May 22, 2025 • 24 mins
We explore the unexpected financial shocks that can derail even the most carefully constructed retirement plans and discuss strategies to help prepare for these challenges.
• Healthcare costs average $315,000 for couples throughout retirement, yet most Americans estimate only $75,000
• Medicare has significant gaps requiring additional coverage and costs that increase annually
• 70% of adults who reach age 65 will need long-term care, with annual costs ranging from $47,000 to $131,000
• Traditional long-term care insurance has become problematic, but alternative solutions exist
• Home repairs and aging-in-place modifications can require substantial withdrawals from retirement accounts
• 75% of Americans over 50 want to remain in their current homes, but retrofitting costs range from $3,000 to $50,000+
• Elder fraud and scams are increasingly sophisticated, targeting even financially savvy retirees
• Market volatility, tax changes, and inflation can significantly impact retirement security
• A comprehensive retirement plan should address all these potential financial shocks
Visit masterplanretire.com to schedule a complimentary consultation or call 770-980-9262 to see where your strengths and weaknesses in retirement planning may be.
Have a topic or question you'd like Mark and Evan to address in a future episode? Email us at info@masterplanretire.com or call 770-980-9262.
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Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants. The aforementioned are affiliated companies.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Evan (00:06):
Is your retirement plan shockproof?
Hey folks, thanks for joiningus.
Welcome back to RetirementRoadmap with Master Plan
Retirement Consultants.
My name is Evan.
With me, as always, retirementplanner Mark Fricks.
Transitioning to retirement isan adjustment both financially
and emotionally.
With big changes alreadyhappening, there can also be
(00:26):
unexpected shocks to yourretirement plan, Mark.
We know that once we've got aplan in place at some point,
inevitably there's going to besome adjustments that have to be
made.
Where we get into trouble iswhen we don't consider some very
big parts of the plan that needto be taken care of ahead of
time.
Mark (00:43):
Well, you know people that come to us.
Typically, unless it's childrenof clients or typically 50 and
older, they've lived enough lifeto know things change, you're
right, and just as much asduring life, they change
probably even more in retirement.
You're talking about 20, 25, 30years of life, and then you
throw in things that may nothappen as much during your
(01:05):
earlier years, like healthissues and things like that.
So, yeah, absolutely, we haveto plan for that, or it's got to
be flexible.
Right, we got to be able toshift gears.
Maybe it's a slight detour,maybe it's a total 180, whatever
it may be, but you got to beprepared and we go ahead and
look at that as we're talking totalk about today, ahead of time
, so that we're not necessarilysurprised.
(01:26):
I'm not saying it's a greatthing to have to do, but we do
need to be able to maneuver thatand change that a little bit,
because there's definitely someareas we're going to talk about
today.
Evan (01:36):
Some of these will be shocking and maybe not have been
considered before by ourlisteners.
Some of them, "oh yeah, ofcourse that's part of a
retirement plan, but maybe wedon't realize how devastating it
can be to a retirement plan.
So the first one we all knowhealth care costs are going up,
so that's our first financialshock.
However, lately I'm noticingone of the more common reasons
(01:56):
clients are delaying theirretirement is because of health
care.
Mark (02:00):
Well, you know, Medicare doesn't kick in until 65.
And first of all, that'sgetting more expensive, right,
Medicare, Part B and Part D andall that is getting more
expensive.
Government's kind of talkingabout do we want to cut some
benefits or whatever, but until65, that's a big consideration.
A lot of our clients areretiring before 65.
And so, whether it be one partof a couple or both the couple
(02:23):
or whatever it may be, you'vegot that situation of, and we
just had this discussion with aclient yesterday.
You know their big concern wasyou know, if I could retire now
I think he's 57, 56, somethinglike that what am I going to do
about health insurance?
And so we explored some options.
There are options available Ifsomebody were to get laid off,
(02:44):
there's a possibility of maybesome benefits coming from the
company if they have seniority.
But that's not going to lastprobably very long.
18 to 36 months might be themax.
So there are some other thingswe look at.
We have some other ideas thatwe look at, but that is a major
consideration and when youconsider that healthcare
inflation is more like six tosix and a half percent, it's not
(03:09):
going to get any better.
I don't know where this isheaded.
I know just as a company.
Our group health has more thandoubled over the last 18 months.
It's been wild.
Yeah, it's just crazy.
And so in retirement, whenyou're maybe on a more fixed
income, it's even more critical.
Evan (03:24):
Right.
And we have that discussion aswell.
You know there are a lot ofother resources to go to.
The marketplace is a place, issomething to consider.
However, that is income-basedand if you have a lower income
for a while in this transitionperiod, then that might be worth
it.
But if you're also using thisperiod, maybe you're 60,
(03:46):
somewhere around there usingthis period to prepare for
retirement, with things likeRoth conversions or things that
are going to impact your incomefor that year, then that might
not turn out to be such a goodplace to go.
Mark (04:00):
It's got to be closely watched and you want to make it
part of that retirement budget.
So that's something we examinewhen we're creating that income
plan.
Again, we've had several peoplecome to us whether it be
federal government workers orwhether it be just anybody in
the open public sector that havesuddenly found out that, hey,
(04:21):
they're paring down the economyright now is a little weird, a
little sideways.
And so there are companieseither not hiring or they're
cutting back, and many timesit's that middle to upper middle
management that gets cut.
And so these are a lot of thefolks we talk to age 50 to 60.
And all of a sudden they'relike do I retire?
I'm this age, what about healthinsurance?
(04:42):
What about income?
Have I got enough saved?
All of these questions comeinto being, but healthcare is
certainly probably one of thebigger ones.
Evan (04:49):
And if industry-wide those positions are being cut, it's
hard to find a position thatpays the same amount and reenter
the workforce.
Let me give you some tangiblenumbers here.
So Fidelity says that theaverage 65-year-old in 2024 will
spend $165,000 on health carethroughout retirement, so that's
over the course of 20 plusyears.
