How traditional retirement planning fails
SPONSORED — It’s the moment most Americans dream about; after years in the workforce, it’s time to enjoy the long-awaited fruits of your labors. For most people, retirement means taking a break, focusing on favorite hobbies, spending time with grandchildren or other loved ones, traveling the world or all the above.
Unfortunately, that scenario isn’t always realistic — especially when you consider that most Americans close to retirement have saved a minuscule 12 percent of what they need, according to CNBC.
While Americans are struggling with their savings, many are also overlooking other key aspects of retirement planning. In fact, traditional planning regularly fails American retirees. Here’s why.
The focus is all financial
It seems intuitive; when you retire, you won’t be getting the same paycheck every couple of weeks. That means you’ll need savings to replace or supplement that income, right? Well, yes, of course. Unfortunately, when you focus solely on the financial aspects of retirement, you’re going to come up short. As your lifestyle changes, so too will your financial needs. That hard-earned and carefully saved cash may not cut it when your housing or health circumstances change.
“Proper planning requires careful coordination between health, housing, finance and legal areas that seldom takes place,” says Rajiv Nagaich, elder law attorney at Aging Options, which provides multidisciplinary life-planning solutions.
Planning for each aspect of retirement ensures you’ll be able to age in place (if possible), protect your assets and preserve as much independence as possible.
It only plans for one scenario
Your retirement plan may be airtight — as long as you continue to live healthy and mentally strong in your own home. While that scenario is ideal, the unfortunate truth is this situation won’t be a reality for most retirees.
“Though an overwhelmingly large number of Americans hope to live out their lives in their own home, studies show that less than 20 percent will realize that hope,” Nagaich explains. “Most will take their last breath in some variation of an institutional care setting and, in the process, will become a burden on loved ones while having spent some or all of their retirement nest egg paying for uncovered long-term care costs.”
It neglects long-term care
Those long-term care costs can be staggering. Think about this: The average price of a nursing home facility in Washington state is $266 per day, according to Senior Homes. That’s nearly $100,000 per year that you may not have in reserves if you’re planning to live out your retirement at home. Even if you are enrolled in Medicare or have supplemental insurance, you may not be prepared to cover the housing and medical costs associated with becoming incapacitated. These responsibilities will inevitably fall to your family members.
It doesn’t involve the right people
Retirement planning should include financial, legal, medical and housing strategies. Even if you bring in an expert in each field, you could be doing yourself a disservice. According to Aging Options, “Going through the traditional planning process, the typical retiree will have dealt with insurance agents, physicians, financial planners and legal counsel, among others. But all these professionals will be approaching your needs from their unique perspectives, leading to you having engaged in fragmented planning.”
A life planner, on the other hand, can coordinate all aspects of retirement to ensure your needs are met, regardless of what the future brings.
“Seek out a Super Planner,” Nagaich advises. “This person can help you understand why traditional planning fails retirees and what you need to do differently to avoid failure.”
To find a Super Planner skilled at life planning, visit Aging Options.