Free Wealth Management Guide Retirement Planning: What You Need To Know

Retirement Planning Challenges: What You Need To Know An Educational Resource From Solid Rock Wealth Management By Christopher Nolt, LUTCF, Registered Principal, Investment Advisor Representative Introduction Rising Healthcare Costs People face many financial challenges today. Low interest rates, volatile stock markets, increasing life expectancies, uncertainties of Social Security and fears of higher inflation and tax rates have made planning for retirement a daunting task. In addition, news reports on our economy, national debt and homeland security raise fears about our well-being and future financial security. Many today are scared, confused and unsure of how to invest to provide themselves an income that will last as long as they do and that will keep pace with the rising cost of living. The rising cost of healthcare is one of the greatest fears people have today. According to the U.S. Department of Health & Human Services, health care costs were less than 10% of our total Gross Domestic Product (GDP) as recently as the early 80’s. Currently, health care represents about 17% of our GDP, and is projected to hit 20% in 2017. Increasing Life Expectancies As we age, the percentage of our annual spending on health care costs rises. As you can see in the chart below, the amount spent on health care in our 60’s and 70’s is twice to three times as high as in our 40’s. One of the greatest challenges people face today in retirement is longevity. People are living longer due to advances in medical technology. Today, a married couple age 65 has a 50% chance that one spouse will live to age 90. Investing for a retirement that could last 20 to 40 years requires a lot of money and careful planning. MARRIED COUPLES, AGE 65 One spouse lives to age... 70 75 80 85 90 95 Probability 99.5% 97.2 90.6 75.9 50.3 22.1 For married couples, age 65, there is a 50% chance of at least one spouse living to age 90. Source: Applied Risk Management During Retirement, Milevsky and Abaimova, June 2005, Society of Actuaries RP-2000 table. 1