(05:10):
However, fidelity also foundthat Americans estimate their
retirement health care costs at$75,000.
So that's less than half of thereality, and a couple's average
cost in retirement is $315,000.
Mark (05:24):
Yeah, let's talk about where that comes from.
A lot of people are like, well,I'll be on Medicare.
Well, so Medicare Part A ishospital.
We've had Medicare shows beforebut, briefly, it's paid for
over the course of your lifetimewhen you pay into FICA.
But Part B is paid for inretirement and right now it's
around $185 per person.
So if you're a married couplethat's $370.
(05:45):
And that goes up almost everyyear a percentage, and so just
do that math every month for 25years.
You can see what that wouldcost.
Well, we still got Part Dcoming in, which is the drug
coverage.
That typically is not cheap.
Many people want the vision andthe dental.
You know a lot of things andeven hearing, and you start
(06:06):
looking at the cost of hearingaids and you know a crown
replacement.
All of this.
You kind of want the insurancefor that and I felt like I'm
missing something.
You know, oh, the supplementyou know a part, you know G or
whatever it might be is anadditional cost.
Now some people go to theMedicare Advantage it is cheaper
but it's changing as well andthen deductibles, things of that
(06:28):
nature.
So that's a real number$365,000.
Is that what you said?
Give or take?
Evan (06:35):
$315,000 for a couple
Mark (06:37):
$315,000.
Yeah, that's real money, and sothat's something, we've got to
plan for it.
We got to make sure we have theincome coming in to cover the
unexpected, which is why I loveoverages in our income plans
when we have more coming in thanwe need.
That's a beautiful scenario.
Evan (06:53):
Well, and maybe you know, if you look okay, retirement
could be 20, 25, maybe even 30years, so 315,000 spread over
that many years.
Okay, maybe I can break thatdown and look at it, but then
you're considering that's oneelement of retirement.
Mark (07:08):
Right, one element and then we're going to go over some
more, I'm sure.
But yeah, that's just one pieceof the puzzle that comes into
play.
And again we've got someclients that all of a sudden
they've got three or four healthissues in a row and it stacks
up over a course of, y ou know,it typically happens in a year
or two.
Then they're kind of good for afew years.
All of a sudden barrage hitsagain, and if it's both of them,
that's even more.
(07:28):
You know more of a problem.
So if you're not planning forhealth care costs, you're not
planning.
Evan (07:34):
Number two along a similar avenue as health care costs,
and that would be long-term care.
An estimated 70% of US adultswho survive to age 65 will end
up needing some amount oflong-term care insurance.
Mark (07:46):
What percentage was that?
Evan (07:48):
70% of US adults who survive to 65, they'll end up
needing some amount of long-termcare in their lifetime, but the
cost involved could becatastrophic.
So long-term care costs varysignificantly, with average
annual costs ranging from$47,000 to $131,000 or more,
depending on the type of careand location.
(08:10):
So Genworth's most recent costof care survey puts the average
annual cost of home health aidat $77,792.
For the assisted livingcommunity, a little bit lower,
the annual price tag is $70,800.
But then there's nursing homecare, with an average price tag
(08:30):
of $111,325 for a shared roomand $127,750 for a private room.
Even a brief nursing home staycould empty a moderate income
retiree's bank account.
Mark (08:50):
Let's not be fooled, Medicare does not cover
long-term care.
It'll pick up some cost in thefirst 30 days, a little bit more
cost in the next 30 days, someskilled nursing but long-term,
past that point don't thinkMedicare is going to cover that.
There's a little bit of amisunderstanding about that.
So what do you do?
Well, as we've talked aboutbefore, we're not big proponents
of the traditional long-termcare insurance.
It's gotten really expensive,hard to get, doesn't cover
(09:13):
nearly as much as it used to,and clients that bought it 20
and 30 years ago they're gettinga letter every two or three
years saying we're going up 10%,we're going up 20% or you can
cut your coverage and it gets tothe point they have to cancel
it.
So we're not going that route.
There are some new toolsavailable and we've gotten into
them before.
We won't spend a lot of time onthem.
(09:33):
But it needs to be part of yourplan.
It needs to be part of how canI increase my income if a
long-term care need is triggered?
And there are two or threetools we're using.
They're working pretty well.
In fact, one of them worksreally really well, but you're
not putting out a lot of moneyto pay for it.
It's kind of a rider on anotheraccount.
(09:53):
And so definitely if youradvisor or if you do have a
planner, if you don't have aplanner, you need one, not just
an advisor.
But if they're not talking toyou about long-term care and how
do we take care of that in thefuture, you're missing out on
another element of what couldreally derail your retirement.
And then you have the doublewhammy.
Right, Evan, you've got let'ssay, I'm in assisted living for
(10:16):
a while memory care, nursinghome, seven-year period, spend
half a million dollars of myassets and my spouse now I
probably am going to pass awayin the near future.
After that, right, I pass away,my spouse is left with a lot
less money than we had and sheloses some of her income.
Right, one of the SocialSecurities goes away.
(10:37):
If I'm on a pension, some ofthat might go away, and so it's
that double whammy that we planfor with every client to make
sure that we have some kind ofstrategy in place.
Evan (10:54):
Yeah, so use that opportunity, folks, to go to our
website, masterplanretire.
com, see where your strengthsand weaknesses in retirement are
.
We offer complimentaryconsultation to anyone
interested and basically that'san opportunity to run a series
of reports.
We'll see if you have along-term care need or a health
care need.
We'll see if your income willlast through retirement.
Are you protected with bearmarkets or higher taxes or
inflation?
How does that affect yourretirement?
We'll run all of those reportsand more for you,
masterplanretire.
com, or call us at the office770-980-9262.
Mark (11:22):
The nice thing about the website is that, first of all,
treasure trove of resources.
But secondly, there's a littlebutton that says schedule a
meeting and you push thatmeeting and our calendar comes
up.
You pick when you'd like tohave a phone chat, a Zoom
meeting, a face-to-face whatever, like an initial chat.
