First, Complexity Increases as Physical Health Declines

Nearly 95% of older adults have one chronic condition and 80% have two or more.² People 80-84 take an average of 18 prescriptions per year.³ You’ll likely have more medical tests to schedule and be dealing with more medical specialists and pharmacists. Plus, you’ll have more healthcare decisions to consider. 

Depending on your medical needs or if you become hospitalized, you may be transitioned from the hospital to a rehab facility, then back home, or to a long-term care facility. This cycle can repeat itself if you take longer to recover or your health worsens. 

More Medical Care; More Paperwork

You’ll get bills from doctors, hospitals, rehab facilities, and other providers. You’ll get insurance statements from Medicare, or insurance companies, that summarize what medications and services are covered and which ones aren’t. These statements say, “This is not a bill.” But they certainly look like one, because they indicate amounts you’re responsible for.

It’s a daunting task to keep track of them all. But you should, because a study found that 49% of Medicare-paid claims have at least one error.⁴ Other groups that review bills on patients’ behalf found error rates close to 80%.⁴ In addition to increasing paperwork, caregiving often adds complexity in this retirement phase.

A Strong Social Network Can Improve Health

Strong social networks play a significant role in promoting your overall health. Adults with strong social connections have a reduced risk of many significant health problems, including depression, high blood pressure and an unhealthy body mass index (BMI). In fact, studies have found that older adults who have meaningful relationships and social support are likely to live longer than their peers with fewer connections.¹⁰ If keeping friends is so important, why do we lose them?

We tend to lose friends in this phase because of mobility challenges. Because of declining health, driving to visit a friend or family member can be challenging, for both you and your friends. Friends your age could be managing their health-related issues which makes driving and maintaining connections a greater challenge. Since keeping friends is more difficult than it was when you were younger, it requires more planning and effort to keep them.

How to Keep Your Friends in this Phase

To make and keep friends, be intentional about it. Try to find someone you can do something with weekly, such as going to the gym, watching a movie, or having lunch. Sticking to this kind of consistent schedule can be challenging because of medical appointments and other commitments. But to make close friendships, your friends will need to be a top priority in your schedule. 

Consider these ideas for finding new friends:

• Do volunteer work
• Enroll in a college course
• Frequent a neighborhood coffee shop
• Use online social networking to meet others
• Join a travel club
• Enroll in an exercise class
• Ask family and friends for an introduction to others
• Attend a senior center

You may be able to find friends online. Stitch is a website built to help people over 50 make friends. Consider signing up to find new friends in your area. Stitch makes it easy to meet others in a group setting, whether it’s a new movie, exhibit, or just dinner.

Fourth, Complexity with Finances

In this phase, you may need to make decisions that have large financial consequences. One of these may be about where you’ll live. If you continue living at home, you may need to make home modifications, such as widening hallways, adding ramps, installing no-step showers, and more. Basic modification project costs (e.g. a bathroom renovation including flooring, sink, faucet, and shower) average $9,500.¹¹ A whole-home aging in place renovation averages $50,000.¹¹ 

Depending on your health, you may need help with household chores. If you don’t have family to help, you could hire help. Home-health aides cost on average $28,080 per year based on 20 hours of help per week.¹² Getting help around your house could be expensive, but the financial impact of having to move out of your home can be even more costly.

Aging in Your Home Can Increase Your Risk of Falls, Which Could Lead To A Broken Hip

A broken hip will keep you from driving, meaning you wouldn’t be able to get to the grocery store or doctor appointments. A broken hip can also make it impossible to cook, clean, and maintain your home. These challenges could prompt you to consider moving to an assisted-living community, or a nursing home. The average cost of assisted living is $54,000 per year and a nursing home is $108,405.¹² Along with the high cost of housing in this phase, healthcare costs also tend to rise considerably.

Total health care spending for Americans 65 and older is about $15,000 per year, on average, nearly three times that of working-age Americans.¹³ Fidelity estimates that a couple will need $315,000 for healthcare in retirement.¹⁴ You might think, “That’s OK, I’ll have Medicare.” But traditional Medicare only covers about 80% of healthcare costs, and it doesn’t cover anything for assisted living or nursing home expenses. You’re responsible for the rest and there’s no limit on how much you could have to pay out of pocket.

How to Plan for Financial Complexity

A financial professional can help you navigate the complexity of this phase by anticipating your financial needs. And they can offer guidance, or connect you with other professionals, to help with decisions on Medicare choices, such as Medicare options A-D, and supplemental coverage options A, B, C, D, F, G, K, L, M, and N. These options may reduce your risk of large healthcare expenses. 

If you want to age in your home, consider hiring a certified aging in places specialist (CAPS) or an occupational therapist. They can help you determine home modifications, and costs, that will make it easier and safer for you to age in place. 

If you’re not sure if you want to age in your home, a retirement community, an assisted-living community, or a continuing care retirement community, a geriatric care manager can help you and your family understand the pros and cons of each option. They’ll also know about the quality and cost of these options. 

With All the Complexity in This Phase, It Sounds Like All Doom and Gloom

The challenges facing us in this phase of retirement are significant. As a result, you might think that living through them will be sad and depressing. Surprisingly, despite the complexity and increasing costs, things probably won’t be as glum as you’d expect. A 2015 Gallup-Healthways State of Well-Being Rankings for Older Americans revealed that people over 75 had the highest level of well-being in the areas of purpose, social, financial, community, and physical.¹⁵ Another study found that our psychological well-being peaks at age 82.¹⁶

When Planning for the Navigating Complexity Phase, Remember These Four Things

• First, as your health declines, you may be managing multiple health problems. These problems mean more tests, more treatments, and lots of bills and statements to keep track of.
• Second, if your mental capacity begins to slip, you may need help making decisions. Consider setting up a durable power of attorney with a loved one. 
• Third, we tend to lose friends as we age, and isolation can become a risk. Be intentional about making and keeping friends. 
• Fourth, finances get more complex because of healthcare and housing needs

You’re Never Sure When You Might Enter the Navigating Complexity Phase

We tend to think of retirement as one long vacation where we get to rest, relax, and enjoy ourselves. Alternatively, the MIT AgeLab says retirement has four phases: the honeymoon phase, the big decision phase, navigating complexity phase, and the solo journey phase. Each phase has its distinct challenges. The trick is that we’re never sure when we’re going to enter each phase. Like Herman Lamm’s detailed bank heist planning, we’ll increase our chances of successful retirement if we anticipate and plan for the challenges we’ll face in each phase.

Next Steps

1. Visit hartfordfunds.com and search for our 8,000 Days MIT AgeLab white paper that describes the four phases of retirement
2. Visit the healthcare section of AARP’s website to learn about health insurance options
3. Meet with your financial professional to create a plan for navigating complexity phase