Prepare for the Top 4 Surprise Retirement Expenses
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Also in Your May Newsletter: A Detailed Look at Target Date Funds in Retirement
Even the best financial plans will encounter surprises. In past newsletters, we've discussed how to handle unexpected stock market moves and tax uncertainty. This month, we’re focusing on how to prepare for, and respond to, unexpected expenses in retirement. Unplanned costs can be challenging, even in good times. But when combined with market volatility, inflation, and growing concerns about whether your retirement savings will support your lifestyle, these surprise expenses can undermine the confidence of even the most well-prepared retiree. Read on to learn how we help clients prepare for and manage the most common unexpected costs in retirement. We’ll also introduce this month’s webinar, which takes an in-depth look at target date funds, exploring what they do well and where they may fall short in helping you plan for retirement. As a reminder, if there are other topics you’d like to see covered in a future newsletter or if we can help you implement any of these ideas in your financial plan, simply reply to this email, and we’ll be in touch. Regards, The Arnold & Mote Team Top 4 Surprise Expenses in Retirement
1) Home Expenses The Society of Actuaries found that unanticipated home repairs are retirees' single most common financial surprise. Accounting for realistic housing expenses from the start is important. Underestimating housing costs over decades of retirement can lead to faster-than-expected asset depletion, putting your long-term plan at risk. There’s also the challenge of knowing how to prepare for and pay for these unexpected costs when they arise.You’ll need accessible funds (not locked in annuities or other illiquid investments) and a tax-efficient strategy for withdrawals. You don’t want an unexpected tax bill to make a surprise expense even worse! 2) Uncovered Health Care Costs Health care in retirement is expected to be costly, but there are still surprises—especially if you venture outside Medigap plans. Prescription drugs are another source of unexpected expenses in retirement. That’s why it’s important to review your Part D plan each fall. We can walk you through the process during our fall meetings, or you can watch our webinar here where we show you how to compare Part D plans and choose the best option for your needs. 3) Long-Term Care Costs Depending on your retirement plan and level of assets, you have two options for handling potential long-term care costs. You can budget for anticipated expenses in your original retirement plan. Genworth offers a helpful study to estimate your potential costs based on your location and level of care required. Or, you can consider long-term care insurance. Though it can be expensive, long-term care insurance can help turn a large, unpredictable expense later in life into a manageable, predictable cost you can plan for. Even if insurance is the right option for you, you’ll still need to sort through the different types of long-term care policies to find the one that fits your needs. We have a short video highlighting the differences between two types of long-term care insurance here. This is also a topic we’ll explore with you in detail before you make any decisions. 4) Family in Need It can be difficult to balance the desire to help family or friends with the need to protect your financial plan. A study by Bankrate shows that nearly 1 in 3 adults have made significant sacrifices to their retirement in order to help loved ones. We help clients in this situation in two ways: First, we can run a retirement guardrail analysis to help identify how much you can give without putting your plan at risk. At a minimum, you should understand how a gift affects your sustainable withdrawal rate or overall plan strength. Second, we can help determine the best, most tax-efficient, way to give. Whether you're helping with college costs, medical bills, or other unexpected needs, there are many ways to give—each with different effects on your financial plan and tax situation. May Webinar: A Detailed Look at Target Date Funds This month’s webinar, hosted by advisor Chad Gammon, dives into one of the most widely used investment tools in retirement planning today—Target Date Funds (TDFs). These "set-it-and-forget-it" funds have grown rapidly in popularity, but are they the best choice for every investor? We’ll explore how TDFs work, who uses them most, and the strengths and weaknesses of their preset glide paths. We’ll use real fund comparisons and allocation data from leading providers like Schwab, Vanguard, and Fidelity to demonstrate how these funds gradually shift from stocks to bonds as you near retirement. We'll also explore what that shift means for your portfolio’s risk and return. In this session, we’ll answer key questions like:
Whether you’re decades away from retirement or already drawing from your accounts, this webinar will help you assess whether target date funds align with your goals, timeline, and desired level of engagement. Join us for the live broadcast at noon Central Time on Friday, May 30th, streamed on our YouTube channel here:
Want a reminder before we go live? Click the button above and subscribe to our channel to be notified as the webinar begins: If you can't attend live, a replay of the webinar will be accessible immediately after and available alongside recordings of all previous webinars on our YouTube channel. If there are questions you'd like to have answered, simply reply to this email and let us know! Last Month's Webinar RecordingIf you missed last month's webinar, here is the recording of "Buy the Winner, Sell the Losers? - Impacts of Trying to Time the Market" From the Blog: QLAC Annuities — For Tax Deferral and Longevity Protection As with all insurance-based financial products, it’s important to carefully consider the long-term consequences before purchasing. In this article, we briefly cover the basics of QLACs, their key benefits, and some potential drawbacks.
Arnold & Mote Featured in the Press Yahoo Finance: 5 Common Retirement Missteps We were interviewed for this Yahoo Finance article about common mistakes retirees make in financial planning. Our contribution highlights long-term tax planning and the risks of deferring taxes for too long.
See our other recent press mentions on our Press Page.
Looking for Something From a Prior Newsletter?As a reminder, you can now find the last 12 months of our newsletters here:
Whether you’re new and want to browse newsletters you missed or are trying to follow up on a topic from a few months ago, we’re now publishing all newsletters at the link above. We'll also keep this link at the bottom of all future newsletters.
Quinn and the Arnold & Mote Wealth Management Team (319) 393-4020 Contact Us | Blog | arnoldmotewealthmanagement.com Facebook | LinkedIn | YouTube You are receiving this newsletter because we've talked with you in the past about financial planning and wealth management. Privacy Policy The information herein was obtained from various sources. Arnold & Mote Wealth Management does not guarantee the accuracy or completeness of such information provided by third parties. The information given is as of the date indicated and believed to be reliable. Arnold & Mote Wealth Management assumes no obligation to update this information, or to advise on further developments relating to it. This is for informational purposes only. Investing may involve risk including loss of principal. Past performance is no guarantee of future results. |