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Avoiding Common Financial Drains After Retirement

Most retirees fear draining their retirement fund more than death itself. With life expectancy getting longer, most retirees don’t have enough funds to last 20 to 40 years. Utah is no exception. Utah retirees are some of the healthiest in the nation, but the constant drain on their finances is often a big burden. Fortify your finances by rooting out unnecessary expenses and limiting essential ones.

1. Credit Card Debt

Stop using your credit card. Spending is easier if you go cashless, and most seniors often spend beyond their means. Around 60 percent of seniors are mired in credit card debt, averaging more than $7,500 per person. Monthly interest rates for $7,500 comes at around $100 a month, enough to pay for utilities or one to two weeks of groceries.

Switching to cash allows you to control your spending. Make a weekly or monthly budget and try to keep your spending below it. If you have credit card debt, strive to pay it as soon as possible. You can also restructure or transfer your debt to a credit card account focused on getting rid of the debt, preferably one with 0 percent APR and decent grace periods.

2. Medicine

Before retiring, make sure to opt for Medicare Advantage if you take medication. Basic Medicare will not cover prescription medicine, so costs can accumulate over time or if you need additional medication. You’ll need to go to private insurance companies to avail of Medicare Advantage.

Insurance companies to consider are easyMedicare, Aetna, Humana, Cigna, and Highmark. Aetna offers the cheapest Medicare Advantage plans, while easyMedicare and Humana have the best coverage. Most Medicare Advantage plans also cover vision and dental services as well as preventive medicine/therapy.

3. Utilities

You can cut your yearly electric bill to $100 with solar power. Utah’s elevation makes it one of the ideal states for solar power. The price of solar panels is also dropping, and a 5-kW solar power system can go for as low as $8,000. State and federal solar incentives cut the price to less than $5,000. A 5-kW system can produce more than 20-kWh per day. A similar system was used by Weber State to win the recent International Solar Decathlon. Their solar power system powered a 2,500 square foot six-bedroom house.

Use a ten-year loan for the $5,000, and the monthly savings on your electric bill (around $80 to $120, depending on your usage) should be enough to cover your monthly premiums (around $50). Your solar power system will pay for itself within 5 years, and you’ll have an extra $100 each month to spend or save as you see fit. Solar panels can last up to 45 years, so expect free electricity for the rest of your life.

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4. Car problems

Senior drivers are often taken advantage of on the road or in repair shops. Car accident scams or swoop and squat scams are common in urban centers. Scammers will often overtake or swerve in front of a vehicle before hitting the brakes and causing a collision. Police will often find the trailing vehicle at fault, especially if driven by a senior. Sometimes, the scammers take it upon themselves to shake down their victims.

A dashcam should provide a modicum of protection from these scams, and a reputable auto accident lawyer should make scammers pay (financially) for their despicable acts. Car repair scams are harder to deal with. You’ll need to find a trustworthy mechanic through trial and error or word of mouth and stick to his shop to limit the cost and frequency of repairs.

5. Hospitalization

Extended hospital stays are the biggest drain on retirement funds. While Medicare will cover emergency procedures, it will not cover extended stays during recovery. Hospital visits can be avoided, and the most significant factor in most hospitalizations in the US is obesity. Over 65 percent of patients admitted to hospitals every year are overweight or obese. Excess weight figures prominently in their condition or disease, particularly for heart disease, hypertension, strokes, kidney disease, type II diabetes, and cancer.

Control your weight with a proper diet and physical activity. Just ten minutes of physical activity every week can reduce your hospital visits by more than 30 percent. Exercising for 20 minutes a day ramps the numbers up to 50 percent.

Your independence is tied to your financial stability. Small expenses can snowball into bigger ones, especially if you’re not aware of or prepared for them. Fortify your finances so that you don’t have to rely on your family or the state during your senior years. You can look forward to your retirement years without problems by becoming financially stable before hitting that age.

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