While there has been an ongoing debate about how much education in financial matters should be bolstered for younger people, sometimes losing perspective on the importance of senior financial literacy can also be generally detrimental to workers. This is according to a column published this week by MarketWatch, authored by President and CEO of the nonprofit National Committee to Preserve Social Security and Medicare, Max Richtman.
“What older workers may not realize is that many seniors are living solely on Social Security,” Richtman writes. “Others are barely getting by on a combination of Social Security and modest income sources such as personal savings or part-time employment. Almost all are grappling with the staggering costs of prescription drugs, healthcare, food, caregiving and other living expenses. Not to mention the record-breaking inflation that is walloping working-and middle-class Americans of all ages.”
As retirement and life expectancy commensurately become longer, the risk of seniors to outlive their financial resources grows increasingly apparent, the column reads. On top of that, the burgeoning need for financial products and solutions to address the evolution of American retirement is making the concept of aging in America a complicated one, compounding issues related to financial literacy.
“Near-retirees (aged 55-64), more than other age groups, are confronted by a mind-boggling array of choices, as well as life decisions that can affect their finances,” Richtman says. “Even with the life wisdom they’ve accrued over the years, many older Americans are not fully informed or prepared to make these choices. When to claim Social Security? Which Medicare plan to choose? Is it too late to save for retirement? How much money will I need? There are a few key areas where it is important for older workers to be as financially literate as possible, along with knowing where to turn for help.”
For instance, the average monthly Social Security benefit in 2022 is $1,657, which comes out to under $20,000 in annual income from that benefit alone. Some Social Security benefits are also subject to federal income taxes, and enrollees in Medicare Part B have their premiums deducted from Social Security benefits, the column explains. Keeping up with these dynamics is critical to bolstering a senior’s financial literacy for their own situations, the column explains.
Seniors would also benefit from earlier considerations of long-term care options, the column says, a more recent addition to the financial literacy equation.
“Some seniors are able to afford long-term-care insurance,” says Richtman. “But for most, Medicaid ends up being the only resource to pay for skilled nursing care, whether in nursing homes or home-and-community-based care. But Medicaid eligibility can be tricky. It requires knowledge of how the program works, which isn’t always intuitive. Seniors must meet strict income and asset requirements to qualify.”
On top of that, as technology becomes more sophisticated, so do the bad actors that are likely to target seniors for their own enrichment, which plays into financial literacy conversations as well.
Read the column at MarketWatch.