What is Financial Wellness?

3 minute read

To be financially well, especially later in life, involves awareness and in-depth planning. It means being as fully prepared as you can be for the financial challenges and risks you’re likely to face.

Your physical health also plays a critical role. It does not need to be perfect, however, you do need to make sure you have access to good medical care, make your healthcare advanced directives clear, and identify trusted individuals who can help make decisions.

After Chris Heye, PhD. confronted dementia in his own family and witnessed elder financial abuse amongst his friends, he decided not enough was being done to protect older adults. As a result, he helped design a clinical study at the Massachusetts General Hospital which investigated the behavioral and cognitive underpinnings of sound financial decision-making. He also founded two firms to help people address these issues- Whealthcare Solutions, Inc. and Whealthcare Planning LLC.

Whealth Risks of Aging

As you age, the chance of losing some of your mental faculties increases. These include memory loss, diminished mental capacity, executive function, overconfidence. All are risk factors that can contribute to poor financial decisions.

This is especially risky in retirement because most people have to generate income from their own savings and investments. Studies show that the peak age of financial decision making is 53, well below the average retiree’s age of 62.

Baby boomers, the wealthiest and healthiest generation in U.S. history, are living longer which makes them more likely to face a variety of health issues, especially in the late stages of life. These present both challenges and opportunities for the financial services industry.

WATCH Your Money Map: Defining and Pursuing your financial wellness

Chris Heye, CEO and founder of Whealthcare Solutions, joined Jean Chatzky on Your Money Map to discuss defining and pursuing your financial wellness on March 8, 2022.

You Will Live Longer Than You Think

Almost a third of Americans 50 or older underestimate their life expectancy by five years or more, according to a recent study by the Society of Actuaries. And keep in mind that, as you grow older, the more likely you are to continue to live a longer life.

Operating under a misconception about how many years you have ahead of you has one potentially huge downside: You could run out of money. Numerous studies over the years – including the Alliance’s Protected Lifetime Income Study – show that running out of money in retirement is one of the top fears retirees have. Remember- Your life expectancy is the foundation of your planning.

Give Yourself a Checkup

The goal is to go into retirement with a game plan for addressing diminished capacity risk. There are a number of steps you can take to get ahead of this risk, including:

  • Assess your situation
  • Make a written plan
  • Set up legal protection
  • Buy appropriate health coverage
  • Use financial tools to provide insights into our financial health

A Financial Wellness Score

The Financial Wellness Score can help you get a clearer picture of your financial wellbeing.

Once you have a clearer picture of where you stand financially, it will help you better plan for your future.

You can use your financial wellness score to validate how you are spending your money or to take a step back and reconfigure your spending habits, make your advanced directives clear and identify trusted individuals who can help you make decisions.

It’s never too early to know how your financial wellness looks. A financial professional can be a great way to do a check up to see where you stand. People who take these steps will find that, as they age, they are in a much better position to help themselves and their families.

Get your financial wellness score here: https://www.protectedincome.org/financial-wellness-score/

And to get a snapshot of whether you’ll have enough retirement income to cover your basic expenses and live the life you want, get your RISE Score® here: https://www.protectedincome.org/rise-calculator/

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