How to Handle Financial Emergencies As a Senior
How to Handle Financial Emergencies As a Senior
By Harrison Bryan
Everyone has financial emergencies during their lives, however, the number of seniors who are struggling financially is alarming. A sudden emergency can drain retirement plans, and for many older Americans, that’s exactly what’s happening. In this article, MRE Finance provides insights on the strains of financial emergencies on seniors and how they can cope with these situations.
Financial Emergencies After Retirement
To illustrate just how serious a single financial emergency can be to many seniors, consider that only 61% of seniors have enough savings to cover a financial emergency according to a GOBankingRates survey.
Statistically, retirees in the United States are a more financially vulnerable demographic. Over 20% of retired Americans have less than $50,000 saved up. Retirees living on a fixed income who face financial emergencies don’t have the same opportunities to recover their losses as younger people in the workforce.
How Debt Impacts Financial Emergencies Among Seniors
Although there are different drivers of the financial challenges seniors face, debt is one of the biggest. The cost of medical care is one of the most concerning issues for seniors. According to Fidelity Investments, a 65-year-old couple retiring in 2019 can expect to spend $285,000 in health care and medical expenses throughout retirement.
Of course, medical, legal expenses, and mortgages aren’t the only forms of debt that retirees have. According to AARP, a large number of retirees have increased their financial burden by co-signing on student loans for children and grandchildren. An overwhelming 73% of older Americans acquired student loan debt in an effort to help out a relative. According to the Consumer Financial Protection Bureau, “over 2 million Americans over the age of 60 have student loan debt”. Typically, these loan amounts are significant and have high-interest rates putting further strain on countless retirees’ finances.
Retired Women Struggle More Than Men with Financial Emergencies
According to Forbes, women are less financially prepared for retirement than men. Although there are a number of contributing factors, income inequality is the most apparent and concerning cause of the disparity. Women retire with an income that is 30% lower than men.
Many of the women who struggle financially before retirement tend to struggle after retirement as well, making them more vulnerable in the event of a financial emergency.
How Can Retirees Better Handle a Financial Emergency
It is important for seniors to be financially responsible, cutting unnecessary expenses in order to reduce or eliminate debt. For example, eliminating cable television, subscriptions, memberships, donations or negotiating lower rates with service providers.
Many seniors who have reduced their unnecessary expenses and debt ahead of retirement are able to get through difficult financial times. However, many seniors start too late. An article featured in Forbes indicated that seniors need better and more timely professional advice when making financial decisions.
For example, deciding when to start collecting Social Security or what age to retire has a significant impact on one’s financial future. Retiring too early can put an additional strain on finances and result in smaller Social Security payments. The combination can make it difficult to live comfortably and ensure you have enough savings for retirement. Knowing which accounts to draw funds from at what time, such as savings vs. IRA’s or 401ks can also affect your after-tax income.
There are other expenses such as life insurance premiums that seniors habitually pay although they may no longer need the insurance coverage. There are a growing number of seniors who are eliminating debt by selling their life insurance policy through a life settlement. Most seniors are not aware that they can sell their unneeded life insurance policies, often for significant amounts. The proceeds from the sale can be used pay off medical debt, student debt or supplement savings.
A Life Settlement Could be the Answer
A life settlement is the sale of a life insurance policy by the policy owner to a licensed third party. A life settlement can be a way to get cash for a life insurance policy you no longer need or can no longer afford. For older adults who are struggling, a life settlement can be a much-needed lifeline.
Start your journey to financial freedom with MRE Finance. MRE Finance offers a free online life settlement calculator where you can receive an estimated settlement value of your life insurance policy within minutes. You can also call one of our specialists at 1–800–521–0770. We’ll answer all your questions as we walk you through the life settlement process with ease!
Website: mrefinance.com
Ph#: 1–800–521–0770
About MRE Finance LLC
MRE Finance brings over 25 years of experience in the life and viatical settlement industry. Our mission is to educate and provide information to help seniors and those chronically ill, live life with dignity and greater financial stability by assisting them in selling their life insurance policy. MRE Finance believes in being transparent with its clients and, above all respecting their privacy.
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