Affording Senior Living Tips From Jean Chatzky

“Money without good health, it just doesn’t work anymore,” Chatzky continues. “Even if you have substantial financial resources, poor health will eventually wreak havoc on your bank account.”

Here’s how you can help to keep that from happening.

Take a good, honest look at your wallet.

To start, Chatzky suggests taking an inventory of your current financial health. Ask yourself these questions:

  • What do I earn?
  • What do I owe?
  • What do I love?

Start saving for retirement.

Next, begin to assess how much you can save for retirement. Chatzky suggests that adults try to have 10 times their income saved for retirement. But if you’re approaching retirement age and haven’t yet hit this number, there are still a few moves you can make to help yourself get closer to that amount.

First, try downsizing even before retirement to save some cash.

Second, look at your investments and consider whether you could afford to take a little more risk.

Third, and most importantly, Chatzky recommends meeting with a financial planner at least 10 years out from retirement. To learn more about financial planners, what they are, and how to find one, check out our financial planner explainer.

Play mind games with your money.

As human beings, our brains are generally hard-wired to be motivated by instant gratification. Too bad saving money just isn’t as instantly gratifying as spending it! But luckily, we can also use our brain’s preferences to make good financial decisions without even thinking about them. Chatzky recommends two means of doing so: automation and substitution.

“Automation makes 401(k) and other work-based retirement plans work like magic,” she explains. Chatzky says that by automating expenses so that they are paid-for immediately, we relieve our brains of the stress of battling their natural tendencies toward instant gratification.

Substitution works in a complementary-but-different way. The substitution method entails taking the cash-burning habits you have and substituting them with something else.

“Turn that Starbucks that you buy on the way to work into coffee you brew at home,” Chatzky offers. “Turn the hours you spend online into extra hours of sleep.”

Don’t be daunted by inflation.

When it comes to retirement, inflation won’t stop just because your income has. But that doesn’t mean you need to stop spending. In fact, Chatzky says pulling your money off the market can be one of the biggest mistakes seniors make when wrestling with inflation. “Keep investing in the market,” she says. “You need to have your money working for you while you are not working.”

And one more recommendation: “I think the best weapon that you have against inflation is using any extra cash that you have on hand to pay off high interest rate debt before it goes even higher,” Chatzky says.

Don’t assume that you need long-term care insurance.

Insurance — everybody needs it, right? Well, not necessarily. Chatzky says that long-term care insurance is often more appropriate at very specific times for people in very specific situations.

“By the time you’re 60, there are a lot of health conditions that make you uninsurable,” says Chatzky. “And when you’re 40, you’ll be paying the premium too long before you actually use it.” Instead, Chatzky recommends age 50 as the sweet spot for looking into long-term care insurance.

But perhaps more important than having the right timing is having the right situation for long-term care insurance. Some of the situational considerations are financial.

“If you have less than half a million in investable assets, or maybe a little more, then you should spend your assets down and qualify for Medicaid,” says Chatzky.

According to Chatzky, long-term care insurance likely makes the most sense for people who cannot spend down to qualify for Medicaid and people who may not have someone to care for them otherwise. Chatzky says that single people generally should invest in long-term care insurance and disability insurance for this reason.

To learn more about saving for retirement, check out our other blogs on financial topics to learn about everything from possible Social Security increases — and what that means for you — to complex financial topics put simply.

The above content is shared for educational and informational purposes only. The content is not intended to be a substitute for professional legal or financial advice and should not be relied upon for making legal, financial or other decisions. Please consult your attorney or financial advisor before acting on any content on this website.


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