Other Retirement Facts:
Mind the gap! Just like when you walk onto a subway car, you want to pay attention to where you’re going. To make sure you don’t trip up on your financial plan, we talk through four areas you need to pay attention to on today’s show. Have you planned for these scenarios?
Watch out for the paycheck gap. After you stop working, you’ll still need income. It’s important to understand how a monthly income will fit into your plan. You can’t just see the total sum of your savings and assume you have enough. Know where your money will come from every month moving forward.
If you retire early, make sure to mind the Social Security gap and the Medicare gap. How will you bridge that gap until you can withdraw from Social Security? And what will you do to cover insurance during this time? Health insurance is extremely costly. Five to ten years of paying medical premiums out of your pocket is a big expense. It’s great to have the option to retire early, but you have to make sure your insurance is covered during that time.
The inflation gap used to be forgotten, but right now it’s making itself known. Inflation is one of the bigger concerns you have to understand and plan for in retirement. Everything moves in cycles, from markets to interest rates, and inflation does the same thing. What’s your plan to hedge against that?
There are all sorts of misunderstandings when it comes to long-term care. Phil approaches planning with his clients by stress-testing the “what if?” Getting that gap covered can save you from leaving your spouse in bad shape. Don’t put off deciding whether or not you need long-term care insurance. When you need it, it’s too late. Think through the costs of long-term care and how you would cover them if needed.
Unfortunately, the reality is, there will be a surviving spouse after one passes away for some period of time. You have to consider the widow or widower’s gap. Think about how the income will change. Taxes will also change as you go from married filing joint to filing single. This is a huge change financially, not to mention amidst an emotional time. It’s best to take care of these things and plan for them ahead of time so that it’s not as jarring of a transition financially.
Listen to the entire episode or skip ahead using the timestamps below.
[0:32] – What inspired today’s podcast?
[1:25] – What’s the paycheck gap?
[3:35] – What challenges would you face when retiring early?
[8:22] – The inflation gap is apparent right now.
[10:22] – What’s the long-term care gap?
[13:15] – How do you cover the widow gap?
A Quotable Moment:
“You can’t just look at the big number and say, “I’ve got enough!” How do you make that work? Where’s it coming from, physically?”
-Phil Putney