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Epoch Times
10-05-2025
- Business
- Epoch Times
Americans' Retirement Readiness Gets a Bad Grade in One Area
By Christy Bieber Kiplinger's Personal Finance Millions of Americans risk not being ready for retirement. Like Kryptonite to Superman or Achilles' heel, one issue is weakening retirees' retirement preparations. That troubling news comes from a retirement readiness study conducted by IRALOGIX, a technology company specializing in IRAs. The The index revealed a national retirement readiness score of only 45.8 out of 100; scores below 50 are in the 'Moderate Risk' zone. In a press release regarding the data, IRALOGIX explained the average score indicates that 'many pre-retirees may face uncertain futures without adequate savings, health care coverage, or financial confidence to sustain themselves through retirement.' So, why are Americans falling so short in retirement readiness, and what can be done about it? Why Most Americans Have Low Retirement Readiness Americans are falling short of the ideal scores in three key areas: Health care readiness Savings and investments Lifestyle and spending However, health care readiness was the worst category, with Americans earning just 6.3 out of a possible 15 points in this category. Key gaps included a lack of understanding of how Medicare works, the absence of a plan for covering health care emergencies, and a lack of preparedness for chronic illness. 'Americans are unprepared for the costs of health care in retirement because people are living much longer lives,' warned Steve Azoury, ChFC® and owner of Azoury Financial. 'The longer you live, the more care you'll likely need. Health care in retirement has become extremely costly, and many Americans don't think about it when they're younger.' Long-Term Care (LTC): The Retirement Achilles' Heel John Gillet, CEO and founder of Gillet Agency in Hollywood, Florida, says many pre-retirees are understandably caught off guard by health care expenses. It's challenging enough to plan for routine spending, he explains, much less for one of the highest costs of all: the potential need for nursing home or home care. The proverbial Achilles' heel of retirement. 'Many Americans are just unprepared for normal living expenses in retirement,' he said. 'Therefore, it's no surprise they haven't given serious consideration to the potentially growing health care expenses they may encounter. The most significant health care expense bomb that's itching to detonate and blow away many retirement dreams is long-term health care.' Related Stories 9/7/2023 2/28/2025 As many as seven in 10 Americans are likely to require long-term care. A Poor Retirement Readiness Raises LTC Risk IRALOGIX also acknowledged that many Americans have saved too little in general, with survey respondents earning just 15.1 of a possible 35 points in the savings and investment category. Many do not understand how to create a sustainable retirement budget or withdrawal strategy, either. These issues only exacerbate the crisis that being unprepared for health care spending could cause, as those with too little savings and no clear budget will have an even harder time covering their medical needs. Retirees can, if necessary, cut many expenses in retirement, from downsizing to a less expensive house to moving to a lower cost-of-living area. But there's no escaping the fact that estimates suggest the typical 65-year-old retiree in 2024 would need $165,000 to cover out-of-pocket expenses not paid for by Medicare during retirement. With health care costs rising faster than inflation, future retirees will need an even larger sum. As the IRALOGIX report shows, not having a plan for this is one of the key factors undermining retirement readiness. How You Can Be More Prepared for the Future Planning for health care simply isn't optional for future retirees. In fact, as you think ahead to retirement expenses, and especially before deciding it's time to retire, it's critical you make sure you can cover these costs. 'In planning for retirement, build a budget that covers what you believe to be all your fixed monthly expenses, including health care expenses,' advised Domenick D'Andrea, an AIF®, CRC®, CPFA® and co-founder of DanDarah Wealth Management. Azoury agreed, stating, 'Just like living expenses will need to be calculated, so do health care costs. As you age, costs will rise, so it's important you factor that in as well.' To estimate your budget, be sure you understand what Medicare covers and excludes, as common care needs like dental costs, hearing aids, and long-term care aren't covered. You should also understand that traditional Medicare comes with 20 percent coinsurance costs for most outpatient care, so you'll need to look into the cost of Medigap plans that supplement traditional Medicare or Medicare Advantage Plans that replace it. You should also consider your family's health history and your current health status when estimating what you'll likely need to spend. And don't forget about preparing for nursing home or home care. 'A properly structured long-term care plan can help Americans pay for these unexpected care costs,' according to Gillet. This could include buying long-term care insurance or making a Medicaid plan with an estate planning attorney. Improving your overall retirement readiness can also be helpful. You can do this by identifying a safe withdrawal rate, creating a spending plan, and of course increasing the amount you save and invest. 'Americans who are over the age of 50 can use the catch-up provision and contribute an additional $7,500 into their 401(k),' D'Andrea said. 'Secure 2.0 also allows a super catch-up contribution for people from age 60 to 63 to increase their contribution by $11,250 instead of $7,250.' D'Andrea also said if you can't save more, working longer may be your only option if you aren't fully prepared for health care and other expenses. Ultimately, the more you can invest for retirement, and the clearer you are on your budget, the better your chances of covering health care costs. If you aren't sure your money will stretch far enough, it simply may not be your time to retire. ©2025 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Yahoo
