Creative Generosity

There are some great advertisements that show you retirees traveling, gardening and enjoying their hard-earned reprieve from the workforce. It gives a great glimpse of how good retirement can be, giving folks something to strive for. However, it’s not the only reflection of retirement. Sometimes there are valleys to go along with those peaks, and one of the most distinct valleys that are experienced in retirement is mounting health care costs.

The financial weight of health care can start off with small steps, or small pills to be precise. Nine out of ten people 65 and older have commented that they have taken at least one prescription drug within the last 30 days.1 As health issues progress, so can treatments, with some people having multiple medications and continuous appointments, not all being covered by private health insurance. According to an annual estimate conducted by Fidelity, the average retiring couple “will need $280,000 to cover health care and medical costs”.2 While many expect to rely on Medicare for their health care costs, the program is not comprehensive. Fidelity’s figure includes deductibles, cost-sharing requirements for certain medications, as well as services and devices that Medicare doesn’t cover, like hearing aids. For the unprepared, these figures can be staggering.

Those who are unprepared can, unfortunately, find themselves sliding into practices where they are not taking care of themselves in retirement. According to the 2018 Economic Well-Being Report, a quarter of adults went without needed medical care because they were unable to afford the cost.3 Those who do go in for medical care can be overwhelmed by mounting medical costs. According to a study done by the Consumer Financial Protection Bureau, “43 million Americans owe a medical debt.”4 Stress-induced by medical issues combined with stress over mounting medical costs is not what people expect to experience in their retirement.

The key to good retirement planning isn’t to plan to maintain your current lifestyle. It is to plan for possibilities and scenarios that may not seem likely today, but that statistics show could impact your tomorrow. While these statistics can be very overwhelming, if you start saving early and work with a trusted financial professional, you can be fully prepared to enjoy your retirement. In the end, you need your finances to be in good health for those moments when your body can’t be.

https://www.iris.xyz/advisor/9-facts-about-retirement

http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/

https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf

https://finance.yahoo.com/news/4-tips-keep-medical-debt-overwhelming-174638865.html

The one constant in life is change.

It sounds cliché, but it’s very true. Almost everyone will have a moment where change will rock the typical steadiness of your life. A health scare. An unexpected job change. Divorce. A significant drop in the market (i.e., a bear market) as you’re on the verge of retirement. These shocking twists can make us want to scramble and take immediate action to right our suddenly turned around world.

However, sometimes the simplest solutions are the best. When coping with physical imbalance, the key is to focus on a stationary point.1 This allows your brain to make adjustments to maintain your equilibrium. The same applies to other life changes. Fear and frustration may urge you to take some unexpected course of action to address sudden changes, and sometimes these knee-jerk reactions cause more harm than good. In those highly-charged moments, soliciting some professional council, like from a trusted financial advisor, can help us locate that stationary goal and work with us to identify any adjustments that need to be made.

Every time I meet with my clients, I remind them what we’re working towards. Yes, I want to be made aware of any changes they may have experienced, but I also want to remind them what all the decisions we’re making and actions we’re taking are working towards. We planned for the unexpected expenses by saving an emergency fund. For my younger clients, momentary dips in the market don’t necessarily derail us from our long-term goals. In fact, it actually provides purchasing opportunities. Additionally, markets go down, but they are always achieving new high’s long-term. For my clients on the cusp of retirement, these dips were prepared for by diversifying their savings and expanding their emergency fund. With the long-term goals in mind, it’s easier to see the horizon from within the storm.

The trick of it all is to stay focused on the long-term vision of the life you’re trying to create. I’ve learned that this applies not simply to your finances, but other aspects of your life like your career or your family as well. Changes will occur, and your world may get a little rocked, but as long as you take a breath and continue to focus on your long-term goals, you’ll find yourself on sturdy ground once again.

1. https://www.scienceabc.com/sports/why-focussing-on-something-helps-in-maintaining-balance.html