Are Seniors Struggling Financially? (2024)

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Understanding the Challenges of Retitrement Finances.

TheU.S. Chamber of Commerce reports that it is likely the U.S. will experience a mild, but short, recession in the middle of 2023. The expected small recession will be caused by lower consumer and business spending due to rising interest rates. Experts also anticipate that inflation will come down significantly during 2023. It is believed that theFederal Reserve’santi-inflationary policies designed to curb demand and tighten financial conditions will start to bring prices down much closer to the Fed’s 2% inflation target over the course of the year.

With the expected financial ups and downs in the coming year, it is understandable that many seniors are concerned about their savings andretirement planning. So, whateffects of the recessionshould seniors expect?Are seniors struggling financiallyright now? And what are some steps seniors can take to avoideconomic hardship?

Aging and the Economy

Aging and the economyare related in many ways. And the ups and downs of the economy uniquely impact seniors, both before and afterretirement. Here are a few ways the downturns in the economy impact seniors in both situations:

ApproachingRetirement

Most households approaching retirement still rely on income from work. A recession could cost them their job.
If a job is lost, a senior may be inclined to begin takingSocial Security benefitsearly, lowering the amount they can receive.
Declining house prices could impact the collateral value of a house.
Increases in debt could eat intoretirementsavings.

AfterRetirement

Declining house prices could affect their ability to pay for current expenditures, but also to afford a place in anassisted living facility, a continuing care retirement community (CCRC) or a private nursing home.
High inflation can reduce purchasing power, even of an indexed benefit.Social Security benefits, for example, are adjusted once a year, based on the increase in consumer prices over a period ending a few months before the adjustment. However, the price of groceries and those of other goods and services increase continuously through the year.
Retirees often turn to their savings to get them throughretirement. But when inflation occurs, the purchasing power of those savings diminishes, creating a need to withdraw larger amounts of savings to cover the costs of living, effectively shrinking the lifespan of theretirementsavings.
Stock market declines could impair the ability to pay off student debt and the ability to makeinter vivostransfers to support younger family members who had been thrown out of work.

Financial insecuritycurrently affectsmore than 15 million seniorsin the United States. Older adults are now facing economic insecurity because of many factors, including:

Social Security benefitsare not enough to live on without additional sources of income.
Many older adults do not save personal funds forretirement, while others live longer and outlast their savings.
Healthcare for seniorsis costly and now takes a larger share of a senior’s income than in previous decades.

LoweringRecession Impactfor Seniors

The threat offinancial insecuritycan lead anyone to look for options to safeguard their savings and their future. For seniors, especially those ofretirement age, it can be comforting to have a plan in place ahead of time. Here are a few things to remember when thinking aboutseniors and the economy:

No one individual can prevent a depression or a recession or control high inflation.
If these events do occur, it is likely to cause at least some level ofeconomic hardship.
It is possible toadopt strategiesto help survive financial downturns and lower therecession impact.

For seniors who are retired, or those who are consideringretirement, here are some steps that can increase the odds of surviving a recession duringretirementyears:

During tough times, it is important to be able to react appropriately and think clearly. Putmental and physical healthat the top of the priority list to be able to best handle anything that comes.
MaximizeSocial Security benefitsby delaying the start of receiving the benefits.
If possible, maximize income from traditional pension plans or cash balance plans.
Create a dependable social circle of peers, family and friends who can provide support during trying times. Socializing can also bringhealth benefits for seniors.
Establish a plan to make systematic withdrawals from retirement accounts to survive a market downturn; consider using a portion of savings to buy a cost-effective annuity, which can act as a personal pension.
Adjust living expenses to match retirement income. Creating a streamlined monthly budget can help keep spending on track. Moving into aretirement community, likeMount Prospect Senior Living, can help seniors establish one monthly payment that covers nearly all budgetary needs.
Take calculated investment risks for the opportunity to grow savings andretirementincome.
Stay up to date onretirementtrends,financial planning for seniorsand new strategies forretirement planning.

About Mount Prospect Senior Living

AtMount Prospect Senior Living, we want our community to feel like home. Mount Prospect is designed to meet the needs and wants of active, engaged seniors. The Mount Prospect team utilizes theVibrant Life® program to allow residents to use creativity and personal preferences to create their day in any way they like. The program challenges and inspires residents, encouraging new adventures and making suggestions based on individual interests and physical abilities. We offerassisted living and memory care apartments to fit every need, and our team is here to help you make your new space into a new home!

At Mount Prospect, we would love to invite you and your family tovisit our community and learn more about our programs, our culture and our care. Have questions before you make the trip? Call us at 847-250-6029 today — we are happy to answer any questions you have!