Retirement is Changing: Top Financial Trends for Retirees in 2022
As we move into the future, the way we view retirement is changing — for workers and for retirees. Financial trends that may have seemed foreign even a few years ago have become ever more present in the personal finance world for retirees. As we look to 2022, it’s important to stay on top of the latest retirement trends to stay financially fit.
The Impact of Low Interest Rates
The Federal Reserve has kept interest rates at historic lows since the recession of 2008, creating a challenging environment for retirees. Those depending on interest-bearing retirement accounts like CDs are seeing a sharp reduction in their earnings, while investors with large stock portfolios may be getting larger returns than anticipated.
Rising Health Care Costs Impact Retirement
Health care costs are constantly on the rise, creating increased expenses for retirees who are already on a fixed income. With medical costs and prescription drugs accounting for a significant portion of retired individuals’ budgets, it’s important for retirees to plan for the long term and have an allocation strategy for their finances.
Increasing Demand for Support Services
Social media and telemedicine have increased demand for support services, giving retirees more options for healthcare, virtual care, at-home assistance, and other lifestyle services. With the aging population, there will be an increased need for organizations offering support services to safeguard elderly individuals.
Secure Retirement Planning in 2022
Retirees should be sure to review their financial options, budget accordingly, and adjust for regular market fluctuations. To help ensure the highest return on their investments, retirees should look into:
1. Low-risk Investment Strategies
Retirees should focus on low-risk investment strategies that are tailored to their individual needs and current life circumstances. Money saved through conservative investments can be used to fund everyday expenses, leaving retirees’ the safety of their money in tact.
2. Long-term Care Insurance
With the potential for rising health care costs, long-term care insurance may be an obvious choice for older adults looking to cover medical expenses. This type of coverage helps secure care for those unable to care for themselves without draining retirement funds.
3. Reverse Mortgages
Reverse mortgages are financial arrangements between homeowners and lenders, allowing seniors to convert their existing home equity into cash when they need it. However, it’s important to understand the risks of a reverse mortgage, including the fact that lenders may take possession of the home it payments are not made.
4. Social Security Benefits
Social Security benefits represent a steady source of income for retirees and allow them to count on a certain amount of money each month. Those who have already claimed their benefits should consider strategies for optimizing their Social Security income and navigating other retirement income sources.
5. Building an Emergency Fund
An emergency fund is a crucial part of retirement planning and is essential for keeping retirement savings safe in preparation for unforeseen expenses. It’s recommended that retirees have at least 8 to 10 months of living expenses saved in a safe account to protect against falls in the market and other unforeseen expenses.
Retirement planning is more challenging than ever before, and while the current environment may seem overwhelming, understanding the changing trends can be the key to maintaining financial success. As we look to 2022 and beyond, it’s important to stay up to date on the latest retirement trends and ensure that you’re making the most of your retirement.
