than those faced by retirees in past generations. Increased longevity has made it harder to make ends meet.
If you are at least 65 years old and have stopped working, then you’re probably already familiar with many of the problems that face America’s elderly population today. Your income is probably less than it was while you were working, and your health may also be starting to deteriorate. The elderly in America today have to make their money last longer and do more than retirees of past generations.
The elderly in America today face physical, mental, financial and family issues that can erode their sense of security and cause a great deal of stress. A list of the problems of the elderly includes:
- Health Problems
- Mental Issues
- Financial Issues
- Family Issues
- Leaving A Legacy
- Life Settlement Solution
As seniors move into retirement, a host of health issues that they may not have previously experienced may manifest themselves. Many of these conditions can be helped with proper diet and exercise, while other ailments and chronic diseases can be unavoidable. Here’s a list of the common healthcare issues faced by seniors:
- Increased longevity – Healthy retirees today can often expect to live well into their eighties or nineties, instead of dying in their sixties or seventies like past generations. Advances in healthcare are allowing Americans to live longer than ever before, and this trend is only likely to increase as new medical technology and procedures appear.
- Osteoporosis – As you age, your bone density lessens and can sometimes reach a point where an action as simple as standing up or sitting down can cause a fracture. This usually happens with the “old”-old age group who have made it into their late eighties or nineties. But the Osteoporosis Foundation estimates that over 50 million Americans age 50 and up are affected by this condition.
- Arthritis – This is perhaps the single most common ailment afflicting older adults today. Roughly half of all adults age 65 and up suffer from this condition to some degree, and the joint pain it causes can erode a retiree’s quality of life.
- Heart Disease – The Center for Disease Control and Prevention (CDC) ranks heart disease as the leading cause of death among those age 65 and up. About a third of all men and a quarter of all women in this age category suffer from some sort of chronic heart ailment. Those with high blood pressure and/or cholesterol levels are at greater risk for heart disease than others. And many elderly patients cannot afford to treat these conditions.
- Obesity – Just over a third of all men and about 40% of women between the ages of 65 and 74 are considered to be obese, and this risk factor can lead to heart disease, cancer, diabetes and other chronic conditions. Daily activities such as exercise can help to address this problem.
- Substance Abuse – Studies show that about one out of 5 seniors have had some sort of substance abuse problem either now or in the past. The most commonly abused substances are alcohol and tobacco, which can interact in unhealthy ways with any prescription medicines that are being used. It can also lead to greater risk of injury from falls or tripping. Substance abuse can also lead to other medical conditions such as diabetes or a stroke. Those who struggle with this need to find a social support group that can help them to recover.
Not all health-related issues are physical in nature. Many seniors suffer from various mental health ailments, including:
- Dementia – Despite the recent advances in medical care, the elderly still grapple with several major common medical conditions, such as Alzheimer’s disease or another form of cognitive impairment, which can require constant supervision and care by either a friend or family member or healthcare professional. These symptoms also tend to appear in those in their eighties or nineties, although they can start sooner in some cases. The Alzheimer’s Association estimates that about 1 out of every 9 adults in the United States age 65 and over have this condition.
- Depression – The American Psychological Association estimates that 15 to 20% of those age 65 and up have experienced depression at some point in their lives. Depression can affect seniors in many ways, such as by lowering their immune systems and making them more vulnerable to disease. Seniors can help to combat this with regular exercise and increased social interaction.
- Loneliness – Many seniors who live alone don’t spend enough time interacting with other people, and loneliness can be overwhelming for some of them. And this can make those who suffer from this more vulnerable to fraud (see below). It is important for elderly persons to maintain a network of social contacts and stay in touch with their health service providers.
The high costs of healthcare along with any debt that has accumulated can make it very difficult for some seniors to make ends meet. A list of the financial issues that the elderly face today includes:
- Poverty – A Kaiser Family Foundation report revealed that a whopping 45% of all adults age 65 and up had incomes below the poverty level in 2013. The rate of poverty is slightly higher among elderly women than males. And, of course, those who live in poverty have a much harder time paying medical bills and prescription drug costs that address their health conditions than those who are more fortunate.
- Lack of Financial Planning – Those who fail to plan are essentially planning to fail. Millions of Americans are retiring without seeking advice from a financial planner about how to handle their retirement plans and other savings and maximize their tax deductions and credits. A financial advisor can help his or her clients to stretch their dollars further and economize in ways that the client can live with. He or she can also help retirees to allocate their assets in a way that matches their risk tolerance, time horizon and investment objectives.
- Running Out of Money – This goes hand-in-hand with poverty, but many seniors simply do not have sufficient savings to tide them over during retirement. Many in this dilemma are forced to go back to work in some capacity, which can be very hard on them in their later years. One way to combat this factor is through the use of annuities that can provide a guaranteed lifetime payout.