I call it a fireside chat, butwe don't have a fireplace in
(11:43):
here, so that's kind of a littlemisleading there.
So a cup of tea, cup of coffeeor whatever.
But really what we're lookingfor is what are you concerned
about?
What are you worried about?
What do you see coming up thatis like oh, you know, I'd like
to retire, but and we want tohear about that but we also want
to hear about your goals andyour dreams as well.
And how can we meld thosetogether?
(12:04):
Take care of the issues but atthe same time fulfill your goals
and your dreams in retirement.
Those reports are the beginningof the process of discovering
where you stand.
Evan (12:14):
That's great.
Number three (12:14):
home repairs.
Now that's something that wedon't consider as much, but we
see that quite often.
How often do you get a call oran email "hey Mark, I need money
for a porch or a roof or HVACor whatever.
It happens quite frequently,and here's the thing A lot of
these folks, if they're stayingin their home during their
working years and they choose tostay there in their retirement,
(12:37):
by that time that house couldhave been aged quite a bit.
There might have been a buildupof repair need.
Homeowners are often advised tobudget 1% to 4 percent of their
property's value for upkeep andrepairs.
But that guidance applies togeneral maintenance, not large
repairs like replacing a roof orHVAC.
Mark (12:56):
A week doesn't go by that I don't get a phone call or an
email that says we need $10,000,$20,000, $30,000 because this
has happened to the house.
It seems like it's every 20years.
That seems to be kind of thelife of an air conditioning or a
roof or you know, and then, 40years, you start getting into
foundation issues and thingslike that.
And so a lot of thesediscussions that I have with
(13:20):
clients are and I just read anarticle about this the other day
.
I've been having thisdiscussion for a couple of years
, but it was about should yourent in retirement?
You retirement, and when youthink about it, you can get some
rent protections.
What I mean by that is manyleases will limit increases.
If you're in a complex, all youcan do is make a phone call and
whatever's broken will be fixed.
(13:41):
They probably have a gym there,a pool there, the whole bit.
Many have garages and stuff,and some of of them are catered
to the over 50 crowd and so it'sworth exploring.
Some people are like no, no, no.
Well then you can take theequity out of your house, maybe
paid for, but at least has someequity put that into an income
(14:01):
producing tool that pays yourrent, you see, and now you don't
have that.
I need $10,000 for this or$20,000, then you can call us
and say I need $10,000 to go toEurope.
So much better, right?
I'm not saying it's right foreverybody.
This is certainly not arecommendation, but we do have
those discussions and, again, ifyou're not talking to your
retirement person about some ofthese things, you might need to
(14:25):
get a second opinion.
Evan (14:26):
Another smaller consideration
making some of these homerepairs yourself, as you age
that might become more and moredifficult.
So you need to pad extra incomefor professionals to come in to
take care of that for you.
Mark (14:38):
The two things people tell me when they get close to
retirement is number one I don'twant to manage my money anymore
.
And number two I just don'twant to have to fix everything
that goes broke in my houseevery two weeks or whatever, and
so, again, it's something toconsider.
Yeah.
Evan (14:53):
Number four shock
It was once fairly common forolder Americans to downside or
relocate in retirement.
These days it's an importantquestion Do you want to age in
place or move?
A growing number are opting tostay in their homes that they
know and they love as they age.
So an AARP report states that75% of Americans age 50 and
(15:15):
older want to age in place.
73% hope to stay in theircommunities.
However, aging in place oftenmeans making changes for safety
reasons, and retrofitting a homecould get quite expensive.
So, for instance, fixer F-I-X-Rsays homeowners spend an
average of $3,000 to $15,000 toremodel their homes to age in
(15:37):
place.
But the cost you incur willalso depend on the scope of the
work that needs to be done.
Simple adjustments likereplacing doorknobs that can
cost as little as $350, whilemajor structural changes like
widening hallways or sellingwalk-in showers things like that
that can reach 50,000 or more.
Mark (15:55):
We're not even talking yet about the upstairs.
Right, where's the adultbedroom?
Is it upstairs?
Do you have to maybe build abedroom downstairs?
Do you put in an elevator?
I mean, this just gets to be so.
.
.
Is it better to move?
Well, I know in most areas thatwe deal with you can say we're
going to downsize.
That doesn't mean you'redownsizing in price, because
(16:15):
many of these newer homes thatare built to one level maybe a
50 and older community, or maybenot, maybe just an older ranch
that needs to be redone you'respending probably almost as much
money as you're getting foryour older home.
Evan (16:27):
And multiple generations are seeking those types of homes
out.
Mark (16:30):
They're getting harder to find, absolutely, and they're
trying to build some, but thesenew buildings are a lot more
expensive because of inflationand again, you know supply and
demand.
So it's funny.
People will come in and say,yeah, we're going to downsize
and I say, have you checked theprices yet?
And they'll come back.
We may need to take a secondlook at this for sure.
Evan (16:50):
Yeah.
So if you know ahead ofretirement that you prefer to
live out your days in yourcurrent home save for eventual
renovations, you can incorporatethat into your retirement plan.
Like everything else we'vediscussed already, the more
details you have, the better jobyou can do saving ahead of
retirement so you're able tomake whatever changes are
necessary and create a safeliving environment.
Number five (17:13):
legal or scam related issues.
So we know that elder fraud ishuge and it's just getting worse
and worse.
Financial fraud, identity theftor costly legal disputes can be
devastating, especially forolder adults who have less time
to recover from their losses.
Mark (17:27):
Had two phone calls in the last, I'd say nine months, of
clients, and these are smartclients.
One was a physician, one was anengineer type.
They both got scammed out of asignificant amount of money One
$10,000, one into six figures.
And so, I mean again, they'renot stupid, they've read the
(17:50):
articles, but it is so criticalthat you keep up with this kind
of stuff.
And if you're not sure, I meanthey have classes.
In fact we'll be interviewing,I think pretty soon, someone
that deals with cybersecurity.
