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Retirees reflect on financial fragility of retirement

Published in RINewsToday on December 9, 2024

Literally just hot off the press… the Los Angeles, California-based nonprofit Transamerica Center for Retirement Studies® (TCRS) in collaboration with Transamerica Institute®, released the findings of its 24 Annual Transamerica Retirement survey.  Considered to be one of the largest and longest running annual surveys of its kind, its findings paint a picture of being retired in America.

Retiree life in the post-pandemic economy examines the health and well-being, personal finances, and retirement security of U.S. retirees no longer working. The report’s analysis was prepared by the research team at Transamerica Institute and TCRS. The 25-minute online survey was conducted within the U.S. by The Harris Poll on behalf of Transamerica Institute between September 14 and October 23, 2023, among a nationally representative sample of 10,002 people, including a subsample of 2,404 retirees who are retired and do not work.

Shedding light on the many facets of retirement

According to TCRS’s retirement survey, released on Nov. 26th, fewer than one in four retirees (23%) say they are very confident and able to maintain a comfortable lifestyle throughout their retirement.

“Retirement brings freedom and time for personal pursuits,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS in a statement announcing the release of the 76-page report. “However, retirees are living on a fixed income with limited financial resources. Many would be unable to withstand a major financial shock, such as the need to pay for long-term care. Retirees’ fragile financial situation serves as a cautionary tale that underscores the imperative for strengthening our retirement system,” she says.

“Many retirees may wonder what they could have done differently to save and plan for retirement, and many may feel they have done everything right but still came up short,” adds Collinson. “In reality, over their working careers, the world has changed, the retirement landscape has evolved, and the need to self-fund a greater portion of one’s retirement income has intensified,” she said.  

Based on the report’s findings, retirees are active and engaged in meaningful ways. As retirees, they are:

·         spending more time with family and friends (58%)

·         pursuing hobbies (43%)

·         traveling (36%)

·         taking care of their grandchildren (19%)

·         doing volunteer work (16%)

·         caregiving (10%)

Although most retirees express a positive feeling about life, others say they are distressed.  Most retirees say they are:

·         generally happy (89%)

·         have close relationships with family and friends (88%)

·         enjoying life (86%)

·         have a positive view of aging (79%)

·         have a strong sense of purpose (79%)

·         have an active social life (53%)

However, three in 10 retirees (30%) have financial trouble in making ends meet, 27% indicate they often feel unmotivated and overwhelmed, 24% often feel anxious and depressed, and 17% are isolated and lonely.

Retirees who retired before the age of 65 are cutting short their working years and income, a situation that could inevitably lead to a decrease in their retirement income. Almost six in 10 retirees say they retired sooner than planned (58%) and, among them, almost half did so for personal health-related reasons (46%) and employment-related issues (43%), while 20% did so for family-related reasons. Only one in five (21%) retired early because they were financially able.

Retirees are struggling to juggle competing financial priorities and debt, the findings indicate. Retirees’ say their current top financial priorities include

·         building emergency savings (31%)

·         just getting by to cover basic living expenses (29%)

·         continuing to save for retirement (24%)

·         paying off one or more forms of debt as a current financial priority (45%)

o    paying off credit cards (30%), paying off mortgages (20%), paying off other consumer debt (10%), and paying off student loans (3%).

The survey found that the retiree’s greatest retirement fears centered around money and health issues.  Forty-two percent expressed fear that Social Security will be reduced or may cease to exist in the future.  Almost six in 10 retirees (58%) expect Social Security to be their primary source of income throughout their retirement, reinforcing their view that the retirement program is the cornerstone of their retirement income.

Retiring before age 65 impacts your Social Security benefit. Retirees currently receiving Social Security started at age 63 (median) which translates to a lower monthly benefit than if they had waited until their full retirement age of 66 or 67, depending on the year they were born. Only 4% of retirees waited until age 70 or later which would have maximized their monthly benefit, noted the report.

Additionally, the retirees fear declining health that requires long-term care (37%), losing their independence (32%), outliving their savings and investments (32%), and cognitive decline, dementia, or Alzheimer’s (28%).

