Tom Reminds us to Watch for Surprises in Retirement
Transcript:
Katie Nealis:
What are some common expenses that you see in retirement that everyone may not be aware of?
Tom Vaughan:
Oh, yeah, that’s actually a pretty common question. Because, you know, it’s one of the things we all worry about, we get to a certain age where we can’t get a job. And, you know, we’re now living off of this income sources and our assets. And is there something we’re missing is something we’re not thinking about that isn’t in our budget, you know, what kind of surprises can come up in retirement. So one of the things that we always talk about is the cost of medical care in general, and I’m going to ignore long term care for a minute, just regular medical care. Because the I think it’s the Employee Benefit Research Institute, has a big study out saying that, you know, the average male throughout the retirement will spend $144,000, on medical costs, this would be deductibles, you know, drug costs, all of these things, the average female pays $163,000, again, mainly because they live longer. And the average couple pays $301,000. So that’s a big number, you know, this is over a lot of years for the entire retirement. But if you ignore that completely in your planning process, you know, might be that might be a big surprise. So I would definitely look at that kind of basic medical costs, make sure that that’s in your plan, and that you have some, you know, thought process on how that is going to work. Long Term Care is obviously one that a lot of people do talk about. And it’s not particularly a surprise, but having some type of a plan and testing your plan against long term care, should you have insurance, you know, and if you do have insurance is that enough, you know, those types of things, so that that’s a big issue, housing, I mean, I just had my house blow up on me, basically, a leak in the wall and created a huge problem.
Most of that was covered now. So one of the things that I would look at is insurance, had a client had, you know, the 89 earthquake, their house basically was split in half up and Felton. And really, really wrecked her financial plan. You know, the house isn’t worth anything, when it’s in debt damage, they did declare an emergency, and she was able to get a low interest rate loan, but she still had to pay it back. And it was a huge deal. For her. So would have been nice to have earthquake insurance. I know a lot of people don’t do that, or flood insurance and those types of things, I tend to have a lot of insurance personally, and I look at it a little differently than some, you know, if I go to Hawaii, I’m going to spend X amount of money to go to Hawaii, and it’s my vacation, and I’m going to get a certain amount of enjoyment and some you know, feel more relaxed, or whatever it is, by having a lot of money going out to insurance policies, I feel the same way. It’s like going on a vacation, I feel like I got everything covered. So when my house did blow up, you know, it cost me some money, because I do use high deductibles. Because I believe in that i think that you know, I’d rather have that high deductible and lower payment per month for something that might not happen. But so, but those are types of things. The I guess the last one that jumps out at me is kids, different emergencies that might happen to kids or grandkids, or even non emergencies, you know, trying to help your kid buy a house wasn’t really in the plan, all of a sudden, there’s you know, a bunch of money going out to help them with the downpayment. So, you know, if you have kids, that’s always a possibility, some of those things that you should back test, hearing and dental, we put in every plan now, because most times that’s not covered. So some, you know, amount per lifetime for those two areas, for example. So, anyway, that those are some of the major ones that I can think of.
Easan Arulanantham:
Yeah, I think you’ve covered all of them. Um, how when do people usually lose their hearing or new new or new dental work done usually like in their, like, 70s 80s?
Tom Vaughan:
Yeah, well, it’s obviously variable, you know, depends on the person, we do put it into the plan, in kind of that mid 70s to mid 80s timeframe for both of those. On average, I’d say the main reason we put those in the plan now is because we kept getting calls, hey, you know, I’ve got this bridge that I need to put in, it’s gonna be 50 $500, or I need these hearing aids are going to be you know, $7,000 or $4,000, you know, whatever. So, after a while, we were like, Okay, this has got to be something that’s in the plan, because we just kept getting calls for, you know, the money that was being spent on those. Obviously, not everybody needs either one of those, you know, kind of depends on what happens, but that is that is something we put in the plans now.
Easan Arulanantham:
Yeah, so like one for hearing aids, doesn’t Medicare usually cover that kind of stuff? Or is it kind of like the better hearing aids you have to go out and spend some money?
Tom Vaughan:
Yeah, the it depends on the Medicare plan that you have, whether it is covered or not, but I still have clients that want something else. So in other words, even if it is covered, they go and look at what that is. It’s not what they want and they want something better and so then they’re paying out of pocket for that. So yeah, what’s covered? Some people use it. Some people aren’t covered for it depending on their Medicare plan and some people just basically want an upgrade for what for what is covered. So I mean I had a division plan that would cover certain things but you know, they’re not glasses I would wear so I always had a lot of out of pocket you know, money for the glasses that actually wanted