Living Longer, Saving Less

by Norma J. Goldman

According to U.S. government sources, the average life expectancy in 1970 for males was 67.1 years, 74.7 for females. [1] By 2015, it is projected to be 76.4 for males and 81.4 for females. This is a very significant rise, with profound effects on retirement planning for those under 65, and on managing income wisely for those have already retired. Since Americans are living longer, Baby Boomers [2] can expect to live as many as 25 years in retirement!

At the same time, Americans are saving less than previous generations. Except for one brief upsurge at the end of 2012, savings rates per capita hover at about 2.5% of personal income. With interest paid on savings at historic lows, seniors must search for wise investment alternatives to make their nest eggs grow.

Many seniors feel compelled to continue to help children and grandchildren financially, so the impact of insufficient retirement savings is huge. One of the best investments any senior can make in a young person is to pay the cost of a Christian money-management course. Such training is invaluable for making a lifetime of good spending and saving decisions.

Haven’t Retired Yet?

Consider working longer. Even when full benefits are available at 65, many eligible retirees continue to work for another three to five years as health and job availability permits. Benefits are adjusted upward each year, and in many cases, employers extend insurance benefits for the non-working spouse.

Wait for full benefits from Social Security by postponing the date when you begin drawing a check.This is frightening to seniors who worry that sufficient funds will not be available at retirement. Yet, there is a substantial difference in the monthly benefit paid to individuals who opt for drawing Social Security at age 65 versus age 62. If you’re in poor health or unemployed, waiting until age 65 may not be an option, but by working until 65, regular payroll contributions will increase the long-term benefits.

Already Retired?

Managing monthly expenses is key; pay extra attention to your budget. Here are some good places to look:

• Eating out is still a major budget buster for Americans.
  

• Cut the cable bill and spend more time reading, walking, and enjoying friends.
  

• Simplify gift giving; make your time together the focus of holidays rather than gifts.
  

• Eliminate a land line. Today, most alarm systems can work with a cell phone so ask your service provider to help.
  

• Monitor utility use carefully. Reset the thermostat when away for extended periods. Lowering it by only a few degrees makes a big difference in monthly bills. Establish “balanced billing” with your gas or electric company, making monthly charges predictable and easy to budget.
  

• “Living beneath your means” is a way to prepare for unexpected emergencies which surface with alarming regularit:
  

- Mortgage payments rise as a result of property tax increases.

- Appliances have shorter lives than those in previous decades.

- Seniors experience huge increases in medical expenses.

Multi-Generational Household?

Nearly 17% of the population lives in homes with at least two adult generations (parents/grown children, parents/grandparents), and sometimes three! Reasons include out-of-work children and aging parents. For some, it’s the realization that the cost of maintaining three residences makes no sense when all can share in maintaining one. Social security checks that don’t go very far look bigger when pooled with other adults in a single home. Builders recognize this growing trend and many new homes feature privacy and comfort for multi-generational households.

Living longer, saving less requires a major shift in our thinking and the application of the best skills in budgeting and planning we can muster!

About the Writer: Former magazine editor Norma J. Goldman enjoys a successful freelance career in her retirement. The award-winning writer lives near Nashville, TN. Learn more about retirement options at www.boardofretirement.com.

1] White, American citizens; ethnic and non-American life expectancies are substantially less
2] The generation born in the U.S. between 1946 and 1964, some 76 million strong