Retirement Roadmap

The 10 Scariest Things About Retirement (And How to Face Them)

• Mark Fricks • Season 3 • Episode 12

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We examine the most common retirement fears that prevent people from planning effectively and offer practical solutions to address them.

• Running out of money tops the list of retirement concerns as people face longer lifespans without traditional pensions
• Healthcare costs average around $335,000 for a retired couple, with Medicare covering less than many expect
• Loss of identity and social isolation after leaving the workforce can lead to depression and accelerated health decline
• Creating purpose through volunteering, social activities and new interests helps maintain mental and physical health
• Longevity risk requires planning for potentially decades of retirement with inflation outpacing fixed income sources
• Fear of burdening family members can be addressed through proper long-term care planning
• Market volatility concerns can be managed through strategic "bucket" planning for different financial needs

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Have a topic or question you'd like Mark and Evan to address in a future episode? Email us at info@masterplanretire.com or call 770-980-9262.

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Evan Fricks:

What are the scariest things about retirement? Hey folks, thanks for joining us. Welcome to Retirement Roadmap with Master Plan Retirement Consultants. My name is Evan. With me, as always, retirement planner Mark Fricks. Today we're going to discuss the scariest things about retirement, things that keep people from facing their retirement plan, putting off planning, maybe even keeping folks from retiring when they may be able to. Mark, how big of a factor does fear play into a retirement planning?

Mark Fricks:

First of all, is this like, an early Halloween show?

Evan Fricks:

It's sort of halfway there.

Mark Fricks:

Yeah. So really, the folks that we talk to, the folks that we meet with, that's some of the first things that we ask: what worries you, what scares you, what bothers you about retirement? And I think it's very important that we touch on those items, because these are real, these are very common. Don't feel like you're the only one that's worried about this particular thing or that particular thing, but also we may bring up some things that you really hadn't thought about worrying about. So I don't know if that's good or bad, but there are solutions, and so you can't solve something until you face it and take a look at it and get to work on it. So that's what I think today's show is going to be really great, powerful, all that kind of good stuff.

Evan Fricks:

One of the first things we do with new folks who walk into the office is discuss hopes, dreams, fears, next six months, two years, five years and beyond. A lot of times we find that folks haven't really discussed them or thought about them with themselves or with their spouses.

Mark Fricks:

Well, and we also find that people that we don't work with so this would be maybe a friend from church or a neighbor or whatever and you start talking about this and then they start talking about I'm retiring or I have retired and it's like they ignored all of it. It's like they just turned on a switch. You've mentioned this before, just turn on a switch and just take off, head through retirement and hoping it all works out and hopefully it does. But there are so many things you can do to maximize the efficiency of your retirement assets and other things related to make sure that these issues, if they do, arise.

Mark Fricks:

And hey, we've been in a business now for 15 years Happy celebration coming up for us here shortly but so we've seen a lot, and even before that, I've been an advisor for 15 years before that, and so you see a lot of the common reoccurrences of the problems. But now we're beginning to see, as our clients age, that they are coming to fruition, some of them, and we're seeing that, hey, these tools are working, these tools are giving them peace of mind, and because we meet with our clients once or twice a year, we don't see them for a year or so, and then you can really see a change in their aging and things they're doing and how they're evolving into retirement. So, without getting too deep in the woods, this is a real subject. I hope this is helpful. In fact, I know it'll be helpful and don't ignore it. I think that's the whole point.

Evan Fricks:

Yeah, absolutely. Well, number one you alluded to it a little bit: running out of money. I mean, that's the big one. In retirement planning, one of the most common and legitimate fears is running out of money during retirement. If you haven't saved enough, or if unexpected expenses arise, or maybe even mismanaging your withdrawals, the thought of not having enough funds to last through your retirement years is terrifying. This fear is particularly strong with longer life expectancies, inflation, rising health care costs, tariffs, you name it.

Mark Fricks:

There's a lot going on right now, there really is, and I always relate this back to my grandfather and his retirement. I was probably, you know, 10 years old when he retired. So I can remember visiting my grandparents outside of Rome, Georgia.

Mark Fricks:

He worked for a mill and he worked there for 30 something years. He had a pension, a good, solid pension. He had social security. He wasn't in the market, you know, most people weren't in the market until the 401K came out and the IRA, and so his money was in CDs and savings, his house was paid for and he lived about seven years, and so none of these things Y ou just kind of went into retirement and hoped you lived long enough to enjoy it. And so today is so different. Like you said, we're living much longer. Because we're living longer, we have more health issues, and then the fact that, again, most pensions are gone and we have a lot of federal workers that we work with and listen to us, and so they have a great pension program, but most of us don't have that, and so that's something that's missing as well, and we're relying more on the market. Markets do what? Markets go up, markets go down, and so if you're trying to take money from a market, that's another area of worry.

