I'm in My 70s
Spiking the Ball: Financial Planning in Your 70s
Welcome to the New Retirement! This is not the golden years as we used to know them. In general, we are healthier, more prosperous, and better educated than any seniors before us. Science tells us that we'll live longer than them too. But that's a double-edged sword, because all those additional years will bring additional costs, too. This is no time to take your eye off the ball.
- Health and Lifestyle - Some of us will work, some will find physically active pursuits, some will while away the hours counting raindrops. Whatever your lifestyle choice, be sure to continue to manage your health. See your doctor regularly, get all recommended tests, and sleep and eat well.
- Planning Your Retirement - At this point, you're not so much planning as managing the execution of your plan. Still, things change, and some people are surprised to learn, for example, how much they miss the purpose and routine of work. Others are surprised to learn how much they enjoy NOT working.
In our experience, the typical retirement has three phases:
- You finally get to do all those things you've been saving for and dreaming of, like touring the Southwest in an RV. The danger here is that fuelling an RV is expensive, and you may have such a good time that you'll spend too much.
- You sell the RV and stay closer to home, spending time on activities such as gardening. Needless to say, mulch is cheaper than diesel, and this is a relatively low-cost period.
- Later, as health inevitably declines, expenses again rise, this time because of medical costs.
If you see yourself in any of these descriptions, or if your retirement is following a less typical course, be sure to consult with a qualified independent advisor.
Saving for Your Retirement - By now, your saving is done. The name of the game at this stage in your life is "capital preservation." A good rule of thumb is that you can plan to withdraw about 4% of your savings per year for a long time without jeopardizing your principal. As usual, though, each situation is different, so you'll need to discuss yours with a qualified independent advisor.
Estate Planning - An underappreciated danger to any estate plan is being underinsured for long-term care.
Insurance - Make sure you have the right kinds and enough of it to protect your loved ones.
Medical Insurance - If you're over 65, we'll assume you're on Medicare. Be sure to also consider Medicare Supplementary Insurance; if you do, be sure to review your options regularly: Unlike other forms of insurance, which have varying options, inclusions, and exclusions, this insurance is the same wherever you go. So your only considerations should be price and the reliability of the insurer. We can help you with your supplementary insurance review.
Long-Term Care Insurance - A little-known fact: For all practical purposes, Medicare will not cover you for long-term care. At this writing, a year of LTC in the Lehigh Valley can run over $96,000 a year and in New Jersey be $330/day or about $120,000 per year, which is enough to blow a hole in anyone's legacy. But if you're not already covered for LTC, the cost of the insurance is prohibitive. What to do? The answer's not easy, but a qualified independent advisor can help.
Life Insurance - If your kids are grown and financially independent, the mortgage is paid off and your spouse would survive without your income, you may no longer need life insurance. On the other hand, if any of these are a concern, you may need to keep a policy in place or even purchase additional insurance. Another exception is if you've got an estate of more than $11.2 million. Life insurance could help to pay the 40% estate taxes that will be due on any amount over the $11.2 million exemption.
Disability Insurance - Because the income you earn from work is no longer a primary concern, neither is the possibility that your income will decline should become unable to continue working. One less thing to worry about!
Homeowners and Liability Insurance - Throughout your retirement, a home can remain a cornerstone of your financial stability. So protect it, with sufficient homeowner's insurance. In addition, make sure you have adequate liability insurance. Raise the liability limits on your homeowners and auto insurance policies to the maximum, and consider adding a personal liability policy (also called an umbrella policy). In general, maintain liability coverage equal to one to two times your net worth.