Are you close to retirement? Are you not as prepared as you’d like to be? If you’re LGBTQ, do you have a support system? You’re not alone. Our friend and fellow Forbes contributor, David Rae of FinancialPlanner-LA.com, shared with us on Queer Money™ how you can get prepared.
Objects in the mirror may be closer than they appear. This applies to many parts of life, not just looking in your rear-view mirror. For example, how are you doing with your New Year’s resolutions? If you’re thinking that you have plenty of time until next year, remember that we’re almost halfway through the year.
Five Surprising Statistics
1. Only 25% of the general population and 18% of the LGBTQ population feel confident they’ll have enough money to last through retirement
Much of this may be attributed to the downturn in the markets in 2008 and 2009. That being said, much of those losses, if you didn’t pull your money out of the market, has been recouped. Unfortunately, many older Boomers were concerned about the prospects of a long-term bear market and did withdraw their money.
If you pulled your money out of the stock market, it doesn’t mean all is lost. Working with a financial advisor to create the right financial plan for you, you can build a plan that will help mitigate losses and retain enough money to last you through your lifetime. Rae suggests that preparing for retirement by cutting expenses may be the best course for those not confident with their retirement savings.
2. More Boomers than ever are getting divorced, leaving them without dual social security benefits
“Gray divorce” is a relatively new trend in retiring populations, which in some cases may mean that older, single individuals are spending more money to maintain two households.
An additional concern is that this trend may leave some older retirees without the benefit of dual social security checks, versus their married counterparts. Missed Social Security benefits, such as the Spousal and the Survivor benefits, are issues that many LGBTQ seniors have been struggling with for decades. Marriage equality should equalize this, but divorcing and establishing new relationships in retirement will make receiving such benefits more complicated.
3. 42% of Boomers have nothing saved for retirement
Although the 401(k) was only introduced in 1978 and the Individual Retirement Account only four years prior, in 1974, when Boomers were in their late teens to early thirties, many still weren’t aware or took advantage of them.
For any working Boomer and some retired Boomers, increasing retirement account contributions, if possible, is a great way to catch up on retirement savings. For example, you can contribute up until the age of 70 ½ if you have earned income. If you are over 70 ½ but your spouse is younger with earned income, they can make a spousal contribution to your retirement account on your behalf.
If you don’t currently have earned income, consider taking up a side hustle. Side hustles aren’t just for Millennials. They’re for Boomers, too. Even just a few hundred dollars a month invested for a few years can offset expenses. In fact, this Boomer blogger has a list of 60 side hustles for seniors.
4. Four years equals $140,000 or more
All our medical advancements are paying off and we’re living longer, which is a good thing. In fact, Boomers are expected to live an additional four years longer than the previous generation. Unfortunately, that means your retirement dollars need to stretch further, or you need more retirement dollars. Taking into consideration how fast health care costs are rising, you may need even more of them in the future.
For many gay and bisexual Boomers, life expectancy has surpassed what they imagined in the 1990s, especially for those impacted by HIV/AIDS. Much of this is thanks to medical advancements and education around safe sex. Although for those living with HIV, medical costs are higher than the general population. Another reason for higher savings.
We can only imagine that for GenXers and Millennials, the average lifespan will keep increasing and so should our expectations for retirement savings. GenXers and Millennials have more information today at their fingertips than Boomers, so we should and can be better prepared for retirement.
Do you know your retirement number? Use this calculator to find it.
5. The average cost of 1 bedroom assisted living in 2017 was $45,000
Queer or straight, that housing cost is concerning. The average duration in an assisted living facility is 28 months. That totals nearly $100,000 for an average assisted living facility for the average patient. If you hope for a better-than-average assisted living facility for you or a loved one, you will need to save even more money for retirement. Unfortunately, for the LGBTQ community, there are even fewer assisted living facility options where we can continue to live outside of the closet and get the nuanced care we need. This means higher assisted living costs for queer people.
If you haven’t planned ahead for the late stages of life, consider obtaining long-term care insurance or adding riders on your life insurance. In most cases, these protections can be used to supplement assisted living expenses.
These statistics and Rae’s comments highlight a growing concern for Baby Boomers, especially LGBTQ Baby Boomers who are less prepared for retirement than the general population. All have many tools and resources available to them. Seek out and use them before these statistics become your reality.