While some media report the growing population of seniors—which is expected to double in the next 30 years—is facing a retirement crisis, Bloomberg News reports that innovative retirement plans, new policies and products, including reverse mortgages, can enrich the lives of those fast approaching their golden years, contrary to popular belief.
“While historically low interest rates mean annuities and longevity insurance are expensive now, they should become a better deal when rates inevitably rise,” Bloomberg says. “Reverse mortgages, which earned a deservedly bad reputation in an earlier incarnation, might also help.”
“Fear is a poor motivator,” says Bloomberg about retirement planning, noting that Apocalypse-type scenarios accompanying visions of retirement only encourage a non-action approach to planning.
Erik Carter, employee of financial education firm Financial Finesse, tells Bloomberg that pessimists far outnumber optimists when it comes to retirement planning among workers: “They’re discouraged to take any action, because they just don’t think they’re going to retire.”
And Pew Research Center poll results confirm that pessimism among the millennial generation — just 6% expect to get their full benefits from Social Security, and half believe they’ll get nothing at all.
But there is hope, Bloomberg says.
“The trust fund built up to pay for Baby Boomer retirements does run out in 2033, but even then Social Security should be able to pay 77 percent of benefits. And that’s assuming politicians can’t find extra revenue for what is arguably the government’s most popular and effective program,” Bloomberg says, adding that Pew Research Center poll results show that more than 80 percent of all generations, including millennials, support Social Security and Medicare.
Bloomberg also notes the government’s 10-year spending projection for health care has fallen $900 billion since 2011 as an example of health care cost growth slowing.
And while Social Security is a favorably perceived among Americans, the rest of living costs that arrive in retirement will come from planning ahead — including taking small steps toward financial stability.
“Small changes now — paying more attention to fees and setting up automatic savings accounts, for example — pay off later,” Bloomberg says, adding that baby boomers have time on their side with “decades more to save and plan.”
Written by Cassandra Dowell