How to successfully navigate financially in retirement

Transamerica Center for Retirement Studies (TCRS) recently released a study illustrating the issues and opportunities retirees are facing while offering insights for current and future retirees.

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“An all-important ingredient for success when saving and planning for retirement is: do your homework,” says Catherine Collinson, CEO & President at Transamerica Center for Retirement StudiesShe goes on to say, “retirement preparations involve major financial decisions requiring careful attention. Both large and small decisions can profoundly influence your long-term financial security – positively or negatively. Many people may need to seek the expertise of a qualified professional adviser. In answering these three specific questions, I’m sharing my perspectives as a retirement researcher. I am not a certified financial planner.”

Catherine Collinson, CEO & President Transamerica Center for Retirement Studies

     Boomer:   If I am still carrying a mortgage, should I use my savings to pay it off once I retire?

Collinson:  The TCRS survey of retirees  found that 76 percent are homeowners, and that 28 percent of retirees still have mortgage debt, with an estimated median balance of $52,000. The decision whether to pay off your mortgage upon entering retirement involves a myriad of personal factors such as your overall financial picture, tax situation and peace of mind that may come from paying it off, even if the last isn’t quantifiable. 

Start by doing your homework: What are the terms, conditions, interest rate and duration of your mortgage? Are there advantages to continuing to have one, such as tax deductions for interest payments (although most mortgages are structured so that later payments are more principal than interest)? If you pay it off, would you still have adequate savings on hand for an unexpected major expense? If you decide to continue carrying a mortgage, do you have a solid plan for ensuring that you can continue to make payments for the duration of the loan and/or your retirement?

For most people, their home is their greatest asset and they need to plan to protect it. Two scary situations I often hear from people are: 1) The person is overly optimistic about the level of retirement income they’ll have and they belatedly realize it’s harder and harder to come up with the payments; 2) Similarly alarming, they mistakenly assume their mortgage will outlive them and they find themselves stuck making payments into their 80s, while simultaneously facing increasing healthcare costs that often come with older age.

A professional adviser can help you navigate the pros and cons of the decision to pay off your mortgage early or not, based on your personal facts and circumstances.

Boomer:   For those retirees who did not include long-term care in their retirement portfolio, is it too late to get coverage? 

Collinson:   Our survey found that only 12 percent of retirees have long-term care insurance. We did some research and found that the coverage is often still available to people in their 70s, but insurers expect that applicants are still healthy and not already needing long-term care. That’s why it is important to obtain coverage while you’re healthy and eligible. The longer you wait the more likely you’ll have a pre-existing condition that could rule you out for coverage. The cost of long-term care insurance also typically increases with the age of the applicant.

In our survey, 49 percent of retirees said they plan to rely on family or friends as caregivers if their health declines. What may be unclear to them is the amount of burden and potential risk that puts on the caregiver. Caregiving can be very time-consuming and take a toll, necessitating an adult child or other caregiver to give up a job, which can severely compromise that person’s long-term health, employment and financial security. Families need to have frank conversations about caregiving expectations and make sure one member doesn’t take on an undue burden, especially if they can’t afford to do so.

Long-term care insurance policies are often hard to understand. Working with a qualified financial adviser can help you sort out the differences among policies including costs and levels of benefits provided. An adviser can also help you weigh other options for financing long-term care needs. Shop carefully for advisers. Get referrals from trusted friends and interview more than one person. If you feel that an adviser isn’t being fully transparent, answering all your hard questions clearly and openly, you shouldn’t be comfortable working with him or her.

Boomer:  The study shows retirees are getting by financially, but what if they lack the financial resources needed to recover from a major financial setback?

Collinson:   Only 12 percent of retirees currently have a written retirement strategy. It is important to lay out a long-range strategy with best, worst and mid-range scenarios, and contingency plans in the event of a financial setback. The process of creating a strategy might even help you find way to save money or uncover the advantages of taking on a part-time job.

Consider what could be a major financial setback and try to plan for it. Do you have insurance coverage to protect against things like your roof collapsing or your car being stolen? What might be your out-of-pocket costs under Medicare? Is Medigap insurance or Medicare Advantage appropriate for you? Insurance can mitigate the risks of a major financial setback – but it is very personal and depends on your circumstances.

If you are financially vulnerable, living on limited income and/or fear running out of savings, take some time to learn about governmental and community assistance programs, including the types of programs available, eligibility requirements, and how to enroll. A special note about affordable housing programs: In certain parts of the country, the waiting lists are quite long – perhaps even years. If you are eligible and interested, be sure to research the waiting lists. In some cases, it may be advantageous to get on a waiting list sooner rather than later. You can always say “no” if your turn comes up before you are ready to move.


I highly encourage everyone to take charge of their finances by doing their homework and enlisting a professional advisor, if needed. Careful planning and preparation can really pay off in the end.