Dealing with unexpected retirement expenses
Henry K. "Bud" Hebeler,
former president of Boeing Aerospace and author
of "Getting Started in a Financially
Secure Retirement," gives Jenny high
"It's not just what happens
when he dies, it's all of the surprise events
in retirement that cost money," Hebeler
says. He also notes that depending solely
on the government for most of your income
"Don't forget the government
is a sovereign power and can change the laws
and pensions and tax rates and health insurance
premiums," Hebeler cautions.
Hebeler's advice: Take nothing for granted. "It's commonly assumed that the government won't change pension rules for current recipients, particularly the military, but if the government is in economic trouble, even military pensions are fair game."
Means testing, changes in the
index used for increasing military and other
cost of living adjustment (COLA) pensions, and adjustments to medical
insurance coverage all signal reductions in
Bottom line: "Unless you are a Microsoft heir, most people better find a way to start saving 20 percent of their income for retirement," say Hebeler, who now runs a retirement Web site, www.analyzenow.com.
Pitfalls of keeping up with the Joneses
Consider this scenario: A couple eyeing retirement buys their dream home. It's bigger than the one in which they raised their children and also comes with a hefty price tag. Even though they've sold their older home, they now face another decade or two of payments. That means they won't pay off their home until their mid-70s or 80s.
Dr. Marion Somers, author of
"Eldercare Made Easier" and an eldercare expert, says
to rein in status spending now. Instead, buy
used cars, forgo the bigger house and make
even your smallest expenditure count.
line: Cut up those credit cards and
down your debts. Gauge your housing needs
realistically. Before you relocate, look past
the present. Will you one day need to return
to be near family? Will your new home see
you through your entire old age? And do you
really need that McMansion or brand new sports utility vehicle?
"Say, 'Yes, I'd like to have it, but
I've made the decision a new car is a waste
of money,' and don't feel badly about it,"
for health care expenses
Arthur Koff, who runs www.RetiredBrains.com, says lots of retirees face barely scraping by because they're not fully prepared for changes in health and medical problems.
Estimates for out-of-pocket
medical expenses not covered by Medicare run
higher than $200,000 for 55-year-olds who
will retire in 10 years, Koff says. "Very
few couples have planned for this, resulting
in retirees looking for employment after they
thought they would no longer need to work."