Important steps to ensure you don’t outlive your money – Introducing the Financial Longevity Bundle©

By KAREN EMMA, UNIVERSAL WEALTH MANAGEMENT
Posted 4/15/21

There was a time, not so long ago in the 20th Century, when thinking (at all) about supporting yourself through your retirement years generally involved only one factor: the size and viability of …

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Important steps to ensure you don’t outlive your money – Introducing the Financial Longevity Bundle©

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There was a time, not so long ago in the 20th Century, when thinking (at all) about supporting yourself through your retirement years generally involved only one factor: the size and viability of your financial portfolio and your non-liquid assets (if any).

Not anymore in the 21st Century.

Today, financial portfolios and non-liquid assets, while obviously important, are only one of the critical elements that make up and affect the cash flow that you will absolutely need for your retirement income – cash flow that ensures that you do not outlive your money.

In order not to outlive your money, you need to recognize and manage all of these critical elements.  Do this and you will have what we call a Financial Longevity Bundle© —Lifetime Cash Flow!

Below we outline 11 Deadly Errors to avoid  to ensure you don’t outlive your money.

Deadly Error 1:       Disregarding Extended Longevity

Living a long life is no longer wishful thinking. It is a valid belief. In the 21st Century, we are experiencing a longevity revolution. Life expectancies in the United States are on the rise. Reaching your 100th birthday is increasingly common.

Just over a decade ago in 2010, the U.S. Census reported 53,364 centenarians (people 100 years or older). Last year, in 2020, that number nearly doubled as it was reported that 90,000 over 100 years old were living in the U.S. That number continues to grow. By 2030, the population over 80 years old in the U.S. is expected to increase from 9.3 million to 19.5 million. You could be one of them.  

Deadly Error 2:       Grossly Insufficient Lifetime Saving

In the U.S., savings and investments have declined significantly as a percentage of Gross Domestic Product (GDP) over the last 40 years. Savings and investments have all but collapsed since the 2008 financial crisis. The excuses often heard: 

  • The government continues to deduct more and more for Social Security and Medicare.
  • I have no money left after 401(k) / retirement plan contributions, taxes, increasing healthcare costs and inflation.
  • How can I save anything when I have a family to support?

Lack of savings is particularly prominent in youth who suffer from a need for immediate gratification fed by technology which conveniently delivers to the door. Large college loans, irresponsible spending and social pressure – all contribute to a corrosive savings malaise.

Deadly Error 3:       Unaffordable Mortgages / Lifestyle

Levels of lifestyles barely financed at the peak of your income are difficult to maintain on reduced cash flow needed to last for possibly 40 years. A painful symbol of this is the financial drain of a large long-term mortgage on a house that was barely affordable when purchased.

Deadly Error 4:       Failure to Monitor / Manage Retirement Plans

(Pensions / 401(k) plans)

A pension fund and a 401(k)/Qualified Plan may not be monitored or managed successfully. However, for many it is easier to trust that all is being properly managed or at least monitored by plan administrators.  Employees often purchase company stock in 401(k)’s out of loyalty and rarely sell it for fear of retribution regardless of how poorly it may be doing or is expected to do.  Many also still believe that if they save in these types of retirement vehicles alone they will have more than enough in retirement.  Others need immediate cash flow while working and never save enough in these means for their retirement.

 

Deadly Error. 5:      Inept / Often Too Conservative / Too Aggressive

Portfolio Management

Nothing can erode portfolio values faster than careless professional management.  Investment advice should not be influenced by advisor personal profitability, increased fees and expenses and over-conservative/ over-aggressive portfolio management. We continue today to see crippling failure by portfolio management to recognize the trend to extended longevity. 

 

Deadly Error 6:    Failure to Manage / Maximize Healthcare Costs & Plans

The cost of healthcare has become increasingly expensive. The average American while still employed can be lost in the healthcare system. Misunderstanding the impact of obligations such as copays, deductibles, and coinsurance can surprise and potentially impoverish you with healthcare debts for which one never planned.  Medicare was supposed to help you when you retire. Instead it has created more confusion and increased expenses for retirees.

 

Deadly Error 7:    Failure to Maximize / Plan Social Security

The original promise of Social security: A government guaranteed retirement income that replaced the whole or part of your income from your job.  However, over the years, the payment that you can expect has increasingly become only “in part.”  Today it is important to sort out and maximize Social Security and its complex changing array of moving parts: payments, claiming options and multiple choices for individual/family situations. Moreover, the future value of Social Security payments is too often not anticipated as cost-of-living increases (COLA’s), if any. Instead, Social Security payments are being drastically reduced by deductions such as Medicare Part B expenses, penalties, and rising health plan costs.

 

Deadly Error 8:       Divorce: End of Living on Two Incomes

Divorce is the enemy of retirement planning. Not only can a settlement divide assets and cash flow, but it can also end the obvious benefit of combining a couple’s Social Security and other income without necessarily an equal reduction in expenses. Divorce can also eliminate Social Security Retirement Benefits and Social Security Survivor Benefits may be affected.

Deadly Error 9:       Non-Recognition of Future Family Responsibilities

Aging parents and/or relatives living in your guest room or nursing homes, unemployed or dysfunctional children and grandchildren staying in your basement or playroom, family members suffering from mental illness and/or alcoholic or drug problem siblings - are just a few examples that can be unanticipated drains on retirement cash flow. Today we have parents, grandparents and other family members who go so far as to have co-signed college loans, auto loans and more. The co-signers always assume these loans will be paid back before or during their retirement and also assume that after college the borrowers would easily be able to obtain well-paying jobs. Both assumptions are not bankable.

Deadly Error 10:     Failure to Plan for Unanticipated Life Events

If the past year has taught us anything it has taught us to expect the unexpected events can occur as Covid-19 continues to impact our lives and the future plans for many. Job loss, reductions in hours and more have affected many of our finances and continues to do so. Now more than ever, we have learned the importance of planning for our future to ensure financial security and longevity.

Only if you are unusually lucky can you absolutely count on not suffering in your lifetime such crippling events as:  Being involved in a serious automobile accident; being robbed or assaulted; losing your home in a fire or natural disaster; losing a leg to a shark; choking on a piece of steak;  unexpected loss of a loved one; sudden contraction of a catastrophic disease; a crippling fall in bathtub or icy walk, need for an elder care nursing home -- all could happen to you.

Deadly Error 11:     Inadequate Estate / Generational Planning

Neglect, forgetfulness or absence of sound estate planning can result in serious erosion of cash flow late in life, with overwhelming debt at the end of life and costly estate settlement litigation. Along with disposition of assets, the potential burden of such possible financial obligations as a home underwater, medical bills, unpaid credit cards, auto loans, personal loans and funeral expenses need to be addressed.

The Eleven Deadly Errors can interact with and trigger each other and can seriously shrink your lifetime cash flow.  Awareness and avoidance are hallmarks of a successful retirement plan - Financial Longevity Bundle© - lifetime Cash Flow (budget) - to ensure all areas are covered when planning for one’s retirement and you will not outlive your money.

Karen Emma - Founder & President 

Universal Wealth Management (UWM)⬩ UniversalWM Healthcare

The Financial Longevity Bundle©

 945 Reservoir Avenue

Cranston, RI. 401-331-7600

For more information visit www.universalwm.com 

 

         

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