Fear of unanticipated costly long-term care

Only 13% of retirees are very confident they would be able to afford long-term care, if needed – and only 13% have long-term care insurance, noted the findings. When asked if their health declines and they need help with daily activities and/or nursing care, almost half of retirees (48%) say they plan to rely on family members and friends to provide such care. Moreover, relatively few retirees have codified their wishes in legal documents such as powers of attorney and advance directives.

Annual Income

The survey respondents had an annual household income of $55,000 (estimated median) as of late 2023 with more than one-third of retirees (36%) having an income of less than $50,000. Retirees’ household savings excluding home equity were $71,000 (estimated median) in 2023.

Untapped opportunities might be helpful to retirees in strengthening their finances.The researchers say that retirees need to be fully engaged in financial planning or taking steps that could improve their overall situation. Only 24% indicate they have “a lot” of working knowledge about personal finance, 19% have a financial strategy for retirement in the form of a written plan, and just 7% frequently discuss saving, investing, and retirement planning with family and close friends. Only one in three (33%) use a professional financial advisor.

“Many retirees may wonder what they could have done differently to save and plan for retirement, and many may feel they have done everything right but still came up short,” said Collinson. “In reality, over their working careers, the world has changed, the retirement landscape has evolved, and the need to self-fund a greater portion of one’s retirement income has intensified.”

Thoughts about Retirement in the Ocean State    

“I can confidently say there’s less road ahead to retirement than there is behind me,” quips Kemal Saatcioglu, Ph.D., associate professor and chair of the Economics and Finance Department at Rhode Island College (RIC). “Going through this report was an eye opener even for me and I came away with a mix of inspiration, awareness, and a sense of urgency,” he says.

“Asnoted in this report, the retirees’ ability to find purpose, freedom, and joy, even amid challenges shows the resiliency and flexibility we all possess, notes the RIC Professor.  “Knowing that many retirees successfully navigate these waters is inspiring and is a motivator for getting into retirement planning with confidence,” he adds.

According to Saatcioglu, the report is a wake-up call for retirees. The data clearly indicates that they, in general, can be better prepared.  “The statistics about limited savings, reliance on Social Security, and the lack of written financial plans might push those of us nearing retirement to re-evaluate our financial readiness. The survey data will likely create motivation to consult a financial advisor to ensure better use of available resources,” he says. 

Saatcioglu calls the points about life expectancy and the length of retirement striking. “While it may be daunting at first to consider how 15 to 20 years could stretch retirement savings, prioritizing strategies for sustainability, such as long-term care insurance or budgeting for healthcare costs are great steps to take,” he says, especially the importance of mental health and stress management also encourages a more holistic view of our overall well-being.

Retirees must recognize local challenges and strengths. “Granted Rhode Island is not the most retirement friendly state. Higher costs of living, especially on housing, utilities, and food, and less than a friendly tax environment are challenges but knowing about them ahead of time and taking steps early on can mitigate those challenges,” recommends Saatcioglu.

Finally, Saatcioglu believes that the survey creates a motivation to take action—whether it’s updating financial plans, discussing retirement goals with family, or exploring community resources. Retirement can be an exciting, and rather long, stage of life, as long as proactive steps are taken now.

Maureen Maigret, Policy Advisor for the Senior Agenda Coalition, notes that the findings of the Transamerica report align with what older Rhode Islanders are concerned with in terms of their economic security, especially the  cost of healthcare and housing, worries about being able to afford any needed long-term services and a lack of planning to meet those need.  “Adding to those worries is uncertainty about possible proposed changes from a new federal administration for two of the most valuable programs for older adults – Social Security and Medicare,” she says.

According to Maigret, the Senior Agenda Coalition of RI (SACRI) has advocated to enhance the economic security of older Rhode Islanders.  She stated that a recent SACRI survey found the costs for health care and housing were priority issues for the state’s older population.  “That’s why we will continue to work in 2025 to expand the Medicare Savings Program to increase its income eligibility so lower-income older adults and persons on Medicare will be able to get their Medicare Part B premium covered and in some cases co-payments,” she says, also stressing the importance of ensurng that the housing bond funds are targeted toward developing more affordable housing options for older adults.  

“I deeply appreciate the insights in this report. It highlights the importance of proactive retirement planning and the emotional and financial complexities retirees face in the post-pandemic economy,” says Josh Wells, CEO of The Retirement Factory, who stresses the importance of balancing the emotional and financial aspects of retirement.

