MarketWatch: Why Seniors Should Prioritize Financial Literacy
Although there has been an ongoing debate about the extent to which financial education should be strengthened for young people, sometimes losing sight of the importance of senior financial literacy can also be generally detrimental to workers. That’s according to a column published this week by MarketWatch, authored by the president and CEO of the nonprofit National Committee to Preserve Social Security and Medicare, Max Richtman.
“What older workers may not realize is that many seniors live off Social Security alone,” Richtman writes. “Others barely manage to get by on a combination of social security and modest sources of income such as personal savings or part-time employment. Almost all of them struggle with the exorbitant costs of prescription drugs, health care, food, care and other living expenses. Not to mention the record inflation that is hitting working-class and middle-class Americans of all ages.
As retirement and life expectancy lengthen proportionately, the risk of older people outliving their financial resources becomes increasingly evident, the column reads. On top of that, the growing need for financial products and solutions to address the evolution of American retirement is making the concept of aging in America complicated, compounding issues related to financial literacy.
“Near-retirees (aged 55 to 64), more than other age groups, face a bewildering array of choices, as well as life decisions that can affect their finances,” Richtman says. “Even with the life wisdom they have accumulated over the years, many older Americans are not fully informed or prepared to make these choices. When to apply for Social Security? Which Medicare plan to choose? Is too late to save for retirement How much money will I need? to get help.
For example, the average monthly Social Security benefit in 2022 is $1,657, which is less than $20,000 in annual income from this benefit alone. Some Social Security benefits are also subject to federal income tax, and those enrolled in Medicare Part B have their premiums deducted from Social Security benefits, the column explains. Tracking these dynamics is key to building the financial literacy of seniors in their own circumstances, the column explains.
Seniors would also benefit from earlier considerations about long-term care options, the column says, a more recent addition to the financial literacy equation.
“Some seniors are able to afford long-term care insurance,” Richtman says. “But for the most part, Medicaid ends up being the only resource to pay for skilled nursing care, whether in nursing homes or home and community care. But qualifying for Medicaid can be tricky. This requires knowledge of how the program works, which is not always intuitive. Seniors must meet strict income and asset requirements to qualify.
On top of that, as technology becomes more sophisticated, so do bad actors who may target older people for their own enrichment, which also plays into conversations about financial literacy.
Read it column at Market Watch.