Planning For Success At Older Ages
BY: ANNA RAPPAPORT
Anna Rappaport is an internationally recognized actuary, consultant, author, and speaker and founder of Anna Rappaport Consulting. www.annarappaport.com
Three key factors contribute to the quality of life at older ages: sound financial resources, good health, and social interactions. In-depth interviews with U.S. and Canadian older retirees as well as their adult children offer new insights into how these factors shape the lives of older people.
A new Society of Actuaries (SOA) report entitled Post-Retirement Experiences of Individuals 85+ Years Old summarizes findings and includes many retirees’ insights on how they manage. One finding is that even those of modest means are often satisfied, and that people at older ages adapt quite well to changing circumstances.
The report also shows that, for most middle-income Americans, Social Security is a major source of regular retirement income and housing equity can be rather substantial, but not very many people have substantial financial assets. Tips for individuals who will rely primarily on their Social Security for retirement income include trying to claim Social Security at age 70 or as late as possible to maximize Social Security income, and managing expenses carefully.
Many households work to manage their regular expenses so these do not exceed annual income. To this end, some families minimize drawing down their assets, instead withdrawing only the Required Minimum Distributions (RMD) from their tax-deferred retirement accounts. Interestingly, though some do spend these RMDs, others simply move the money to savings or investment accounts. Additionally, older respondents are often reluctant to use financial assets or home equity to help finance regular expenses, preferring instead to draw on these assets only for major and unexpected expenses.
Most people over age 85 are frugal, and they tend to accept their situations and manage within constraints. Yet physical limitations tend to be disruptive: when family members can no longer care for an older person, elders tend to rely on paid caregivers, assisted living, or nursing homes. These are expensive, and not surprisingly, assets then decline rapidly. Some will rely on long-term care insurance, while others will turn to Medicaid. Successful retirement for people who develop significant limitations requires planning rather than simply “rolling with the punches.”
While financial security is important for older retirees, there’s clearly more to quality of life than just money. A recent consumer guide by the SOA and Financial Finesse called Retirement Health and Happiness offers practical ideas for improving retiree health and happiness. For instance, the guide considers how people can stay emotionally healthy. Tips provided include:
- Joining a club, association, or religious organization to connect with others who share interests;
- Seeking out opportunities to volunteer and pursue interests;
- Engaging in a meaningful hobby;
- If possible, getting a roommate or adopting a pet.
In addition, the guide suggests that readers interested in volunteering can search for opportunities in their area via the internet. To enhance physical health, the guide recommends:
- Gardening and/or yard work;
- Joining a gym, exercise, or yoga class;
- Walking, jogging, or riding a bike;
- Learning how to eat healthier foods.
Inevitably, peoples’ level of activity and vitality at ages 85 and beyond will vary. The SOA interviews found that most have experienced physical or mental declines, yet the majority plan to remain independent. When help is needed, family members or communities can provide support services and amenities for older persons.
Phyllis Mitzen has an interesting write-up of age-friendly communities and the “village” movement in the SOA Living to 100 and Beyond Monograph (see Session 6b). Some people may even consider moving to a location offering more access to the things they would like to do at older ages.
This piece was originally posted on October 6, 2017, on the Pension Research Council’s curated Forbes blog. To view the original posting, click here.
Views of our Guest Bloggers are theirs alone, and not of the Pension Research Council, the Wharton School, or the University of Pennsylvania.