If you see the post retirement years as a time to kick back, relax and enjoy the good things in life, you might be in for an unpleasant surprise, according to the latest research published by the Consumer Financial Protection Bureau. They report a retirement landscape of escalating debt and financial insecurity.
The consumer watchdog performed an analysis of more than 100,000 consumer complaints it has received from consumers aged 62 and above over the past five years. Let’s take a look at the top three issues the report raised, along with tips to make retirement the stuff of dreams, not nightmares.
With many pension funds showing returns way below their original projections, the biggest issue that retirees face is an income that is simply insufficient to meet their needs. So having planned on being able to take extra vacations and enjoy leisure pursuits, they find themselves struggling just to keep up with the monthly bills and cost of living.
No wonder so many are tempted by the reverse mortgages offered by lenders. These allow seniors to leverage the equity in their homes to provide a guaranteed income, and unlike a traditional mortgage, there is no monthly repayment. Of course, a reverse mortgage should not be seen as a “silver bullet” and it is important that anyone considering one takes independent financial advice and evaluates all the options.
Last year, more Americans retired in debt than ever before. Perhaps this is not entirely surprising – today’s economy is far more credit-driven, and some commentators argue that a degree of “good debt” – that is, debt relating to an appreciating asset such as a mortgage, is not a bad thing.
However, in the majority of cases, trying to make the minimum debt repayments just exacerbates the cash flow difficulties outlined above.
We are all aware of the scams that periodically go around, but the sad truth is that the elderly are typically seen as a “soft target” by these reprehensible criminals.
Not only are they more vulnerable to attack, but they also find it more difficult to deal with anti fraud measures and check on disputed transactions, thanks to the largely automated systems they have to navigate. Many said they simply did not know what to do in this sort of situation.
The report made for sobering reading. Perhaps the biggest lesson to come out of it is that financial management is more complex for everyone today, but particularly for seniors. It is imperative that they and their families ensure they receive the advice and support they need for a secure and prosperous retirement.