The Retirement Finish Line


Many people still see retirement as some sort of finish line. Truth be told, it’s far more than that. Retirement is a rewarding time of life brimming with opportunities and newfound freedom. Forget budget cruises and rocking chairs on the porch; Americans are embracing a new kind of future. About one out of every three 65-year-olds today will live past age 90, and about one out of ten will live past age 95.1

It’s easy to daydream about your ideal future, but don’t forget: A goal without a plan is only a wish. Let’s explore some common retirement obstacles and strategies to overcome them — because it’s never too early to start preparing for your next stage of life.

Consider the Bigger Picture

People approaching retirement face many decisions: Where to live, how to stay engaged, how to stay fit, access to health care, and future sources of income. It’s easy to delay these decisions. However, if we fail to look ahead, we can leave ourselves vulnerable to unanticipated events like market volatility, an unforeseen tax liability, health challenges, or a financial emergency involving a child, parent, or spouse. People need to be able to pivot quickly, and planning provides the necessary flexibility to do so.

One of the big misconceptions of working adults is that they’ll spend less money after they retire. For most retirees, that simply isn't true.2 Spending in retirement often fluctuates. It helps to picture retirement as three separate phases: Early, middle, and late. Early spending tends to go up since you’re likely still active, eager to travel, and ready to start scratching items off your bucket list — without your usual salary to fund these activities.

In the middle phase of retirement, many retirees may prefer to eat in, stay local, and enjoy the comforts of home. Therefore, discretionary spending decreases. Perhaps you’ll decide to stop driving, further reducing expenses.

In the late years of retirement, people tend to settle down further. Managing existing health conditions, as well as new diagnoses, can lead to increased medical care and costs. While individual retiree spending patterns vary, healthcare expenditures consistently represent a significant portion of retiree spending.

The Elephant in the Waiting Room

If you walk away with only one lesson from this article, let it be this: Future healthcare costs may be the biggest obstacle in the way of your ideal future. The average healthy 65-year-old couple today will need a projected $363,946 for healthcare expenses during retirement.3

Yes, that sounds scary. But don’t wave the white flag just yet. There are plenty of strategies, both physical and financial, you can employ during your journey toward a fulfilling future. We’ll get into these shortly.

Other Considerations

Inflation. Benjamin Franklin once wrote, “in this world nothing can be said to be certain, except death and taxes.”4 While true, Mr. Franklin forgot a third certainty: inflation. During our working years, inflation is usually offset by increases in earnings; but in retirement, it can become a true thorn in the side. Particularly since most retirees are balancing some degree of fixed income with investment risk and the desire to maintain a standard of living. To maintain their vision, workers should account for inflation and consider properly managing inflation-protected sources of income.

Longevity. We’re living longer, and while that’s exciting, the possibility of outliving resources is real. Planning for the future can often feel like a guessing game. After all, how can you create a predictable stream of income for an unpredictable length of time? While it’s impossible to eliminate uncertainty entirely, you can work with your financial professional to review things like current health history, family history, and attitudes towards sacrifices that may be necessary. Sustainable withdrawal strategies can be calibrated to meet individual expectations. Tax efficiency, withdrawal rate, and portfolio composition should all be considered. A contingency fund can also be established and kept in reserve if needed to provide income in years beyond life expectancy.

Investments. As we’re all aware, there are countless challenges and opportunities associated with investing. Interest rates shift, the market keeps us guessing, and the timing of contributions and withdrawals can have a dramatic impact on portfolio performance. One of the few ways to mitigate market risk is to properly diversify your portfolio. This is a discussion best had with your financial professional, not the new guy at the office blathering about bitcoin.

Strategies to Be Well and Stay Well

As we touched on before, the biggest hurdle you may face in retirement could be healthcare costs, or more specifically, not having prepared for them during your working years.

There’s an important distinction at the core of retiree expenses that cannot be overlooked. You can downsize your home, you can cut down on travel and entertainment, but you can never eliminate healthcare costs. Quarterly Medicare premiums, supplemental health insurance premiums, high deductibles, copayments, non-reimbursed expenses, as well as out-of-pocket medications and supplies can’t be avoided. So, what can you do?

·       Consider tax-efficient strategies when going through the process of turning assets into income to ensure adequate resources are available, if needed, for healthcare costs later in life.

·       Optimize healthcare benefits by choosing the right plan. During retirement years, we no longer have an employer to lean on for healthcare information and support. Try to take ownership of your decision, doing your due diligence to make sure you get the plan that meets your needs.

·       Develop healthier habits today. It’s impossible to overstate the importance of adopting good habits before retirement for both your finances and your health. Doing so can put you in a better position to ensure your retirement years are your best years.

·       Consider lifetime income solutions to pad your retirement income. Many people will earmark assets to create an income stream to fund certain expenses like health care or housing. Be mindful of the gaps pensions or Social Security may leave open.

·       Consider all Social Security options. There is no single filing strategy that works for everyone. Each situation is unique and calls for a different approach. For spouses or those with ex-spouses, don’t forget to consider that spousal and survivor benefits may be available.

·       Know your family health history. Understanding the conditions that run in your family can give you a head start preparing for the unexpected. Check out this resource that shows common health challenges and how to address them.

Looking for a Retirement Plan?

Consider the AVMA Trust Association Retirement Plan. To learn more or schedule an appointment, call 888-310-7605 or email


1 Social Security Administration, Accessed February, 2019.

2 “Think You’ll Spend Less in Retirement? Think Again.” The Motley Fool, 2018.

3 “2018 Retirement Healthcare Costs Data Report,” HealthView Services, 2018.

4 National Constitution Center, 2018.

5 “This is the Real Reason Most Americans File for Bankruptcy,” CNBC, February 2019