Retirement Planning

Senior Inflation is Increasing

Last Updated (Monday, 21 July 2008 09:55)
Written by Scott Slater

As you assess whether or not senior inflation is a topic that affects you, ask yourself these questions:

1. Are you a senior in perfect health?
2. Do you hate to travel?
3. Do like to live on very little food?
4. Are you a complete do-it-yourselfer?

If you answered yes to all of these questions, you should do just fine during retirement.  If however, you are like most of us, senior inflation can turn these into major concerns during retirement. Health costs, food, travel expenses, and day to day maintenance items are some of the major costs facing seniors in retirement. Food in the supermarkets has increased by 5.7% since last year, hospital services by 8.5%, nursing home care by 4.5%, and even funeral costs are up by 4.8% over last year.

Seniors should be very cautious when planning their retirements based on the published CPI index because it currently does not reflect what seniors are experiencing in retirement. To make matters worse, millions of baby boomers are beginning to enter into retirement.  This will add additional inflationary pressures on those goods and services that seniors need most.

Cost of living increases for pensions and social security are primarily based on the official CPI index and that index will not adequately keep seniors ahead of the costs that truly affect them. What is needed to keep seniors from experiencing problems later is to have an accurate and comprehensive plan that takes into account all the complexities that seniors will face. A good financial plan will give you a realistic view of what standard of living to expect during retirement, and how to minimize the devastating effect inflation has on seniors. “Senior inflation" should be of great concern, but professional planning and counseling can prevent a carefree retirement from turning into one of worry and stress.

Scott Slater is an Associate of Brock and Associates, LLC and specializes in meeting the unique needs of seniors through specialized retirement planning.

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Is Retirement Right For You?

Last Updated (Wednesday, 16 July 2008 15:35)
Written by Hank Brock

The Top Questions You Need To Ask Yourself About Retirement

Working beyond retirement age might appeal to you for a number of reasons. You will have ongoing socialization, an opportunity to keep mentally and physically active, and hopefully an escape from boredom.  It may give you a reason to get up in the morning. It exposes you to a mixed age group. And, of course, it can help supplement other income sources. Plus, it may help you feel like you are contributing to society in a meaningful way.

The down side, of course, is that you will probably have less time for leisure activities, a possible reduction in Social Security benefits, and the inability to plan vacations, travel, and family time at your convenience.  Weigh the advantages and disadvantages, and then ask yourself the following questions:

• Are you ready to retire?
• Have you prepared financially?
• Not only do you have enough dollars set aside, but are those dollars invested in a portfolio that will provide an inflation hedge as well as downside risk protection?
• Do you have an estate plan?
• Have you raised your children to be financially independent? Or, are they still coming home to siphon from mom and dad?
• Are you emotionally ready?

According to Dr. Thomas H. Holmes, retirement can be a major source of stress for many people.

• Have you prepared yourself mentally and emotionally to cope with these potential stressors?
• Has your spouse likewise prepared for the mental or emotional adjustment?

Dr. Thomas H. Holmes, at the University of Washington School of Medicine, has developed a scale to measure the psychological stress that may be caused by various changes in life circumstances. Dr. Holmes indicates an accumulation of 200 or more "life-change units" in a single year may be more disruptive than individuals can withstand, and make them susceptible to depression and other illnesses.

• How is your health?

Everyone has heard stories about workaholics who would take little relaxation, and then die when they had nothing to do. That is not uncommon, because of the stress factors and the lifestyle adjustment.

I remember well a CPA client whose wife was an author.  She needed quiet time at home during the day in order to write. When he retired, his constant presence drove her nuts!

• Have you and your spouse talked things over, and made provision for the amount of time together and the amount of time away from each other?

It is important to work out a schedule that meets both of your needs.

• Are your hobbies, interests, or part time job engaging enough that you feel you have purpose?

Don't expect to live a life of boredom, monotony, and lack of purpose, and then suddenly develop a purpose upon retirement. If you are a couch potato before retirement, you are not going to develop interests overnight.

Finally, try practicing retirement with your spouse. Develop a weekly schedule, and try living it. Imagine what you would be doing day in and day out. Try living on the amount of income that you would have at retirement. Evaluate your physical activities and your diet. Get involved in those activities which you might be pursuing after retirement. Start looking for a new residence, if you plan to move when you retire.  Work on developing social contacts outside your office environment.  Then, make the retirement decision that will work best for you.

Hank Brock is President of Brock and Associates, LLC and author of "Your Complete Guide to Money Happiness." Hank is an expert at making your retirement plan a success!

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