As if the current crisis of rising healthcare costs weren’t enough to stress most of us, the Employee Benefits Research Institute announced the results of a study regarding the savings that a person will need upon retirement to pay for expenses not covered by Medicare and Medicaid. The results are different for men and women, because of longevity issues. A man retiring at the age of 65 in 2009 will need anywhere from $68,000 to $173,000 in their savings to cover additional medical expenses. Because women live longer, they will need even higher savings at retirement. A woman retiring at age 65 in 2009 will need somewhere between $98,000 and $242,000 to cover their out-of-pocket medical expenses. The study is daunting, because many people are barely making their mortgage payments and covering their current bills with little left over to amass a significant savings for retirement.
Even though this is not the best news for consumers, there are actions that you can take now to start planning for retirement. In an article by MarketWatch, they suggest the first step is recognizing that you will need a mass savings and start preparing, the earlier the better. The next step is to “reduce dramatically your standard of living, save aggressively, consider working longer, and try to stay as healthy as possible for as long as possible.” These are generally good suggestions. Cutting costs in your daily expenses and utilizing more saving strategies is always the best first step in debt management. Working longer and trying to stay healthy are also solid recommendations.
However, these recommendations don’t adequately factor in our current recession. Most of us would like to work longer, but with the unemployment rate climbing each month and more business closing, that option may not be available to everyone. Irving Based Kimberly Clark, Inc., the maker of Kleenex and Huggies, announced today that it would be cutting 1,600 jobs. Most of us try to eat healthy and not get sick, but some illnesses are only controllable, not preventable. Managing a disease like high blood pressure or diabetes is expensive even under the best of circumstances.
Because of the recession, consumer spending has decreased and more and more people are already reducing their standard of living. Hundreds of people are hitting web sites like couponmom.com and mommysavers.com looking for ways to reduce the basic costs of living. AAA has announced that Fourth of July travel is expected to drop because of the recession. The bottom line is that many people are already doing everything they can to make it through and are already living below their standard of living. Especially when you are in your thirties and forties, most people are not thinking about saving for medical costs during retirement, they are focused on making it through this year without financially crumbing.
Not dealing with serious debt issues right now does have long-term consequences. It impairs your ability to save and rebuild your financial stability. The number one message in the MarketWatch article is the sooner the better. If you are struggling with towering debt and foreclosure feels like it is just around the corner, getting good information sooner is better. It will assist you in making sounder financial choices so that you make it through your current financial crisis sooner, rather than later. No one likes the idea of bankruptcy…but it may be the best option to help you get through the financial crunch now… so that you can start focusing on saving for retirement expenses. A qualified bankruptcy attorney can help you work through the process to help you make the best longer-term and short-term decisions for your financial situation.