Unless you find yourself sipping Mai Tais on the Riviera at 60 years old, unless you can comfortably live off your savings and spoil your grandkids rotten with trips and toys, unless you’ve stopped working voluntarily and paid your final mortgage payment, you’re not really retired. At least not in the American Dream kinda way. We’ve got Betty White and the Golden Girls to thank for that disillusionment. And remember those lucky dotcomers (the ones who got out early) who enviously retired at age 32? The real estate flippers who made millions in just a couple of years? The YouTube (Stock Quote: GOOG) founders who turned a video web site into a billion dollar deal? These exceptional people reinforced the blissful notion of early retirement to an entire nation of hardworking 9 to 5ers. I want that, too!
But millions of dollars is likely what you’ll need to retire early and comfortably in the United States, assuming you want to maintain your standard of living for the next 30 or 40 years. And even if you do plan to retire at around 65—and you’ve been building up a nest egg—you may still face some financial challenges.
For those nearing retirement now, a more realistic approach to your next few decades may be to act (in some ways) like you’ve just come out of college. (Bear with me). Consider that Social Security payouts won’t necessarily pay the bills, your 401(k) may have gotten halved over the past year and health care is still a huge question mark.
Here are some 20-something financial solutions for the 60-something retiree.
Secure alternative health care. The average college student right now has maybe a 50/50 chance of getting health care after graduating. Maybe their new employer will pay for it, but there’s no guarantee, especially if it’s a small business. Maybe they jump on their parents’ health care plan, but that’s only viable for a short while. You may feel a bit stuck, especially when that toothache is starting to keep you awake at night and you’ve no disposable income to put it to rest. Such is the predicament for many retirees who no longer receive health benefits from their previous employer, except when you’re 65 it’s not just a toothache. It may be several prescriptions, an unexpected procedure and eventually long-term care.
Where to turn? The good news is President Obama’s stimulus bill has more than $20 billion tucked away for investing in the health care industry. For now there’s Medicare, but it has its limits. The federal health care plan doesn’t cover most at-home care or pay for assisted living. So, much like in your 20s, you need to think outside the box when it comes to getting adequate health care coverage. Here are some ideas:
- You could enroll back in school (like some 20-somethings do). More retirees are moving to college towns for their vibrant social and cultural lifestyle. But by enrolling in a single class retirees may be eligible for the school’s group health policy. Many schools are known to extend their group insurance rates to both full- and part-time students.
- Consider working a few shifts in retail. A Merrill Lynch New Retirement Study from 2006 found more than 70% of boomers say they will continue to hold a job after retiring. That percentage has probably only gotten greater amidst this recession. Borders (Stock Quote: BGP), Costco (Stock Quote: COST), Gap (Stock Quote: GPS), Petco, Whole Foods (Stock Quote: WFMI) and dozens of retail outlets that offer exceptional health care benefits to both full- and part-time employees.
- Your county or district may have free medical clinics for the underinsured or those without any health coverage. The Department of Health and Human Services has a great site to find a free medical clinic or camp in your area. There are also retail clinics that charge a flat fee and offer a limited number of minor checkups, such as a throat check or an eye exam.
- Talk about it! As I advise to young adults to talk to their parents about finding solutions, you should have a talk with your children before you retire to talk about ways to afford the medical care you may need in the long term. It may make sense to take out a long-term care policy.
Downsize your life. Young adults often get a rude awakening to the real world, when suddenly faced with living in a tiny apartment they need to share with four other roommates. (Oh, and it’s the fifth floor of a walk-up building). It kinds of makes life at home with Mom and Dad or even your old fraternity house at Penn State seem like the lap of luxury. Now, I'm not suggesting that retirees should start looking for apartment shares on Craigslist, but moving to a smaller home is sometimes a great way to boost your savings (assuming you can pocket some equity after selling your home) and reducing the cost of maintenance and upkeep. And think of the quick cash you can make selling your extra furniture.
Still another alternative: Like some 50% of young adults are doing now of college, you may decide to boomerang and move back in with your children to save money. And to feel like you’re contributing to the household, consider, like some grandparents do, to offer your adult children your time and help with their childcare. And do you really need your car? If you live in an urban neighborhood, move in with your kids or transition to a college town where you can often travel to most places using public transportation.
Have a few income streams. We already know that a majority of boomers plan to work in retirement, since their Social Security payments and life savings may run dry sooner than later. This predicament is much like that of a recent college grad, earning a starting salary and trying to combat the credit card and student loan debt that piled up during school. You both need to make more money. Sometimes a part-time job (in addition to a 9 to 5) helps pay for day-to-day expenses and build a savings. As stated above, some part-time jobs even extend health care benefits to workers.
And who’s to say you can’t start your own business at 65? As we’ve reported before on MainStreet, many retirees are being entrepreneurial by direct selling, starting their own business and launching franchises. In addition to having a part-time shift or being your own boss, also think of other ways to make occasional side income. You could sell used items on eBay (Stock Quote: EBAY) or turn your skills, such as a language skill or consulting, into paid services. And remember, there’s always bartering to get what you want, instead of paying cash. If you have any items you deem valuable, consider posting them on sites like FriendlyFavor.com and FavorPal.com, in exchange for someone to help you with some yard work, home maintenance or even free medical checkups. No joke: Some physicians are willing to barter for appointments.
Live it up. Your 20s were a blast. Your golden years should also be exciting and social. Like many young adults, consider volunteering at your local charity, place of worship, school or community organization. It’s a great way to make friends and spend quality time helping others. As my friend’s 81-year-old grandmother often tells me, “When you get old you need to keep your mind and your heart alive.”
It’s important to feel like a part of a community, to build a social network. Jump on Facebook and Twitter while you’re at it. More boomers are logging on. The search for a social lifestyle is yet another reason why so many retirees are moving closer to university towns. Taking a class may not just be a ticket to affordable health insurance. It also keeps you busy. And finally—like all the young folks out there nabbing discounts with their student IDs—remember you can get great rates at the movies, restaurants, museums and theater for flashing your ID.
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