How Does Cost Of Living Affect Retirement

Have you ever heard the expression’ money is the root of all evil’? Well, in some ways, it can be true as quite often it is your bank balance and income that will dictate what you can do in life and when. It is the same situation regardless of what stage of life you are at, whether you are 16 or 60. Quite often, it is more about getting the most for your money and reducing the cost little by little.

Facts and figures

When you look at the cost of living across New Mexico, it is surprisingly low, with the average spend per $100 standing at $88.4, which is significantly below the national average of $100. There are a number of things that can contribute to your cost of living, whether it is your grocery shopping, utilities, or even medical bills and insurance. The average salary reaching $17.27 per hour while nationally reaching $28.44 marks a 3.1 percent increase on the previous year. Across New Mexico, this comes in at $323 per person for health insurance, whilst healthcare costs nationwide have reached an average of $662, justover double what you would pay just in the one state. Without insurance, healthcare can be extortionate, with a visit to a doctor’s office costing anywhere between $84 and $131. With the cost of living for elderly people also increasing, medical costs are one of those things that they could ideally be doing without. Obviously, medical care is something that is always going to be necessary, so if you are in need of medical attention, then you will pay whatever is required.

What is the cost of a care home?

Even nursing homes fluctuate in price, with elderly US citizens paying anywhere between $2,000 and $12,000 each month just to have somewhere to live and care for them when they may potentially need more help as they get older. The cost of senior living is something that is offset a little in assisted care as it is possible to put it down as a tax deduction with the help offered in assisted care, counting as medical needs. Nevertheless, assisted care homes are still expensive, so they should ideally be used if there is no alternative care. This isn’t to say that they are necessarily bad as they offer a vital service to those who are in need or might have serious health conditions where they can’t get any treatment otherwise. It is one of those necessary costs that help you to ensure the best possible future and use of your hard-earned cash. With Social security making up a significant portion of post-retirement income,it is important to make sure that your money is being utilized properly. Even in New Mexico, the average cost of a nursing home is expected to see costs of $7,406 and $8,304, all depending on if you were to choose to go private or not. Again the total cost will soon build up over time, so it is important to ensure that you have enough money to fall back on beforehand.

What are the options?

If you wanted to avoid going into a care home and would prefer to stay in your home then that is possible, particularly as 61% of over 60s have stated that they would much prefer to grow old in their own four walls rather than go into a retirement home, assisted or otherwise. There are other options however. You could always choose to look after your relatives yourself, or even hire a Home Care Health Aide, although they don’t come cheap. In 2020, you would have been set back almost $55,000, so you would need to be absolutely certain that this is the correct course of action and exactly what you need. Their monthly wage stands at roughly $4,576, meaning it would be expensive to have despite whatever specific health requirements you or your relative mighthave. It would cause unnecessary strain and stress to yourself and your relatives. Even if you didn’t want to go down the assisted care route, there are still options that would allow your parent or family member to keep that sense of independence and freedom that they would have had if they were living at home. The only difference is the staff who are likely to be available all day and night to offer help and support when you might be struggling.

Where does the money come from?

As with many things, a fair amount of saving is required to make it truly viable to use nursing homes or any form of social care. Whilst Social Security does help to foot some of the bill, with up to 40 percent of your pre-retirement wage being supplied, it is more than likely you will have to draw on your pension or savings to help fund a nursing home should you require one. Retirement income drops as you age, and with 84 percent of older Americans receiving monthly benefits payments from social security and fewer than 31 percent having any form of pension, it is left to whatever savings are left over to help fund any care or even just basic living once you retire. It’s difficult, but the more you save now, then the more you will have when you really need it in the future.

In summary

It is never easy trying to pinpoint how and when someone should look for help and try to access social care or give up their independence. It’s even harder when trying to juggle finances to ensure that you have everything you need at every important stage in your life. Whether it is family or friends, there is always likely to be someone there who can help you to find your feet and muddle through as best you can. Just stay focused, and with the right support and savings, you should be able to set yourself up for a happier and potentially more stable retirement.