None of us like to think about the worst-case scenario when we’re making plans for the future. Yet, when it comes to retirement, it’s really a necessity. Before you retire, it’s important to roll up your sleeves and crunch the numbers to make certain you can handle when the worst that can happen, actually happens. Because odds are it will.
Can Your TSP Nest Egg Last Till Age 90?
You’re probably wondering why living to the ripe old age of 90 can be considered a worst-case scenario. If it causes you to outlive your savings, it can be catastrophic. Living longer costs more money across the board. And, since health issues increase as you age, you may be paying out-of-pocket for long-term care as discussed below. If you do the math and discover your TSP will run dry before age 90, it’s time to revamp your retirement plan before it’s too late.
“If your calculations reveal an income gap when you or your spouse pass away, you need to correct course before you retire.”
Will A Spouse’s Death Significantly Reduce Household Income?
Married couples have to consider a harsh reality when entering their golden years — the death of a spouse can significantly reduce their retirement income. When a federal retiree passes away, their survivor will lose around half of their deceased spouse’s FERS/CSRS annuity (pension). For FERS participants, household Social Security income can drop by as much as 50%. Add to this, the surviving spouse’s income tax burden may increase because they can no longer file as a couple. If your calculations reveal an income gap when you or your spouse pass away, you need to correct course before you retire.
Have You Added The Cost Of Long-Term Care To Your Retirement Plan?
Long-term care is assistance with day-to-day activities like dressing and bathing that you’re unable to do for yourself. This type of custodial care is provided in assisted living facilities and nursing homes and it’s not covered by FEHB or Medicare.
Research conducted by “A Place For Mom” reveals that 70% of adults aged 65 and older will require long-term care at some point. Meanwhile, the median cost of assisted living is $4,640 per month and a private room at a nursing home averages $9,034 per month. Since the average length of stay in a long-term care facility is 3.2 years, the cost can really add up. If you don’t have Long-Term Care Insurance, you’ll be paying this expense out of pocket.
If your nest egg can’t bear the financial stress of these worst-case scenarios, it may be time to get a second opinion on your retirement plan from an FRC® trained advisor.
Sources:
https://www.aplaceformom.com/senior-living-data/articles/long-term-care-statistics
https://www.aplaceformom.com/senior-living-data/articles/average-cost-long-term-care
