1. The cost of long-term care insurance
While it may not be the most pleasant thing to think about, how you plan to cover potential eldercare costs like a nursing home or a home health aide should be on your radar, stat. Long-term care insurance can help pay for so-called “custodial care” services like those, which are often not covered by Medicare—but the longer you wait to buy a policy, the more expensive it’s likely to be. “It’s something to start thinking about even prior to age 50,” says Chuck Roberts, CFP®, founder and C.E.O. of Financial Freedom Planners in Richmond, Virginia. “It becomes more expensive as you grow older.” According to 2012 data from the American Association for Long-Term Care Insurance, a couple taking out a policy at age 55 will pay an average of $2,466 a year, while a couple who waits until they’re 60 will pay $3,381. But some health conditions—a stroke or metastatic cancer, for example—can make you ineligible to purchase such a policy in the first place. So it can be wise to look into a policy now, while you’re in good health.
2. You’re likely not going to stay an empty nester
Got grand plans to build a wet bar in your basement? Not so fast. “Unless [your child] is a shark on Wall Street, he may need some help from his parents,” says Brian Mahany, CFP®, principal at Sustainable Financial Planning in Toledo, Ohio. “I am definitely seeing some parents converting their basements for their kids to live in.” Pew Research data reveals that the percentage of 25- to 34-year-olds living in “multigenerational” households rose from 11% in 1980 to 21.6% in 2010. And only 48% of these so-called Boomerang kids pay rent to their parents. “A great many parents feel honor-bound to help their children,” says Mahany. “They’re not giving their kids any kind of lease.”
3. And you may still have to pay for your children’s health insurance
Recent grads are having a hard time in the job market: One study by the Federal Reserve Bank of New York estimates that 44% of recent grads are underemployed, meaning that they work in jobs that don’t require a college degree—which also likely means they aren’t getting the perks that a good job normally brings, like insurance. On top of that, they are graduating with a lot of debt, which tends to leave little money left to cover their bills, let alone health care. “With the student debt load kids are carrying, I have seen more instances of parents bringing kids back into the family health plan,” says Mahany. According to Healthcare.gov, children under 26 may be eligible for coverage under their parents’ health insurance plan even if they’re married, not living at home and attending school. Keeping your kids on your insurance may only amount to a few extra dollars a month for you, but it’s still an extra cost that you’ll have to budget for—on top of the fact that they’ve taken over the basement.
4. You should consider making credit card debt a thing of the past
“By the time you’re 50, you should be out of revolving debt, such as credit card purchases,” Roberts says. That money would probably be better off helping you prepare for retirement—plus, when you’re ready to enter your golden years, you don’t want a debt burden during a time when you’re no longer earning a salary. Unfortunately, debt has been steadily rising amongst people of retirement age: According to recently released research by the National Center for Policy Analysis, in 1989 the average credit card balance for people ages 65 to 74 was $2,100, compared with $6,000 in 2010. If paying down credit card debt is something you still need to work toward in your 50s, you can use our checklist to help you get started.
Especially if you don’t plan on staying in your current home, you should ask yourself where you might want to settle down, whether it’s a ranch house in Tucson or a condo in Miami Beach. That’s because where you eventually relocate will likely have an impact on how you’re saving for retirement now. For example, you may need to ask yourself, “Do I really have enough to take on a new mortgage 15 years down the line? Does my current savings plan take into consideration a change in cost of living? How retiree-friendly—or not—is the state I’m thinking of moving to?” And get as granular as you need to, even down to the type of home. “People should [even] think about what kind of house they want to live in: Is it a single story or multiple story?” Mahany says. All those details may help you determine what you’ll end up paying for housing in your dream retirement locale.
In fact, many financial planners complain about clients who don’t seek help mapping out their retirement until they reach their 60s. “When anyone comes to me thinking about retirement by their 50s,” says Mahany, “I’m very happy.” LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.