Aging: Non-investment questions to ask before you retire

Using a financial advisor for your investment needs is 100% on brand, but what about other parts of your retirement life? For example, one-third of people age 64 and older have a financial advisor, but only 2 percent have asked their advisor to help them choose Medicare, according to a July report by health care consulting firm Sage Growth Partners.

But Medicare and other non-portfolio topics — like travel and long-term care — can affect your finances.

“We actively provide these ideas to our clients, but there are still many advisors who are not,” says Crystal Cox, a certified financial planner in Madison, Wisconsin. “They’re still just focused on the investments and the portfolio.”

Here are some questions to ask at your next meeting.

What retirement decisions should I think about?

Your retirement life may not last as long as it has in the past. Are you planning to travel? Are you planning to move to another state or downsize? How often do you want to buy a new vehicle?

“Most people just think, ‘I need a certain amount of money to live,'” says Daniel Lash, a certified financial planner in Vienna, Virginia. “What about all the ancillary things that come along with life? All the things you want to do?’

Mapping out your retirement plans can help you and your advisor determine when and how you’ll need money.

“Do you have an idea where you’re going to move and what the real estate looks like in that general area?” Lash says. “They’ve been thinking about retirement, not ‘What am I going to do when I retire?'”

What do I need to know about Medicare?

Although you usually can’t sign up for Medicare until you’re 65, your income in the years before that will affect what you pay for coverage. Each year, both Medicare Part B and Medicare Part D base their premiums on your reported modified adjusted gross income from two years ago. So if you filed more than $91,000 individually or filed more than $182,000 jointly, you’ll pay extra amounts each month.

“Because there is hindsight of Medicare spending gains, we will adjust plans accordingly, as they may pay significantly more in the first few years after retirement than later in retirement,” Lash says.

It’s also wise to consider guidelines for choosing Medicare in general, because sometimes you can’t change coverage later if your health situation changes — and Medicare is complicated. “We have an annual meeting with someone who is a Medicare specialist,” Lash says. “All customers are invited to attend.”

Can I afford to self-insure long-term care?

A person turning 65 now has about a 70 percent chance of needing some kind of long-term care, and the costs are high: That’s $54,000 a year for an assisted living facility and nearly $95,000 for a shared room in a nursing home, according to the insurance Study of the Genworth Company on the cost of care for 2021.

“Some people are well off enough to be comfortable self-insuring,” says Kevin Brady, a certified financial planner in New York. “Others have more limited assets.”

No matter what the case, it’s crucial to discuss the potential costs and whether you have the savings to manage them. If you don’t, you’ll need to check the numbers on products like long-term care insurance or a hybrid policy that combines permanent life insurance with a long-term care rider.

“We always work with an expert to make predictions and see what makes sense,” Brady says.

Do I have enough money to have fun?

A successful retirement is not always about material possessions. For many, this is a time to realize dreams of travel and other experiences, but spending too frugally can get in the way.

“Clients are often overly conservative for fear of running out of money, but in the process they’re diminishing the retirement experience,” says Kevin Lum, a certified financial planner in Los Angeles. “By the time they realize their abundance, they are too old to spend it.”

Talk to your advisor about your big wants and whether you have enough money to splurge a little before settling on a quieter spending spree.

The actual cost of retirement looks more like a smile than a straight line, Lum says, with more spending at the beginning for things like travel and more spending at the end for long-term care.

“I’m not saying people should spend irrationally,” says Lum, “but thinking of retirement spending as a fixed calculation that doesn’t change over a lifetime of retirement is not a smart idea.”

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