Contact Us:

670 Lafayette Ave, Brooklyn,
NY 11216

+1 800 966 4564
+1 800 9667 4558

Advice Only Retirement Financial Planning

The annual Retirement Confidence Survey consistently shows retirees’ expectations pre, and post-retirement may not always be realistic for specific areas of retirement planning. A realistic financial plan will consider all variables and any high-risk scenarios.

Being real with expenses

Expenses are one of the most disliked aspects of developing a financial plan. It’s almost impossible to determine the long-term sustainability of a financial plan without a clear idea of expenses. If you are interested in creative solutions to tackle the planning expense exercise check out our article on How To Budget a Sustainable Retirement.


Being real with inflation can be a difficult assumption to settle on right now. Inflation is the change in certain goods and services over a long period of time. It is important to remember that in the plan report, even a small change can radically change the course of your planning decision-making. Let’s not move too quickly and too dramatically. The truth is that inflation has averaged about 3% over the last 30 years; that remains a fair and realistic assumption despite the recent inflation increases due to the COVID pandemic and the Russian invasion of Ukraine. When it comes to financial planning assumptions, it is important not to create planning panic based on what may be a temporary peak in inflation when viewed in the grand scheme of things. Blowing up a plan based on what could be a short-term assumption may ultimately prove to be a less than fruitful exercise.  I advise watching how things play out over the next year or so and deciding if to change the long-term inflation assumption built into the plan. An example might be to move the inflation assumption from 3% to 3.5% over a 30-year period.

Being real with medical costs

The RCS reports that most retirees experience higher than expected medical costs once they formally retire. A big surprise for many retirees is the price fluctuations associated with Medicare Part B&D. Did you know there is an essentially tiered system for who pays what in Medicare premiums? The IRMAA (or Income Related Monthly Adjustment) is a surcharge added to Medicare Part B&D premiums determined by your past two years’ tax returns.

Because IRMA is based on income, including potential capital gains, you may pay more for Medicare than expected. Medicare planning can be a pitfall or planning opportunity depending on how far in advance you wrap your head around how it works in your particular situation.

Let’s say a couple plans to sell a primary residence in the same year they retire. Let’s assume they’ll have capital gains beyond the primary home exclusion of $500,000 (for a married couple). Suppose those gains are substantial and earned income in their final year is still reasonably high. The combination of higher income and capital gains could expose them to paying more for Medicare. An alternative strategy might be to delay selling the property until income drops a year later. It is important to note that certain life-changing events allow individuals to petition an IRMAA surcharge. Visit the Social Security website to learn more.

Being real with custodial care needs

This is a big one. If a plan for the long term has not been determined prior to retirement, the decision of having a long-term care insurance policy to cover a potential need may have already been decided. However, while some may have bought some time by not addressing the issue, no one is off the hook for coming up with a plan for long-term care (should it happen).

The average age for a claim has historically been around 80 years old, but it may be prudent to plan closer to age 84 (if it occurs). Unfortunately, even with a long-term care plan in place, it’s common to be sideswiped by this need, and it frequently affects individuals at inopportune times. It can lead to situations such as being forced to sell investment accounts in a down market or “fire sales” on an investment property. The ability to raise and maintain cash flow and expenses is an added stressor on top of an already troublesome period.

The time to repair the roof is when the sun is shining.

-John F. Kennedy

 Furthermore, what is going to be the strategy for paying? How realistic is it to have funds come from cash reserves, retirement accounts, or a property sale? That’s where insurance can play a role, but in many cases, it just makes sense to consider a reverse mortgage to reduce costs or tap into equity.

Retirees should keep in mind the statistics. says a substantial number of retirees will need custodial care at some point in their lives. The actual cost to pay for long-term care out of pocket can be reasonably determined from this resource.

These are often big numbers to most retirees, and they typically occur during a vulnerable period in people’s lives when individuals are on a fixed income.

No matter what, there ALWAYS needs to be a consideration and a well-rationed plan for long-term custodial care, even if insurance was not purchased or is unavailable. I’ve seen all kinds of creative ideas, and if you are interested in learning more, please read our article Prequalifying Yourself for Long Term Care.

Can I rely on Medicaid to pay?

First, be sure not to confuse Medicaid and Medicare. Medicare is not generally considered “custodial care.” On the other hand, Medicaid is a joint federal and state program to fund long-term custodial care needs for certain impoverished individuals. Furthermore, it is important to know that some Medicaid programs have unique names. The Medicaid program in your state can be found here.

Medicaid programs by state


Relying on Medicaid to pay for custodial care is probably not ideal and should ultimately not be a “Plan A” for the vast majority of retirees with functioning retirement plans. Being realistic about the viability of the utilization of these programs is of high importance. Medicaid is generally for those with little or no assets. It typically requires that individuals spend their assets down to a very small amount to qualify for the program. Some protections exist for surviving spouses, but it’s not generally realistic or desirable to consider Medicaid a practical solution for long-term custodial care needs for those retirees with functioning retirement plans. Furthermore, for the individuals who do qualify, the expectation is that the individual needing care will likely be required to go to a facility and will not generally receive ongoing long-term care in their home.

Being real with risk

Risk tolerance and, in turn, your withdrawal strategy are key areas of a financial plan that should require ongoing re-examination – but not necessarily a change. Sometimes I invite my clients to consider the “B.S. factor” of their plan assumptions. General awareness of your comfort levels with risk keeps the family unit on the same page. It foreshadows a potential contingency plan for a change when trouble arrives, not if or after it arrives. It’s part of having a “tactical” financial plan; trust me; you want some of that.

It’s called planning for a reason.

Your risk tolerance should probably stay relatively constant throughout retirement, with minor tweaks reducing risk over time. That’s the conventional wisdom anyway. But at times, individuals are presented with a “deer in the headlights” moment that I call “the long game” and the “short game” decision. In essence, this is the difference between what the plan generally says it wants to have happen compared to what the facts in front of you and what your gut is telling you. Don’t get this confused with short, medium, and long-term bucketing. What I mean is sometimes what you’re supposed to do long-term isn’t always what your gut says is the right thing to do this second – even with long-term money. I hope that phenomenon is crystal clear.

Obviously, the goal is to rectify the two impulses, but sometimes, it’s much easier said than done. Think of it as what the plan initially decided upon versus potentially “calling an audible” at the last minute or making a “game time” decision. It’s true; the general rule is to avoid changing things around all the time. I see plenty of people making bad decisions that way. Still, I am never afraid to tell my clients to make a personal choice in highly subjective situations – especially regarding market risk. Regret, I find, is worse than feeling you had no option to make a last-minute judgment call based on the best information you had at the time – it happens. But don’t overthink it! Whatever the decision, be sure you’ll be able to live with it, and it doesn’t cause the potential for a financial disaster. I say ALWAYS resist making a change to something that has the potential to disrupt an otherwise perfectly functioning financial plan. These may be situations where it makes sense to seek the guidance of a trusted advisor and make sure there is a rational decision-making process.

To learn more about developing a risk tolerance see our article 7 Steps To ‘Personalize’ Your Risk Tolerance.

Editor’s note: This blog offers informal investment and financial planning advice. We know nothing about your unique financial situation. The buying and selling of any financial product or security should only be considered in context. If appropriate, seek the counsel of experienced, ideally objective, financial, tax, or estate planning professionals. Past performance is not indicative of future performance.

Leave a comment

Your email address will not be published. Required fields are marked *