Bleeding Money

Updated: May 4

We don’t like to skirt around the inevitable.

Healthcare is the number one cause of bankruptcy in retirement. Most people don’t fully prepare for the draining costs it will take to make it through retirement. If you’re 65, your typical average health care costs are about $500 to $550 a month. This cost is a culmination of Medicare premiums, supplements, and anything out of pocket.

And if you’re a couple, it’s around $1000 to $1100 a month. By age 95, you’re going to see that monthly cost triple due to inflation. I want to help you realize the significance of this matter in your retirement. 72% of you will see at least one spouse make it into your 90s. This is key information for planning.

According to a JP Morgan study, it’s assumed that healthcare inflation will go up by 6%. We will certainly take that percentage into account when planning. But what do you do when you face extraordinary costs, such as chronic illness? Some, if not most of you may reach a point where you’re not able to perform some of the basic functions in your day to day life, such as feeding yourself, bathing yourself, or otherwise and you will need to rely on someone else for help.

Men, 64% of you will get to a point where you’re not able to perform two of those six activities in daily life, officially qualifying you as chronically ill. Unfortunately, your Medicare doesn’t pay for this and your normal healthcare doesn’t pay for this. The cost comes out of your pocket until you’re bankrupt. At that point, you start receiving help from the government through Medicaid.

Women, 75% of you will become unable to care for yourself. Why is the number so much higher? Usually, women live longer than men and bodies just wear out to a point where we need outside help. So put the two percentages together, and you get an average of 70% between men and women that will require outside care.

Have you truly planned for this? Has someone done a stress test on your portfolio to make sure you’re able to pay out of pocket?

Some of you may benefit from a great product called ‘Long Term Care Insurance,’ but it’s incredibly expensive and getting more costly every year. At Lord and Richards, we want to prepare and plan for the added healthcare costs. If it does end up coming out of your own pocket, we’ll help you find the most efficient way to pay tax free.

Here's another statistic: 64% of men and 59% of women will need three or more years of care in their retirement. What does this long-term care cost per year? Right now, average costs are around $113,000 per year and the costs are continually soaring.

A couple in their 60s is likely to spend close to a million dollars for an average four-year stay in their 80s. I’m giving these statistics intentionally, not to scare you but to help you see the importance of planning ahead.

Now that we know the average costs, let’s construct a plan that will ensure that you never run out of money before you run out of life. Let’s build a written income plan, a written risk management plan, and a written estate plan.

I know my team or I would love to personally help you build a plan for the future. All it takes is a 15-minute phone call to get started with us today! Give us a ring at 720-592-1040.

We hope to chat with you soon!

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