We are very excited to announce that our owner, Ron Ray has been published on one of the nation’s leading financial websites. His article, Four Pillars to a Successful Retirement, can be read below or accessed on the CNN Money website by clicking the link. Give us a call to Stress Test your retirement plan.
By Ronald D. Ray, Turning 65 Solutions
The key to living a happy, healthy, and wealthy life for the rest of your life is simply having four legs under your retirement table. Those four legs are:
- Health care
- Long-term care/longevity
- Final expenses/legacy
You can expect to spend a third of your life in retirement. If you are missing any of these pieces, your retirement could be compromised, and this may force you to change your overall strategy or, even worse, go back to work.
1. Health care is the leg that rarely goes unnoticed because the squeaky wheel gets the grease. Most retirees will be coming off employers’ health plans and entering the world of Medicare. At that point, you may face an unrelenting barrage of health insurers calling you. If you are on an employer-sponsored health plan when you turn 65, you must find out if you will be able to keep your plan and how that plan interacts with Medicare. If you cannot keep the plan, you may want to consult a reputable, local, independent agent who specializes in Medicare education and the various Medicare supplements available to you. Making the wrong choices here may be irreversible and could cost you thousands of dollars in out-of-pocket costs and penalties.
2. In the 21st century, longevity is something to consider. We are living longer than ever before. We can survive diseases and accidents that could have killed us 20 years ago. With a life expectancy of 86, women outlive men — whose life expectancy is 84 — by an average of seven years. One in four 65-year-olds will live to age 90, and one in 10 will live to 95 (www.ssa.gov).
Within this current environment, 70% percent of baby boomers will need some level of long-term care insurance — our second leg. The average nursing home stay is three years with a price tag of $224,000 (www.longtermcare.gov). These costs are rising at a rate far greater than inflation and require specific planning focus. The last thing you want is to deplete your assets and end up on your state’s Medicaid program. You can have three options for using other people’s money to fund your long-term care (LTC):
- LTC insurance can be expensive and hard to qualify for, and one can risk losing premium if the benefits are unused.
- Life insurance with an LTC rider can be expensive, but it is easier to qualify for and has no premium risk due to a death benefit. However, the policy also lacks inflation protection.
- Asset-based policies are normally much less expensive and easier to qualify for, and premium is backed by the issuing insurance company.
It is also important to discuss this matter with your spouse and children. When asked, most boomers state that their children will help take care of them; however, they don’t wish to be a burden. Whatever your thoughts on the matter, you should meet with your financial professional to complete a thorough needs assessment.
3. Legacy is the third leg. According to Funeralwise.com, in 2014 the average funeral cost was just over $8,500, not including cemetery costs. Final expense life insurance policies are growing in popularity, but they are intended for just that: final expenses. They do not address income replacement, estate transfer, or legacy.
Most couples lose a significant portion of their fixed income when a spouse dies. The smaller Social Security check disappears, VA disability pay can go away, and/or all or some of their pension could be lost, depending on which option was chosen at the time of retirement.
Estate transfer is less of a concern for most families due to the current high estate tax exclusions. However, that exclusion is often used as a bargaining tool for political agendas by Congress. Simply put, it is not safe to rely on politicians when bargaining with your estate. Life insurance can be the cheapest way to leave a large gift on a tax-favorable basis. A guaranteed or indexed universal life policy will give you the ability to leave that legacy to your grandchildren, church, or favorite charity.
4. The final pillar is income. When we speak about retirement income, we are referring to lifetime income: Social Security, pensions, and annuity riders. It is hard to figure non-guaranteed accounts into the equation. With continuing low interest rates, the return of market volatility, and the rapidly increasing cost of health care, the 4% rule no longer works for everyone, and it is very likely that, without proper strategizing, you can outlive your non-guaranteed retirement accounts. There are over 500 strategies for claiming Social Security. You need to find the one that is best for you because the wrong choice could cost you thousands over your lifetime. As in other areas, a complete needs assessment performed by a qualified, independent financial professional can provide insight you may not have had previously.
If you didn’t catch the theme here, it is that retirement can be tough if you don’t prepare. And those preparations should be done with the help of a reputable, local, and independent agent who specializes in holistic retirement planning. He or she should focus on the retirement phase of life, that is, the controlled decumulation of your retirement savings. Holistic retirement professionals should be experienced in all four areas: health care, long-term care, legacy, and guaranteed retirement income. Your retirement professional’s No. 1 priority should be for you to live a happy, healthy, and wealthy life for the rest of your life.
Investment Advisory Services offered through Retirement Wealth Advisors (RWA), a Registered Investment Advisor. R&R Wealth Management and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
Ronald Dale Ray and R&R Wealth Management are not affiliated with nor endorsed by the Social Security Administration or any other government agency and do not provide legal or tax advice. Please consult with your attorney, accountant, and/or tax advisor for advice concerning your particular circumstances. Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. By contacting us, you may be provided with information about insurance products, including annuities, offered through Ronald Dale Ray, life insurance and annuity licensed in Texas. Insurance License #: 1564340.