An Introduction to Preparing for Later Life

Sue Daugherty
Mar 23, 2010

 

Middle-age people and those just entering into retirement are not doing the research to really financially prepare for the costs as they grow older. Nor are they prepared for the length of time they are likely live.

What about you? Have you always been mindful that at some point in your life you would not need to work? Or that you might not be able to work? Have you been dedicated to the cause of having a physically fit body and mind? Have you been squirreling away a percentage of your earnings to prepare for that day when you will no longer be working?

If you haven't given your retirement this kind of thought it's not too late to start now. Let me suggest that you begin by first giving yourself a bit of a reality check. Begin by identifying how long you are likely to live from this point forward. You can do this by going to www.livingto100.com. The site has a life expectancy calculator  which asks a series of questions about your lifestyle that predicts the probability of how long you are likely to live. Don't be surprised when it tells you that you are going to be alive and kicking longer than you suspect.

Once you have completed the longevity calculator, consider some of the current basic health care costs -- and the cost for those services 20 years from now. For instance, are you aware of how much Medicare will cost when you retire? Boston College's Center for Retirement Research believes health care will increase by 5.7% per year for the next 20 years. Today, Medicare Part B (the insurance that covers your outpatient care -- doctor visits, blood work, physical therapy, etc.) is 96.40 per month. Multiply that by 5.7% per year for 20 years and that figure looks like this -- $292.10 per month.

If you need to be admitted to the hospital, Medicare Part A pays for this type of health care. Today, there is no monthly premium to pay, but your "deductible" (a "deductible" is the part that has to come out of your wallet, first) is $1,024.00 per year. By 2028 that deductible will become $3,103.88. And should we really plan on Medicare Part A being free of a monthly premium? I'm not holding my breath on that one.

Last, but not least, is Medicare's prescription drug insurance (also called Medicare Part D). This can cost anywhere from $16.60 per month to $98.00 per month. If your health requires you to take multiple medications each day, you can exhaust this prescription coverage after 4-6 months. At that point you're on your own until you reach what Medicare calls a "catastrophic" level of prescription consumption. Then and only then do they pick up 95% of the prescription costs.

I think you get my drift. Generally speaking, if you aren't prepared for the costs of later life, frugality now (not later) and a lifestyle change that supports physical and mental fitness are crucial first steps. It's never too late to plan and act in a responsible manner.

So tell me, what is it you would like to know more about so you can create a more stable productive later life for yourself? I'd like to know!

Comments

Gulliver

I've definitely gotten too comfortable thinking posperity will always stay in the USA. I wish I would have known the value of work at a young age(delivering papers, mowing lawns)and the greater value of saving a set amount of what I earned. If I had started when I was 10yr old and continued... I'd be well off today.

Anonymous

A potential growing problem for boomers is that they may have to work in order to help supplement their inadequate retirement income. But due to morbidity, they may be unable.

Earlier poor lifestyle habits, like smoking, obesity or a sedentary nature will eventually take their toll and prevent people from securing gainful employment.

With approximately sixty-six percent of the current adult population being overweight to obese, more boomers will find themselves at the mercy of government provided health and welfare programs.

Anonymous

I'm so sick of you boomers- you made your beds now you can lie in them.

Anonymous

WorktillDeath:

LOL.

I truly hope that you're saving more than enough and then some for retirement sweetheart, 'cause you youngsters are gonna pay and pay and pay some more.

Gulliver

Jeff I like your perspective... and agree with it. Our American culture has really become fat & happy, not while not giving any thought about how disabling that is over time.

What do you think of universal health care, but those who smoke, drink, over-weight/obese, and are not actively engaged in an exercise program would have to pay a premium in addition to paying taxes for this health care coverage.

Anonymous

Gulliver:

The problem as I see it is that the majority of boomer retirees will have SS as their only income.

On such a limited budget, additional premiums may not be a viable option.

The premise of growing boomer morbidity is not mine. I read Ken Dychtwald’s book ‘Age Power’ years ago and it scared the stuffing out of me.

See: http://www.agewave.com/index.php

Lots of good (but often scary) stuff.

Anonymous

Remember prior to the Social Security Act of 1935, there was no Social Security period. You worked until you dropped dead or, if you had a loving family, they took care of you.

Anonymous

I just read an article that stated that the Amish don't contribute to SS.

Why not?

Is it because they don't ‘believe’ in insurance?

Heck, there’s a number of programs that our government promotes that I don’t ‘believe’ in and would rather not have my tax dollars supporting.

Is the money that they earn not considered income?

Can I opt out too if I promise never to draw down on the benefit?

Can I also have my previous 'contributions' returned to me so I can in turn invest them?

Are there other groups like the Amish that earn an income and not contribute?

Nothing against the Amish, but I found the inconsistency troubling.