16-03-2025
- Business
- Yahoo
Is Inflation Avoidable? How Much Power the President Really Has
Inflation remains a vital economic concern for Americans because it affects the price of everyday items — from groceries to gas. Americans are now looking to the White House for answers as the consumer price index rose to 3% in January, compared to 2.4% last September, when it hit a three-year low. Read Next: Find Out: 'In our country, the sitting president can have a huge influence on inflation and the effects of it,' said Steve Azoury, CEO of Azoury Financial. 'Inflation can turn $1 into 50 cents, and for a society to run, it must be under control.' Is inflation avoidable? How much power does the president really have? President Donald Trump successfully campaigned on the promise to end inflation. His first few months back in office have been consumed by a flurry of economic policies, such as increasing tariffs, deregulation, cutting government programs and reducing foreign aid. 'Presidents influence inflation through their spending decisions,' said Wayne Winegarden, an economist at Pacific Research Institute. 'Running large deficits will create pressure on the Federal Reserve that ultimately causes inflation to rise.' Winegarden explained, 'Similarly, implementing a fiscally responsible budget with a more efficient tax system will reduce the deficits and free up the Federal Reserve to implement sounder monetary policy.' Be Aware: While presidential policies dominate headlines, inflation is primarily influenced by broader economic forces. 'The connection between government spending, economic growth and monetary policy drives inflation,' Winegarden said. 'But because of its complexity, it is not well understood.' Energy costs are one of the biggest drivers of inflation. 'The cost of energy needs to get under control,' said Joe Camberato, CEO at National Business Capital, an online resource that helps business owners find and secure financing. Camberato explained, 'Think about every single thing you use in your daily life — it uses energy. Your house, all forms of transportation and every item you buy was shipped to you. We need energy prices to come down, and innovation in energy to happen faster.' Regulations also play a significant role. Trump has pushed for deregulation, signing an executive order requiring the elimination of ten existing rules for every new one added. 'Restrictions on companies can have a big impact on what companies can or cannot do,' Azoury said. 'Productivity of workers and supply chain issues can impact inflation, as well. High productivity can help increase output and wages. Supply chain issues can help promote supply and demand.' A president can shape inflation by influencing policies on energy, regulations and economic growth — but they don't control it entirely. Historically, presidential policies have had mixed results in controlling inflation. The 1970s saw severe inflation due to a combination of weak Federal Reserve policy and excessive government spending by Presidents Johnson, Nixon, Ford and Carter. However, inflation during the 1980s was kept relatively under control due to more disciplined monetary policy, despite occasional economic crises. Camberato said Trump's trade policies during his first term helped him keep inflation low. 'Trump did a solid job during his last term by using tariffs strategically and getting companies to bring manufacturing back to the U.S.,' Camberato said. 'That move helped stabilize prices and keep inflation low. It showed how smart trade policies and a focus on domestic production can make a big difference.' The president also influences inflation through energy policies, changes in regulations and adjustments to taxes, as well as by creating manufacturing incentives for producing things like food or energy. 'All of that affects prices,' Camberato said. 'Plus, a president can either boost [consumer] confidence or destroy it, which plays a big role in how markets react. And when markets move, inflation follows.' For example, Trump's latest moves, including doubling tariffs on Canadian steel and aluminum to 50%, have escalated tensions with the U.S.'s neighbors. While the administration has said that the tariffs protect domestic industries, some businesses, according to Reuters, warned of 'consumer reluctance' and 'weaker-than-expected profits.' Executives from companies like Delta Air Lines and Kohl's warned that the economic changes are hurting their businesses. Reuters reported that Delta CEO Ed Bastian 'noted several sectors were showing softness, including autos, technology, media and aerospace and defense.' Ultimately, while presidents can shape inflation through economic policies, they don't have absolute control. Inflation remains a complex issue driven by politics, policy and long-term economic trends. Understanding these nuances helps individuals make informed financial decisions instead of placing all of the credit and blame on the White House. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRatesHow Paychecks Would Look in Each State If Trump Dropped Federal Income Tax10 Cars That Outlast the Average Vehicle This article originally appeared on Is Inflation Avoidable? How Much Power the President Really Has Sign in to access your portfolio