- Fraud – Many seniors are very trusting people, and hucksters often prey upon this type of person, pretending to be their friend in order to get them to send money for some good or service. Lonely persons are usually the easiest targets, but even savvy seniors can get caught up by scams on occasion. The National Adult Protective Services Association issued a warning, saying that financial fraud against the elderly is on the rise. Children or other loved ones need to educate the elderly on common scams and rackets that are being used. And, unfortunately, in many cases the swindler is one of the elderly person’s children or other relative who seeks to take advantage of their generosity.
- Low Interest Rates – Seniors who have previously relied on income generated by fixed-income investments have had a hard time finding decent yields in recent years. Although rates are now finally starting to rise again, many senior investors have had to reallocate their portfolios into more aggressive instruments such as junk bonds, high-yield mutual funds and preferred stocks in order to generate the income that they need to live on.
- Fear of the Stock Market – The Subprime Mortgage Meltdown of 2008 caused a substantial bear market for stocks. But while savvy investors were buying stocks right and left, many seniors who lost substantial sums of money missed out on the subsequent bull market that has lasted for almost 10 years. Many of them remained in low-yielding investments that have substantially lagged the markets for the past several years.
- Social Security Funding – The Social Security trust fund is expected to be depleted by 2033. At that point, seniors may be forced to absorb a reduction in benefits of over 20%. This is alarming news, considering the large segment of seniors who rely on Social Security as their primary or sole source of income.
- Increasing Healthcare Costs – The cost of healthcare in America is rising at a much faster rate than the overall rate of inflation. This is especially true in the managed care sector, which includes nursing homes as well as in-home care services. And healthcare costs will most likely continue to rise as pharmaceutical companies and medical device manufacturers continue to churn out personalized therapeutic drugs and devices.
- Poor Job Market – Seniors who have no retirement savings and need to reenter the workforce will find themselves at a disadvantage, as many employers are looking to hire younger employees who will work for a lower rate of pay.
- Debt – About half of all seniors who retire today still have a mortgage payment, compared to a quarter of retirees in 1992. But housing debt isn’t the only kind of debt that many seniors are saddled with. Student loan debt among seniors has grown to $18 billion – more than 500% of the level of student loan debt among seniors in 2005. These debts make it more difficult for seniors to make ends meet and can erode their ability to reach other financial goals, such as paying for healthcare or taking a vacation.
Dealing with family can be a complicated affair for many seniors. There can be leftover feelings of anger or resentment between parents and grown children or other unresolved issues that need to be worked through. Personal boundaries may need to be (drastically) redefined or other changes in relational dynamics may need adjustment. Some of the family issues that the elderly must contend with include:
Assisting Adult Children – A recent report from the Pew Research Center revealed that almost half of all seniors who are age 60 or above were helping their adult children to pay their bills. Of course, it’s hard to find fault with this practice, but statistics show that this trend is substantially impacting the level of assets of the elderly. About a fifth of the $18 billion in student loan debt among seniors was borrowed to support a child or grandchild attending school.
Living with Adult Children – Parents who can no longer care for themselves often move back in with their adult children. This arrangement can be dicey in some circumstances, where the parent or parents must adjust to the role of receiving care instead of giving it. But this arrangement is also often the most practical one by far; care that is given by a family member may cost little to nothing, while care provided by a professional can cost hundreds or thousands of dollars out of pocket.
Leaving a Legacy
The final factor that the elderly must prepare for is leaving their remaining assets to their children or other heirs. These decisions can also be fraught with peril, as there may be disagreements among the heirs as to how the assets should be passed. Here are some of the issues that elderly persons must contend with when it comes to dispersing their assets:
Avoiding probate – Many elderly persons would be wise to place their assets inside a revocable living trust so that the probate process can be bypassed. While some assets such as IRAs and annuities are inherently exempt from the probate process, other items such as vehicles, homes and retail bank and investment accounts are subject to this procedure if they are not placed inside a trust. The probate process can be expensive and time-consuming and may result in assets being distributed inequitably or going to heirs that the deceased did not intend.
Legal Issues When the Spouse Dies – Many seniors who lose their spouse have no idea how to transfer any assets that were solely in the spouse’s name to themselves. Adult children may need to get involved in this process in order to ensure that everything gets done correctly.
The Life Settlement Solution
Elderly persons who own a cash value life insurance policy have another option that they can turn to if they find themselves in dire straits financially. They can either access the cash value directly via withdrawal or policy loan, or they can sell their policy to a qualified buyer. This is usually a life settlement company that is in the business of buying life insurance policies from older people.
The company will pay the insured a hefty sum up front and then assume the responsibility of paying the policy’s premiums. It will also name itself as the new beneficiary on the policy and will collect the death benefit when the insured dies. The advantage to doing this is that the insured will usually receive much more than the cash value in the policy when they sell it. If the insured is terminally ill, then a viatical settlement may be the right choice. Viatical settlements closely resemble life settlements, except that the payout is usually slightly higher.
A large percentage of the elderly population in America today are caught between reduced income and rising healthcare costs. Consult your financial advisor or insurance agent for more information on how you can protect yourself or an elderly family member from running out of money.