{"id":412,"date":"2023-01-18T13:45:53","date_gmt":"2023-01-18T13:45:53","guid":{"rendered":"https:\/\/www.jrhastingslaw.com\/?post_type=newsletter&p=412"},"modified":"2023-01-18T13:45:53","modified_gmt":"2023-01-18T13:45:53","slug":"life-expectancy-and-health-care-planning","status":"publish","type":"newsletter","link":"https:\/\/www.jrhastingslaw.com\/newsletter\/life-expectancy-and-health-care-planning\/","title":{"rendered":"Life Expectancy and Health Care Planning"},"content":{"rendered":"
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Volume 7, Issue 3<\/b><\/div>\n
The Wealth Advisor<\/div>\n
Life Expectancy and Health Care Planning<\/strong><\/span><\/div>\n<\/div>\n<\/td>\n<\/tr>\n
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The aging, healthcare and special needs conversation is vitally important to you and your family.<\/p>\n
Except for government employees and Social Security, retirement plans that pay benefits until death are pretty much a thing of the past. Plus, people today are living longer. Yet retirees\u2019 need for income that is sustainable and that they will not outlive is unchanged. Adding to the problem, the cost of health care continues to rise more rapidly than inflation and is now one of retirement\u2019s biggest expenses.<\/p>\n
Increases in longevity and starting families later means that many people who are nearing retirement age today also have responsibilities to their parents and their children. In addition, two major bear markets and historically low interest rates have taken a toll on many people\u2019s retirement savings.<\/p>\n
For all these reasons, many people today are understandably concerned about how they will make it through their retirement years.<\/p>\n
In this issue of The Wealth Advisor<\/i>, we will look at how demographics and economics are creating a longevity risk for retirees, why longevity risk is more often primarily a woman\u2019s issue, and the generational issues.<\/p>\n
Demographics, Economics and the Longevity Risk<\/strong> \nIn financial planning, \u201clongevity risk\u201d in retirement planning is the risk of outliving a plan to spread resource use over anticipated remaining life. The primary wild cards that create longevity risk in retirement planning are the retiree\u2019s future health care costs and longevity.<\/p>\n
The Baby Boomers<\/i> \nThe U.S. birth rates jumped up in 1946 (the year after the veterans returned from World War II) and did not drop until the use of oral contraceptives became widespread in 1964. Those born in this period are referred to as the \u201cbaby boomers.\u201d The baby boomers are now age 49 to 67. Some 8-10,000 of them retire every day.<\/p>\n
The Increase in Life Expectancy<\/i> \nLife expectancy has risen 60% in the last century. At age 65, an American male in reasonable health has a 50% chance of living to age 85; for females, it is 53%. For a 65-year-old married couple in average health, there is a 72% probability that one of them will live past age 85.<\/p>\n
The Increase in Health Care Costs<\/i> \nFidelity estimated that a couple age 65 retiring in 2013 would, on average, have $220,000 in medical expenses in retirement (based on a 17-year life expectancy for the husband and 20 years for the wife). Plus, that $220,000 does not include the expense of over-the-counter medication, most dental services and long-term care.[i]<\/a><\/p>\n