Joe Anderson and Al Calpine emphasized the importance of intentional retirement planning to avoid sabotaging decades of savings. They encouraged having realistic expectations about retirement, accounting for market fluctuations, and making informed decisions. They also raised awareness of elder fraud, citing 88,000 victims over age 60 who lost $3.1 billion in 2022—an 84% increase from the previous year. Planning for lifestyle and purpose, not just finances, is essential for a happy retirement. Despite 55% of people expecting to work past 65, only 19% actually do, showing the gap between expectations and reality.

Financial Missteps and Buyer’s Remorse

Common financial missteps include buying RVs, dream homes, or boats without thorough research, often leading to buyer’s remorse. Joe and Alan advised visiting destinations multiple times and in different seasons before making major purchases. They also warned about overestimating investment returns, underestimating inflation, and overlooking medical expenses, which can all disrupt retirement plans.

Inflation and Investment Strategies

Inflation erodes purchasing power over time—$100 in 2000 equals about $180 today. Coffee prices have risen from $0.25 in 1970 to over $3 today, illustrating the need for investment strategies that outpace inflation. Joe and Al recommend maintaining a diversified portfolio that includes equities to grow wealth over time. They discussed sequence-of-return risk, which occurs when retirees withdraw funds during market downturns, and encouraged mitigating this with a diversified and flexible withdrawal strategy.

Required Minimum Distributions (RMDs)

Understanding RMD rules is critical. Depending on birth year, RMDs start at age 72, 73, or 75. RMDs must be taken separately from each 401(k) but can be aggregated for IRAs. Mistakes can lead to double taxation or higher tax brackets. Early planning, especially for large account balances, allows retirees to explore tax-saving strategies like Roth conversions.

Social Security Claiming Strategies

Claiming Social Security too early can reduce benefits permanently. Waiting until full retirement age (typically 67) or age 70 increases monthly payouts. Attendees were advised to consider their health, assets, and spousal needs when deciding when to claim. The gap between retiring at 62 and qualifying for Medicare at 65 was highlighted, as private insurance costs during this period can be significant.

Long-Term Care and Medical Expenses

Long-term care is expensive, with nursing home rooms averaging $10,000 per month. In high-cost areas like California and New York, it’s even more. Joe and Alan recommended ensuring enough capital is available to cover such costs, even without long-term care insurance. Planning for the financial needs of a surviving spouse is also crucial.

Estate Planning

Estate planning is often neglected, with half of Americans dying without a will or trust. This can result in assets going through probate and distribution being determined by state law. Joe and Al advised creating key documents: wills, trusts, durable powers of attorney, and healthcare directives. Ensuring beneficiary forms are up to date is also vital.

Retirement Lifestyle and Communication

Retirement isn’t just about money—it’s about how you spend your time. Unrealistic expectations, like spending every moment with a spouse, can cause friction. Jim from Solana Beach shared that having too much unstructured time led to challenges in his marriage. Joe and Alan encouraged developing hobbies, volunteering, or part-time work and having open discussions with partners to align retirement expectations.

Legacy and Investment Decisions

Kristen from Tacoma asked whether retirees should exit the stock market once they have enough money. Joe and Al explained that the answer depends on whether assets are intended for personal use or as a legacy for heirs. If the goal is to grow a legacy, staying invested makes sense. If not, capital preservation may be more appropriate. They advised aligning investment strategies with long-term goals, risk tolerance, and retirement objectives.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

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• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

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Elder Financial Abuse Elder financial abuse is a growing national problem, costing victims an estimated $2.6 billion annually. Shockingly, half of Americans over age 65 show signs of financial abuse, which can include unnecessary services, excessive fees, stolen checks, and even family members withdrawing money without consent. Ric emphasized the importance of adult children monitoring their parents’ finances, discussing estate planning, and obtaining power of attorney to safeguard against abuse. Five signs of financial abuse were outlined: unnecessary purchases, unexplained disappearance of money or possessions, unpaid bills, large withdrawals, and individuals exerting excessive control over elderly parents. If you suspect abuse, contact law enforcement, adult protection services, or the National Center for Elder Abuse.

Graduate School Debt and Career Planning The financial implications of graduate school debt can be staggering, and Ric cautioned parents against allowing their children to incur six-figure debt without understanding its long-term impact. He advised having serious career conversations with children to ensure their education aligns with future income potential and specialty areas that generate sufficient earnings. Strategies to minimize debt include scholarships, employer-sponsored education programs, and military service in exchange for tuition coverage. Ric stressed the importance of viewing education as an investment in a child’s future and evaluating whether the cost of the degree is justified by the career benefits.

Insurance Needs and Financial Protection Insurance is a cornerstone of financial planning, not for wealth creation but for financial protection. Ric outlined key types of insurance, including disability insurance to protect income, life insurance for dependents, auto insurance, health insurance, and long-term care insurance. Statistics show that one out of two Americans over 65 will need long-term care, with costs averaging $7,000 per month or $84,000 per year. Ric advised purchasing the minimum necessary insurance to cover potential losses and emphasized analyzing risks and financial implications.

401(k) Plans and Retirement Savings Dallas Salisbury, CEO of the Employee Benefit Research Institute (EBRI), shared insights on 401(k) plans, noting the average balance in the U.S. is $67,000, while individuals who have contributed for 30 years average just under $200,000. Ric and Dallas emphasized the need for early and consistent saving, highlighting the importance of educating individuals about saving at home, school, and the workplace. Automatic enrollment and contribution escalation in 401(k) plans were discussed as effective strategies to encourage saving, along with pre-diversified investment options to simplify decision-making. Ric stressed that saving for retirement is a personal responsibility, and individuals must actively choose to save to avoid financial shortfalls.

Consumer Behavior and Saving Challenges While many recognize the need to save, instant gratification and impulse buying often derail financial goals. Surveys show that most individuals could afford to save an extra $25 to $75 per week but fail to prioritize it due to lifestyle choices and advertising promoting immediate enjoyment. Ric and Dallas discussed initiatives like America Saves Week and Choose to Save campaigns, which aim to educate and motivate individuals to save for their financial future. Tools such as financial planning checkups and public service announcements were highlighted as resources to help individuals understand their financial situation and make informed decisions.

Medicare and Retiree Health Care Costs Medicare covers only 64% of health care costs for retirees, leaving individuals responsible for nearly 20% of expenses, with private insurance and government programs covering the rest. Ric warned that these out-of-pocket costs could amount to hundreds of thousands of dollars for retirees and their spouses, making it essential to factor health care costs into financial planning. Proper planning can prevent financial strain during retirement.

Market Volatility and Investment Strategy When it comes to setting sell orders on 401(k) retirement funds based on market predictions, Ric advised against this strategy. Timing the market is incredibly challenging, and short-term performance often has little impact on long-term investing success. He emphasized diversification as a protective measure against losses and warned against emotional reactions to market volatility, which can lead to poor financial decisions. Staying invested through market ups and downs generally leads to better outcomes than trying to predict and react to market swings.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

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