Monday Morning Quarter-Buck 10/01/2018: Episode 1 of 2 - What will your finances look like during retirement? By Kim Anderson


“Life is a journey that must be traveled no matter how bad the roads and accommodations.” - Oliver Goldsmith

 This is edition one of two for the weekly Monday Morning Quarter-Buck.  Last week about half the team was away at a conference where we talked a lot about our vision, both personally and professionally.  So it was extremely fitting that Financial Planner and CPA Kim Anderson wrote about having a vision of retirement.  We so often think of it as a date, but in reality, it is a journey.  Kim’s closing comments are so true, we often forget to remind you that although the numbers are scary sometimes, we are here to help.  Stay tuned for an upcoming Podcast with Kim to get to know her a little better.

What will your finances look like during retirement?

By Kim Anderson


Many of my friends and family can't wait to turn 62 years old because that is when they can start collecting social security and retire.  Some of them are resigned to the fact that they must work until at least age 67, but my sister wants to retire at age 58. Whaatt?

 My aunt says she won't retire until she turns 67 because that year her husband turns 65 and is Medicare eligible (until then, they have health insurance through her employer).  My sister, on the other hand, hasn't really figured the cost of health insurance or health care into her retirement plan.  Again, whaatt?

 For this discussion, let's talk about someone who retires in 2018 at age 62. 

 This year the average monthly Social Security check is $1,404--or just $16,848 annually.  Out of this income, retirees will pay both health insurance and out-of-pocket medical costs because they likely won't qualify for Medicare until they reach age 65.  They also need to pay housing costs and of course they need to eat.  At this point, the $16,848 is pretty much gone.

 Let's also assume this retiree gets to experience a 25 year retirement.  If the *average* retiree spends $200,000 on *health care* over the course of their retirement, $200,000/25 = $8,000 per year.  That is nearly half of their social security check!  The average cost of healthcare is just that, an average.  If the retiree is unfortunate enough to experience more health issues than the average senior, their costs will increase--and we are seeing this more with the prevalence of dementia/Alzheimer's which can last 10 years or longer and cost $10,000+ per month for nursing home/specialty care.  ($10,000 per month x 12 months = $120,000 per year x 10 years is $1,200,000).  No matter how you look at it, $1.2 million is a lot of money!

 The bottom line is if your plan is to rely on Social Security for all (or most) of your income during retirement, you're likely to struggle during the most financially vulnerable stage of your life.  Struggling like what I've set forth above will take all the joy out of what is supposed to be the most enjoyable time of your life.

 So whether you are 20, 40 or 60, there is  no better time to talk to a Financial Planner than today.  All Planners at Irvine Wealth Planning Strategies can analyze your current financial situation, and make recommendations to help you become more fiscally fit before you enter your golden years.  Call us today at  607-438-2761