Live Long & Prosper with a Self-Directed Retirement
Published on January 17, 2017
This is a great mantra if you are healthy and have planned ahead for your retirement. However, a new Healthview Services report acknowledges that with women living longer than men and the possibility of high health care costs looming in their future, it is more important than ever for women to get serious about ensuring that their retirement plan is in good shape.
Modern-day women are in a unique position. They have longer average life expectancies and typically have lower average lifetime earnings than men. And, while health care costs for men and women are similar during their lifetimes, it’s a fact that women tend to live two years longer than men. This means they will have more years to pay Medicare premiums and other out-of-pocket medical costs.
Other factors to take into consideration:
- Since husbands are often a few years older than their wives, many women may deplete much of their household assets to pay for the care of their spouse. After their spouse’s death, these women may spend their final years alone and with fewer assets.
- Rising divorces rates among older women may reduce available assets in retirement.
More Costs Ahead
Health care inflation and rising medical needs that are all part of aging translate into a stressful reality: Women face more years of health care expenses than men and with greater costs for each additional year of life.
- The report states that healthy women retiring this year at 65 (living to 89) can expect to spend more than $235,000 on health insurance premiums over the rest of their lifetimes, compared to men who are projected to spend $200,000. That figure includes Medicare Part B, which covers doctors’ visits, outpatient services, and Part D premiums for prescription drug coverage. It also considers Medicare supplement insurance and the assumption that health care costs will increase by about 6 percent annually.
- Add other out-of-pocket costs such as hearing, vision, and dental expenses, which are not covered by Medicare, and the total lifetime health care costs for women rises to $314,673, 17% higher than the total health care costs of $267,395 for men.
- An additional challenge will be meeting long-term care needs. According to the S. Department of Health and Human Services, 70% of people turning 65 will require some form of long-term care during their lifetime.
The numbers above are based on an assumption that a modified adjusted gross income for retirement is below $85,000 for individuals and $170,000 for married couples. These income figures would trigger high-income premium surcharges for both Medicare Parts B and D.
Plan to Prosper
The answer lies in understanding there is no gender equality in retirement. Therefore, the best way for women to live long and prosper is to plan ahead.
Knowledgeable investors should think strongly about self-directing their retirement plan and building a more diverse portfolio. Those who are already investing in alternative assets such as real estate, commodities, precious metals, or loans and mortgages may include these in a self-directed retirement plan and enjoy all the same tax advantages of regular IRAs. With Social Security at risk of disappearing and the stock market’s unpredictable returns, many people who are comfortable making their own investment decisions—and understand the ins and outs of nontraditional investments—can plan to prosper in their retirement years through self-direction.
At Next Generation Trust Services, our professionals are available to answer questions about self-directed retirement plans, and our transaction specialists are educated to ensure you are investing within IRS guidelines. Since we do not give investment advice, we strongly recommend you consult your trusted financial advisor about your investments and any tax implications for your unique situation. Contact us at 888.857.8058 or Info@NextGenerationTrust.com for more information, and read through our Starter Kits to open a new self-directed retirement account.