For those of you that don’t know, I work by day as a geriatric social worker (by night I write this blog, read a lot of books, and bake a lot of cookies). I absolutely love my work. I’ve worked as a geriatric social worker in a variety of roles and I have loved every single one. Knowing that I am making a real and profound difference in people’s lives every day is incredibly rewarding. I feel so privileged to get to do the work I do with the seniors I meet. I’ve also had the privilege of learning a great deal about many topics from the seniors I work with, both from their stories and their situations. One of the areas I’ve gotten to learn a lot about work is the importance of managing your finances and being frugal. I’ve been inspired to be better with my own money because of what I’ve see at work.
Now, before I get into examples of what I’ve seen and lessons I’ve learned, I want to state up from that this post is in no way means to be demeaning of the seniors I serve at work. This post is merely me taking an opportunity to reflect on some of the things I’ve seen and learned from the seniors.They come from all walks of life and are experiencing a variety of situations, sometimes for reasons that are beyond their control. If you think I am being discriminatory or demeaning or oppressive in this post, call me out or call me in. I want to know if I am being oppressive, so I can work to change that and to be a better person.
Now, with the disclaimers out of the way, let’s talk about what I’ve learned. Mostly what I’ve learned is that all the advice about the importance of saving for retirement and planning for retirement is there for a reason. Several big reasons. If you don’t plan and save for retirement, you can end up in a less than ideal situation in your older years. I see people everyday who, for a variety of reasons, didn’t plan or save and instead relied on some common personal finance myths and assumptions about their elder years. Often, relying on these assumptions doesn’t turn out as well as you might assume. One of the biggest assumptions I see is people assuming they can work until they die. That’s all well and good if you can, but I don’t think that’s a viable plan and I definitely don’t think it should be your only plan. What happens if you get dementia or develop other health problems and have to stop working? What happens if you get fired or let go? How will you support yourself when you’re searching for a job in the face of spectacular ageism? I’ve worked with people in all of these situations and it can be really really hard for them to make a good life for themselves when they can’t work anymore and are left to rely solely on government pensions. They’re living very close to the poverty line and let me assure you, it’s not fun.
Talking about government pensions leads me to the second assumption I’ve identified – people assume that they can rely on government pension programs in retirement to provide for them and to provide well. Truthfully, if this is your only retirement plan, you are setting yourself up for a lot of financial stress in the future. Yes, you can get government pension programs once you’re over the age of 65. After filling out reams of paperwork and then waiting almost a year for those applications to be processed, seniors I work with end up with approximately $1600/month from government pensions if they have no other income sources at all. That adds up to just over $19,000/year or a whopping $2,000/year above the poverty line (as measured using the After Tax Low Income Measure). In a city where the average rent for a 1-bedroom apartment is just shy of $1000 and the cost of living is otherwise high, this does not sound like a fun way to spend your golden years. Seniors I see living with only government pension income often experience a great deal of financial stress and worry about affording very basic things like groceries or medications. It’s a stressful way to live.
A third set of assumptions that I see that scares me is assuming that if you don’t plan for retirement “the future will take care of itself” or “someone else (my spouse, my kids, etc.) will take care of it for me.” In my experience, the future does not work quite that way; the more you plan for and take care of yourself, the better your chances are. Secondly, please don’t assume that your spouse or kids will provide for you, no matter how wonderful they are. They may encounter adverse life situations of their own, like job loss or illness or death. You never know what they will be able to do years into the future. It’s not certain. I’ve sadly seen a number of cases where one partner managed the finances in their entirety and the other had nothing to do with them. When something unfortunate happens (divorce, death, etc.) the person who had nothing to do with the finances ends up with no idea of their financial situation and no idea of how to manage their money. Often, it’s not a pretty situation for them and it comes with some very steep learning curves. Take advantage of the time that you have now to learn these skills and to become involved in your finances, so you can save yourself the heartache later. The other reason I’m not comfortable with the strategy of depending on someone else to take care of you in retirement is that I’ve seen way too many cases of horrific elder abuse. Financial abuse is actually one of the most common forms of elder abuse I see in my work and it’s terrible. My worry about the assumption that others will provide for you is what happens if you place that trust in the wrong person? I am not at all trying to say here that the seniors I work with who are experiencing abuse are at fault here. Rather, I just want to express my discomfort with the idea of relying on others as a retirement strategy, because you never know how that will turn out. Again, I believe that the more you plan for yourself and plan to take care of yourself, the better your odds are.
What I’ve learned from my work with the seniors is not all just things that we should avoid or not do. I’ve also learned a lot of lessons about what we can do to make our retirements more financially secure. For starters, NOW is the time to deal with your debt. Become debt free as young as possible. I’m starting to see more and more seniors carrying heavy debt loads into retirement, and it usually causes them a great deal of stress and financial hardship. Think about all the stress you can save yourself by becoming debt free and learning to live within your means, so that you don’t have to go into debt in the future. These are skills that I believe will serve you well throughout your life (hence why I write about them so much) but I think they are especially important in retirement. Your income will likely decrease once you retire, so developing skills to live frugally will definitely help you live well then. Plus, think about how many years you have to hone your frugal skills before you get to retirement! You can do so well with all that practice!
This ties really well into my second point about what I’ve learned from seniors about what to do now with my finances. I’ve learned that NOW is really the time to develop financial literacy skills. Things like learning to make and stick to a budget, how to plan financially, and what your different investment and savings accounts options are and how they work. NOW is the time to develop these skills for yourself. Don’t assume that you don’t need to learn about these things or that they don’t matter because of whatever excuse you are about to say. I might be preaching to the choir a little bit (since you are reading my frugality blog) but I firmly believe that these skills are important for everyone! Financial literacy skills are are a necessary and important part of life regardless of your age, life stage, income level, plans, goals, etc. Managing your money is a crucial part of having control over the shape of your life. Again, the earlier you start practicing these skills the better you get and the more they pay off in the long run. It’s never too late to start!
That all being said, I want to emphasize that planning and saving for retirement doesn’t fix or solve everything. I’ve seen people who’ve done everything right and still ended up in horrific situations. The difference, however, is that these individuals have more resources at their disposal to deal with these hardships or to stave them off for longer. This leaves them in a better position mentally, emotionally, physically, and financially. Those with the increased financial options and skills typically (in my opinion) have higher resiliency and a better chance of success. This is not to say that their is anything wrong with the seniors whose examples I’ve shared above; again, my intent with this post is not to judge or demean. Often they end up in the situations that they are in for a whole host of systemic reasons, rather than individual faults or poor choices. However, I want to encourage you, my lovely readers, to begin to think about your retirement. Begin to think about how you can plan, save, develop financial literacy skills, and learn to live within your means. It’s never too late to start and the rewards you reap will be great at all ages and stages of your life.