Retirement Income Planning
Retirement Planning, retirement planning, where to begin. Well, sometimes the best way to plan for that future is to start with a mental picture of what you want your life in retirement to look like. Are you looking for the same lifestyle you have now, a more upscale and active lifestyle with more traveling, or a more subdued lifestyle? With the proper planning early enough, you can better control the lifestyle you want to lead in retirement. With no planning, look out!
At Houston Retirement Income Planners we help you plan at all stages of your life. Retirement Income Planning can begin early, and the earlier the better. Houston Retirement Income Planners also helps you plan later in life as you get closer to retirement, and of course, our planning continues during retirement.
Years ago, Retirement Income Planning was a lot simpler. Remember 7%, 8% and 9% CDs (Certificates of Deposit)? A one year CD today pays 2.03% - 2.15% at best. How about some 10 year U.S. Treasuries at 1.35%? How many do you want? (Rate Source: Wall Street Journal 2/26/20)
Years ago retirement planning in general was a lot simpler because life spans were so much shorter. For males born in 1900, their life expectancy was 51.5 years, and for females 58.3 years. Fast forward to today the life expectancy for men is 76 years and for women 81 years. (Sources: The Social Security Administration and the WHO, World Health Organization published 2018.)
In 1935 when Social Security was created by the Roosevelt administration for those who reached 65, the average life expectancy was only 61.9 years. You can see how from these numbers why the social security administration has been strained to meet the demands of those retiring today and continuing to live another 10, 20, and 30 plus years beyond 65. More and more of the retirement responsibility has been forced on individuals to make up the large social security gap, and more importantly our much longer life spans have greatly increased the significance of Retirement Income Planning.
Because of the number of years we live now beyond a retirement at 65, Retirement Income Planning has to take into account many more items to address for example:
- Retirement location: Many may be forced to move to cities and states with a more affordable/ lower cost of living in retirement.
- Downsizing: Retiring in the home we have lived in for 30, 40, 50, and 60 years might no longer be affordable on a fixed income in retirement. Even though we may relish the idea of living mortgage free in retirement, rising property taxes and other taxes might grow back to the size of our original monthly mortgage. -
- Increasing Medical Expenses: Many are not aware of the gaps in Medicare that can require additional medical insurance expenses. Many medical expenses additionally are not covered at all, including assisted living and long term care. Out of pocket medical expenses alone can run as much as $500,000 per couple in retirement. That's why I do a hypothetical Retirement Medical Expense Calculation and Report for each of my clients, currently at no charge. Please schedule an appointment for your medical report today.
- Future Social Security payments and deductions: Many are not aware of it, but you know those social security statements that come to you once a year estimating what your social security check will be at different ages in retirement, well those estimates do not include deductions for Medicare and recent adjustments and payments due under the Tax Act of 2013.
- Interest rates at historical lows: 1%-3% interest on U.S. treasuries barely, or perhaps doesn't even keep up with inflation, so at those interest rates, the buying power of your money is eroding everyday by inflation.
Remember, at Houston Retirement Income Planners, our goal is to help you "Not Outlive Your Money," live a comfortable retirement, and pass wealth on to your heirs in a tax efficient way through estate planning.