So make sure you stay tuned forthat episode coming up.
But it's a critical area andthat's why we try to educate our
clients on that.
Evan (18:08):
We've even had once or twice thankfully it hasn't been
more than that but we've hademails from strange addresses
asking for money.
Mark (18:19):
It looks like our client.
You know all that kind of goodstuff, and so we've learned to
do a phone call, verify it,that's right and say is this
really you and I'm like I don'tneed money this week or whatever
it may be?
You and I like I don't needmoney this week or whatever it
may be.
So just more and more layers.
You know people complain aboutsecurity and and, and you know
having to get a code and allthat kind of stuff.
It's going to get worse.
Yeah, we're already seeingother layers for our stuff
(18:39):
because we want to be extracareful.
So just stay up on that step, onthat kind of stuff.
Evan (18:44):
Elder fraud includes a variety of scams targeting
seniors with tech support scamsWe've seen that so many times
Identity theft, of course,romance scams you think about
somebody who might be single andolder, feeling lonely, romance
they can be extra susceptible tothose kinds of things.
That happens a lot.
Absolutely Fake investments aresome of the most common
(19:06):
Government impersonation.
How many times have we gottenthe IRS?
I've been getting the textsaying I have a violation for
the Peach Pass.
Mark (19:16):
I've been getting those too.
You've gotten those?
Yeah, yes, I have, and I did goon the site to double check and
I don't.
But yeah, I was getting themprobably once a week for a while
and I can see people and I'veon on some of the social media
sites about people followingthat link and stop just in time.
You know, before they startputting in, we need your credit
card to pay this, fine, orwhatever it may be.
Evan (19:36):
There was a FedEx delivery one that was going around for a
while and I think a fakeMicrosoft.
I mean there's, they're endlessand there's gonna be.
There's gonna just be more andmore.
And, keep in mind, with theadvent of AI, the problems are
only going to get worse.
Use identity theft protection,monitor your accounts, consider
freezing your credit, have legaldocuments in place: your wills,
(19:58):
your powers of attorney,healthcare directive and, just
like Mark said, be cautious withyour phone and online
solicitations.
Mark (20:04):
And if you're not sure, ask your eight-year-old grandson
or granddaughter.
Evan (20:09):
I think they need less internet.
So these are just some of thelesser considered areas of
financial concern in retirement,but you have to include them on
a list of points that can becomprehensive, that have to be
covered by a successfulretirement plan.
So, in conjunction with thethings that we've mentioned
already, consider marketvolatility in retirement.
(20:31):
You've got the risk of sequenceof returns even down to timing
when you can retire.
Do you think many people wereeager to retire the first half
of this year, or March, about2007.
Or 2000s?
Well, they didn't know then.
Mark (20:45):
That's what I'm saying.
If they retired, many of themtried to go back to work, but
the positions are closed becauseyou're laying people off, and
so be careful with that.
I'm not saying don't retire.
I'm saying have a plan in placethat the market could do
anything in the next year, haveaccounts that are stable, that
you can take income from, andthen we'll let the market do its
job over time.
Evan (21:06):
Right, absolutely.
Another consideration (21:07):
taxes and retirement.
We talk about these things allthe time, but it's for a very
real reason.
Taxes can eat up as much ofyour income as a market drop.
We know that most Americanswho've been putting away into
employer-sponsored plans fortheir entire careers, most
(21:28):
Americans, the vast majority ofbaby boomers today retiring have
a tax problem, a huge tickingtax time bomb, as you like to
say.
Mark (21:35):
Yeah, Ed Slott, a colleague, a fairly famous CPA,
that's always writing booksabout taxes.
He tries to warn people.
You know, all this money builtup in these 401ks, IRAs, thrift
savings plans or whatever thatare pre-tax, which is the way we
saved for the last 40, 50 years.
There's a mortgage on thatamount of money.
(21:57):
So when you think about yourbalance, I want you to do it
right now.
Don't close your eyes and thinkif you're driving, but think
about how much you have in yourIRA or pre-tax accounts and
subtract anywhere from 20 to 40%.
That's the real value aftertaxes.
And so now's the time, wheretaxes don't sell, to begin
having a tax strategy.
(22:17):
And again, if somebody's nottalking to you about this,
they're not doing the full job.
We can show you the report, andwhen people see that report
about taxes, just going back tothe old tax rates accelerates
how quickly they run out ofmoney.
So you need to see that so thatyou're attuned to it, so that
we can then have a strategy todo something about it.
Evan (22:37):
And there wasn't consideration.
.
.
It wasn't until about 2022 thatwe started thinking about the
"I word again, and that'sinflation, cost of living
increases, that's aconsideration in retirement.
Add a couple of these together.
What if you have a combinationof higher taxes and inflation,
or bear markets, which areguaranteed to happen every four
(22:58):
to seven years, historicallyright.
Mark (23:00):
Absolutely.
And so you've got these thingscoming together.
If you don't have a strategyfor every area, that one area
that you don't have a strategyfor could be the one area that
totally destroys your retirement.
And I hate to see people.
I've run into people at places.
At Walmart I ran into a guythat was in his 80s, had to go
(23:21):
back to work at Walmart becausehe was running out of money from
poor planning.
So that was a true story and itwas just a sad story.
And he said I can only work somany days because my knees are
gone, but I got to do it and soit's a true story, it happens.
Evan (23:32):
So there's some more ideas for concerns that you need to
consider in retirement to makesure you have a full and
complete retirement plan.
Every point we've mentionedtoday we deal with regularly and
we see the impact on clientswho are successful with it and
maybe those who are not.
Mark (23:48):
So I hope you'll consider this.
I hope you'll visit the websitemasterplanretirecom, schedule a
time with us.
It's complimentary and it willenlighten you as to where you're
at and how to get where youwant to be.
So until we see each otheragain, remember plan well and
prosper, take care.
Speaker 4 (24:03):
This was Retirement Roadmap Radio with Mark Fricks
of Master Plan RetirementConsultants.