According to Wells, retirees often feel the weight of navigating Social Security decisions or managing healthcare costs. This report underscores that many retirees are unsure about these critical choices, with only 7% frequently discussing retirement planning with family or friends and just 33% using a financial advisor. ”It’s a powerful reminder that education and open dialogue are key to achieving retirement confidence,” he says.

“Rhode Island retirees exemplify resilience and adaptability in the face of change,” says Wells.  “The report highlights that 70% of retirees feel confident about maintaining a comfortable lifestyle, even amidst financial and health challenges. For Ocean State retirees, this confidence is bolstered by state-specific benefits such as the ability to exclude up to $20,000 of retirement income from state taxes for those at full retirement age and meeting income thresholds, as well as property tax relief of up to $600 for eligible seniors with limited incomes,” he says, noting that these program reflect “the state’s commitment to supporting its senior population, enabling retirees to plan carefully, stay connected to their communities, and enjoy a fulfilling retirement.”

Like the report’s findings, RI retirees are juggling competing financial priorities, especially with only a minimal 2024 increase in their ERSRI pension, says Sandra Paquette, representing the Advocates for Cost of Living Adjustment (COLA) Restoration and Pension Reform. Of equal, often ignored significance, these retirees have been deprived of 13 years of potential savings,” she says.

“By unjustly removing a COLA, the former teachers, state workers and some municipal employees  have been plunged into survival mode, where limited, fixed incomes are barely sufficient to cover necessities and essentials. In many instances, choices must be made among prescriptions, heating and food– by individuals who spent a lifetime of service, and of contributing  to their retirement benefits,” adds Paquette.

For a copy of Transamerica Center for Retirement Studies’ new report, go to https://www.transamericainstitute.org/research/publications/details/retiree-life-in-the-post-pandemic-economy-2024.

Advocates call for Governor to reject budget cuts they say would harm older adults

Published in RINewsToday on Oct. 28, 2024

As the state’s Office of Management and Budget (OMB) holds its Revenue & Caseload Estimate Conference to discuss the economic and revenue outlook for the upcoming legislative session, the Senior Agenda Coalition of RI (SACRI) warns of “onerous budget cuts” proposed by state agencies overseeing programs and services for Rhode Islanders. At press time, the state’s Medicaid and the Office of Healthy Aging offices proposed 7.5 percent budget cuts to be included in the upcoming fiscal year 2026 budget. 

“It is unconscionable that at a time when our older population is growing – projected to reach one out of every four Rhode Islanders in a few years — to propose budget cuts for programs proven to keep them healthy and safe and that in the long term can save taxpayers money,” says SACRI Board Chair, Diane Santos.

According to Santos, the requests put forward by the Office of Healthy Aging (OHA) include a reduction in state funds for the Meals on Wheels home-delivered meals program projected to cause 13,000 fewer meals to be delivered to persons unable to shop and prepare meals; cuts in funding for local Senior Centers and programs for older adults; elimination of grants to provide security services in elderly housing; and decreased funding to support the Elderly Transportation program. 

Santos warns that proposed changes in Medicaid eligibility guidelines are projected to cause hundreds of vulnerable older adults and persons with disabilities to lose state Medicaid coverage for their nursing home care and cause nursing homes, many of which are already struggling financially and face critical worker shortages, to lose millions of dollars if implemented. In addition, changes in the Medicaid CNOM (Costs Not Otherwise Matchable) program could reduce federal dollars that match state funding and impact hundreds of persons receiving home care and adult day services that help keep them living at home, the proposed cuts could result in greater spending in other areas.

For example, says Maureen Maigret, SACRI Policy Advisor, “Brown University researchers have shown that funds spent on home-delivered meals can delay or even prevent costly nursing home care.”

Over the years, Maigret noted that SACRI has worked to boost state funding to communities to assist them to operate local senior centers and programs. These serve hundreds of older adults and families across the state with a wide range of programs that keep older adults healthy, informed and connected to their communities, she noted.

SACRI has called for the state’s budget to provide ten dollars for each person aged 65 and over to Rhode Island’s 39 cities and towns, says Maigret, calculating that this amounts to about $20 per older adult. “The proposed cuts now being considered fail to recognize the increased need for these services due to the significant growth of our older population,” says Maigret.

