Stop Worrying About Running Out of Money in Retirement - Hire your Team


Advisor Cycle GraphicOne of the biggest concerns of my Massachusetts and Rhode Island clients is whether they will have enough money for their retirement.  For most of us, it’s never really about money for money’s sake.   It is about whether we can achieve our dreams and goals for a more fulfilling life, both for ourselves and for those we love.

Of special concern is whether there will be enough money to provide for a surviving spouse, or for children or grandchildren who may need financial help to achieve their dreams and goals.

We call this “shortfall risk,” and it is a legitimate concern. People are living longer and health care costs continue to rise, especially the price tag for long-term, nursing home care.  The recession has set us back on our retirement investments and interest rates are at historic lows.  But the good news is  there are some things you can do now to help manage your shortfall risk and protect your assets. 

Key Takeaways

  • You are not alone in your fear.  The fear of running out of money in retirement is a valid concern because of increased life expectancy (average age 81 years old for women, 76 for men),  increasing health care costs (national average for nursing home at $75,000 a year, in MA, over $110,000), low interest rates (national average on one-year CD .18% – 1.16%), and the lingering recession.
  • Using experienced advisors who specialize in certain areas, and who collaborate with each other to devise a comprehensive plan for you, can help you maximize your retirement income as well as preserve, grow and protect your assets once you have them.  

Role of Specialists

A retirement specialist or financial planner can help you determine the best strategy for taking distributions from an IRA, 401(k) and other retirement accounts; the tax implications involved; how to continue to grow your savings; when to start taking Social Security benefits; and how to plan for out-of-pocket medical and long-term care costs.

An estate planning attorney can help you shield your family and your assets from probate court interference at incapacity and death, the risk of unintended heirs, the payment of unnecessary taxes, and lawsuits.

Other specialists should be brought in as needed.  For example, a certified public accountant is invaluable for tax planning, an insurance broker/agent can offer advice on protecting your assets and providing relatively inexpensive ways to provide for a surviving spouse or children, and a realtor, real estate attorney, or lending manager may help you decide whether it’s time to sell or buy one of your most valuable assets: a home.  If you decide to buy or sell, maybe the team includes an architect, interior designer/decorator, or landscaper.  Each of these advisors can contribute their expertise toward one goal: maximizing your overall financial position.

What You Need to Know

Experts agree that the best way to plan is to seek out a group of advisors who are committed to colloboration, who collectively learn about your particular family, financial circumstances, and goals/dreams, and then communicate with you and each other to achieve your  goals and dreams.  The financial advisor who helped you grow your retirement nest egg may not be the best choice to help you determine how to take your money out. Likewise, your business attorney is probably not the best choice to do your estate plan.  An innocent error by a well-meaning but inexperienced advisor can result in a costly and often irreversible mistake.   This risk if you have a team of advisors to coordinate your planning.

I have seen the positive results of such collaboration, where my client comes to a plan design meeting at my office accompanied by his or her other advisors.   Instead of being overwhelmed by the planning process, the client is energized and empowered by the experience.  They have the peace of mind in knowing everyone in the room is working for them and is “on the same page.”  If I have a technical question, for example, and the client does not know the answer, he knows that his or her CPA can stes in to answer it.

Actions to Consider

  • Be open to new products and strategies that you may not have considered in the past.  For example, consider trusts combined with investments and property to manage the conflicting demands of income, spending, taxes, distributions and transfers.
  • Explore new long-term care options from insurance companies. These include:
    • Asset-based long-term care (a single deposit premium; if not needed for long-term care, the benefit amount is paid tax-free to your beneficiary);
    • Life insurance accelerated death benefit (allows you to access the death benefit before you die for long-term care expenses);
    • Home health care doublers (a guaranteed lifetime income contract that doubles your income for up to five years if you need long-term care).
  • Delay taking Social Security benefits.  If you delay benefits until age 70 and live past age 79, your lifetime income will be more than if you start taking benefits at Full Retirement Age (66-67).
  • A revocable living trust will avoid court interference at both incapacity and death. This is why more people prefer a living trust over a will.

Stop worrying about running out of money in retirement.  Instead, seek out an established team of advisors who can develop a comprehensive plan to get you to the dream you envision.

DLO serves the estate planning, elder law and asset protection needs of Massachusetts (especially the communities of Attleboro, Foxboro, Mansfield, North Attleborough, Norton, Easton, Sharon, Canton, Franklin, Plainville, Rehoboth, Seekonk, Taunton, and Wrentham) residents and Rhode Island (especially Providence, Pawtucket, Warwick, Cranston, Cumberland, Lincoln, and Woonsocket) residents.

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