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The “Greatest Generation” experienced the burgeoning of government and corporate pension and health-care plans post-World War II, but baby boomers and later generations are facing the severe compromise of those benefits.
While thousands of boomers reach retirement age every day, they will continue to take on more responsibility for providing income for their essential living expenses, such as housing, food and health care, says Marc Sarner, president of Wake Up Financial and Insurance Services Inc. (www.wakeupretirement.net).
“The changing landscape of retirement financing has the vast majority of baby boomers concerned, yet millions fail to ever meet with a professional to review their portfolio,” he says. “I would recommend reviewing your plan immediately – preferably with a professional.”
Sarner suggests five areas to keep in mind while reconsidering your retirement plan.
- Plan for a long life. In 1935, when the Social Security Act was passed, 65-year old beneficiaries received payouts for an average of 12 to 15 years. Now, however, a couple aged 65 has a 70 percent chance that at least one of them will live to 85 – which can mean providing for 20 years or more of income once you qualify for Social Security benefits. More importantly, Social Security is not intended to be a retiree’s sole form of income.
- Health care expenses may increase. The longer you live, the more likely you’ll experience chronic health conditions such as diabetes, arthritis and/or heart disease, according to the Centers for Disease Control and Prevention. While some credit goes to more active, health-conscious and smoke-free lifestyles, it may be safe to say that today’s retirees owe their longer lifespans to prescription drugs and medical advances. And as we all know, health care can be expensive. In 2011, 74 percent of American employees had not considered a plan to cover health care expenses in retirement, according to a survey by Sun Life Financial Unretirement.
- Plan for long-term care assistance. With a longer life comes the greater likelihood of needing assisted living or long-term care. For a couple, this kind of care can be costly and is important to consider when developing a long-term care strategy. Medicare pays for acute care, not long-term residency. Medicaid pays for long-term care, but requires that you “spend down” your assets before coverage kicks in. Individuals who delay buying long-term coverage may be considered high risk and may be denied coverage or charged higher premiums.
