A new study looking at people in retirement determines that retirees aren’t necessarily selecting to spend less in their golden years but are instead influenced by health and wealth issues. The Centre for Retirement Research at Boston College found that household consumption drops 0.7% to 0.8% each year on average during retirement when looking at data form 1992 to 2018 and 2001 to 2019.
For healthy and wealthy households, however, consumption decreases only 0.3% per year on average. What is important to note here is that this shows that this is not the true preferences of retirees but rather decisions they may be forced to make about their retirement or even possible estate plan strategies based on wealth and health constraints.
This study also identified that when it comes to sustaining a preferred level of consumption, Social Security plays a significant role. If it’s been a while since you checked in regarding your social security strategy or your estate plan, now is the perfect opportunity to revisit these plans.
One of the biggest possible threats to your retirement plan is the possibility of high expenses for long term care. Long term care might require a stay in a nursing home that will not be entirely covered by Medicare. Furthermore, you might not be able to immediately qualify for Medicaid services, and the shortfall requires out of pocket payment.
Together, your retirement plan and your estate plan help create a strategy for you to protect your own interests in the future and to make sure you can pass on wealth to your loved ones.
If you want to make sure these two things are connected well, contact a dedicated Pasadena estate planning lawyer today for a consultation about your needs.