Nearing Retirement

How to Plan for Financial Pressures Facing Retirees

Retirement is a time for pursuing your passions, reaping the fruits of your life’s work, and making the most out of life. But there are many financial pressures facing those planning to retire in the coming months and years.

Maximize Your Social Security Benefit

For social security, having a strategy is essential for maximizing the benefit. Some ways to get the best benefit include:

Keep an Eye on Your Pension
If you were promised a pension, congratulations! But some people may experience a freeze, where employers will no longer provide pension credit for future years of work.

If this is your situation, talk to your company’s human resources department to help calculate what your new payments will look like. Ask if they offer anything to help compensate for the money you weren’t putting away in retirement (for example, a buyout option).

Health Care Costs Are Rising
Most people have a greater need for health care as they age—and it can get expensive quickly. In fact, it’s one of the largest expenses you’ll need to consider during retirement.

In general, health care is only getting more expensive. As baby boomers age, the number of Americans ages 65 and over is growing dramatically and this rise in demand will drive up healthcare costs. The Centers for Medicare and Medicaid Services projects that healthcare costs will rise to an average of 5.4% every year until 2028.1

In addition, people who reach age 65 are likely to live longer than ever before — in fact, about six years longer than their grandparents on average — prolonging the time that they require medical care.2

Healthcare needs arise whether we like it or not, but you can prepare yourself.

Open an HSA Account
If you’re on a high-deductible health insurance plan, consider opening a Health Savings Account (HSA). HSAs offer unrivaled tax efficiencies. They allow you to contribute pre-tax dollars that can be used towards current or future medical expenses. The money in the account carries over every year—even after you retire. After a certain threshold, the pre-tax dollars in the account can be invested in securities, and essentially serve as another IRA.

Look into Tax Deductions
You may be able to itemize your tax deduction and deduct unreimbursed medical expenses on your tax return. This strategy usually works best for people who require a lot of expensive healthcare services.

You May Need to Financially Support Others
Many people don’t just need to support themselves during retirement, but others, too. Whether you’re helping an adult child who needs support, aging parents who aren’t self-sufficient, a family member in need, or a combination of these, caring for those that rely on you can impact your retirement. Have conversations with your loved ones now—even if it’s uncomfortable. Gathering documentation and developing a plan while your loved ones are still healthy will better prepare you to care for them later.

With the Right Plan, You Can be Confident in Your Retirement
At first glance, these pressures on your retirement may seem overwhelming. But no obstacle is insurmountable, especially if you have the right plan on your side. With a comprehensive retirement plan, you can enter this exciting phase of your life armed with the resources you need to thrive.

If you have questions about your retirement plan or need help solidifying your plan, talk to a financial professional.

1. “National Health Expenditure Fact Sheet.” Centers for Medicare and Medicaid Services, 2020. December 16. Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet.
2. Zuo, Wenyun, Sha Jiang, Zhen Guo, Marcus W. Feldman, and Shripad Tuljapurkar. “Advancing Front of Old-Age Human Survival.” PNAS 115 (44), 2018. doi: