10 Money Problems That Ruin Retirements and Keep People Awake

Thoughts of retirement can be both exhilarating and scary. Sure, you look forward to leaving your job one day, but the nation also has an ongoing retirement crisis.

One group that is very anxious about retirement is those age 50 and older. In fact, it’s the most financially challenged generation in American history, according to AARP.

When it comes to anxiety, the overall retirement picture for the general workforce is about the same. Roughly 3 in 10 workers said they feel mentally or emotionally stressed about preparing for retirement, according to the Employee Benefits Research Institute. What’s more, another 3 in 10 said they worry about their personal finances while at work.

If you’re getting closer to the big day but you’re not as prepared as you’d like to be, you’re likely feeling anxious about your financial future. Let’s take a closer look at 10 things keeping people up at night. Can you relate to any of these?

1. Student loan debt

pile of coins

The number of people age 60 and older who have student loan debt has quadrupled over the past 10 years. | iStock.com

Surprisingly, quite a few older Americans are struggling with student loan debt. The number of people age 60 and older who have student loan debt has quadrupled over the past 10 years. In addition, this age group is now the fastest-growing segment of the student loan market, according to the Consumer Financial Protection Bureau.

What’s even more startling is the older Americans who have been struggling with student loans over the past five years have saved $182,000 less for retirement. This will result in a $1.3 trillion retirement savings gap by 2021, according to AARP’s 2017 Financial Innovation Frontiers study.

The reason older Americans are still managing student loans is because many of them borrowed money for their children or grandchildren. The report found 73% of borrowers over 60 said their student loan debt was for a child’s or grandchild’s education.

Next: Mortgage debt that won’t go away.

2. Lingering mortgage debt

Exterior of small American house

Lingering debt could derail retirement savings. | iStock.com/ irina88w

Most people hope to be done with their mortgage by the time they retire. Older Americans nearing the end of their work days who still have a mortgage are among those tossing and turning at night. Lingering debt could derail retirement savings, so it’s no surprise pre-retirees are nervous about having a mortgage.

The Consumer Financial Protection Bureau sounded the alarm when it noted in a report that rising mortgage debt is threatening the retirement security for millions of older Americans. The bureau reports the percentage of those age 65 and older carrying mortgage debt has risen from 22% in 2001 to 30% in 2011.

Next: Losing your job is always hard.

3. Job loss

senior man

Losing a reliable income stream close to retirement often means extending one’s retirement timeline. | iStock.com/Highwaystarz-Photography

The loss of steady employment is also another cause for concern. Losing a reliable income stream close to retirement often means extending one’s retirement timeline or remaining in the workforce a lot longer than anticipated. Older Americans who have experienced a career setback within the past five years have saved an average of $207,000 less for retirement. Unfortunately, this will result in a $4.3 trillion retirement savings gap by 2021, according to AARP research.

4. Unexpected expenses

banking and people concept

Despite the rise of dual-income households, many haven fallen prey to lifestyle inflation. | iStock.com/dolgachov

Older people are also getting sidetracked by unexpected expenses. Despite the rise of dual-income households, many haven fallen prey to lifestyle inflation and were taken by surprise when an unforeseen expense or emergency arose. A financial emergency tends to have a bigger impact on older Americans because they’re much closer to retirement or are already in retirement. Funds are limited, so this could put a once-comfortable standard of living in jeopardy.

5. Taking care of older parents

family

Older people will likely be caring for their aging parents as they prepare for their own retirement. | iStock.com

Advances in medicine and healthier diets mean people are living longer. However, that also means health care costs will be an issue for a longer time period. As we age, trips to the doctor become more frequent and prescription medication use rises. Consequently, older people will likely be caring for their aging parents as they prepare for their own retirement.

Taking care of parents often requires some financial support, so adult children are being hit pretty hard in their wallets. A Pew study revealed roughly 3 out of 10 older adults have provided their aging parents with financial assistance or personal care, such as bathing or getting dressed.

6. Rising health care costs

emergency room entrance

U.S. consumers spent an average of $4,342 on health care in 2015. | iStock.com

No matter how well you take care of yourself, your body will eventually start to wear down. Unfortunately, this often results in higher health care costs. U.S. consumers spent an average of $4,342 on health care in 2015, according to the Bureau of Labor Statistics. This was a 1.2% increase from the previous year. Furthermore, AARP found brand-name drug prices increased nearly 130 times faster than the general inflation rate in 2015.

A poll by CreditCards.com found health care costs are keeping Americans up at night more than any other money worry. Roughly 38% said they toss and turn because of anxiety over health care and insurance bills. This is an increase from 29% the previous year.

7. Saving for retirement

woman hand putting coin into piggy bank

Roughly 1 in 3 Americans has nothing saved for retirement. | iStock.com/dolgachov

Saving for retirement has been difficult for young and old. Daily financial demands and unexpected expenses have many people delaying retirement or not saving for retirement at all. Roughly 1 in 3 Americans has nothing saved for retirement, according to a survey by personal finance site GOBankingRates.

Among those who have saved, the picture isn’t any better. Approximately 1 in 4 employees said they and their partner have less than $1,000 combined saved for retirement, according to a report from the Employee Benefit Research Institute. Close to half of all respondents said they have less than $25,000 saved.

8. Complex financial products

couple talking to financial planner at home

Many have trouble making sense of the financial products available. | iStock.com/Edward Bock

Older Americans want to take a proactive approach to their retirement, but many have trouble making sense of the financial products available. AARP identified this as one of the top financial stress factors the 50-plus age group experiences. There are plenty of options available. But they can be overwhelming, especially when many people don’t have a full understanding of investing, taxes, insurance, and regulation. If a financial product doesn’t make sense, it’s always best to ask questions.

 9. Lack of helpful digital resources

man on tablet and laptop

Those in the 50 and older age group are active users of technology. | iStock.com/manfeiyang

There are plenty of digital tools available for retirement savers. If you have a problem, there’s likely an app or some other digital tool to help you navigate the issue. Those in the 50 and older age group are active users of technology. Roughly 99% have a tablet, laptop, or desktop device. However, not all of these apps and tech tools are helpful or easy to understand. Those age 50 and older are looking for tailored digital tools to help them make sense of the retirement saving process.

10. Credit card debt and car loans

credit card

This is the time you should be cutting back on spending and working to stretch your existing resources as far as you can. | iStock.com

Having a mountain of credit card debt or a hefty car loan during retirement puts you at a great disadvantage. This is the time you should be cutting back on spending and working to stretch your existing resources as far as you can. The experts at Charles Schwab put it this way:

There’s nothing positive about debt that’s high cost, isn’t tax-deductible, and is taken to buy an asset that will likely depreciate. Things like credit card debt and car loans fall into the “bad debt” category. The image of taking on high monthly payments for a new car that decreases in value the minute you drive it off the lot is probably one of the clearest examples of debt that works against you.

 Follow Sheiresa on Twitter @SheiresaNgo.

More from Money & Career Cheat Sheet:

More Articles About:   ,