To schedule a complimentaryconsultation, go to
masterplanretirecom or call770-980-9262.
Speaker 3 (24:27):
Thanks for listening and remember plan well and
prosper are believed to be fromreliable sources and no
representations can be made asto its accuracy.
All ideas and informationshould be discussed in detail
with one of our qualifiedrepresentatives prior to
implementation.
Advisory services offered byMaster Plan Retirement
Consultants, a registeredinvestment advisor in the state
of Georgia, Mark Fricks, andMaster Plan Retirement
Consultants are not affiliatedwith or endorsed by the Social
Security Administration or anyother government agency.
Is your retirement plan shockproof?
Hey folks, thanks for joiningus.
Welcome back to RetirementRoadmap with Master Plan
Retirement Consultants.
My name is Evan.
With me, as always, retirementplanner Mark Fricks.
Transitioning to retirement isan adjustment both financially
and emotionally.
With big changes alreadyhappening, there can also be
(00:26):
unexpected shocks to yourretirement plan, Mark.
We know that once we've got aplan in place at some point,
inevitably there's going to besome adjustments that have to be
made.
Where we get into trouble iswhen we don't consider some very
big parts of the plan that needto be taken care of ahead of
time.
Mark (00:43):
Well, you know people that come to us.
Typically, unless it's childrenof clients or typically 50 and
older, they've lived enough lifeto know things change, you're
right, and just as much asduring life, they change
probably even more in retirement.
You're talking about 20, 25, 30years of life, and then you
throw in things that may nothappen as much during your
(01:05):
earlier years, like healthissues and things like that.
So, yeah, absolutely, we haveto plan for that, or it's got to
be flexible.
Right, we got to be able toshift gears.
Maybe it's a slight detour,maybe it's a total 180, whatever
it may be, but you got to beprepared and we go ahead and
look at that as we're talking totalk about today, ahead of time
, so that we're not necessarilysurprised.
(01:26):
I'm not saying it's a greatthing to have to do, but we do
need to be able to maneuver thatand change that a little bit,
because there's definitely someareas we're going to talk about
today.
Evan (01:36):
Some of these will be shocking and maybe not have been
considered before by ourlisteners.
Some of them, "oh yeah, ofcourse that's part of a
retirement plan, but maybe wedon't realize how devastating it
can be to a retirement plan.
So the first one we all knowhealth care costs are going up,
so that's our first financialshock.
However, lately I'm noticingone of the more common reasons
(01:56):
clients are delaying theirretirement is because of health
care.
Mark (02:00):
Well, you know, Medicare doesn't kick in until 65.
And first of all, that'sgetting more expensive, right,
Medicare, Part B and Part D andall that is getting more
expensive.
Government's kind of talkingabout do we want to cut some
benefits or whatever, but until65, that's a big consideration.
A lot of our clients areretiring before 65.
And so, whether it be one partof a couple or both the couple
(02:23):
or whatever it may be, you'vegot that situation of, and we
just had this discussion with aclient yesterday.
You know their big concern wasyou know, if I could retire now
I think he's 57, 56, somethinglike that what am I going to do
about health insurance?
And so we explored some options.
There are options available Ifsomebody were to get laid off,
(02:44):
there's a possibility of maybesome benefits coming from the
company if they have seniority.
But that's not going to lastprobably very long.
18 to 36 months might be themax.
So there are some other thingswe look at.
We have some other ideas thatwe look at, but that is a major
consideration and when youconsider that healthcare
inflation is more like six tosix and a half percent, it's not
(03:09):
going to get any better.
I don't know where this isheaded.
I know just as a company.
Our group health has more thandoubled over the last 18 months.
It's been wild.
Yeah, it's just crazy.
And so in retirement, whenyou're maybe on a more fixed
income, it's even more critical.
Evan (03:24):
Right.
And we have that discussion aswell.
You know there are a lot ofother resources to go to.
The marketplace is a place, issomething to consider.
However, that is income-basedand if you have a lower income
for a while in this transitionperiod, then that might be worth
it.
But if you're also using thisperiod, maybe you're 60,
(03:46):
somewhere around there usingthis period to prepare for
retirement, with things likeRoth conversions or things that
are going to impact your incomefor that year, then that might
not turn out to be such a goodplace to go.
Mark (04:00):
It's got to be closely watched and you want to make it
part of that retirement budget.
So that's something we examinewhen we're creating that income
plan.
Again, we've had several peoplecome to us whether it be
federal government workers orwhether it be just anybody in
the open public sector that havesuddenly found out that, hey,
(04:21):
they're paring down the economyright now is a little weird, a
little sideways.
And so there are companieseither not hiring or they're
cutting back, and many timesit's that middle to upper middle
management that gets cut.
And so these are a lot of thefolks we talk to age 50 to 60.
And all of a sudden they'relike do I retire?
I'm this age, what about healthinsurance?
(04:42):
What about income?
Have I got enough saved?
All of these questions comeinto being, but healthcare is
certainly probably one of thebigger ones.
Evan (04:49):
And if industry-wide those positions are being cut, it's
hard to find a position thatpays the same amount and reenter
the workforce.
Let me give you some tangiblenumbers here.
So Fidelity says that theaverage 65-year-old in 2024 will
spend $165,000 on health carethroughout retirement, so that's
over the course of 20 plusyears.
(05:10):
However, fidelity also foundthat Americans estimate their
retirement health care costs at$75,000.
So that's less than half of thereality, and a couple's average
cost in retirement is $315,000.
Mark (05:24):
Yeah, let's talk about where that comes from.
A lot of people are like, well,I'll be on Medicare.
Well, so Medicare Part A ishospital.
We've had Medicare shows beforebut, briefly, it's paid for
over the course of your lifetimewhen you pay into FICA.
But Part B is paid for inretirement and right now it's
around $185 per person.
So if you're a married couplethat's $370.
(05:45):
And that goes up almost everyyear a percentage, and so just
do that math every month for 25years.
