At the gym where I work out it’s not uncommon to hear older guys complaining in the locker room about our aches and pains. When the complaining subsides, inevitably someone will remark, “Well, at least getting old is better than the alternative.” Everyone gets older, which means that everyone has to retire; there are huge consequences for not preparing financially for retirement.
If you are fortunate enough not to die prematurely, you are going to grow old one day. As youth begins to gradually fade and health limitations increase, the reality that you will not be able to earn a living forever will present itself. At some point in time your financial support will need to come from something other than your job or business.
It’s very easy to dismiss this when we are young because we’ve never known anything but being young. We take our health, vigor and capabilities for granted. Just like anything that is “normal,” only when it’s gone do we tend to really appreciate it.
I never gave any thought to opening a door, drinking a cup of coffee, or cutting up the food on my plate until I tore my rotator cuff and my right arm was rendered useless. A few weeks of doing without it taught me a whole new appreciation for the value and ease a functioning right arm brings to my life.
Unfortunately, many of the capabilities we lose with aging do not return after a few weeks of healing. The harsh reality is that eventually most of us will not be able to take care of ourselves in the ways we are used to. (For more from this author, see: Establishing a Financial Caretaker for Old Age.)
So when you think about retirement planning, here is what it really means: When you can’t earn an income, how will you be provided for? Where is the money for rent and utilities going to come from? How are you going to get to doctor appointments and the store when you can’t drive anymore? Who will help you pay your bills when your eyesight or your mind aren’t as clear as they once were? Who is going to help you with meal preparation or remind you to take your medications?
If you have fully funded your retirement, you can feel secure that no matter what care and assistance you may need, you will have the means to pay for it. If you haven’t saved adequately, you will need to rely on others to take care of you financially as well as physically.
For many people, “others” mean first spouses, then children, and finally governmental or charitable organizations. These all have limitations.
What happens if you don’t have a partner? Or when they can no longer care for you? Or when both of you need care? (For related reading, see: Who Will Handle Your Finances When You Can’t?)
Unlike many other countries and cultures, “living with the kids” is not necessarily expected or accepted in the U.S. Most children are not equipped emotionally or especially financially to become caretakers for aging parents. According to studies I’ve read, the cost of caring for a parent who has not provided for themselves ranges from $250,000 to $700,000 in lost wages, opportunities and out-of-pocket expenses. People may have to quit jobs to care for a parent or hire care at a cost of up to $100,000 a year. Few in America can afford that.
Social Security provides only a minimal income. Medicaid pays for only basic care such as shared living space. Services like public transportation, subsidized elder housing and reliable in-home services are not available everywhere, especially in rural areas.
This is not a pretty picture of retirement. Unfortunately, it’s reality for millions of Americans. The consequences of neglecting to prepare financially for old age has real consequences.