Death and Taxes

Ben Franklin Quote

Benjamin Franklin famously said, “in this world, nothing can be said to be certain, except death and taxes.” As we all check off our tax returns this month, a study from Allianz reported that 61% of people fear running out of money more than death!

When we meet with clients for the first time, we always ask them to bring any statements, tax returns and retirement income plans they have on file. They normally have plenty of bank and brokerage statements (sometimes boxes of them) and tax returns. But, very few have a written retirement income plan. Do you? 

If so many people worry about running out of money in retirement, why don’t more people have a written retirement income plan? As people retire (or approach retirement), we think it is essential that they have a written plan which shows their sources of income – year by year – for as long as they live. Retirement income is normally derived from:

  • Social Security – how and when to take it are the key questions;
  • Pensions – for those lucky enough to have one!
  • Personal Savings – and how to turn that into reliable income?

Our greatest satisfaction comes from helping people develop a written retirement income plan (it can be one page or a multi-page report). We can develop it together and when complete, review it annually to ensure you have complete peace of mind in retirement.

Do your taxes but don’t worry about running out of money in retirement.  Contact us and let’s schedule a time to start building your personalized plan!

Health Care Costs in Retirement

If you are prudent you know how much monthly income you will need to meet your basic needs in retirement. For some people, it is $4,000 per month, for others $10,000 per month and for some, it can be $15,000 to $20,000 per month in retirement.  It all depends on where you live, how you live and of course, how long you live. Our written retirement income plans start with that base assumption and adjust annually for inflation.

But, are you thinking about health care costs as you age? Here are some interesting statistics:

  • If you are 65, your average additional life expectancy is 18 years (for men) and 21 years (for women). So, on average, 65 year olds will live until they are 80 to 85 years old. Of course, the lucky ones will live longer!
  • Fidelity Investments estimates that a 65 year old couple, who retired in 2015, needs about $245,000 to cover medical expenses throughout retirement. This applies to retirees with traditional Medicare coverage and does not include costs of dental care, long-term care or OTC medicines.
  • About 70% of people over 65 will need long-term services and support at some point in their lives. Medicare and most health insurance plans (including Medigap policies) don’t pay for long-term “custodial care.”
  • On average, assisted living can cost $40,000 per year and nursing home care can cost $71,000 to $78,000 per year (semi-private or private rooms).

Most of my clients hate long-term care, though, because it can be expensive, premiums can increase and if you don’t need it, it can feel like wasted money!  But, there are alternatives available (asset-based long-term care) that offer simplified issue, long-term care benefits and return of premium or death benefits, should you not need care.

Contact us for an informative white paper, Preparing for Your Retirement: Planning for Health Care Needs In Retirement, and let’s talk about how and if your income plan provides for your long-term care needs, if and when you need it.