The Financial Protection Program
The Six Basic Steps to Financial Security and Peace of Mind
Financial planning is made out by the financial industry to be quite complicated, but it doesn’t have to be. Following this simple checklist will ensure your financial security and peace of mind during your retirement.
1. Protect yourself from unaffordable medical, vision, and dental expenses during retirement
People covered by Medicare are fortunate enough to have a medical plan that will typically cover about 80% of their medical expenses, whether they are going to the doctor for a minor sickness, or ending up in the hospital.
However, under Medicare there is no cap on how high your out-of-pocket medical expenses can get.
So the very first thing anyone turning 65 must do, is sign up for either a Medicare supplement plan, or a Medicare Advantage plan. Both of these options will limit your out of pocket costs, and protect you from large uncovered medical bills.
Dental and vision are also not covered by Medicare, so make sure you have a plan for how you will cover those expenses.
2. Assess your disability risk
If you are still working and are dependent on that income, then you face a financial risk if you become disabled and are unable to work.
Assess how this would impact your income and your ability to pay your bills, and make sure you have a plan for what happens if you do become unable to work.
3. Secure a guaranteed lifetime income
The biggest risk most people have in retirement is called “longevity risk”. This is the risk that you may outlive your money.
The key is to make sure you have a source of income that is guaranteed not to run out.
Calculate how much you’ll have coming in by adding your expected social security to any pensions you have from a job or union. If you have rental property that pays you an income, or royalties, or other ongoing income that you expect to last a lifetime, add that in as well.
The amount should cover at least 80 – 100% of your base living expenses. If it does not, you can self-fund a pension plan to cover the difference.
To learn more about securing your income in retirement, we’ve explained it in detail in a special report that you can read and download for free. Click here to get your free copy.
4. Plan for long-term medical costs (NOT covered by Medicare)
As financial speaker Tom Hegna says, you must have a plan for long-term care.
Staying in a nursing home, even for a short period of time, is very expensive. Typically it will cost about $100,000 per year.
Unfortunately, a lot of people need this type of care at some point in their lives – but it is not covered by Medicare.
In fact, nearly one out of every four people between age 65 and 84 need at least some assistance with basic activities of daily living, such as bathing and eating.
Make sure you have a plan in place so that a period of long-term care does not wreck your retirement. This is crucial.
5. Create a Living Will
A living will is a document that describes how you would like to be cared for, if you are unable to communicate your wishes at the time.
We believe everyone should have a living will. This will ensure that your wishes are clear, and relieve any burden from loved ones who may be making decisions on your behalf.
6. Complete Your Legacy Planning
Legacy planning is about what happens after you’re no longer here.
The first step is to make sure you have an up-to-date will, describing what should happen to any of your assets.
This is also a good time to put together anything you want to share with those you’re leaving behind – be it memories, last wishes, or bits of wisdom you’ve gained in your life.