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Retirement Planning Blog

on 21 February, 2018

 retirement risks part 2

Editor's Note: This is Part 2 of a two-part series on retirement risks that we should definitely plan for. For more information on retirement money mishaps and how you can enjoy a comfortable retirement lifestyle, you may find helpful answers in The New Retirement Report

In the first half of this series, we discussed 5 of the 10 Retirement Risks you need to plan for. With apologies to the Late Night Show and Late Show, no Top 10 List would be complete with a stop at the halfway point. So, without further ado.... Here are 5 other retirement risks that retired and working-age investors should definitely heed.

As you read through this list, you may want to consider the strategies your plan has to manage these risks. If you are unsure or would like more confidence in your plan, a retirement-knowledgeable financial professional can help you. Their guidance can help identify potential financial gaps, clarify your needs, and solve for those shortcomings. 

Retirement Risks to Watch Out For

#6: Healthcare & Long-Term Care Cost Risk

Research data indicates healthcare and personal care needs will be a great cost burden for future retirees. To put this in concrete terms: A couple retiring in 2017 would need an estimated $275,000 to cover health care costs in retirement, according to Fidelity. That's a 6% increase over 2016.

This estimate relates to those with traditional Medicare insurance coverage and considers premiums, co-payments, deductibles, and out-of-pocket drug costs. It excludes the cost of a nursing home or any long-term care (LTC) that might be needed.

And long-term care might well be the most bitter—and expensive—pill to swallow. The Genworth Cost of Care Survey in 2017 found these monthly median costs for long-term care:

  • Home Health Care Homemaker Services - $3,994
  • Homemaker Health Aide - $4,099
  • Assisted Living Facility Private, One Bedroom - $3,750
  • Nursing Home Care Semi-Private Room - $7,148
  • Nursing Home Care Private Room - $8,121

#7: Tax Burden Risk

Long-range tax strategizing will be especially crucial if you’re counting on tax-deferred accounts (think of traditional 401(k) and 403(b) accounts, for example) for income in retirement. Withdrawals from these accounts will be taxable as ordinary income. Having too many funds wrapped up in tax-deferred accounts could mean a huge 'tax time bomb' later on, especially when you will have to start taking required minimum distributions at 70.5.

This may be a higher risk for those desiring a high-end lifestyle in retirement. It's likely they will need more income to match their spending goals. Talking with a financial planner about income diversification and tax efficiency can help solve this situation.

You can keep more of your hard-earned money for yourself and sidestep sending an excessive proportion of it to Uncle Sam. That's helpful especially in the times when you need it most.

#8: Survivorship Risk

Losing a spouse is itself a sad event. It can be compounded exponentially with new circumstances ensuing from a partner's death. The resulting loss in income and benefits can greatly impact the financial well-being of the surviving partner. This personal loss can also bring a financial burden of lingering medical debts.

Because there are many factors that affect the financial strength of the surviving spouse, you and your partner should run the scenarios of each of you going first, so you’ll know what to expect. And, more importantly, what you can change now to achieve your desired outcome.

Consider life insurance, survivors' pensions, well-planned Social Security maximization strategies, and long-term care insurance to protect the income and needs of survivors. Estate planning is also key to include in a retirement plan for couples.

#9: Senior Fraud & Abuse Risk

Knowing that, when you are at your most vulnerable, someone could target you for fraud is a sickening thought. Yet The True Link Report on Elder Financial Abuse 2015 reveals that seniors lose $36.48 billion each year to elder financial abuse. That is more than twelve times what was previously reported. The report’s findings include:

  • Small losses are evidence of an underlying vulnerability.
  • A senior who lost as little as $20 in a year to exploitation could be expected to lose $2,000 a year to other types of fraud.
  • It is estimated that 954,000 seniors are currently skipping meals as a result of financial abuse.

There are steps that can be taken to guard against this risk. Be aware that people of retirement age and beyond are at risk from strangers, and possibly even close friends. Develop good fraud detection and countering habits, such as being skeptical of unsolicited offers and doing thorough research on them.

