07/10/2015 06:05 pm ET Updated Dec 06, 2017

3 Nightmares of the New Retirement


As I look at the many issues facing seniors and Baby Boomers, I have come to an uncomfortable conclusion: Retirement will very tough for many of us, and for some it will be downright scary.

Our lives have many chapters. We start with our youth, endure our adolescence and hopefully thrive during adulthood. Our final chapters, however, cover retirement and end of life issues, yet I think many people focus heavily on their early chapters and don't start addressing the end of their story until it is perhaps too late. If we don't get a handle on where we will live, begin to understand who we will likely live with and figure out how to pay for it, we may be in for difficult and harsh realities in retirement.

I have developed some guidance for seniors and boomers on how to better prepare for a few key end of life chapters.

Where will we live?
Where we live in retirement has a major impact on the end of life equation. This covers not only the physical location but also the manner in which we will live. It's best to have answers to these questions figured out early enough so that we have control over the decision and also so that we don't become a burden on our loved ones.

For many of us, our home is our largest asset and will likely be a linchpin of our retirement plan. If you want to stay in your own home until the day you leave Earth, then you need to figure out how you will continue to pay necessary expenses, even if the home itself is paid off. Homeowner's insurance and property taxes must continue to be paid, but some retirees may also have to cover flood, windstorm or other insurance coverage for other potential catastrophes. If you want to stay in your house, then that huge asset will remain illiquid until you die. Will you be able to afford it if you live into your late 80s, 90s or beyond?

If you end up selling your home, then what? Will you be able to afford to rent? In some markets, rental rates are rising to astronomical levels. Is an adult community an option? What about living with relatives? Will it be possible to reside with aging siblings, children or extended family?

We may have a desire to live in another geographic location that gives us a chance at a longer life expectancy, such as the so-called Blue Zones, but this may not be an option.

Who will we be with?
I bet most married couples or those in committed relationships assume that they will be spending the rest of their lives with their current mate. Statistics argue otherwise. First, there's a big "D" to contend with, as in divorce. We all know that half of all married couples get divorced. So right there, you start off with a diminished chance of living your golden years with your current spouse or partner.

For Baby Boomers, those aged 50 to 70, the divorce rate is more than four times that of those 65-plus. Still, those seniors are a substantial part of what's being called the "gray divorce" trend. And these splits can take family and friends by surprise. It may seem depressing but according to studies, high divorce rates typically are caused by couples drifting apart vs. a deal-breaking event like an affair. People change over the course of decades-long relationships.

Then there's the other big "D," as in death. According to statistics from the U.S. Census Bureau, 14.9 percent of all men age 65 and older are widowed. For women, 45.2 percent of those 65 and older are widowed.

The odds are quite good, particularly for women, that you won't be with your current significant other until death do you part. So, why the focus on this buzzkill for romance? Because you need to look ahead and realize that in retirement you may not be with your present mate.

This brings up a host of issues. Reporter Stanley Luxenberg from the New York Times illustrated these here. Getting re-married can change your tax bracket, your ability to pay for your children's education, healthcare costs and nursing home expenses. It can also impact your social security payouts, retirement accounts and pensions. Many seniors are shying away from remarrying for these reasons, but then other issues arise. Will your new "significant other" inherit part of your estate when you pass? Will he or she have the right to make medical decisions on your behalf?

How will we pay for it?
How we pay for retirement is, of course, the issue we are all focusing on as we plan for our golden years. Many longevity and retirement calculators exist to help us figure out how much we need to save. Sadly, those who are behind on their savings are usually struggling and can't just follow the typical advice of "save more." We need to regularly review our current assets -- our home, our property, our investment portfolio -- and look for all the possible ways that we can pay for retirement. This might be leveraging the home in some manner, such as arranging a reverse mortgage or sale/lease back, using our current IRA for investments off Wall Street and assessing assets such as life insurance. All options need to be considered.

My main message is that people need to realize that end of life issues are getting more complicated and won't get any easier. We should all start drafting our final chapters now, as it will make for a better story for us and our loved ones.