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How much will you need to retire? If you took the Bloomberg survey, you might think that you need $3 to $5 million. If you took the Wall Street Journal survey, you might think that you need $1.3 million, $300,000 more than you thought you needed before post-pandemic inflation. If you follow The Motley Fool, you might think that you need $1.25 million.

Challenges with Online Calculators

But maybe you are not among the 30,500 Austinites with $1 million or more. Or, whether you are or not, maybe you prefer to use one of the online calculators. Those calculators assume that you retire in good health, do not want to leave anything for your family and will claim Social Security as soon as you retire. That applies to about 4% of Americans.

Navigating Unique Retirement Considerations

If you are among the 90% of us who will have at least one chronic condition by age 80, you may have retired in good health but must plan for the days when you will face challenges.

If you are among the 75% of Americans who want to leave a financial gift for your spouse or children, for friends or charity, it does not apply to you.

If you among those who maximize Social Security benefits by waiting until age 70 to take them, but retire before age 70, those online calculators may not work so well for you either.

So how do you decide?

Gaining Insight into Retirement Expenses

It is estimated that housing during retirement costs about 38% of our income. If you are among the 87% of Americans who own their own home, you still have property tax, utilities, repairs and maintenance but those do not come to 38%. Maybe they come to 8% or 18%.

Social Security was never designed to provide all of our income. It was designed as one leg of a three-legged stool with pensions and personal savings providing the rest. Today less than 10% of Americans have a pension.

Grasping the Complexity of Healthcare Needs

In addition, with longer life has come more years needing help. 80% of us will need years of personal and medical care: women for an average of eight to ten years; men for an average of five to six. Medicare pays for very little and then only in limited circumstances. Neither Medicare nor Medicaid pay for assisted living (The VA does, for those who qualify). Medicaid home health care is limited and usually requires that there be someone else in the home evenings and weekends. Even if you can pay out-of-pocket for home health care, you may well have trouble finding people or finding the right people.

According to the Department of Labor, while Americans can expect jobs overall to increase 5% over the next decade, caregiver jobs are expected to increase 25%, including caregiving in homes, in group homes, and in day care for children and adults. With this demand, caregivers can job hop. 2021 saw a turnover rate of 64.8%.

Maybe you should put some money aside for this. Life is long: don’t eat desert first.

 

 

Elder law attorney, Terry Garrett, CELA, is a member of the National Academy of Elder Law Attorneys and is an Approved Guardianship Attorney. She assists people in elder law, estate and special needs planning, guardianship and settling estates. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

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