A. If you are about to retire, or already there, here are 5 rules of thumb to help manage some things that can affect your income in retirement.
1. Plan for Health Care Costs
With longer life spans and medical costs that historically have risen faster than general inflation—particularly for long-term care—managing health care costs is important for retirees.
According to Fidelity's annual retiree health care costs estimate, the average 65-year-old couple retiring in 2019 will need an estimated $285,000 to cover health care costs during their retirement, and that is just using average life expectancy data. Many people will live longer and have higher costs. And that cost doesn't include long-term care (LTC) expenses. Having a dedicated pool of monies for long-term care expenses may be an important consideration to cover long-term care expenses, ultimately protecting your retirement income.
As reported by the US Department of Health and Human Services, about 70% of those aged 65 and older will require some type of LTC services—either at home, in adult day care, in an assisted living facility, or in a traditional nursing home. According to the Genworth 2018 Cost of Care Survey, the average cost of a semiprivate room in a nursing home is about $89,297 per year, assisted living facilities average $48,000 per year, and home health care homemaker services are $48,048 a year.
How to cover long-term-care needs? Please read our previous blogpost about new strategies to cover long term care needs here.
Next, we will discuss how to be prepared to live longer.