How Confident are you in Retirement?

By: Max Valavanis, CFP®

Retirement planning is trickier than ever. Some refer to planning for retirement as creating a map to navigate through this “adventure”. While this metaphor has its uses, a map can be misleading or outdated. Everyone has fallen victim to an inaccurate Google Maps route or a MapQuest printout; likewise, a Financial Plan can lead you to a dead-end. Thus, it is important to be malleable with your financial outlook, and merely look to the plan as a guideline of what may occur, rather than something set in stone. 

A common mistake retirees encounter is believing their income will maintain its strength as they age. Unfortunately, as time ticks, purchasing power seemingly dwindles as inflation creates its mark. Even modest inflation can rear its ugly head on your retirement funds. 2.5% inflation over 25 years will degrade purchasing power by over 46%. In essence, in 25 years this relatively low inflation would make $100,000 worth less than $54,000 in today’s money. In a world where people live longer in retirement, inflation becomes far more important in preparing for the future.

The Society of Actuaries studied the life expectancy of a couple aged 65, and their findings highlight the importance of planning for a long retirement. Their studies found a 50% chance one spouse will live past age 90! This is amazing to hear, but many people aren’t prepared to live this long. AARP announced that 61% of those 50 years or older fear they do not have enough money for retirement. As the population lives longer, inflation’s effects grow stronger, and we must adjust our financial plans accordingly.

As we know already, with age typically comes healthcare costs. Thankfully we have Medicare and supplement plans at your disposal, but seniors must recognize the possibility of paying some costs out-of-pocket. Fidelity estimates a 65-year-old may need approximately $157,500 in savings to pay for these healthcare expenses. Many of these costs can come from extended stays in long-term care facilities or rehabilitation centers. These types of care are typically covered only up to 100 days with Medicare. The rest must be fulfilled either by your savings, a specific long-term care insurance policy, or Medicaid – if you qualify. A comprehensive financial plan will address this issue and the appropriate steps to take.

Your retirement plan should grow with you, and adjust to the changes in the economy and YOUR needs! It must have fluidity for aging into your 90s, unexpected health care bills, and a multitude of other issues that may arrive in the future. As a Certified Financial Planner™ (CFP®), I specialize in creating financial plans tailored for you. Whether you have a plan or not, I welcome you to a complimentary appointment at our office to assess your financial health. You can call ValaVanis Financial at (321) 956-7072. I look forward to seeing you soon.

Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). ValaVanis Financial and JWC/JWCA are unaffiliated entities.