Now is the time to create a Retirement Survival Plan. Don’t be at the mercy of the government for any portion of your retirement income or health care. Assumptions can be dangerous. Planning your financial and healthcare future on assumptions that a provision promised today will be there tomorrow is not only dangerous, it is down right nuts!
“The nation’s governors face a daunting $555 billion in unfunded liabilities to finance retiree health coverage.” (The New York Times)
“Massachusetts’ largest 50 cities and towns will owe $20 billion to pay for their public workers’ health care, an “exploding” cost that could force them to cut services taxpayers need, a new study said on Tuesday” (Reuters)
State and local governments are cutting health benefits and pension plans for retirees because they can’t pay for them anymore. The NYT article states that expenses are rising by 20% of more in some states. Let this be a retirement planning lesson for all of us.
“Over all, the Center for State and Local Government Excellence found that 68 percent of city and county officials surveyed said they were pushing to have retirees assume more of their health costs, while 39 percent said they had eliminated or planned to eliminate retiree health benefits for new hires.” (The New York Times)
This is exactly what happens when a foolish promise is made by politicians to extend unfunded benefits to non-payers. The writing is on the wall and yet the Federal Government is attempting to extend benefits to one portion of the population by cutting the benefits to another potion of the population and mandating that individual states pick up the difference. There is one problem with this ‘brilliant’ idea. State and local governments are broke. The unions can scream “gimme gimme gimme” until they are red in the face as the age of entitlement quickly comes to an end and unions fall into irrelevancy.
Like the flu, some of the worst ideas of the last 60 years have finally run their course. The problem is that more bad ideas, like PPACA (Obamacare) have arrived to replace them. Lately, the American public has woken up to the fact that Big Government causes more problems than it solves but, Big Government is in denial.
When we retire, most of us will be on a ‘fixed’ income. How much of that income will come from the Government? What if the government decides to cut your income or health benefits? A comfortable retirement can be transformed into a nightmare with a single piece of legislation.
A wise man once said to me, “Hope for the best and prepare for the worst”.
Retirement Survival Plan of Action:
A Retirement Survival plan consists of two main components;
- HealthCare: This includes Medicare, Medigap, and Long Term Care insurance
- Income: This includes plans that provide income to pay living expenses in retirement years. This also includes survivorship plans to provide for anyone who may depend on your income.
Your retirement plan must include contingency plans. Retirement planning is about layering and preparing for both the expected and the unexpected. There is no question that we all need long term care insurance and a lifetime income plan to pay living expenses. If today’s events tell you anything, it is the following fact; It’s NOT the government’s responsibility to take care of us (regardless of things promised).
If you depend on the government to provide for you, be prepared to lose those provisions.
Do you really want to be at the mercy of Big Government?