Time brings change. Baby boomers have reached retirement age and, like their predecessors before them, have identified new life priorities. Today, seniors reflect spending habits that emphasize their unique goals and the particular needs of the baby boomer generation as a whole. For millions of seniors across the country, saving to meet – and maintain – retirement is of utmost importance. As seniors near retirement age, they tend to allocate their resources towards new priorities – especially mortgage and home equity loan payments.
Maintaining a Mortgage as a Senior
Today’s seniors spend more on mortgage and interest payments than expected based on previous generations. Thanks to research from the National Center for Policy Analysis, we can see the spending habits of the elderly today compared to their counterparts from twenty years ago. Seniors often carry a mortgage and spend more money on housing as a whole. Since 1989, the percentage of seniors between 65 and 74 making mortgage or home equity loan payments has increased to 37 percent from 21 percent. This isn’t a temporary hurdle for seniors just entering retirement either. The problem persists for those seniors age 75 or older; a meager 6 percent of this age group in 1989 made mortgage or home equity loan payments whereas 21 percent of these seniors make such payments today. What should we make of such drastic changes?
These major increases have drawn concern from economists and financial planners caring for elderly clients – many seniors will face trying times ahead as retirement accounts run low. Today’s seniors rarely rely on guaranteed incomes, company pension plans, and other safety nets to the same degree as earlier generations. Given that mortgage interest rates have remained low in recent times, seniors must be taking on more debt and for greater periods of time. If you’re concerned about making your retirement last, consider proactive budgeting and other ways to alleviate debt.
According to the Bureau of Labor Statistics, households with at least one member age 55 or older do not spend quite as much money on clothing, gas, and food. But, the elderly population does spend approximately three percent more of their funds on health care. While healthcare has always played a prominent role in the lives of seniors and will likely continue to remain a major expense in the future, these increased expenses don’t stand out as a growing trend. Thanks to legislation bringing more generic drugs into the market, many seniors can afford cheaper versions of necessary medications. Naturally, Social Security and pension deposits also decrease as seniors begin to enter retirement. While total healthcare expenditures increased slightly, these figures remain stable.
While many seniors struggle with retirement savings and budgeting challenges, they also choose to spend their entertainment funds on more personal hobbies. Since 1990, miscellaneous entertainment spending – anything from exercise equipment and RVs to photography equipment and camping equipment – has grown by an average of 9.8 percent. Leisure matters in a balanced life, and the baby boomer generation recognizes the importance of staying active. Fewer seniors give up their cars nowadays and new as well as used car sales have increased for seniors across the board. However, the fastest growing expenditure is education. Many of these expenses involve a grandchild’s college tuition but many seniors must also focus on paying back their own student loans as well. Between education, transportation, and miscellaneous expenses, seniors are staying active and engaging in different lifestyle choices compared to their predecessors.
Saving for Retirement
Now more than ever, seniors face increasing challenges to a comfortable retirement. Housing and healthcare costs burn through savings while Social Security and 401(k) plans crumble. That said, there are still plenty of means of assistance out there for seniors in a bind. Between proper budgeting techniques, cost-reduction plans, charity missions dedicated to senior needs, and alternative options like the Home Equity Conversion Mortgage, seniors can find relief from tight fiscal constraints. While the road ahead may look rough for many baby boomers, solutions exist to help those in need.