After working for many decades, buying a home, raising a family, sending children to college, and paying for a wedding or two, retirement probably seems like a just reward. Yet now is no time to sit on your nest egg. Even if you've been retired for several years, you need to keep planning for the future, which could extend beyond your 80s. According to a recent estimate, the average life expectancy for a U.S. citizen was close to 78 years. And if you’ve made it to age 70, the average rises to about 87. Since many retirees can now reasonably expect to live into their eighties or nineties, retirement planning never really ends.
Of course, everyone’s situation is different, but here are several areas that could have a major impact on your plans.
Investment portfolio. Most retirees tend to invest rather conservatively, and for good reason. When you’re living on a fixed income, you need to make sure you have enough coming in to cover your basic expenses, and you may not have time to recover from steep market losses. Still, keeping too much of your portfolio in bonds and other comparatively safe investments may backfire over a long life span, especially if higher inflation returns. Allocating a judicious percentage of your assets to stocks may enable you to maintain your standard of living when expenses rise.
Insurance policies. Your coverage needs change with age, and a review during retirement of all of your policies can not only make sure you have enough insurance but also that you’re not continuing to pay for coverage you may no longer need. Term life insurance may be an unnecessary luxury now, while long-term care insurance, to pay for extended care in a nursing home or in your residence could be a necessity. And while Medicare covers most doctor and hospital fees, you might need to buy additional supplemental coverage at a time that many employers are scaling back health insurance for retirees.
Wills and trusts. Estate planning, too, tends to be a work in progress, and wills and trusts created several years ago will likely need to be updated to reflect your evolving circumstances as well as changes in estate tax rules. During the course of your retirement, for example, your children may become so successful that they no longer need to inherit as much of your wealth, while bequests or trust payments to grandchildren could be help them buy a home or launch a business.
Weighing all of these factors and making sure that your retirement continues to unfold according to plan is a daunting proposition. But you don’t have to go it alone. We are here to work with you and other advisors to help keep you on track regardless of where you are in your post-work life. Please call for an appointment to review your progress.