How to Survive Retirement

The concept of retiring is a strange one. Many people work their entire lives and are ready to stop working. However, there’s always a question about: What happens next?

Over the weekend, I read two articles on retirement that I thought were pretty interesting.

The first one from USA Today dealt with keeping busy in retirement.

I found this quote especially informative:

Financial planner Brad Zucker, president of Safe Money Advisors in Las Vegas, says before people retire they need to find their passions. “Retirement could last 25 years,” he says. “You want to be certain you have some kinds of interests and passions to make it through those years.”

People don’t realize that if they retire in their mid–60s, they could have another 1/3 of their life left to live. If you’re content to sit around and watch soap operas, you might be okay without a hobby. The rest of us, however, are going to need something to occupy our time — and sometimes what you choose costs money.

That brings us to the second topic – Will you have enough money to survive retirement?

This article from the NY Times talks about why having a million dollars (ONE MILLION DOLLARS!) isn’t enough money for retirees.

I thought the article didn’t do enough to discuss the catastrophic effect that a long-term care crisis could have on savings. They focused on what happens to the ability to live on your retirement when the return on investments is so low. For instance:

For people close to retirement, the problem is acute. The conventional financial advice is that the older you get, the more you should put into bonds, which are widely considered safer than stocks. But consider this bleak picture: A typical 65-year-old couple with $1 million in tax-free municipal bonds want to retire. They plan to withdraw 4 percent of their savings a year — a common, rule-of-thumb drawdown. But under current conditions, if they spend that $40,000 a year, adjusted for inflation, there is a 72 percent probability that they will run through their bond portfolio before they die.

However, many elderly retirees are forced to spend much more than $40,000 per year when you factor in the cost of long-term care. Home health care aides can cost up to $21/hour, assisted living facilities can run north of $6,000 per month, and skilled nursing facilities (or nursing homes) can cost more than $12,000 per month. A year or two of those kinds of bills can wipe out retirement savings lickety-split.

Is there a better choice? Sure, hire an elder law attorney to put together an asset protection plan for you — just don’t wait until it’s too late.

Posted by Victor J. Medina,
Medina Law Group, LLC