Digital transformation is touching every aspect of our lives. While fintech is the evident driver behind financial behavior for millennials and Gen Z, its profound impact on older demographics tends to be overlooked. As more platforms cater to users of all ages and backgrounds, fintech’s influence on the financial security of the silver generation is becoming just as strong.
What happens when fintech reshapes the financial landscape for those of retirement age? With a market value approaching $1.5 trillion by 2030, fintech is revolutionizing how everyone manages money. It can transform how seniors approach retirement, pay off loans, account for their expenses, and manage their finances.
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How Fintech Platforms Are Reinventing Retirement
Fintech is breathing new life into the retirement process. Traditional retirement planning and methodology have always been ridden with inefficiencies and problems like lack of personalization, limited accessibility and transparency, high cost, limited flexibility, and excessive reliance on expertise.
Today’s financial technology attempts to address these issues by automating and simplifying previously complicated and time-consuming processes.
Through the ingenious integration of users’ needs into streamlined platforms, the financial aspects of retirement can now be managed better and more inclusively. The following are ways fintech apps and platforms are transforming retirement and empowering retirees to take charge of their financial decisions:
Custom banking solutions
Retirees have different banking needs compared to other demographics. When a person retires, they can go into “deaccumulation mode”—the opposite of the accumulation phase, which is working, planning, and saving for the accumulation of assets and building up the value of their investments.
When retirees move on to a distribution phase, they essentially access and use what they already have—hence, “deaccumulating.” The prospect of “deaccumulation” can be a scary transition for some older adults.
Financial technology is providing room for such needs by ensuring that banking services are age-friendly, conveniently accessible round-the-clock, and don’t need personal visits to accomplish.
The COVID-19 pandemic accelerated older generations’ move to online services.
Because of the increasing number of seniors turning to online resources, there has been a clear need to create platforms that address the senior population. Improvements in the user interface ensure that statements are easy to read and understand. Voice-activated banking is now available with an enhanced, intuitive interface. Such features are intended for older adults with physical limitations.
Other notable features of novel age-friendly apps include faster access to Social Security checks, reduced monthly fees, better earnings on balances, and no minimums. Some fintech apps now offer unique financial products tailored to retirees’ income and investment needs. The goal is to help retirees make the most out of limited resources.
Access to credit
Even with a stable retirement income, seniors and older adults need continued access to credit. Unfortunately, despite long credit histories and strong demand, credit access is more difficult for older adults. Because of their altered financial status, it may be more challenging for seniors to get approval for something as simple as a new credit card.
The lower approval rates may be due to several factors that cause credit card companies to view them as higher risk. These include less annual income or loss of regular employment income. In addition, seniors may be denied access to more credit because of debt obligations.
To offset the prohibitive atmosphere around credit for seniors, fintech platforms and apps are being developed to help them find convenient ways to get credit with less tedious requirements and friendly rates.
Fintech apps now cater to the growing need for credit among the older population. For example, seniors looking to borrow money for unexpected expenses can use peer-to-peer (P2P) lending as an alternative option. Such platforms usually provide easy access to capital with competitive rates.
In addition, such apps promote age-inclusive financial literacy as part of their customer service—financial information for seniors used to be hard to come by. Today’s financial apps and websites are changing that by offering free information with every signup. Fintech platforms provide vast resources of relevant information and data in user-friendly language to help retirees understand their options and make informed decisions.
Debt management for retirees and senior citizens
While most of us wish to retire debt-free, it is impossible for many. Many seniors carry debt well into retirement and seek ways to ease the burden. There are different types of debt: credit card debt, mortgage debt, and student loans.
Credit card debt
Consumers in their 50s have amassed the highest levels of credit card debt, based on a recent study evaluating 2023 credit card statistics. Some fintech platforms can help those nearing retirement age to improve their situation. They assist in negotiating lower interest rates and facilitate ways to help you pay credit card debt faster.
Mortgage debt
Mortgage debt is generally considered “good debt.” However, those who plan to get rid of their mortgage debt entirely upon or soon after retirement should devise a strategy to refinance their mortgage at lower interest rates and enable a faster payoff.
Refinancing Parent Plus Loans
When a parent or grandparent co-signs a loan, both the borrower and co-signer’s loan and payment history show up on the credit report. Should the borrower miss a payment, the record will reflect negatively on the co-signer, thus posing a risk to retirees who continue to carry such loans.
Parents or grandparents commonly get Parent PLUS loans for undergraduate students to help them pay for college. To reduce the impact of such loans on retirement finances, seniors and retirees can refinance. A Parent PLUS loan refinance strategy could help you achieve lower interest rates than the US government offers.
Moreover, refinancing Parent PLUS loans may help you extend the payoff period, reducing the monthly financial burden. It can also consolidate several loans into a single loan, so you can ideally lower your interest rate. Several fintech platforms created by private lenders make such options possible.
Fintech platforms allow retirees to manage, refinance, and consolidate their loans to accommodate their financial goals, such as paying off a loan faster or allowing for favorable rates and more forgiving monthly payments.
Paying for healthcare and emergencies
Healthcare can become a mounting burden with age. Unexpected events during the retirement period necessitate platforms that help provide financial relief for this largely unaddressed demographic.
Fintech apps and platforms are making it more straightforward to manage healthcare costs by providing retirees with tools to track their medical expenses, analyze their level of insurance coverage, and suggest optimal health insurance to suit their needs.
Simplified estate planning
Today’s fintech apps make estate planning easier with digital tools to set up trusts, draft wills, and ensure that any existing assets are distributed according to their wishes in strict detail. Some platforms offer state-specific expertise, which provides retirees the proper documents for every jurisdiction.
Fintech websites also address the growing need for digital estate planning among retirees. Planning to protect one’s digital legacy is no longer confined to tech-savvy niche groups. Intellectual property and digital assets affect everyone. They make up an increasing part of retiree portfolios, some of which are of immense value.
Digital estates include creative and intellectual property, websites and domain names, software, code, photographs, videos, multimedia, cloud storage contents, online businesses, cryptocurrencies like Bitcoin, other digital financial assets, and the contents of various gadgets like phones and hard drives.
Everything you store online or on your devices may be considered as part of your digital estate. Fintech apps can play a valuable role in access management and other details necessary to document, transfer, or grant rights to digital files and assets as part of a retiree’s comprehensive or overall estate plan.
Fintech Helps Retirees Take Charge of Their Financial Future
Retirement is not the end of financial planning and management. It is certainly not the end of pursuing dreams and looking for new investments. Fintech empowers would-be retirees, retirees, and senior citizens to take control of their financial lives by getting ahead of the curb.
Through abundant and accessible information, those in the retirement phase are educated about their options, allowing them to make the best possible decisions tailored to their goals. Fintech also creates a positive impact on retirees’ financial futures. Instead of stagnating and relying on limited resources to support their lifestyles, they can look at various ways to access credit, consolidate or refinance debt, choose healthcare plans, and decide on investments that suit their risk tolerance.
Moreover, retirees can secure their estate by simply looking up apps that help them protect their assets for the next generation.
Retirees can now proactively manage their portfolios instead of relying heavily on loved ones to handle their money and financial specialists and professionals for advice. Fintech allows flexibility, support, and dynamism that empowers them in revolutionary ways, paving the way for greater independence.
