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Your Biggest Risk Thumbnail

Your Biggest Risk

After enduring the ups and downs of the markets over the past twenty-five years, you might think that the greatest risk to your financial well-being in retirement is a nasty bear market.

You might consider otherwise.

Your greatest risk is more likely to be unexpected healthcare costs later in life. Let’s take a closer look.    

With nearly 70% of retirees needing some type of long-term care, and with the national annual median cost of skilled nursing in a semi-private room rising to $104,000, does your financial plan include this unexpected surprise?

Here are some strategies to consider:

Budget for this in your retirement planning: Research long-term care expenses in your area and integrate them into your financial plan. Planning for these costs can prevent them from derailing your overall retirement strategy. Determine the cost of care in your area with a program like Genworth's Cost of Care calculator.

Build a Health Savings Account (HSA): If you are eligible, contributing to an HSA is a tax-advantaged way to save for future medical expenses. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. Maximize contributions while you are still working to build a substantial cushion for healthcare costs in retirement. 

Long-Term Care Insurance: Consider purchasing long-term care insurance to cover services that Medicare typically doesn’t cover, such as extended nursing home stays or in-home care. The earlier you purchase this insurance, the lower the premiums, and it can provide peace of mind knowing you are protected against substantial long-term care costs. 

Plan for the Unexpected

Understanding your long-term care choices and associated costs for this care are essential first steps toward being prepared for your aging journey. 

One last thing - thank you for your emails about my recent announcement in my latest newsletter. I am confident that my firm’s investment philosophy and focus on comprehensive financial planning will only be enhanced by aligning with and being acquired by Barron’s #1 Registered Investment Advisor (RIA) in the nation for the last six years, Edelman Financial Engines.

For more information about insurance options, or to order a copy of the National Association of Insurance Commissioners’ free booklet, “A Shopper’s Guide to Long-Term Care Insurance,” visit InsureUOnline.org or call (866) 470-NAIC.

The Barron’s 2023 Top 100 RIA Firms list, an eight-year annual ranking of independent advisory firms, is qualitative and quantitative, including assets managed by the firms, technology spending, staff diversity, succession planning, and other metrics. Firms elect to participate but do not pay to be included in the ranking. Investor experience and returns are not considered. The 2018 ranking refers to Edelman Financial Services, LLC, which combined its advisory business in its entirety with Financial Engines Advisors L.L.C. (FEA) in November 2018. For the same survey, FEA received a precombination ranking of 12th.