Retirement is supposed to be a time of rest after years of working hard. However, for many Americans, retirement is anything but peaceful. Several challenges come with retiring in the United States. Here are five of the biggest challenges you may face.
Lack of Savings
One of the most common challenges faced by retirees is a lack of savings. About 47% of workers don't have enough money to cover even basic expenses in retirement. This leaves many retirees struggling to make ends meet and often forced to rely on family members or social security benefits. If you're looking for ways to save, here are some of your options.
One popular way to save for retirement is FIRE: financial independence, retire early. This approach involves saving a large percentage of your income so that you can retire sooner than the traditional age of 65. It's not easy to achieve, but it can be done with careful planning and budgeting.
Achieving FIRE usually means sacrificing your current lifestyle, such as giving up expensive vacations or eating out frequently. It can be a difficult lifestyle change, but it may be worth it if you can retire years earlier than planned.
Invest in Index Funds
Investing in index funds is another popular way to save for retirement. Index funds are investments that track a specific market index, such as the S&P 500. This can be a less risky way to invest than picking individual stocks, and it can also be more straightforward and require less maintenance than other types of investments.
Increasing Health Care Costs
Another major challenge for retirees is the rising cost of health care. As we age, we tend to need more medical care, whether it's for chronic conditions or unexpected illnesses. But unfortunately, Medicare does not cover all medical expenses, leaving retirees responsible for footing a large portion of their medical bills. According to a study by Fidelity Investments, a 65-year-old couple retiring today can expect to need $280,000 to cover their medical costs in retirement.
Long-Term Care Expenses
In addition to regular medical bills, retirees may also face long-term care expenses if they develop an illness or injury that requires extended care. These costs can add up quickly and are not always covered by insurance. In fact, according to Genworth's 2018 Cost of Care Survey, the average annual price of long-term care services is $100,375 for a private room in a nursing home and $48,612 for home health aides. If you want to save up on long-term care expenses, then you'll need to follow these tips.
Choose the Right Living Facility
The facility you choose can determine how much you spend once you retire. First, you need to learn how to choose an assisted living facility. You can find various online resources for this. However, remember that the best living facility has a good reputation and affordable rates and is located near your family or friends.
Work with a Financial Planner
If you're worried about your long-term care expenses, working with a financial planner may be helpful. A financial planner can help you figure out how much you need to save and what kind of investments are right for you.
While the cost of living generally increases over time due to inflation, retired Americans are especially vulnerable to its effects since they often have a fixed income from Social Security or pensions. This means that their purchasing power decreases over time as the prices of goods and services continue to go up. According to the Bureau of Labor Statistics' Consumer Price Index, prices have increased by an average of 2% per year over the past ten year however, this This year's inflation rate has reached 8%, one of the highest in history.
Loneliness and isolation
Finally, another common challenge faced by retirees is loneliness and isolation. After years of working and being around other people regularly, it can be challenging to adjust to retirement life, where you may not see other people as often. This isolation can lead to feelings of loneliness and depression, which can be detrimental to your overall health. If you're facing this challenge, there are several things you can do, such as joining social clubs or volunteering in your community which can help you feel more connected and less isolated.
Retirement is supposed to be when you can relax and enjoy your golden years. However, for many Americans, retirement brings several challenges that can make it difficult to adjust to this new stage in life. From financial concerns like a lack of savings or increasing healthcare costs to emotional challenges like loneliness and isolation, there are several obstacles you may face when retiring in the United States. However, by being aware of these challenges and taking steps to address them, you can prepare for them and make your retirement more enjoyable.
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A travel, beauty and lifestyle blog with the occasional afternoon tea by Angelina Belle
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