One’s golden years should be rife with well, gold, but
seniors can be ill-equipped to tackle their personal finances if they lack
financial literacy.
According to a new FINRA study, lower financial literacy
among seniors adds up to poorer decision-making, higher vulnerability to scams
and lower psychological well-being.
“I find that roughly 45% of people in retirement lack
financial literacy,” said Peyton Leonard, a finance expert with
EffortlessInsurance.com. “A lot of times, they lack financial literacy because
they are no longer in the workforce. They become comfortable in their
retirement and forget the skills they used to have.”
Leonard likens the phenomenon to kids going into the summer
break after the school year.
“All that they learned the previous year goes out the window,”
Leonard said. “When they come back to school in the fall, there’s always a lot
that has to be retaught.
They Didn’t Grow Up in the Information Age
Another reason that retirees may find themselves lacking in
financial literacy is because they didn’t have the privilege of growing up with
the endless digital scroll of information: the internet. Furthermore,
retirement planning wasn’t always the hot topic it is today when we’re facing a
crisis around under-saving.
“The retirees of today did not grow up in the information
age,” said Terry Sacka, founder and chief strategist of Cornerstone Asset.
“Knowledge of and access to financial information regarding retirement
accounts, their benefits and what investments even qualify to go in them was
under emphasized and often neglected during their time.”
The Need for Financial Literacy Intensifies in Retirement
If you’re already retired, you may be thinking, “Why even
bother catching up on financial literacy now?” That’s a valid feeling,
especially with so much media coverage revolving around the importance to plan
and save leading up to retirement. But no matter your age, financial literacy
is still important, and it’s never too late to learn; in fact, retirement is
one of the most crucial times to dig into money management topics.
“Financial literacy is important throughout each phase of
one’s financial life, most especially in retirement as there are no ‘redos’ or
going back,” said Michele Lee Fine, RICP, founder and CEO of Cornerstone Wealth
Advisory. “You have a finite amount that you have saved, so it’s critical to be
informed and aware on how to best protect what you have worked hard to save and
make it last as long as possible.”
There’s also the chance that you could outlive your savings.
“Financial literacy is very very important in retirement, as
there is a significant risk that an individual will outlive their retirement
savings during their lifetime,” said Jovan Johnson, a certified financial
planner, CPA and CEO/owner of Piece of Wealth Planning LLC. “Humans are living
much longer, but are not planning for it. Also, many retirees don’t consider
the large medical expenses that come up during retirement. There is a
misconception that during your retirement years, you will spend significantly
less. This is not necessarily true, as your spending will decrease in some
areas while increasing in others.”
Available Free and Low-Cost Resources
Fortunately, those in retirement have an abundance of free
or low-cost resources available to them to help them navigate their financial
lives.
-Talk with your retirement broker and/or financial advisor.
“Your first port of call should be to talk with your retirement broker or
financial advisor,” said Tony Martins, founder at Profitable Venture. “They
will have the best picture of your financial situation and should be able to
guide you to make the right decisions with your money.”
-Schedule a consultation with an RICP. “There are financial
experts trained specifically in retirement planning such as those with the
Retirement Income Certified Professional (RICP) designation that can help guide
you with the right questions to ask, the important things to consider and be a
resource to you leading up to and throughout retirement so you can make
informed decisions,” said Fine.
-Check Out AARP’s Local Offerings. AARP isn’t just a card
you get when turning a certain age, ahem, it’s a veritable passport to
retirement resources. “AARP US Virgin Islands hosts monthly financial literacy
classes,” said Amy Rose Herrick, ChFC, America’s Profit Building Specialist.
“They are open to the public aged 18-plus in addition to members of AARP in the
U.S. Virgin Islands. Pre-registration is required for these free informative
Zoom presentations you can attend from anywhere. We leave time for Q&A and
attendees receive, by email, copies of the presentation and any other handouts
following the event from the sponsor for future reference.”
-Check out sites like SoFi Learn. This is a financial
education site that makes money literacy topics more digestible.
-Books! There are tons of books about personal finance books
that are not only educational, but they’re also fun to read.
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