Drawing a line in the sand

At press time, SACRI and its partners delivered a letter to Gov. McKee urging him to not balance the state budget on the back of Rhode Island’s older adults, stressing that the “potential ripple impact on families will be significant.

“Nonprofits and those who will be impacted need to know that SACRI and its partners are closely watching this process and are ready to advocate to protect programs and services which may impact our varied constituencies,” says Carol Anne Costa, SACRI Executive Director.

Costa continued, “The fastest growing demographic in RI is people over the age of 65. That is an obstinate fact. And cuts to the budget must be re-prioritized.” The Office of the State Ombudsman agreed, “If anything, OHA should be getting an increase, as they manage to complete all of their obligations on a shoestring budget. And kudos to Maria Cimini and her team at OHA for the outstanding work they do,” says Kathleen Heren, the RI Ombudsman.

Costa noted that OHA is Rhode Island’s designated state unit on aging. It serves as the chief advocate for older Rhode Islanders, adults living with disabilities, and family caregivers. “Prioritizing reductions in spending in areas not directly tied to OHA’s core mission or that would not harm vulnerable older adults and persons with disabilities dependent on Medicaid to meet their long-term care needs is clearly a place to start [in determining budget cuts]. Administrative expenses and the millions of dollars being paid out to consultants could be heavily scrutinized for budget reductions,” she says. 

Adds Mirelle Sayaf, Executive Director of Ocean State Center for Independent Living (OSCIL), “The proposed budget cuts pose a serious threat to the mission of the OSCIL, which is dedicated to supporting individuals with disabilities. Reducing funding, along with changes to Medicaid eligibility and essential programs, will harm those we serve. These cuts jeopardize vital services such as home care, nutritional support, and community engagement initiatives that empower individuals to live independently and maintain their quality of life.”

“Cutting the budget for the OHA when its resources are already extremely stressed to fully meet the needs of a growing older population is unjustified,” charges SACRI’s Maigret, who is also a former Director of the Department of Elderly Affairs.”

Maigret also opposes changes to Medicaid eligibility after advocates have spent years to ensure persons in need of long term supports and services have access to a range of affordable options, and avoidance of long wait lists for service. She calls for increasing resources to the Rhode Island’s cities and towns to help them support local programs for older adults and increasing eligibility for the Medicare Savings Program so lower-income persons on Medicare can afford needed healthcare.  But, Maigret also says that housing needs of older adults must be considered when allocating housing funds.

Food & Shelter important, too

Gerontologist Deb Burton, Executive Director of RI Elder Info also has some thoughts about the state’s proposed budget cuts.

“Cuts to Meals on Wheels that cause our most vulnerable, at-risk, elders to go hungry are simply unconscionable. Taking meals away from our elders cannot happen,” says Burton.

“We must bring back the housing stabilization unit for older adults. Older adult homelessness has increased more than 400% since COVID hit and rents skyrocketed. Rising housing costs, fixed incomes, and wait lists of 2-8 years for affordable elderly housing have all contributed to this crisis. In addition to these challenges, the application process for getting an apartment is onerous and nearly impossible if one does not have access to the internet,” adds Burton.

Eviction prevention is critical in addressing the elder homelessness issue, says Burton, noting that private sector partnerships and philanthropic donations can support a housing stability unit for older adults, ensuring sustainable funding for eviction prevention programs.

“We must find the strength and compassion to provide the funding necessary for food and shelter for our most vulnerable friends and neighbors. If we don’t, what does the future hold for ourselves?” asks Burton.  

A Final Call

“The November Revenue and Caseload Estimating Conferences will provide updated projections to inform budget development which will help set priorities. However, RI’s most vulnerable and fastest growing demographic must be prioritized in finalizing the FY2026 budget,” urges Costa.

Expanding Medicare on political agendas: In-home Health Care critically important

Published in RINewsToday on October 14, 2024

This week Vice President Kamala Harris unveiled a “Medicare at Home” proposal on ABC’s The View that would expands Medicare to assist older Americans to age in place at home by covering some of the cost of in-home care. The proposal targets adults who are part of the ‘sandwich generation,’ estimated to be 105 million Americans who are raising children along with taking care of their elderly parents.

