LOOKING AT THE GOLDEN YEARS
By Dolores Kong
The Boston Globe
Once you've worked a whole career and reached the
promised land of retirement, you might expect your
financial worries to be over.
Instead, they may become more complicated, with
concerns about outliving your nest egg or needing
costly nursing home care at some point in the two to
three decades many Americans spend in retirement.
"The money needs to last," said Sue Stevens, director
of financial planning at Morningstar Associates LLC,
who will discuss managing assets and income in
retirement as part of the Living in Retirement track
at the Globe's Money Matters conference.
And that's why retirees need to understand their risk
tolerance and asset allocation, what their portfolio
is invested in, and how to control their spending,
said Stevens, a certified financial planner and
certified public accountant.
Considering the findings of a new Retirement
Confidence Survey - that says older and younger
workers alike have unrealistic estimates of their
retirement income needs, among other troubling
conclusions - knowing how to preserve your assets in
the golden years is a more pressing issue than many
For instance, while financial specialists say retirees
need 70 to 80 percent of their preretirement income to
maintain their lifestyles, 17 percent of workers think
they will need less than half, and 25 percent expect
they will need between 50 and 59 percent, according to
the survey released last month.
Among other worrisome findings in the new report by
the Employee Benefit Research Institute, American
Savings Education Council, and Mathew Greenwald &
The average worker plans to retire at age 65 but may
retire earlier because of ill health or job loss, if
the experiences of current retirees having to leave
the labor force at age 62 for reasons beyond their
control is an indication.
The average worker's retirement nest egg is generally
small. About 47 percent have saved less than $50,000,
and 15 percent said they have saved nothing. Even
older workers lag in their retirement saving, with
less than 25 percent of those ages 40 to 59 having
saved $100,000 or more.
Even for people who have much more than that set
aside, say half a million dollars or more - whether as
a result of years of disciplined saving and investing
on their own or as a result of inheritance - knowing
how to handle those assets in retirement is critical,
said Ed Slott, publisher of Ed Slott's IRA Advisor and
a Money Matters speaker who will discuss managing
Individual Retirement Account withdrawals.
"What we're finding is that this retirement account
that's been built up may be the single largest asset
they own, and may in many cases be larger than
people's homes," said Slott, a certified public
"Yet so little planning is done" to protect the
savings from income and estate taxes, said Slott, who
will discuss how to prevent what he calls "near
confiscation" of retirement savings by taxes, as well
as the new IRA required minimum distribution rules.
One of the biggest concerns for people living in or
approaching retirement is the possible expense and
loss of independence from the need for nursing home
care, according to Ben Lipson, president of Just for
Seniors Insurance Agency in Chestnut Hill and an
advocate for seniors.
"Everybody knows that if they have long-term care
expenses, it's going to erode some of their assets,"
he said. "People also don't want to go to a nursing
home and lose independence."
But by choosing the right long-term care insurance
that provides the right coverage and home care, people
can better protect their assets and preserve their
dignity, said Lipson, who will discuss such issues as
who needs long-term care insurance, the preexisting
medical conditions to consider, and finding an
insurance policy seller you can trust, as part of a
panel discussion on long-term care insurance.
"Buy it if you can afford it," said Lipson, explaining
that someone in his 50s could buy a good policy for
about $1,000 a year, while someone in his 60s might
have to pay about $2,500 or $3,000 a year, assuming
good health. People in their early 70s might expect to
pay between $4,000 and $5,000 a year, and, at age 80,
between $7,000 to $9,000 a year, again assuming good
"If you're living on a fixed income, it's an expensive
after-tax dollar to spend. If it's going to alter your
lifestyle, don't buy it," he said.
Lipson suggests exploring the possibility of having
your children help pay the premiums, so that your
assets can be protected in your own lifetime and
preserved for the next generation. Considering the
monthly cost of a nursing home stay in Greater Boston
averages $8,000 and Medicare provides only limited
coverage, Lipson said, "if your children won't pay for
it, they're going to get less money."