Tips to Prepare for a Long Retirement :: Wamhoff Financial & Accounting

Tips to Prepare for a Long Retirement

With average life expectancies continuing to rise each year, it’s no wonder that most of us have friends, relatives or neighbors who may be in their 90s, or even approaching 100 years old. While it’s great that we’re living longer, it also means that we have to plan for retirement much differently than previous generations. Bob Wamhoff, president of Wamhoff Financial Planning & Accounting Services, outlines the top challenges, and tips for a long retirement.

Making Income Last

  • It’s crucial to have a monthly retirement income to cover your living expenses, health care, and unexpected expenses.
  • Develop a retirement savings plan that is based on living at least until age 95.
  • Upon retirement, create a disbursement strategy that will help you minimize your tax exposure. We typically recommend taking money from non-qualified plans first, as you’ve already paid taxes on that money.
  • You still need to have an investment strategy in retirement, one that will help you protect your principal and keep ahead of inflation.
  • Diversify your investments with funds inside and outside of the market.
  • Consider an annuity which can help with guaranteed income and cash flow.

Accessing Cash for Unexpected Expenses

  • Just as in your pre-retirement days, you need to plan for the unexpected, and have a rainy-day fund or access to cash in case of an emergency or unforeseen situation.
  • These expenses could include a major repair on your home, a tax bill, or providing financial assistance to a child or family member.
  • A diversified portfolio which includes funds that are easily accessible should be part of your financial plan.
  • You may also consider certain insurance products that can provide for access to cash or tax-free loans based on the value of your policy.

Long-Term Care Expenses

  • It’s been estimated that at least 70% of people over age 65 will require some form of long-term care services at some point in their lifetime.
  • The average cost of a private room in a nursing home in St. Louis is approximately $51,000 per year, and this continues to rise each year.
  • A long-term care insurance policy can help cover costs and protect savings in the event that such care becomes necessary.
  • The amount of coverage needed will be dependent on each individual’s financial situation.
  • It can be prudent to think about getting a policy earlier rather than later. If you wait too long, you risk experiencing health issues which may make you uninsurable, or make coverage unaffordable.
  • Consumer Reports has reported the right time to purchase a long-term care policy is your early 60s.
  • There are also some variable annuity products with riders available for increased income if you or your spouse needs home health care, or go into a nursing home facility.