When being solicited, it's helpful to request those offers be sent in writing via the mail. Work with loved ones and teach them as well as yourself to be on the lookout for warning signs of fraud. Finally, carefully safeguard your information, especially details like your Social Security number, credit card information, and other personal information at risk for abuse. 

An article from details eight helpful tips to combat fraud and senior abuse.

#10: Lifestyle Risk

You know what more free time means? It means more time to spend, travel, and pursue your passions. Your neighbors are taking a cruise down the Seine? Who would want to miss that? Bon voyage! Your granddaughter is competing around the world in ice dancing? How can you miss even one competition?

You deserve to enjoy retirement. You just need to plan for what level that enjoyment might reach and plan for how your priorities could shift. Along with the expenses of travel goals and other lifestyle-related spending, map out what your monthly living expenses will be. Then you start determining what sort of income and cash-flow you will need -- and how you will put your accumulated financial resources to work for you.

#11: (Bonus Risk) Not Taking Action Now

The Risks and Process of Retirement Survey, courtesy of the Society of Actuaries, found most pre-retirees currently don't consult with a financial professional. But retirees report a moderate amount of interest and pre-retirees a high amount of interest in receiving support and education on a variety of finance-related topics.

If you are interested in working with a financial professional, verify their expertise, planning specialty, and background are a good fit for you. They should offer guidance and products that are in your best interest. You might want to confirm how they will fulfill that mission to you.

Confident Futures Start with Planning Today

If you would like help from a professional who can guide you, can assist you.

Use our "Find a Financial Professional" section to connect directly with a financial professional. You can request a personal strategy session to discuss your needs and goals. Should you need a personal referral, call us at 877.476.9723.

on 20 February, 2018

retirement risks

Editor's Note: This is Part 1 of a two-part series on retirement risks that we should definitely plan for. For more information on potential retirement money mistakes and how you can enjoy a comfortable retirement lifestyle, you may find helpful answers in The New Retirement Report

Top Ten Lists were a signature of David Letterman’s Late Night and Late Show legacies. Now that he’s 70, if Letterman were to prepare such a list today, it might look something like this: "The Top Ten Retirement Risks I Didn’t See Coming, But Should Have."

While three decades on TV may give Dave the aplomb to tackle top retirement risks with more leniency, this isn't the case for everybody. Not everyone can be blasé about what they face as they enter and move through retirement. To help you look ahead—and plan accordingly—we offer these Top Ten Retirement Risks You CAN See Coming.

on 15 February, 2018

 retirement income planning for couples

Over the years, you and your spouse have probably had many wonderful conversations about your retirement dreams. Maybe you talked about traveling to exotic destinations. Maybe you have always wanted to move closer to the grandkids. Or you might have dreamed of taking up those elusive hobbies neither of you had quite the time to pursue.

Of course, there are many things to discuss for retirement so you can prepare for a retirement lifestyle that you both find meaningful. One thing you may not have discussed, or agreed on, is how to harmonize your grand plans with your retirement income plan. Because not only will you need money to fund that retirement wish list… You will still need income to support your everyday needs, not to mention healthcare and other potentially costly unknowns.

What will those needs be? That seems to be where the disagreement begins. According to a Fidelity Investments Couples Retirement Study, almost half of the couples surveyed (47 percent) disagreed on how much they needed to save to maintain their current lifestyle in retirement.

One reason may be the small percentage of couples who have taken time to develop a detailed retirement income plan… just 21 percent, according to Fidelity.

on 13 February, 2018

retirement mistakes high net worth investors part 2

Editor's Note: This is Part 2 of a two-part series on common retirement planning mistakes made by high net-worth investors and households. For more information on the retirement and financial challenges awaiting today's investors, request your personalized copy of The New Retirement Report. This resource spells out many of the risks awaiting you in retirement and potential solutions to address them.

In the first half of this two-part series we addressed key mistakes that can drain your wealth in retirement. From the high-ticket expenses of long-term care and healthcare to unaddressed asset protection or liability issues, there are many potential missteps. Here are a few more retirement mistakes to avoid.

Review them with your retirement planning professional or advisor to ensure your plan has strategies to address, or even avoid, these possible financial mishaps.

on 12 February, 2018

 recent market volatility sign of things to come

There is no doubt that individual investors were hit hard by the financial crisis. Several months of double-digit negative stock market returns almost halved investor portfolio values from April 2008 to March 2009, according to Netspar (the Network for Studies on Pension, Aging, and Retirement).

