By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management Advisor®
Accredited Investment Fiduciary
When I meet with people for the first time, the two most important questions I ask are “What is the most important thing I can help you with?” and “What concerns or worries you?” Whether it is for wealth management or retirement planning, among the most common answers are not making large financial mistakes and balancing spending enough while not running out of money. In other words, it would be great if we could devise a plan to spend your last dollar on your last day! Of course, it would help if my clients could tell me when their last day will be!
Some people are confident that they will live a long, healthy life, while others tell me they will be lucky to live to 80. In my experience, when people think about their future, they often underestimate longevity and overestimate their future quality of health and probability for needing long term care. It is prudent to have a reliable income plan in place that addresses longevity and a risk management plan that confronts the costs of potential future care needs. When we stress test retirement plans, we repeatedly find that the number one cause of failure is a large, recurring expense requiring unplanned liquidation of assets at any age. In retirement, the most common reason for this is the need for long term care.
The best retirement plans have flexibility, meaning that the decisions you make today are not permanently irrevocable. Occasionally, I will run into people who tell me that they will rely on some form of government payment to address their care needs, should they ever need it. If this is your plan, be sure you think through what you believe the future will look like: your future as well as the future of the long term care system and the government programs that intend to pay for care. On March 13, 2018, the US Census Bureau newsroom released an article stating “The year 2030 marks an important demographic turning point in U.S. history…. By 2030, all baby boomers will be older than age 65. This will expand the size of the older population so that 1 in every 5 residents will be retirement age.” (1) Recently. The Wall Street Journal reported “Centenarians, those living to (or beyond) the age of 100, now number 82,000 up from 50,000 in 2002. Those 100-plus are America’s second-fastest growing age group, just after those 85 and older.” (2) Clearly, this demographic shift will impact social programs for retirement and long term care, as greater demands are put on the systems.
If this is a concern for you, the good news is, with time and planning, you can address what worries you.
LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Financial Professionals and can be reached at (715) 343-9600 or firstname.lastname@example.org. www.SchulferAndAssociates.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.