The New Finance Of Longevity

Stepping Into Retirement Without Fear

Strategies for not running out of money 

by Wm. Scott Page

Mr. Page is CEO of policyappraisal.com, a leading expert in life insurance valuation and settlements. He has been published in Forbes, Huffington Post and is a regular contributor to our publications.

In the landscape of common fears, typical anxieties like public speaking and fear of heights often top the list, with each affecting around one in four Americans. Fears of bugs, snakes, and other animals follow closely, impacting more than 20% of the population. A slightly smaller group, just under one in five, dreads blood or needles, while about 15% are apprehensive about flying. However, for today’s retirees, a different fear eclipses these traditional anxieties: the fear of running out of money. Statistics reveal that one in six American retirees is worried they won’t have enough financial resources to sustain them. For agents and advisors who are counseling seniors, clients with these fears are on the rise.

Concerns about finances are broad. This aligns with broader economic anxieties such as a study from Chapman University that says half of Americans experience apprehension about finances. Rising costs due to inflation exacerbate these fears, leaving many seniors scrambling for solutions. Thankfully, retirees have options.

Re-Entering The Workforce

A popular strategy among retirees is returning to work. This not only supplements their income but also reintegrates a social component into their lives, which can be missing post-retirement. Additionally, studies indicate that remaining active can contribute to a longer lifespan. This trend sees many seniors engaging in the gig economy or consulting roles, providing them with extra income and the flexibility to work without being tied to a specific industry or location. A survey from AARP found that 27% of older workers are participating in freelance work, and a third of current retirees are considering a return to the workforce.

Cutting Costs And Downsizing

By embracing creative solutions such as re-entering the workforce, cutting costs, selling assets, and reassessing financial strategies, retirees can alleviate some of these stresses...

Another approach involves reducing living expenses. This might mean downsizing to a smaller home or relocating to an area with a lower cost of living and lower taxes. In extreme cases, it could entail moving in with family or finding roommates, akin to the arrangement in “The Golden Girls.” Selling assets, such as a home, can also be considered, though this requires careful calculation, especially if the home is paid off and the cost of living there is relatively low. Some seniors have looked for ways to leverage their homes by renting rooms via services like Air BnB.

Selling Assets And Exploring Unconventional Means

Retirees might consider selling collectibles or artwork of value. Another often overlooked asset is life insurance. Many seniors spend thousands annually on life insurance policies, which might become less needed over time. These policies can be sold in the secondary market, transforming a recurring expense into a source of income, which can then be reinvested or used to cover current expenses. This process begins with a life insurance policy appraisal, turning a potential liability into an asset. Agents and advisors play a crucial role in this process, helping clients understand the value of their life insurance policies if sold in the secondary market.

Finally, seniors need to consult with financial advisors to understand the full range of options available to them. These professionals can offer personalized advice and help seniors navigate the complexities of retirement planning, asset management, and income generation strategies.

Mental And Social Engagement

Beyond financial strategies, addressing the fear of running out of money also involves maintaining a healthy and active lifestyle. This includes social interactions, mental stimulation, and physical activities, all of which contribute to a sense of well-being and can indirectly support financial stability by reducing healthcare costs and enhancing overall quality of life.

The fear of running out of money in retirement is a significant concern for many seniors, compounded by rising living costs and economic uncertainties. However, by embracing creative solutions such as re-entering the workforce, cutting costs, selling assets, and reassessing financial strategies, retirees can alleviate some of these stresses. It’s about finding a balance between managing current needs and planning for the future, turning apprehensions into actionable plans. By doing so, they can not only secure their financial future but also allay some of their retirement fears.

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