Planning for Retirement with Increasing Longevity

The Longevity Challenge: Rethinking Retirement for a Longer Life

Thanks to advances in medicine and technology, people are living longer than ever before. While a long life is a wonderful gift, it presents a significant financial challenge that is changing the very nature of retirement and asset protection planning. The justifiable fear for many seniors is running out of money, a risk that grows with each passing year.

The New Retirement Reality: The High Cost of a Long Life

Increased longevity directly impacts the two biggest financial concerns for seniors: outliving their savings and affording long-term care.

Women, in particular, are at high risk, as they tend to outlive men and are more likely to require care outside the home. The costs are staggering; in the Raleigh area, assisted living can range from $4,000 to $8,000 per month, while nursing facility care often exceeds $9,000 per month. Since health insurance does not cover these expenses, a long-term care crisis can consume a family’s life savings, costing hundreds of thousands of dollars out of pocket. This financial pressure is why understanding how to access programs like Medicaid, North Carolina’s Special Assistance, and the VA Pension benefit is a critical part of modern planning.

The Ripple Effect: A Challenge for Younger Generations

The financial strain of a longer retirement also affects younger generations. Today’s young adults face a difficult economic landscape, with stagnant wages and the uncertainty of future Social Security benefits. Many will need to work longer than their parents to afford a comfortable retirement. Furthermore, many find themselves in the “sandwich generation,” simultaneously raising their own children while providing financial support for aging parents.

A Multi-Generational Solution

For seniors who are financially secure, one of the most powerful gifts they can give their grandchildren is a head start on their own retirement savings. Helping a young person start saving early is often more impactful than an education fund. The best time to contribute to a Roth IRA is at the beginning of a career when their tax bracket is low, but this is also when they can least afford it.

However, it is crucial that these gifts are made strategically. Improper gifting can jeopardize your own future eligibility for long-term care benefits. Any significant financial support for younger generations should be done as part of a thoughtful multi-generational estate plan that protects you first.

Call our office at (919) 256-7000 to schedule a consultation.