The number of Americans ages 65 and older will more than double over the next 40 years, reaching 80 million in 2040.
The number of adults ages 85 and older, the group most often needing help with basic personal care, will nearly quadruple between 2000 and 2040. Additionally, Americans have added nearly 30 years to their lives over the past century. But about 50 percent of Americans are not financially prepared for these extra years.
Humans’ increased life expectancy in their older years has a new issue: financial stability in those increased years! Americans planning to retire at 65 need to put 10 to 17 percent of their current income aside – even if they started saving as early as age 25. Most of the older population finds that they don’t have enough money to take care of themselves past a certain point in time. How can one ensure they have enough money for their future years?
Creating a financial plan for your future self later in the years may include:
- A monthly budget with income and expenses
- A budget for large expenses over 3-5 years
- Revision of health insurance plans to see what is covered and what isn’t
- An overarching review of all assets and debts
- Ensuring you have chosen a person to handle finances and decision making
According to the Federal Reserve Board’s latest Survey of Consumer Finances, the median net worth of Americans aged 55 to 64 is $212,500. Your net worth is calculated by subtracting any liabilities, such as debt, from your assets.
Make sure your retirement plan contains expenses to cover such as:
- Housing
- Health care
- Auto and life insurance
- Taxes
- Utilities
- Groceries + Personal Care
- Transportation
- Debt
- Cable, Internet, Phone Services
- Travel and Leisure
It’s also critical to think about what happens after your life journey ends. To ensure that your financials are in check after your passing; one may take these steps:
- Create a will/trust naming all beneficiaries
- Write a health care directive, aka a living will
- Assign a durable power of attorney
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