Losing Sleep-Literally-Over the Future
In lieu of a lullaby, here are steps to take to ease those financial worries
No surprise, concerns about their financial well-being in retirement mean too many Americans are watching infomercials for colon cleaners and home gyms at 2 a.m. rather then getting their REM sleep. "When you're struggling to put food on the table and feed a couple of kids, you're not in a position to plan for your future," says Joycelyn Ward, 65, of Juneau, Alaska, who plans to keep working for at least an additional 10 years out of financial necessity. "I wasn't able to start setting aside anything for retirement until I was in my 50s."
Some 43 percent of employees at small and midsize businesses, and 26 percent of retirees, are so anxious about being able to afford medical care in retirement that they lose sleep over it, according to the Principal Financial Well-Being Index.
Workers were also anxious about being able to enjoy the same quality of life they have now (42 percent) and even about affording the basic necessities in retirement (38 percent), a concern that is particularly common among women, including Ward. "There is a sense of concern especially since my family tends to live a long time," she says. And the top fear among those who are already retired is that inflation is gradually eroding their purchasing power (37 percent).
But you don't have to give up on getting a sound night's sleep or even having sweet dreams. Here are some ways to ease your fears about what retirement has in store for you.
Plan for the financial transition. Financial planners say it's key to develop a strategy for shifting your savings into a steady stream of income that you can tap in retirement. Lois Gfrerer, 77, a retired homemaker and mother of nine in St. Paul, Minn., met with a financial planner a couple of times each year before she retired to make sure she was managing her finances correctly. "The financial planner advised us to sell all our company stock because the stock is not very stable. So, we sold it and turned it into an IRA," says Gfrerer, who has been retired for 24 years.
But only 30 percent of current employees and 51 percent of retirees have a plan for turning investments into bills paid, the Principal study found. "Just investing the time to plan for the retirement transition with help from a financial professional or your employer and plan service provider," says Dan Houston, executive vice president of retirement and investor services for Principal, "can make the difference between achieving financial well-being in retirement or not."
Pay down debt before you retire. Both housing debt and consumer debt are rising for elderly families. The average debt for a family headed by someone age 75 or older rose from $7,769 in 1992 to $20,234 in 2004, according to the Employee Benefit Research Institute. Those approaching retirement age have increasing levels of debt as well. "You need to get your finances in order," says Craig Copeland, an EBRI senior research associate. "Having debt going into retirement is not the way to have a successful retirement."
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