The Power of Planning: Take Charge!

Author: AB Staff

The Power of Planning: Take Charge!


The retirement years can be a bumpy ride, so planning is of upmost importance. Assuming you’re one of the millions that will soon be living to 90+, there is a lot of ambiguity regarding your health, personal finances, world events and macroeconomics. Indeed, as Scott Hanson notes, “the last five years in retirement will look nothing like the first years.”

When initially deciding whether or not to continue our work life past 65, we’re likely assessing factors such as our health, lifestyle satisfaction, work relationships, and meaningfulness. A study by the Harvard Institute for Learning in Retirement concluded, retirees “seek a greater sense of purpose, more intellectual stimulation and increased social engagement and fulfillment”. But circumstances are always changing. At 70.5 years, we need to start taking out the Required Minimum Distribution (RMD) from our retirement savings. Before this, we need to consider our resources, decide how to preserve wealth, and make investment and RMD decisions that minimize taxes. We must also pay attention to the economic environment: are we headed into a recession, bull-market or stagnation period? Additional pressure is applied with the rise of health issues in ourselves or loved ones. So how might we maximize life’s potential, knowing that tomorrow may bring unforeseen dilemmas?

Most people don’t focus on long-term needs during their youth and middle years, but our thinking shifts as we age. But no matter when you begin to plan, it’s important to consider what you’re up against. For example, health care costs can skyrocket if we suddenly need long-term care. According to Fidelity Investments, a couple, both age 65 and recently retired, could expect to spend $245,000 on healthcare over the course of their retirement. That’s up from $220,000 in 2014 and doesn’t take into account the cost of nursing or long-term care, which can also be pricey. Long-term care insurance provider Genworth estimates an assisted living facility is going to cost $43,200 a year, while a semi-private room in a nursing home will cost $80,300 a year. The longer you wait to purchase policies, the more expensive they will become.

So what can you do? Recognize that the road during our third stage of life can be bumpy, so plans need to be put in place. One great strategy is viewing your future as a series of segments, each lasting a few years, that should be planned for and updated one at a time. This will provide greater focus on your wants, needs, capabilities and resources to optimize life a few years at a time. And remember, a failure to plan will only lead to increased stress, but planning and optimizing each segment is likely to give you the happier life you want.

What are some of your plans for maintaining a happy retirement life? Do you think planning in segments will be a helpful strategy? What is another strategy you like to use? Share with the community!