If you think losing a significant proportion of your nest egg sounds like a life event that would color future money choices, you might be surprised by a November 2017 survey.

When Hartford Funds asked people about the lasting impact of the market meltdown and the ensuing “Great Recession,” 40 percent of them said the financial crisis of 2008 has had no lasting impact on their life. A higher number though, 42 percent, said they now avoid the market. And 46 percent of respondents said they have adjusted their spending and savings habits in the aftermath. 

Interestingly, people have made investment and lifestyle changes in the wake of that momentous market downturn—including avoiding the market all together—yet the perception of its impact has faded for many. “Americans are forgetting what it felt like during those challenging times of 2008-11,” according to a Hartford Funds executive.

on 08 February, 2018

retirement mistakes by high net worth households

Editor's Note: This is Part 1 of a two-part series on common retirement planning mistakes made by high net-worth investors and households. For more information on the retirement and financial challenges awaiting today's investors, please consider a review of The New Retirement Report. Many investors have found this resource useful for planning out for their financial futures.

With even more on the line than traditional retirees, high net-worth households need to be cautious of several all-too-common retirement mistakes that can cause a reversal of fortune.

Review these threats with your retirement planning professional or advisor to ensure your plan has strategies to address—and avoid—these potentially costly pitfalls.

in Annuity
on 07 February, 2018

 impact of market slides on variable annuity investors

U.S. equity markets have taken investors on a wild roller-coaster ride over the last several days. Equities started free-falling after U.S. wage data released on Friday, Feb. 2, showed positive results. While economic news continues to be good, it raises the specter that the Fed will raise interest rates to ward off inflation. 

Higher interest rates would result in higher borrowing costs for companies and businesses. Not only that, it would become more expensive for consumers to buy cars and homes. 

It turned out that Friday’s drop was just the tipping point. The stock market went on a wild ride again on Monday, with the Dow Jones Industrial Average closing down 1,175 points. This represented the worst point drop in history. And at one point Monday afternoon, the Dow was down 1,579 points, which was the largest intraday point drop in the history of the index.

If all this market anxiety had you reaching for the Dramamine, you aren't alone. Most people are invested in the market in one way or another. So, many households felt the sting, and it has only slightly abated as the market has begun to recover some of its losses.

on 05 February, 2018

social security medicare filing deadlines importance

If you think choosing when to start claiming Social Security benefits can be confusing, you’re right. But did you know there is even more to consider when deciding when to start collecting those benefits?

If you are approaching or planning for retirement, you need a Medicare enrollment strategy that synchronizes with your Social Security claiming strategy in order to:

  • Reduce your risk of losing benefits,
  • Prevent you from incurring penalties, and
  • Maximize your benefits from both programs for the rest of your life.

Medicare and Social Security are programs that "talk to each other." Missed deadlines or poorly-timed benefit claims could mean as much as thousands of dollars of lost income. 

What we don't know can hurt us. So, here's a quick look at why you must verify deadlines and information for each program so everything is done right.

on 01 February, 2018

social security break even point age

When you begin claiming your Social Security benefits is one of the most important decisions you will make. Knowing when to start your benefits—and when not to—could mean thousands of more dollars to you, and your surviving spouse, when you could use the income the most.

But with so many claiming possibilities, when is the right time? 

You probably have heard arguments for claiming early and waiting. That being said, it pays off to understand the break-even ages for Social Security benefits, their impact, and how different claiming ages may compare.

on 30 January, 2018

 life insurance for seniors

Millions of Americans depend on life insurance for financial protection, not to mention for many other reasons. But as people get older, insurance coverage may seem out of reach. Many seniors think they don’t have good life insurance options due to age or health.  

Even if you are in your golden years or not quite there, the good news is you do have choices. For example, there are some life insurance policies that may be bought up till age 90. That isn't the most frequent age to get life insurance for seniors, but it's helpful to know there are options for just about any life-stage. Some insurance options might also be available for those who may not be in the best health.

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