The Medicare benefit to assist caregivers would propose to have cost-saving benefits for the federal government by allowing seniors to stay at home rather than being sent to costly nursing homes. It would also reduce hospitalizations, too.

Harris told about her personal experience as a caregiver, providing care to her mother, Shyamala Gopalan, a biomedical scientist, who died of cancer in 2009 at the age of 70. Caring for a parent can translate into “trying to cook what they want to eat, what they can eat,” she said. “It’s even trying to think of something funny to make them laugh or smile,” she added.

“We’re talking about declining skills” of older people, “but their dignity, their pride, has not declined,” Harris added.

“There are so many people in our country who are right in the middle. They’re taking care of their kids and they’re taking care of their aging parents, and it’s just almost impossible to do it all, especially if they work,” Harris said.  “…we’re finding that so many are having to leave their job, which means losing a source of income, not to mention the emotional stress,” she said, explaining why there is a need to expand Medicare to cover more in-home care services.

Harris’ Issues on her website – Protect and Strengthen Social Security and Medicare

“Vice President Harris will protect Social Security and Medicare against relentless attacks from Donald Trump and his extreme allies. She will strengthen Social Security and Medicare for the long haul by making millionaires and billionaires pay their fair share in taxes. She will always fight to ensure that Americans can count on getting the benefits they earned”.

The Costs

The Brookings Institution recently estimated that a “very conservatively designed” program would cost $40 billion a year. They noted that “controlling demand in such a program is nearly impossible – for reference, Medicaid, which covers far fewer adults than Medicare, actually spent $207 billion on long-term services and supports in 2021”.

In addition, “Home health is such a hotbed of fraud,” said Theo Merkel, a health policy expert at the Paragon Health Institute and the Manhattan Institute. “If the proposal is adopted, taxpayers could end up paying for everyone who stays at home with their Medicare-eligible family member as a government paid Service Employees International Union member.”

The Cato Institute, a libertarian think tank headquartered in Washington, D.C., charges that Harris’ new Medicare home care benefit is “uncompassionate, fiscally reckless, and a corrupt attempt to buy the votes of Medicare enrollees and their middle-aged children in an election year.”

Examining the Differences…

According to Matthew E. Shepard, Communications Director for the Center for Medicare Advocacy, the new Harris proposal is quite different from the existing home care benefits that Medicare’s 65.5 million enrollees receive. ”The new proposal focuses on Long Term Services and Supports, something of a term of art in the health care world. While details are scarce, it would provide, we believe, ongoing affordable home care aide service without a need for skilled care or that strict definition of homebound,” said Shepard.  The proposal’s funding would come from increased savings in Medicare Part D as the list of negotiable drugs grows  [a historic provision of the Inflation Reduction Act which is lowering the cost of senior’s medication]  savings currently estimated at $6 billion in 2026, and which will only grow as more drugs are added, he noted.

“We are going to save Medicare that money, because we’re not going to be paying these high prices [for drugs] and that those resources are then put to use in a way that helps a family,” Harris said.

The Trump proposal

The Trump/Vance campaign quickly issued a statement taking credit for already making a commitment to America’s seniors receiving at-home care, saying that Harris’ Medicare expansion policy was just following his lead. Former President Trump released his home care platform last summer, according to an Oct. 8th statement. “Specifically, President Trump will prioritize home care benefits by shifting resources back to at-home senior care, overturning disincentives that lead to care worker shortages, and supporting paid family caregivers through tax credits and reduced red tape,” noted the statement.

One of Trump’s 20 point platforms is “Fight for and protect social security and Medicare with no cuts, including no changes to the retirement age”. In the accompanying 16-page document, which, supports Medicare it says, “President Trump has made absolutely clear that he will not cut one penny from Medicare or Social Security. American citizens work hard their whole lives, contributing to Social Security and Medicare. These programs are promises to our Seniors, ensuring they can live their golden years with dignity. Republicans will protect these vital programs and ensure Economic Stability. We will work with our great Seniors, in order to allow them to be active and healthy. We commit to safeguarding the future for our Seniors and all American families. We will strengthen Medicare. Republicans will protect Medicare’s finances from being financially crushed by the Democrat plan to add tens of millions of new illegal immigrants to the rolls of Medicare. We vow to strengthen Medicare for future generations.”

