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4 out of 5 workers are making this costly retirement mistake

Our daily roundup of retirement news your clients may be thinking about.

4 out of 5 workers are making this costly retirement mistake
Not saving for health care expenses is a costly mistake that many clients make, according to this article on personal finance website Motley Fool. Indeed, four out of five workers don't consider health care expenses when they're determining how much savings they'll need to enjoy a comfortable retirement, according to the Employee Benefit Research Institute's 2018 Retirement Confidence Survey. And among current retirees, the numbers aren't much better — three out of five retirees haven't calculated how much health care costs impact their savings. The article says that a 65-year-old couple retiring today will need about $280,000 for their medical expenses in their golden years, and they should know that Medicare does not cover all of it. To help pay for those extra expenses, one option is the Medicare Advantage Plan, or Medicare Part C. Another option is to contribute to a health savings account, where contributions are deductible and distributions are not taxed if used for qualified medical expenses.

MedicareForms-Bloomberg

How much money will you really spend in retirement? Probably a lot more than you think
Contrary to what most people think, replacing 70% of preretirement income will not be enough to cover needs in the golden years, according to this contributed article from The Wall Street Journal. When asked about their spending in retirement, a group of participants in a study gave the conventional answer of 70%. But then researchers asked a new group of people more specific questions about how they wanted to spend their time in retirement. Based on that information, they determined the more accurate answer was 130%. In light of this, to improve their prospects, clients should consider working past their retirement age, as this would reduce their spending and boost their income.

Should we retire the concept of retirement?
Clients should consider dropping their retirement plan and instead find meaningful work in their golden years, according to this article on the Washington Post. "I’d like to see everyone who is rounding the corner of age 60 begin to think about the next phase of their productive life,” says an expert. “By the time they sell, or step aside or 'retire,' they should have a pretty clear vision and plan for fulfilling the psychological necessities that all of us gain from work — a sense of having an impact, making a contribution, being connected, being creative.”

How to make the most of your 401(k) plan
Workers are advised to participate in their 401(k) plan to take advantage of the benefits of the plan, according to this article on CBS Moneywatch. They should also consider raising their 401(k) contributions and consider loans and withdrawals to be the option of last resort. Tapping into their 401(k) assets could mean smaller savings while unpaid 401(k) loans could significantly reduce their nest egg.

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