Stereotypes – including those held by economists and retirement analysts – are just plain wrong, it turns out.
Seniors are not spending all their money on health care and long-term care. They’re not splurging on round-the-world cruises or other big-ticket, bucket list items. And they’re not living in such abject poverty that they need to survive on cat food.
According to studies by the Employee Benefit Research Institute [EBRI] and the Society of Actuaries [SOA], most retirees are living frugally but comfortably, thank you.
The EBRI tracked non-housing-asset changes in three groups’ first 20 years of retirement – people who retired with $200,000 or less in assets, with $200,000 to $500,000 and with more than $500,000. Overall, retirees with half a million or more in assets had spent only about 12 percent of them, while the other groups had spent just 24 to 27 percent, which isn’t all that much. About a third of the retirees from all three groups actually had more assets after 18 years than they retired with.
SOA focus groups with retirees over 85 found that most spend less than their income, that they’re comfortable with frugality, and that they resiliently adapt to their circumstances. Even the 85-year-olds with low asset levels felt at least somewhat secure financially.
While memories of growing up in the Great Depression may color older retirees’ spending, a bigger factor in retirees’ perceived financial security may be nothing more complicated than force of habit; continuing the habits that helped them build up retirement assets (like not overspending on things they don’t need) is helping them preserve those assets now.
Not overspending on things you don’t need makes sense at any age, but even more so for senior care services.
Many businesses specialize in just one form of senior care. They work conscientiously to provide high-quality, reliable service and honestly believe in the value of the service they sell. But, as the old saying goes, to the man with a hammer, everything looks like a nail.
Take full-time visiting companion services. If all that’s needed is help with housekeeping and cooking, a full-time companion is overkill. And if an elder needs home nursing, a companion can be a risk to health.
If a senior has trouble with bathing, is full-service assisted living really needed? Or will a walk-in bathtub and some grab rails solve the problem for much less? On the other hand, while many businesses will gladly sell you walk-in bathtubs, what if the problem goes beyond bathing? Then assisted living is a must.
That’s why Senior Insights works to define, plan and manage the care you need – not to sell any specific care services. And why before we recommend anything, we conduct a thorough, three-part needs assessment. Only once we’ve defined the holes in a senior’s safety net do know for sure what kind of care, and how much of it, is really needed and which of the reliable independent providers we’ve already vetted is best suited to offer it.
A free 30-minute consultation with us can show you some great ways to preserve your health and independence while you conserve your retirement assets.