Need to Know: Overlooked Retirement Concerns

October 24, 2018

Planning for retirement can sometimes feel like a full-time job, and we know it can be hard to keep track of everything.

 

As you're thinking about the future, we know you probably have your eye on the big picture questions like when can I retire, how much money will I need. This month, we want to make sure you consider a few items that are often overlooked when creating your retirement strategy. Here's what you need to know.

 

  • Required Minimum Distributions

    • The IRS tells seniors that after the age of 70.5, they should withdraw from qualified retirement accounts like traditional IRAs and employer-sponsored plans. These withdrawals are known as  Required Minimum Distributions (RMDs).
       

  • Taxes

    • Something people often don't realize is that while RMDs provide extra income, that income is taxable and cannot be rolled over into a Roth IRA.
      In general, you can't assume that you will pay less tax during retirement due to taxes on retirement income (including RMDs, employer-sponsored plans, etc.). Plus, if you've paid off your mortgage, you won't be able to write off any income.
       

  • Health care costs 

    • Even if you retire while in good health, most seniors have escalating healthcare costs. The average American senior pays over $120,000 for medical care between the ages of 70 until they pass away. The cost of medicine also adds up and thanks to some significant gaps in Medicare coverage, many seniors pay for medication out-of-pocket.
       

  • Eldercare needs

    • Because life expectancy overall is increasing, the need for long-term care is also increasing. Long-term care insurance, while available, can be costly and right now the average American who turned 65 in 2015 can expect to pay up to $138,000 in long-term care bills. In addition, many of us simply don't plan for our own burial and funeral costs, which can be expensive if not pre-planned.
       

  • Rising consumer prices.

    • ​​For the past 50 years, inflation has averaged about 4%/annually. While that may sound relatively low, over time, 4% inflation adds up. If inflation continues at this pace, in 20 years, the buying power of a dollar would be only 46 cents. It's essential to think about rising prices when creating a retirement savings strategy.

 

Don't want to overlook anything in your own retirement planning? The Robin S. Weingast & Associates team can help. Contact us today to make sure you never miss a detail when it comes to planning for your future.