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Why You Need a Retirement Income Analysis Part 1

Why You Need a Retirement Income Analysis Part 1

Why You Need a Retirement Income Analysis Part 1

When your parents retired, they probably counted on substantial outside income to fund their golden years, including Social Se-curity benefits and a corporate pension plan that also may have provided health benefits to retirees. While Social Security remains a crucial part of a retirement plan, pensions are dwindling and becoming a part of the Ameri-can landscape of the past.

Instead, the responsibility for funding retire-ment is moving to the individual. Although there are a wide range of excellent ways to save — including 401(k)s, IRAs, annuities and more — many individuals find themselves questioning if they will ever be able to retire. 

The key to a confident retirement today 

is twofold: KNOWLEDGE AND ACTION. Knowledge begins with a clear understand-ing of your financial picture, knowing where you’re starting from and identifying your unique retirement goals. It’s also important to grasp the challenges you might face during retirement. You take action when you begin making steps toward your goals and as well as being prepared to overcome the challeng-es that threaten to derail them.

It’s time to face the truth: the days of relying solely on Social Security and pensions to fund your retirement are over. As financial professionals, it’s our job to provide a strate-gy that helps ensure your hard-earned money is there to meet your plans. Over the next several months, I’ll offer important strategies in this article series, covering both what you need to know and the action you should con-sider taking to be ready for retirement. 

The Impact of Living Longer

Americans are living longer. On average, men who have reached age 65 can expect to live until age 84.3, while females will live an average of 86.7 years. About 25 percent of today’s 65-year-olds will live past age 90 and 10 percent will pass age 95! [1]

Advancements in medical technology, better fitness and nutrition, and access to vaccines 

and medicines have all played a role in add-ing years to our lives. Older Americans are also putting more life in those years; more retirees enjoy active lifestyles than ever before, counting travel, exercise, gardening and other physical activities among their hobbies. [2]

Living longer is a good thing Of course. It also means you need income that will cover all you hope and dream of doing during those additional years. While many retirees eliminate some of the costs from their working years, living an active lifestyle often creates new family budget expenses.

Challenges Unique to Women

Women, in particular, face challenges in cre-ating income that spans retirement. Women are more likely to live alone in their later years. [3] Despite an increased presence in the workforce, the average woman working full-time still earns 80.5 percent of the income earned by her male counterpart. [4] 

Studies show women are also more likely 

to take time off to provide caregiving roles to children, aging parents or disabled family members. Since Social Security benefits are calculated based on working years and sala-ry, many women have reduced benefits.


Living longer doesn’t necessarily mean we’re living better. Chronic disease affects approx-imately 80 percent of older adults,[5] and for many people, health care is one of the largest expenses they’ll face in retirement years.[6]  

In 1960, the average person spent just $146 on health care annually. In 2018, that number had ballooned to $11,172! [7] Adjusted for inflation, healthcare costs are now about ten times higher than they were in 1960. 

Consider this: An average 65-year-old retired couple in 2019 may need over $280,000 to cover health care expenses in retirement.[8] That number includes things like insurance premiums, out-of-pocket expenses and pre-scriptions, but excludes long-term care. 

Those who wait until age 65 to retire may have access to extended health care benefits through their employer, while people who retire at age 62 will need to cover insurance premiums out of pocket until they are eligible for Medicare at age 65. These are important factors to consider as you approach retire-ment.

In our next article, we’ll look at the implica-tions of long-term care on retirement plans.

If you need help planning your retirement, contact us today to schedule a free income analysis. We’ll help you determine if you have 

enough to retire comfortably, when you can retire and help you put all the pieces of your retirement plan in place. 

This content is provided for informational purposes only and is not intended to serve as the basis for financial decisions. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guar-anteed.

  1. Social Security. “Benefits Planner | Life Expec-tancy.” https://www.ssa.gov/planners/lifeexpec- tancy.html. Accessed July 9, 2018.
  2. Phil Taylor. U.S. News & World Report. March 30, 2018. “25 Things To Do When You Retire.” https://money.usnews.com/money/retirement/baby-boomers/articles/2018-03-30/25-things-to-do-when-you-retire. Accessed July 5, 2018.
  3. Administration on Aging, U.S. Department of Health & Human Services. “A Profile of Older Americans: 2016.” https://www.giaging.org/documents/A_Profile_of_Old-er_Americans__ 2016.pdf. Accessed July 6, 2018.
  4. U.S. Census Bureau, Historical Income Tables Table P-40: Women’s Earnings as a Percentage of Men’s Earnings by Race and Hispanic Origin, 2016. https://www.census. gov/data/tables/time-series/demo/income-poverty/historical-in come-people.html. Accessed July 5, 2018.
  5. Center for Disease Control & Prevention. Page 116. “Life expectancy at birth, at 65 years of age, and at 75 years of age, by race and sex: United States, selected years 1900-2015.” https://www.cdc.gov/nchs/data/hus/hus16.pdf. Accessed Aug. 6, 2018.
  6. National Council on Aging. “Healthy Aging Fact Sheet.” https://www.ncoa.org/wp-content/  uploads/2018-Healthy-Aging-Fact-Sheet.pdf. Accessed July 6, 2018.
  7. Centers for Medicare & Medicaid Services. “NHE Fact Sheet.” https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthex-penddata/nhe-fact-sheet.html. Accessed July 9, 2018.
  8. Centers for Medicare & Medicaid Services.https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/National HealthAccountsHistorical

Investment Advisory services offered through Game Plan Advisors, Inc., a registered investment advisor. Insurance services offered through Wootton Financial Group, Inc. Game Plan Advisors, Inc. and Wootton Financial Group, Inc. are affiliated through common ownership. Neither Game Plan Advisors, Inc nor Wootton Financial Group, Inc. offer legal or tax advice. Please consult the appro-priate professional regarding your individual circumstance. Not associated with or endorsed by the Social Security Administration or any other government agency.
Please consider the investment objectives, risks, charges, and expenses carefully before investing in Variable Annuities. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from the insurance company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
The investment return and principal value of the variable annuity investment options are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions. The principal may be worth more or less than the original amount invested when the annuity is surrendered.
Fixed Annuities are long term insurance contacts and there is a surrender charge imposed generally during the first
5 to 7 years that you own the annuity contract. Withdrawals prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. With-drawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty.  Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated.

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