October marks two important public awareness campaigns for seniors. The entire month is dedicated to long-term care planning, and the week of October 20 is National Retirement Security Week.
Retirement savings and security provide crucial financial support for seniors and they may use their retirement funds to pay costs associated with healthcare and long-term care.
Younger Baby Boomers and seniors in Gen X are preparing for their retirement. Assessing accrued savings in 401K accounts and other investments is crucial to helping to plan for future medical and care needs. Some seniors with health concerns may need to move to assisted living facilities at a younger age, and the monthly costs of these facilities can vary greatly. Here’s what to know about retirement security and long-term care costs.
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Most seniors need around $1 million or more for a safe retirement. However, many are unprepared for their future and lack the savings to afford retirement. National Retirement Security Week focuses on raising awareness about financial needs during retirement. Use this week to assess investments and savings to better prepare for the financial obligations of a post-employment future.
Am I Saving Enough for Retirement?
In the past, many future retirees aimed to save $1 million for a comfortable retirement. However, as the cost of living rises, this figure might not be enough. For seniors who wish to retire in luxury, the goal for retirement savings may be much higher.
Seniors may wonder: “Am I saving enough for retirement?” This is a vague question because every individual has different healthcare and lifestyle needs (and choices). Some wish to retire in pricey communities near the beach, with easy access to a country club and a pristine golf course. Others simply want to pay all their bills on time and have a little left over to enjoy life.
What many don’t plan for is the unexpected. A serious illness or injury can lead to soaring medical bills and a need for 24/7 care and support. Retirement savings must be substantial enough to cover the necessities and provide for emergencies.
One of the simplest tools to determine if an individual has saved enough for retirement is NerdWallet’s retirement calculator. Enter basic details, including a monthly budget, to discover if what you saved is enough for the Golden Years. To fully understand how far retirement income will stretch, include estimated monthly costs of assisted living. On average, assisted living communities in Louisiana cost approximately $3,550 per month.
Retirement Savings by Age
Gen Xers and younger Baby Boomers nearing retirement may wonder how their savings compare to others their age. Use this chart to understand the average retirement savings by age:
Age | Average Retirement Savings |
Less than 35 years old | $49,130 |
Age 35 - 44 | $141,520 |
Age 45 - 54 | $313,220 |
Age 55 - 64 | $537,560 |
Age 65 - 74 | $609,230 |
Age 75+ | $462,410 |
What are the 401K Contribution Limits?
For Gen Xers, Millennials, and younger Baby Boomers who are still saving for retirement, it is important to understand the impact of 401K contribution limits. Employees may contribute up to $23,000 to their retirement each year; this is the 401K employee contribution maximum. IRA contributions are capped at $7,000 per year.
How Long Will My Retirement Savings Last?
Seniors must understand that their retirement savings can drain quickly if they don’t budget. While seniors can assume they understand their monthly costs during retirement, those monthly estimates can fluctuate because of household emergencies (like a new HVAC system), cost of living inflation, and medical emergencies. Budget for several different scenarios and create plans on how to handle large expenses. Retirement savings must be able to sustain seniors until their death.
The Cost of Luxury Senior Living Retirement Communities
Moving to senior living communities (or retirement communities) may be a retirement “goal” for some seniors. These communities are designed to offer a neighborhood with residents of the same age demographic. They typically offer amenities like pools, golf courses, country clubs, and more. These communities are often located in desirable areas; some may be on or near a beach.
The sky may be the limit for the price of senior living communities. Nasdaq named Winchester Gardens in New Jersey the country's most expensive senior living community.
Nasdaq reports that the entry fee is $272,600 and includes a monthly service fee that starts at $2,744.
The Average Price of Assisted Living and Nursing Homes
For some seniors, a move to an assisted living community, nursing home, or memory care facility may be necessary. These long-term care facilities lead to high monthly costs. How much should seniors budget?
In Louisiana, assisted living communities cost more than $3,500 per month (on average). This is an annual cost of more than $40K! ElderLife Financial reports that a semi-private room in a nursing home costs around $6,900 per month, while a private room costs $7,483.
Shocking Retirement Statistics
Assessing retirement savings helps seniors better understand and manage their future goals and needs. Unfortunately, not all individuals can plan and save for retirement. Nearly half of Gen Xers fear that retirement is out of reach for them, and half just don’t want to contemplate retirement (out of fear). CBS News’ headline about Gen X retirement expectations was grim: “Retirement bites? Almost half of Gen Xers say they’ll need a miracle to retire.”
USA Today reports that Millennials aim to retire around the age 60. However, it was reported that the majority of millennials have saved less than $50K towards their retirement.
Invest in the Future
Saving for retirement is an investment in the future. Cardinal Solutions works with seniors as they prepare to transition to a new retirement community, an assisted living facility, or a nursing home. Retirement looks different for everyone, but all seniors must prepare for the unknown. Every individual’s retirement should signal a time of freedom and happiness. Our team enjoys helping seniors prepare for an exciting move during retirement, and we also understand that some seniors face challenges that require long-term care.
Plan for retirement and save for the unexpected. Financial security gives seniors more choices for their future and long-term care. During National Retirement Security Week, assess retirement savings and investments, meet with a financial advisor, and make a plan for the future.
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