Warning clients about the 'Ides' of retirement

Tom Foster

By Tom Foster
E. Thomas Foster Jr. is head of strategic relationships for retirement plans for MassMutual.
Posted on Aug 15, 2018

The Roman Emperor Julius Caesar once said, “Experience is the teacher of all things.”

Caesar’s experiences taught him some important life as well as end-of-life lessons, especially about the Ides of March. Like Caesar, most of us can learn not only from our own experiences but from the experiences of others.

Take retirees and pre-retirees. MassMutual studied their concerns about retirement and found some important lessons. For one, retirees say they are considerably less concerned than pre-retirees about their money lasting throughout retirement, according to the MassMutual Retirement Income Study.Retirees worry more about the financial and lifestyle implications of declining health.

Retirees, it seems, are confident that their retirement income will last as long as they live and that they will have enough money to meet their retirement lifestyle goals, with nine in 10 retirees saying they feel confident compared to roughly half of pre-retirees, the study finds. Pre-retirees worry most about having enough money to enjoy themselves, four times more than retirees (28 percent vs. 7 percent), who are most concerned about healthcare costs (29 percent).

Experience counts. As many retirees experience both the fun and fundamentals of aging – on one hand enjoying the time to pursue their favorite interests while on the other often dealing with the reality of declining health – they may have a better appreciation of how pre-retirees should prepare.

Overall, pre-retirees worry more than retirees about not having enough income in retirement (78 percent vs. 51 percent), changes in Social Security benefits (81 percent vs. 69 percent), and low interest rates hurting income (69 percent vs. 57 percent), the study finds. When asked if their retirement income would last as long as they live, 91 percent of retirees and 56 percent of pre-retirees answered affirmatively.

Retirees’ confidence may stem from finding they need less income than many pre-retirees anticipate, at least earlier in retirement. Overall, 44 percent of retirees find they need at least two-thirds or more of their pre-retirement income to live comfortably and a third of retirees report living on less than 50 percent of their pre-retirement income, according to the study.

What those findings seem to indicate is that many retirees can manage their expenses to lower income levels in retirement. However, the rising cost of healthcare and potentially long-term care may steadily reduce their lifestyles as they age.

Financial advisors, when discussing retirement income needs with clients, may be especially helpful by discussing projections for healthcare and long-term care costs for retirees. The projections are staggering and seem to show that many people may face bigger health challenges than they anticipate once retired.

The average 65-year-old couple could pay almost $490,000 in total health-related costs throughout retirement, according to HealthView Services, a software company that projects healthcare costs.2 The cost of a semi-private room in a nursing home is $235 per day or $7,148 per month, according to the Genworth 2017 Cost of Care Study.3

Meanwhile, day-to-day living expenses may be higher than what many pre-retirees expect. Seventy percent of pre-retirees anticipate spending less in retirement than they did in their working years, a proposition that does not always work out, the study finds. While half of retirees say they spend less, the rest find they spend about the same (41 percent) or more (8 percent).

Pre-retirees also are more inclined than retirees to say they wish they had started saving for retirement sooner. Eighty-four percent of pre-retirees would have started saving sooner compared to 55 percent of retirees, according to the study.

Pre-retirees and even retirees need to heed the lesson that their expenses in retirement, especially for healthcare and long-term care, may be higher than they anticipate, especially in the later years. Otherwise, the later years of retirement can bring unpleasant and difficult surprises.

“Et tu, retiree?”




1 MassMutual, "MassMutual Retirement Income Study," June 2018.

2 HealthView Services, "Why Plan for Retirement Health Care Costs?" July 11, 2017.        http://www.hvsfinancial.com/2017/07/11/why-plan-for-retirement-health-care-costs/

3 Genworth, “2017 Cost of Care Survey,” June 2017.