Living Well If you only take away one thing from my newsletter, let it be this: You can't trust the government to take care of you.
Plenty of folks are nervous about coming changes. Uncertainty about health care reforms and fears that Republicans in Congress will cut programs like Social Security and Medicare are enough to keep anyone on edge.
And here's the truth...
Social Security is bankrupt. In 2004, the benefits paid out began exceeding the tax revenues brought in. Worse, no actual assets support Social Security. So the government must use current cash flow to fund future liability. Imagine telling your doctor you want health care today, but you'll pay him in 20 years.
The website for the Congressional Budget Office (essentially the government's accountants) will show you page after page of tables and graphs explaining how this will all work out OK.
But the bottom line is this: In 2018, Social Security had to use its trust fund to pay benefits – for the first time since 1982. By 2034, Social Security's fund will be depleted.
Here at Health & Wealth Bulletin, we try to stay out of politics. Our goal is to empower you to make the most of your retirement, regardless of what may or may not happen in the country. That's why today, we're going to cover a few of our favorite ways to make your money go further in retirement... so you can protect your nest egg and your future...
1. Avoid overspending. This simple technique can save your retirement. Just making a budget ahead of your retirement helps avoid the dangerous lure of overspending.
In fact, according to the Employee Benefit Research Institute, about half of all households spend more in the first two years of retirement than they did in the years before retiring. Worse, about 28% of folks spend 120% more, regardless of income level.
Before you retire, figure out how much you'll need to spend to maintain your current lifestyle (typically, that's about 80% of your current income level). Then figure out how much you'll have in income from retirement accounts, savings, and Social Security and how that will cover your bills. Create a monthly budget before you retire to help you make the most of your retirement.
Start with an easy calculator like this one from the Financial Industry Regulatory Authority.
And take advantage of catch-up contributions to IRAs, 401(k)s, and similar retirement accounts if you're 50 or older. Find out more right here.
2. Lower your medical bills. Most tests or procedures are ordered with enough time to allow you to compare prices. One of the best resources for this that we've found is something called Healthcare Bluebook.
Simply enter the test or procedure, along with your zip code. You'll find the range of costs in your area, along with what's considered the average fair price. You can use this to negotiate and ensure you aren't overpaying for your next test or procedure.
For example... In Baltimore, the average price of a colonoscopy with biopsy ranges anywhere from less than $1,500 to about $4,500. But the average fair price listed is $1,873.
3. Take advantage of guaranteed lifetime income through annuities. Annuities are a financial contract between you and an insurance company. In the simplest terms, you pay a large amount up front, then the company pays you back over the following years... either for a fixed number of years or until you die.
Annuity structures vary in so many aspects that people find them difficult to understand. Many have poor designs and high fees. And annuity sellers often use aggressive sales tactics because they want a commission.
But when used correctly, annuities are a powerful tool to help ensure a secure, comfortable retirement.
When you put a chunk of retirement money into an annuity with a guaranteed payout for life, you remove a lot of uncertainty about receiving steady payments every month.
Annuities aren't for everyone. And there are plenty of factors that anyone considering annuities needs to know.
Retirement Millionaire subscribers have access to my report on how to buy safe annuities – "The Little-Known Retirement Income Solution." If you're not a Retirement Millionaire subscriber, you can join here.
What are your tips for making the most of your money? Send them to [email protected].
What We're Reading...
- Something different: What makes pink Himalayan salt so expensive? (video)
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
June 6, 2019