You can see what that wouldcost.
Well, we still got Part Dcoming in, which is the drug
coverage.
That typically is not cheap.
Many people want the vision andthe dental.
You know a lot of things andeven hearing, and you start
(06:06):
looking at the cost of hearingaids and you know a crown
replacement.
All of this.
You kind of want the insurancefor that and I felt like I'm
missing something.
You know, oh, the supplementyou know a part, you know G or
whatever it might be is anadditional cost.
Now some people go to theMedicare Advantage it is cheaper
but it's changing as well andthen deductibles, things of that
(06:28):
nature.
So that's a real number$365,000.
Is that what you said?
Give or take?
Evan (06:35):
$315,000 for a couple
Mark (06:37):
$315,000.
Yeah, that's real money, and sothat's something, we've got to
plan for it.
We got to make sure we have theincome coming in to cover the
unexpected, which is why I loveoverages in our income plans
when we have more coming in thanwe need.
That's a beautiful scenario.
Evan (06:53):
Well, and maybe you know, if you look okay, retirement
could be 20, 25, maybe even 30years, so 315,000 spread over
that many years.
Okay, maybe I can break thatdown and look at it, but then
you're considering that's oneelement of retirement.
Mark (07:08):
Right, one element and then we're going to go over some
more, I'm sure.
But yeah, that's just one pieceof the puzzle that comes into
play.
And again we've got someclients that all of a sudden
they've got three or four healthissues in a row and it stacks
up over a course of, y ou know,it typically happens in a year
or two.
Then they're kind of good for afew years.
All of a sudden barrage hitsagain, and if it's both of them,
that's even more.
(07:28):
You know more of a problem.
So if you're not planning forhealth care costs, you're not
planning.
Evan (07:34):
Number two along a similar avenue as health care costs,
and that would be long-term care.
An estimated 70% of US adultswho survive to age 65 will end
up needing some amount oflong-term care insurance.
Mark (07:46):
What percentage was that?
Evan (07:48):
70% of US adults who survive to 65, they'll end up
needing some amount of long-termcare in their lifetime, but the
cost involved could becatastrophic.
So long-term care costs varysignificantly, with average
annual costs ranging from$47,000 to $131,000 or more,
depending on the type of careand location.
(08:10):
So Genworth's most recent costof care survey puts the average
annual cost of home health aidat $77,792.
For the assisted livingcommunity, a little bit lower,
the annual price tag is $70,800.
But then there's nursing homecare, with an average price tag
(08:30):
of $111,325 for a shared roomand $127,750 for a private room.
Even a brief nursing home staycould empty a moderate income
retiree's bank account.
Mark (08:50):
Let's not be fooled, Medicare does not cover
long-term care.
It'll pick up some cost in thefirst 30 days, a little bit more
cost in the next 30 days, someskilled nursing but long-term,
past that point don't thinkMedicare is going to cover that.
There's a little bit of amisunderstanding about that.
So what do you do?
Well, as we've talked aboutbefore, we're not big proponents
of the traditional long-termcare insurance.
It's gotten really expensive,hard to get, doesn't cover
(09:13):
nearly as much as it used to,and clients that bought it 20
and 30 years ago they're gettinga letter every two or three
years saying we're going up 10%,we're going up 20% or you can
cut your coverage and it gets tothe point they have to cancel
it.
So we're not going that route.
There are some new toolsavailable and we've gotten into
them before.
We won't spend a lot of time onthem.
(09:33):
But it needs to be part of yourplan.
It needs to be part of how canI increase my income if a
long-term care need is triggered?
And there are two or threetools we're using.
They're working pretty well.
In fact, one of them worksreally really well, but you're
not putting out a lot of moneyto pay for it.
It's kind of a rider on anotheraccount.
(09:53):
And so definitely if youradvisor or if you do have a
planner, if you don't have aplanner, you need one, not just
an advisor.
But if they're not talking toyou about long-term care and how
do we take care of that in thefuture, you're missing out on
another element of what couldreally derail your retirement.
And then you have the doublewhammy.
Right, Evan, you've got let'ssay, I'm in assisted living for
(10:16):
a while memory care, nursinghome, seven-year period, spend
half a million dollars of myassets and my spouse now I
probably am going to pass awayin the near future.
After that, right, I pass away,my spouse is left with a lot
less money than we had and sheloses some of her income.
Right, one of the SocialSecurities goes away.
(10:37):
If I'm on a pension, some ofthat might go away, and so it's
that double whammy that we planfor with every client to make
sure that we have some kind ofstrategy in place.
Evan (10:54):
Yeah, so use that opportunity, folks, to go to our
website, masterplanretire.
com, see where your strengthsand weaknesses in retirement are
.
We offer complimentaryconsultation to anyone
interested and basically that'san opportunity to run a series
of reports.
We'll see if you have along-term care need or a health
care need.
We'll see if your income willlast through retirement.
Are you protected with bearmarkets or higher taxes or
inflation?
How does that affect yourretirement?
We'll run all of those reportsand more for you,
masterplanretire.
com, or call us at the office770-980-9262.
Mark (11:22):
The nice thing about the website is that, first of all,
treasure trove of resources.
But secondly, there's a littlebutton that says schedule a
meeting and you push thatmeeting and our calendar comes
up.
You pick when you'd like tohave a phone chat, a Zoom
meeting, a face-to-face whatever, like an initial chat.
I call it a fireside chat, butwe don't have a fireplace in
(11:43):
here, so that's kind of a littlemisleading there.
So a cup of tea, cup of coffeeor whatever.
But really what we're lookingfor is what are you concerned
about?
What are you worried about?
What do you see coming up thatis like oh, you know, I'd like
to retire, but and we want tohear about that but we also want
to hear about your goals andyour dreams as well.
And how can we meld thosetogether?
(12:04):
Take care of the issues but atthe same time fulfill your goals
and your dreams in retirement.
Those reports are the beginningof the process of discovering
where you stand.
Evan (12:14):
That's great.
