The retirement crisis in the United States is all over the news, but most people still haven’t saved enough to support themselves throughout retirement.
Key to a Secure Retirement
We all want a happy, stress-free retirement, but how do we go about attaining that? Many people, especially in current economic times, believe that limited income dissolves the ability to adequately save for retirement. However, with careful planning, anyone can put money towards their retirement and end up with a lump sum over time. One man from Georgia told his story to the Daily Finance and is helping bring a new perspective to retirement planning.
Danny is a 38-year-old teacher who, with his wife and two daughters, lives on a teacher’s salary of approximately $41,000 annually. The couple has already managed to save $60,000 for retirement, no small feat on such a small income. His number one tip is simple: prioritize.
In Danny’s words, “most people don’t have an income problem — it’s an outgo problem”. It’s easy to get wrapped up in products and services that you think you absolutely need now while ignoring the bigger costs that are waiting down the road. Avoiding this trap is the key to saving successfully for retirement and having enough assets to your name to live comfortably when the time comes to stop working.
Health Care Costs
Unfortunately, despite your best efforts, your retirement nest egg might not be quite ready for unexpected medical expenses. No matter how much you plan, there is always a chance that a catastrophic event could empty your savings in a matter of months.
A recent study estimated that the average 65-year-old couple retiring in 2013 will need $220,000 for out of pocket health care expenses during retirement. That’s not the end of it either: that estimate doesn’t include the skyrocketing cost of long-term care, something that affects 1 in 2 Americans. As we get older, insurance coverage for this type of medical emergency becomes even more important.
Insure Against the Risk
Long-term care is care that someone needs when they are either injured, ill, or unable to perform activities of daily living on their own. The cost of care varies greatly, but in-home care, the least expensive option, still averages nearly $30,000 a year. Assisted living facilities are pricier at more than $40,000. A private room in a nursing home will run you a shocking $94,000, on average, in the United States.
This is more than just some petty cash – these costs amount to a massive chunk of money, which most people aren’t prepared to dish out during retirement when they are already living on a fixed income.
Long-term care insurance provides coverage for this type of care should you ever need it, and eases the worry that you will be flooded with medical bills. Though a small percentage of Americans have this kind of insurance, more are beginning to recognize the benefits and understand the massive amounts of money that a policy can save you at a time when you are most vulnerable.
Interested in learning more? Read more about long term care insurance.
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