 Dementia caregiving already set to quadruple in 2025

AARP notes on their website that one expansion of caregiver coverage, “a program for dementia patients and their caregivers that launched this year will quadruple in 2025, serving more of the country. The program, called Guiding an Improved Dementia Experience (GUIDE), provides a 24/7 support line, a care navigator to find medical services and community-based assistance, caregiver training and up to $2,500 a year for at-home, overnight or adult day care respite services. Patients and their caregivers typically won’t have copayments”.

Praise for expanding Medicare benefits

“We have long championed the expansion of federal support for long-term care,“ says Max Richtman, President and CEO, National Committee to Preserve Social Security and Medicare (NCPSSM), noting that Harris’ proposal gives that cause an enormous boost.

“Expanded Medicare coverage for home health care also would provide relief to millions of ‘sandwich generation’ Americans, who are struggling to provide care for their elderly relatives while also raising children.  Those ‘sandwich generation’ members are not Medicare beneficiaries, but would most definitely benefit from Harris’ long-term care plan,” says Richtman in an Oct. 8 statement.

According to Richtman, the plan also would add hearing and vision coverage to traditional Medicare. “Proper hearing and vision care are essential to healthy aging — but too many beneficiaries forgo it due to cost and lack of coverage. It is long past time that those coverages be added,” he added.  

Co-Director David Lipschutz says that the Center for Medicare Advocacy (CMA) strongly supports the proposed enhancement of Medicare coverage for on-going home care. “Access to services and supports in the home for those who are unable to independently perform activities of daily living would provide immeasurable help to millions of beneficiaries and their families and is an important step forward for the Medicare program,” says CMA’s Lipschutz. To maximize access to care for people who need it, expansion of home care coverage in Medicare should be combined with enforcing the benefit that exists now, he suggests. 

“Recognizing that most older persons and those with disabilities prefer to remain at home when they need help with daily living tasks, the Senior Agenda Coalition has worked for years to increase access to home and community-based care at the state level as these services are one of the biggest gaps in Medicare,” says Maureen Maigret, Policy Advisor for Senior Agenda Coalition of RI.  To include them in Medicare will lift a financial burden on both recipients and family caregivers as home care costing at least $35/hour that  can be out of reach for far too many who need these services to stay at home,” she says.

“We have not seen many details about the plan, but it would be important to make sure that Medicare provider reimbursement levels are sufficient to allow direct care staff to earn livable wages in order to have workforce sufficient to meet the demand,” note Maigret. “This new Medicare home care benefit should also be a boon for states as it can prevent persons from spending down their resources to a level where they become eligible for state Medicaid and need costly nursing home care,” she says.  

In a new paper for O’Neill Institute for Georgetown Law, McCourt Professor Judith Feder and Nicole Jorwic explore how adding a home care benefit can help beneficiaries and family caregivers. “While this new benefit would not reach the full population in need of long-term care, paired with investments in Medicaid, it’s a good strong start-and given our nation’s resources, clearly within our means,” say the authors. 

“A support system that relies on unpaid family members and underpaid workers is simply not sustainable for the future,” warn the authors.

“Our failure to make Medicare “whole” by addressing Long Term Services and Support needs is not about a shortage of resources, it’s about a shortage of political will. It’s time the nation stepped up,” they say.

Pay attention to Caregiver voters

AARP is nonpartisan and does not take a position on campaign proposals, though AARP has previously said financial relief is needed to help individuals age in place at home and support family caregivers, says Sarah Lovenheim, AARP’s vice president, external relations.

According to AARP’s “She’s the Difference” survey released last month, 96% of woman aged 50 and over say they are highly motivated to vote in the upcoming elections, making them one of the most driven and key voting groups.

“Any political candidate would be wise to pay attention to the concerns and needs of caregivers today. Voters over age 50, who disproportionately make up America’s 48 million plus caregivers, could make or break elections up and down the ballots,” says Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer. “From recent battleground polls, we know that roughly one-third of swing voters over age 50 identify as family caregivers,” she notes.

“Supporting family caregivers is an urgent need – not only for families struggling to get by but for our country’s future,” warns LeaMond.

Regardless of who wins the election, a Medicare at home proposal cannot happen without Congressional support. As the presidential campaign winds down, older voters must make it extremely clear to lawmakers seeking their vote how they feel about expanding Medicare benefits.