Monday Morning Money Ep. 02

When thinking about how you spend money in retirement, do you consider what you might spend for healthcare?  You probably should.  Fidelity estimates a couple will spend over $280,000 on healthcare in retirement.  It is a staggering number.  We’ll talk about that in today’s video.

Video: Monday Morning Money Ep. 02: Healthcare in Retirement

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Where the $2800,000 Goes….

healthcare

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Video Transcript

As your thinking about retirement, how do you see yourself spending your money? A few rounds of golf, maybe some other Hobbies? Travel? Spoiling those grandkids?

Those answers are typically what we hear.  Most people look forward to the good things. But there is something else we need to consider.  It will likely be one of your biggest expenses during retirement.

Stick around we’ll talk about that right after this.

Hi I’m Neal Watson, Welcome to Monday Morning Money. Please take a minute to like our facebook page, And subscribe to our YouTube Channel, A link for all of those can be found below.

Planning for retirement should be something we look forward to.  Once we leave the workforce, we’ll have time to do many of the things we’ve wanted to do, but couldn’t seem to fit them into our daily lives.   And people tend to get excited about those new opportunities.

But there are some realities we must face. And one of those are health care costs.  A recent study estimated the average couple will spend over $280,000 on healthcare in retirement.  That’s a pretty staggering number when you think about it.

It’s even more surprising when you consider this figure doesn’t include premiums for medicare supplements, costs for a nursing home or long-term in home care.

It simply includes things like your part B and part D medicare premiums.  Prescriptions, and other common costs like co-payments, and deductibles.

Over a quarter million dollars on health related expenses.  It’s Mind boggling!  But this will easily be one of your biggest expenses in retirement. And one many people aren’t considering

So what are some of the things you can do to help with these costs?  Let’s take a look.

1.  Invest in a Healthier Lifestyle.

By this we don’t mean putting money in an account.  We mean, make the effort to change some of your habits. Lose weight, exercise more, be more active.  Also take time to give your brain a work out.  Making healthier choices can help reduce some of those expenses you’ll face later in life.

2. Delay retirement to age 65 when you are eligible for Medicare.

Many people want to retire as early as possible, but one of the major obstacles to retiring prior to age 65 is the high cost of health insurance. Health insurance premiums for a 62 year old couple could easily exceed $1,500 per month. That’s over $54,000 total to get to Medicare.

3. Consider Medicare Supplement Insurance.

Some of the deductibles and co-pays for medicare can be significant. These supplements are designed to help cover some of those costs. These supplements do come at an expense, so consider that in your decision making process.

4. Do you have a Health Savings Account?

Not everybody participates in a high deductible health plan that offers health savings accounts.  But if you do, consider maximizing your annual contributions.  This money can be used to pay for health related expenses, and the earnings are tax free.

The cost of healthcare in retirement is not something any of us like to think about.  But it could easily be one of your largest expenses.  And something we should consider in our plans.

Monday Morning Money Ep. 01

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We face a number of financial risks in retirement.  And, when most people hear the word “risk” they automatically think about a stock market crash.  And while those events are possible, one threat always impacts our nest egg.  Every year, everything you buy costs more.  We’ll talk about that in this week’s episode of Monday Morning Money.

Yes there is a Big Mac Index. It was created by the magazine The Economist

Plan for A Better Retirement

We created Monday Morning Money with one goal in mind.  Give you information to inspire you to plan for a better retirement. 

We publish a new episode each week.  And, we will deliver it right to your inbox.

Don’t miss an episode, subscribe today!

Get Free Weekly Tips!

* indicates required

Plan for A Better Retirement

We created Monday Morning Money with one goal in mind.  Give you information to inspire you to plan for a better retirement. 

We publish a new episode each week.  And, we will deliver it right to your inbox.

Don’t miss an episode, subscribe today!

Other things we buy also cost more.

Every Year Everything You Buy Costs More: The First Class Stamp

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Every Year Everything You Buy Costs More: The Big Mac

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When I Was A Kid…

What are some of the things you remember buying years ago?  What are some of the stories your parents or grand parents told you about the prices they paid for the things they purchased?

Leave your comments below.

Video Transcript

We face a number of risks in retirement. Most people focus their attention on another stock market crash like we saw in 2008. Rightfully so. That was rough. But there are other threats we need to consider and plan for. One of the most significant ones: Every year everything you buy costs more.

Who hasn’t heard a parent or grandparent tell us “when I was a kid, a loaf of bread was a nickel and a movie was a quarter. And I had to walk up hill both ways to buy both!”

We all know bread hasn’t been a nickel for decades, and when I was a kid, Buck night at the Athena and Varsity in Athens was a treat.  And my parents dropped us off.

Every year, everything you buy costs more.  It is a simple way to explain inflation. Over time, the prices of the things we buy increase.

But we don’t always notice in our day to day lives. It’s not until we look at the cumulative effect over many years, that we see just how much inflation impacts our wallet.

One of the best ways to illustrate this is a first class stamp.

A little more than a month ago, your cost to mail a letter increased to 55 cents. And while this was the largest increase ever announced by the postal service, it probably didn’t seem like a big deal.

But if we go back 30 years, you could buy 4 stamps for a dollar. Over time the cost to mail a letter has increased gradually.  A penny here, two cents there, And now thirty years later, it will cost you more than a dollar to mail two letters.

Stamps aren’t the only thing which has increased in price.

In 1988 a big mac cost two bucks. Now three decades later, this signature sandwich has more than doubled in price. There is actually something called the Big Mac Index.

The same can be said for

Bacon,
Movie tickets,
gasoline,
bread,
Ice cream
and electricity.

All of these items cost more.

Prices go up, And this impacts how we need to plan for retirement. When thinking about what you’ll spend in retirement, most people look at how they spend their money right now. And that’s a good starting point. But it won’t remain constant over time.

If something costs a dollar today, you should expect to pay more in the future.

If inflation averages 3%,

That same item will cost $1.16 in five years.

It jumps to $1.34 in 10 years.

In fifteen years, you can expect to spend over 50 percent more.

After two decades, that one dollar item jumps to a dollar eighty,

And after 25 years, the price will more than double.

For years, we were able to depend on Social Security to help us with these rising costs.  But in more recent years the cost of living adjustments have been much smaller.  And on top of that, Medicare premiums have been eating up much of those annual increases.

This means we must rely on our savings to provide the raises we will need in retirement. Without a good plan, Inflation could be as much of a threat to your nest egg as a major stock market crash.

So, what’s your plan to deal with this threat?

Leave your thoughts or questions in the comments section below. We’d love to hear from you.

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