The Rising Cost of Healthcare in Retirement

We know life is like a box of chocolates – but what about retirement? Do you really know what it holds, or how much it will cost? It’s easy to budget based on your current lifestyle, but what about anticipating major unexpected costs? The truth is that as you get older, it’s likely you’ll have to spend more on healthcare. But the truth is also that there are things you can do to plan ahead for this. We always hear that healthcare costs are rising and Americans are living longer, so why not take these facts into account when planning for retirement?

According to the Employee Benefit Research Institute, a couple retiring at 65 will need to pay around $399,000 for healthcare costs in retirement. That could be a significant chunk of your retirement savings, and you never know when you might need serious medical attention. 23% of families over 75 experience a $400 or greater medical expense once a year. This can pose a major problem, as Americans between 65 and 74 spend about 77% of their income on housing, healthcare, food, transportation, and clothing. This doesn’t leave much wiggle room for major healthcare expenses.

Working longer can be a solution, but you might want to enjoy the benefits of an early retirement. Saving more is also an option, and specially learning how to use your HAS after you turn 65 can be a good strategy.

If you have a high-deductible health insurance plan, defined as one with an out-of-pocket maximum of $6,750 and a minimum deductible of $1,350, you can contribute up to $7,000 a year to an HSA for your family. You can also learn how to use your HSA after you turn 65.

If you’re exceptionally healthy, you might not be as worried about high healthcare costs, but you might need to worry about outliving your retirement savings. Deferred annuities, or “longevity annuities” pay out a defined amount at a specific date in the future. Deferred annuities cost less than immediate annuities, because the money has more time to grow before payouts start. A deferred annuity can pay you for the rest of your life, and then continue paying your spouse if you are to pass away before him or her. This can be a good strategy to protect both you and your spouse from outliving your retirement savings.

Although it’s difficult, thinking about unexpected costs during retirement now can help you avoid bigger problems in the future. It’s not enough to create a budget based on your current lifestyle: As healthcare costs rise and Americans are blessed with longer lives, retirement planning becomes more complicated.

If you want help creating a comprehensive retirement plan, contact the professionals at SHP Financial. Click here to schedule your no cost, no obligation financial review so we can start helping you plan for the unexpected.

The Rising Cost of Healthcare in Retirement is available on: www.shpfinancial.com/

Weekly Market Thought of the Week – Mixed Signals on the Economy from Stocks and Bonds

This year has been a great start for global stocks. The global stock market rally indicates investor appetite for risk has returned. Equities and lower quality fixed income investments rose sharply, recouping much of their 2018 losses and, in some cases, approaching all-time highs. The S&P 500 index marked its first record since September 2018. At the same time, however, the bond markets are reflecting much more uncertainty about the economy— even hinting at a possible recession. The yield on the benchmark 10-year Treasury note, used as a reference for setting mortgage rates to auto loans, now sits at 2.57% as of Wednesday night’s close, dropping below the level from the start of the year. The U.S. Treasury yield curve continued to flatten and, for the first time since 2007, inverted between 3-month bills and 10-year treasuries. Investor demand for higher quality bonds such as Treasuries are often considered a hedge against market and economic uncertainty. Bond yield falls as bond prices rise. Lower interest rates are hence often interpreted as a sign of slower growth. Clearly, stock and bond markets are signaling a very different story, but which one is right?

Click Here to view the full Market Thought of the Week!

Weekly Market Thought of the Week – Mixed Signals on the Economy from Stocks and Bonds is courtesy of: SHP Financial Planners

10 Financial Tips for New Attending Physicians

One of the most important financial moments in a young doctor’s life is the transition between finishing training and their first job. We have discussed what to do with the first attending physician paycheck, avoiding keeping up with the Dr. Jones, and a simplified approach to investing. Today, let’s discuss 10 financial tips for new attending physicians that will set them on the right path.

1. Make Intentional Goals!
In 2018, we had a visiting professor give a grand rounds. In it, he talked about the physiologic changes caused by climbing Mount Everest. They drew blood gasses at altitude, and he talked about how people trained for months to climb the highest mountains in the world.

Apparently, it is a tedious and difficult task learning to condition the body to accomplish such a challenging feat. During the ascent, people often feel lightheaded, uncomfortable, and nauseous. Oxygen deprivation can even cause delirium.

Yet, people push through, because they know that once they arrive at the precipice the view is going to be worth it. And they will have accomplished something that few others can claim.

Personal finance is not so different. The road to financial independence can be tedious and difficult.

Climbing the mountain of money is no easy feat.

If you don’t know the “why” behind your money decisions (i.e. the “precipice” you expect to see after your disciplined financial journey), it often becomes impossible to maintain the financial discipline it takes to achieve your goals.

This begs the question: What are your goals in life? This is a tough question for many to answer.

Fortunately, there are tools that exist to help you think through this process. To answer these tough questions, I suggest using the Three Kinder Questions.

You might find it strange that my first tip for new attending physicians involves discussing the big picture, but you’ll have to trust me when I say that if you don’t picture the Mount Everest of your financial life first, you won’t make it past base camp.

Read More: https://thephysicianphilosopher.com/2019/02/15/10-financial-tips-for-new-attending-physicians
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