Seniors face certain economic issues as a result of aging and these issues deepen as they approach the final years of life. As life expectancy continues to expand for Americans, becoming a senior at age 65 is no longer considered the major event if once was. People are continuing to work beyond the age of 65 since they are still healthy and prefer to be productive to spending the remainder of their life watching television or playing golf.
Other seniors continue working for financial reasons, or because they have children or grandchildren living with them that they help support, which is becoming more and more common. The reality of today's society is that many older American's remain healthy and productive well into their 80s and even 90s. But as people age their financial situations change as they begin to deal with specific issues unique to elder Americans.
Failure to Plan Ahead
For many seniors there is a period of time prior to their death when they are struggling to stay physically and financially healthy. Health care costs are rising as their savings are being depleted and their income is not keeping up with inflation.
Too often aging seniors, and typically their families, do not properly plan for the extended years when they will be drawing more heavily on a diminishing savings and earnings. It is generally a crisis such as an inability to pay for services or medical care, hospitalization or sudden illnesses that result in action being taken. Unfortunately, by this time it is can be too late. Assets are already depleted and the family is not ready to accept the economic and/or personal responsibility for treatment and care. The key to avoiding this situation is to plan way ahead to be sure adequate resources will be available to cover whatever contingencies may occur in the final years of life.
Savings and Investments Are Running Out
Many elderly Americans reach their senior years with a significant amount of savings and investments—and others not so much. Those without adequate savings and investments are particularly vulnerable to unexpected costs that may arise with the passing years. However, even those who have been diligent in setting aside money for their senior years can end up outliving their savings and investments. As seniors reach, and surpass, age 85 or 90, they can find that numerous expenditures have eaten away their savings and investments.
Elderly are Vulnerable to Financial Exploitation
As people age there is a tendency to be more trusting since it is more difficult to keep up with new information as society changes so quickly while mental capacity decreases. The lighting quick speed of technological innovation makes this knowledge gap even wider in today's society.
Financial exploitation can occur in various ways. For example handymen or mechanics can sometimes take advantage of seniors by providing services that are unnecessary, and then overcharging for those services. Phone scams and Internet scams can take advantage of lonely and unsuspecting seniors and rob them of their savings. Some unethical financial services professionals will sell financial products, financial services or investments to seniors that are not suitable for them and unscrupulous insurance agents can sell extra policies and coverages that are not needed. Family and friends should be on guard to the risk of financial exploitation so they can help protect their senior loved ones from it.
Insecurity of Social Security and Medicare Programs
With almost half of all seniors in the United States falling below the threshold of economic vulnerability, (those below two times the supplemental poverty threshold), policymakers hold a lot of power over the quality of their futures, especially concerning changes to the social insurance programs—predominantly Social Security and Medicare—that protect this group. Proposals that would place a greater burden for out-of-pocket medical costs onto the elderly, or reduce their annual Social Security cost-of-living adjustments, can represent severe financial hardship for many of these seniors. Studies suggest a need for strengthening social protections for the elderly, yet some policy makers are advocating cutting the vital, yet skimp, protections they currently have.
House Budget Committee Chairman Paul Ryan's proposed changes to Medicare predict an increase in seniors' out-of-pocket health costs would raise the share of the economically vulnerable elderly by 8.4%, pushing the share up to 56.4%. That will mean nearly 3.5 million more seniors would be economically insecure. A proposal to shift to indexing cost-of-living adjustments to the chained consumer price index for Social Security benefits would also push 132,000 more elderly into economic insecurity.
Policymakers considering changes to Social Security and Medicare must consider the harsh economic realities confronting elderly Americans. Many of America's 41 million seniors are one injury, diagnosis or health insurance premium increase away from significant hardship. Most seniors live on modest retirement incomes which cover the costs of basic necessities to support their simple, yet dignified, quality of life. For these seniors, and even for those with greater means, Social Security and Medicare are the bedrock of their financial independence and security. Thus proposed changes to these programs should be evaluated not just for their impact on future budget deficits, but for their impact on the ability of the elderly to subsist.
With over 23 million Americans aged 60+ considered economically insecure, living at or below 250% of the federal poverty level of $28,725 per year for a single person; the economic realities that seniors deal with are often very serious and sometimes frightening. These elderly adults struggle with rising housing and health care bills, inadequate nutrition, lack of access to transportation, diminished savings, and job loss, all while dealing with decreasing independence and health as they age. For older adults who are above the poverty level, one major unexpected set-back can change today's reality into tomorrow's financial woes. Planning ahead and dealing with the reality of the economic issues that will beset older Americans as they age are necessary steps to help ensure financial security into the final years of life.