Number three (12:14):
home repairs.
Now that's something that wedon't consider as much, but we
see that quite often.
How often do you get a call oran email "hey Mark, I need money
for a porch or a roof or HVACor whatever.
It happens quite frequently,and here's the thing A lot of
these folks, if they're stayingin their home during their
working years and they choose tostay there in their retirement,
(12:37):
by that time that house couldhave been aged quite a bit.
There might have been a buildupof repair need.
Homeowners are often advised tobudget 1% to 4 percent of their
property's value for upkeep andrepairs.
But that guidance applies togeneral maintenance, not large
repairs like replacing a roof orHVAC.
Mark (12:56):
A week doesn't go by that I don't get a phone call or an
email that says we need $10,000,$20,000, $30,000 because this
has happened to the house.
It seems like it's every 20years.
That seems to be kind of thelife of an air conditioning or a
roof or you know, and then, 40years, you start getting into
foundation issues and thingslike that.
And so a lot of thesediscussions that I have with
(13:20):
clients are and I just read anarticle about this the other day
.
I've been having thisdiscussion for a couple of years
, but it was about should yourent in retirement?
You retirement, and when youthink about it, you can get some
rent protections.
What I mean by that is manyleases will limit increases.
If you're in a complex, all youcan do is make a phone call and
whatever's broken will be fixed.
(13:41):
They probably have a gym there,a pool there, the whole bit.
Many have garages and stuff,and some of of them are catered
to the over 50 crowd and so it'sworth exploring.
Some people are like no, no, no.
Well then you can take theequity out of your house, maybe
paid for, but at least has someequity put that into an income
(14:01):
producing tool that pays yourrent, you see, and now you don't
have that.
I need $10,000 for this or$20,000, then you can call us
and say I need $10,000 to go toEurope.
So much better, right?
I'm not saying it's right foreverybody.
This is certainly not arecommendation, but we do have
those discussions and, again, ifyou're not talking to your
retirement person about some ofthese things, you might need to
(14:25):
get a second opinion.
Evan (14:26):
Another smaller consideration
making some of these homerepairs yourself, as you age
that might become more and moredifficult.
So you need to pad extra incomefor professionals to come in to
take care of that for you.
Mark (14:38):
The two things people tell me when they get close to
retirement is number one I don'twant to manage my money anymore
.
And number two I just don'twant to have to fix everything
that goes broke in my houseevery two weeks or whatever, and
so, again, it's something toconsider.
Yeah.
Evan (14:53):
Number four shock
It was once fairly common forolder Americans to downside or
relocate in retirement.
These days it's an importantquestion Do you want to age in
place or move?
A growing number are opting tostay in their homes that they
know and they love as they age.
So an AARP report states that75% of Americans age 50 and
(15:15):
older want to age in place.
73% hope to stay in theircommunities.
However, aging in place oftenmeans making changes for safety
reasons, and retrofitting a homecould get quite expensive.
So, for instance, fixer F-I-X-Rsays homeowners spend an
average of $3,000 to $15,000 toremodel their homes to age in
(15:37):
place.
But the cost you incur willalso depend on the scope of the
work that needs to be done.
Simple adjustments likereplacing doorknobs that can
cost as little as $350, whilemajor structural changes like
widening hallways or sellingwalk-in showers things like that
that can reach 50,000 or more.
Mark (15:55):
We're not even talking yet about the upstairs.
Right, where's the adultbedroom?
Is it upstairs?
Do you have to maybe build abedroom downstairs?
Do you put in an elevator?
I mean, this just gets to be so.
.
.
Is it better to move?
Well, I know in most areas thatwe deal with you can say we're
going to downsize.
That doesn't mean you'redownsizing in price, because
(16:15):
many of these newer homes thatare built to one level maybe a
50 and older community, or maybenot, maybe just an older ranch
that needs to be redone you'respending probably almost as much
money as you're getting foryour older home.
Evan (16:27):
And multiple generations are seeking those types of homes
out.
Mark (16:30):
They're getting harder to find, absolutely, and they're
trying to build some, but thesenew buildings are a lot more
expensive because of inflationand again, you know supply and
demand.
So it's funny.
People will come in and say,yeah, we're going to downsize
and I say, have you checked theprices yet?
And they'll come back.
We may need to take a secondlook at this for sure.
Evan (16:50):
Yeah.
So if you know ahead ofretirement that you prefer to
live out your days in yourcurrent home save for eventual
renovations, you can incorporatethat into your retirement plan.
Like everything else we'vediscussed already, the more
details you have, the better jobyou can do saving ahead of
retirement so you're able tomake whatever changes are
necessary and create a safeliving environment.
Number five (17:13):
legal or scam related issues.
So we know that elder fraud ishuge and it's just getting worse
and worse.
Financial fraud, identity theftor costly legal disputes can be
devastating, especially forolder adults who have less time
to recover from their losses.
Mark (17:27):
Had two phone calls in the last, I'd say nine months, of
clients, and these are smartclients.
One was a physician, one was anengineer type.
They both got scammed out of asignificant amount of money One
$10,000, one into six figures.
And so, I mean again, they'renot stupid, they've read the
(17:50):
articles, but it is so criticalthat you keep up with this kind
of stuff.
And if you're not sure, I meanthey have classes.
In fact we'll be interviewing,I think pretty soon, someone
that deals with cybersecurity.
So make sure you stay tuned forthat episode coming up.
But it's a critical area andthat's why we try to educate our
clients on that.
Evan (18:08):
We've even had once or twice thankfully it hasn't been
more than that but we've hademails from strange addresses
asking for money.
Mark (18:19):
It looks like our client.
You know all that kind of goodstuff, and so we've learned to
do a phone call, verify it,that's right and say is this
really you and I'm like I don'tneed money this week or whatever
it may be?
You and I like I don't needmoney this week or whatever it
may be.
So just more and more layers.
You know people complain aboutsecurity and and, and you know
having to get a code and allthat kind of stuff.
