Americans are living longer than ever, which means retirement could last 20 to 30 years for some people – maybe even longer.
That’s great for those who remain in reasonably good health and retire with plenty of financial stability.
But lengthy life spans also increase the odds that many seniors will deplete their savings, face debilitating health problems and need to turn to their children for financial help or caregiving.
That’s a far cry from the kind of retirement they dreamt of over the years.
“I’ve done focus groups where one of the chief concerns that comes up is people don’t want to become a burden on their kids,” said Jeannette Bajalia, a retirement-income planner, president of Woman’s Worth (www.womans-worth.com) — which specializes in the needs facing women as they plan for their retirement —and author of “Retirement Done Right” and “Wi$e Up Women.”
It’s really too late to do much, though, when you’re 80 and your life starts unraveling. That’s why it’s important to plan ahead to get your finances and health in the best shape possible, she said. Among some of the points worth thinking about:
• Unanticipated health care costs. It’s estimated that the average married couple will need to pay up to $250,000 in out-of-pocket expenses for healthcare during their retirement, beyond what Medicare and most Medicare supplements will pay.
“We’re beginning to see a lot of cost shifting out of both Medicare programs and private health plans, which means more out-of-pocket healthcare costs,” Bajalia said. “It’s entirely possible that the savings you thought would allow you to travel or to at least pay all the bills could be gobbled up by medical expenses. As you plan for retirement, you should make it a priority to discuss this concern with your adviser so the two of you can look at what options you might have to try to keep that from happening.”
• Long-term care planning. When it comes to aging, consider the possibility you might have to receive home healthcare or live in a nursing home or an assisted-living facility. The costs of such care can be daunting. For example, studies have shown that home healthcare can cost $50,000 or more per year, and nursing home care can run as high as $90,000 per year.
“You don’t want your kids to have to pay for that,” Bajalia said. There are ways to prepare, such as buying a long-term care insurance policy or checking with a financial professional to help you develop a strategy for protecting your assets from nursing-home claims, she said.
• Self-care. Not every financial professional may do this, but Bajalia said she believes it’s important to integrate health education and a lot of self-care into a retirement plan. Spending money on preventive health routines to take care of yourself now can help you avoid significant health problems that lead to even costlier expenses later on, she says. Research is now telling us that longevity is over 70 percent lifestyle.
“I know it’s important to older people that they be able to remain independent as long as possible and not have to turn to their children to help,” Bajalia said. “They just need to remember that careful planning is the route to accomplishing that.”
And one of the planning tools would be to help fund long term care insurance for your aging parents to keep assets in their estates, she says, so long term care is not simply for yourself but for your aging parents.