It's going to get worse.
Yeah, we're already seeingother layers for our stuff
(18:39):
because we want to be extracareful.
So just stay up on that step, onthat kind of stuff.
Evan (18:44):
Elder fraud includes a variety of scams targeting
seniors with tech support scamsWe've seen that so many times
Identity theft, of course,romance scams you think about
somebody who might be single andolder, feeling lonely, romance
they can be extra susceptible tothose kinds of things.
That happens a lot.
Absolutely Fake investments aresome of the most common
(19:06):
Government impersonation.
How many times have we gottenthe IRS?
I've been getting the textsaying I have a violation for
the Peach Pass.
Mark (19:16):
I've been getting those too.
You've gotten those?
Yeah, yes, I have, and I did goon the site to double check and
I don't.
But yeah, I was getting themprobably once a week for a while
and I can see people and I'veon on some of the social media
sites about people followingthat link and stop just in time.
You know, before they startputting in, we need your credit
card to pay this, fine, orwhatever it may be.
Evan (19:36):
There was a FedEx delivery one that was going around for a
while and I think a fakeMicrosoft.
I mean there's, they're endlessand there's gonna be.
There's gonna just be more andmore.
And, keep in mind, with theadvent of AI, the problems are
only going to get worse.
Use identity theft protection,monitor your accounts, consider
freezing your credit, have legaldocuments in place: your wills,
(19:58):
your powers of attorney,healthcare directive and, just
like Mark said, be cautious withyour phone and online
solicitations.
Mark (20:04):
And if you're not sure, ask your eight-year-old grandson
or granddaughter.
Evan (20:09):
I think they need less internet.
So these are just some of thelesser considered areas of
financial concern in retirement,but you have to include them on
a list of points that can becomprehensive, that have to be
covered by a successfulretirement plan.
So, in conjunction with thethings that we've mentioned
already, consider marketvolatility in retirement.
(20:31):
You've got the risk of sequenceof returns even down to timing
when you can retire.
Do you think many people wereeager to retire the first half
of this year, or March, about2007.
Or 2000s?
Well, they didn't know then.
Mark (20:45):
That's what I'm saying.
If they retired, many of themtried to go back to work, but
the positions are closed becauseyou're laying people off, and
so be careful with that.
I'm not saying don't retire.
I'm saying have a plan in placethat the market could do
anything in the next year, haveaccounts that are stable, that
you can take income from, andthen we'll let the market do its
job over time.
Evan (21:06):
Right, absolutely.
Another consideration (21:07):
taxes and retirement.
We talk about these things allthe time, but it's for a very
real reason.
Taxes can eat up as much ofyour income as a market drop.
We know that most Americanswho've been putting away into
employer-sponsored plans fortheir entire careers, most
(21:28):
Americans, the vast majority ofbaby boomers today retiring have
a tax problem, a huge tickingtax time bomb, as you like to
say.
Mark (21:35):
Yeah, Ed Slott, a colleague, a fairly famous CPA,
that's always writing booksabout taxes.
He tries to warn people.
You know, all this money builtup in these 401ks, IRAs, thrift
savings plans or whatever thatare pre-tax, which is the way we
saved for the last 40, 50 years.
There's a mortgage on thatamount of money.
(21:57):
So when you think about yourbalance, I want you to do it
right now.
Don't close your eyes and thinkif you're driving, but think
about how much you have in yourIRA or pre-tax accounts and
subtract anywhere from 20 to 40%.
That's the real value aftertaxes.
And so now's the time, wheretaxes don't sell, to begin
having a tax strategy.
(22:17):
And again, if somebody's nottalking to you about this,
they're not doing the full job.
We can show you the report, andwhen people see that report
about taxes, just going back tothe old tax rates accelerates
how quickly they run out ofmoney.
So you need to see that so thatyou're attuned to it, so that
we can then have a strategy todo something about it.
Evan (22:37):
And there wasn't consideration.
.
.
It wasn't until about 2022 thatwe started thinking about the
"I word again, and that'sinflation, cost of living
increases, that's aconsideration in retirement.
Add a couple of these together.
What if you have a combinationof higher taxes and inflation,
or bear markets, which areguaranteed to happen every four
(22:58):
to seven years, historicallyright.
Mark (23:00):
Absolutely.
And so you've got these thingscoming together.
If you don't have a strategyfor every area, that one area
that you don't have a strategyfor could be the one area that
totally destroys your retirement.
And I hate to see people.
I've run into people at places.
At Walmart I ran into a guythat was in his 80s, had to go
(23:21):
back to work at Walmart becausehe was running out of money from
poor planning.
So that was a true story and itwas just a sad story.
And he said I can only work somany days because my knees are
gone, but I got to do it and soit's a true story, it happens.
Evan (23:32):
So there's some more ideas for concerns that you need to
consider in retirement to makesure you have a full and
complete retirement plan.
Every point we've mentionedtoday we deal with regularly and
we see the impact on clientswho are successful with it and
maybe those who are not.
Mark (23:48):
So I hope you'll consider this.
I hope you'll visit the websitemasterplanretirecom, schedule a
time with us.
It's complimentary and it willenlighten you as to where you're
at and how to get where youwant to be.
So until we see each otheragain, remember plan well and
prosper, take care.
Speaker 4 (24:03):
This was Retirement Roadmap Radio with Mark Fricks
of Master Plan RetirementConsultants.
To schedule a complimentaryconsultation, go to
masterplanretirecom or call770-980-9262.
Speaker 3 (24:27):
Thanks for listening and remember plan well and
prosper are believed to be fromreliable sources and no
representations can be made asto its accuracy.
All ideas and informationshould be discussed in detail
with one of our qualifiedrepresentatives prior to
implementation.
Advisory services offered byMaster Plan Retirement
Consultants, a registeredinvestment advisor in the state
of Georgia, Mark Fricks, andMaster Plan Retirement
Consultants are not affiliatedwith or endorsed by the Social
Security Administration or anyother government agency.
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