Evan Fricks:

So it's all that coming together almost like a perfect storm. Another area of concern, I mentioned already: health care costs.

Mark Fricks:

One of the screens or PowerPoint slides we use when we teach is the difference between normal inflation and the inflation of health care. And inflation of health care is about two to two and a half percent faster than regular inflation. And so not only that, but you know folks have this misconception that, hey, I'll be on Medicare, everything's taken care of. Not so fast, my friend. As an example, one of the things it doesn't cover is it doesn't cover deductibles. It covers some of them, but not a lot of them. A lot of the newer drugs coming on board are priced at full price. Those aren't covered very much. There's just a lot of costs.

Mark Fricks:

But I think the one cost a lot of people don't think about is the premiums from Medicare, part B. Right, they start this year. They're around $185 a month per person. So if you're a couple, you know $380, give or take, and that goes up almost every year, anywhere from 1% to 4%, and so you can see those add up over the course of a year and years. If your income is higher, that premium is higher as well. So the latest study I saw and you can correct me if I'm a little bit off, but I think the average couple is expected to spend $335,000 in retirement on those types of costs.

Evan Fricks:

I was about to say the same thing. I thought it was around 300,000 plus, so that sounds pretty close.

Mark Fricks:

Yeah, and this is not including long-term care cost here. This is strictly medical cost. I've got my parents that are in their 90s and they're at the doctor every week and they're paying out-of-pocket co-pays and deductibles and things like that as well. If they're not at the doctor that week, it's a good week. But we're living longer, and then you get into things like Alzheimer's and things like that. That creates a nother issue that has exploded and so I'm not sure if we're gonna get into long-term care separately, but certainly health care costs. You've got to plan for those absolutely, and it's difficult to.

Evan Fricks:

You can't predict how much health care you're going to need in retirement or how long you're going to live. We'll talk about longevity risk as well, but that brings us to fear. Number three, deteriorating health. Aging brings health challenges, it just does, and the fear of facing serious health issues or physical decline without the employment or health insurance coverage; that's overwhelming for folks. The the potential for chronic conditions, especially loss of mobility, requiring assisted living...

Mark Fricks:

That can create anxiety about the future yeah, I think I'm gonna start keeping track of how many of our clients have had a knee replacement, a hip replacement, a shoulder replacement. It's almost automatic in your 60s or 70s, depending on your job, but also just depending on your lifestyle. Maybe if you played football younger or whatever, but this is almost a common occurrence. Now how many clients will tell me "oh, I've had both knees replaced, I'm so glad I did, but the cost of that is tremendous. Now, out of their pocket probably not a huge amount, but again it continues adding up and they have therapy. Again, I'm not trying to scare people or depress people or anything like that. I want us to be aware so we can plan for this type of thing. And you know, we see our clients over the years, as they come in, as they deteriorate, as they age, you know, and it's just, it's part of life. We're living longer, but it's certainly something that has to be planned for.

Evan Fricks:

I've said this in a recent episode as well, but on this topic: healthy living is a good financial investment.

Mark Fricks:

That's a good point. Yeah, you did talk about it a few episodes ago about taking care of yourself. Exercise, stretching, the right diet all of this keeping mentally active as well can make a huge difference and a lot of our clients, they retire, they start now, they have time.

Mark Fricks:

So, they'll start going to the gym and things like that. Some of the advantage programs will pay for a gym membership. So you know, find something like that. I know it's hard when I quit exercising to get back into it, but it's so important, it really is. Or play pickleball, that's blown up, absolutely.

Evan Fricks:

Fear number four: loss of identity. Now, many people associate their identity with their careers, especially in our Western society. That's culturally how we introduce ourselves most of the time in conversations. So when retirement hits, it's not only the daily work routine that changes, but also the loss of purpose, sense of self. The idea of no longer being that person who contributed to the workforce can lead to feelings of depression, anxiety, things like that.

Mark Fricks:

Yeah, if you've been saying for 30 something years "I'm an engineer or I'm a tech IT person or whatever, and all of a sudden you walk up and they say, what do you do?

Mark Fricks:

I'm retired, that doesn't really describe anything about you as opposed to my job.

Mark Fricks:

Now, my job is not my entire life, it doesn't tell you everything about me, but it's kind of a starting point and lets me know oh so you're in this field, you must have this education or be doing that or whatever. But it's hard for me to imagine saying I'm retired and you know, I've told my clients I don't really plan on ever retiring until I get chased off or don't know where I'm at or something like that. But I love what I do, but it is a big part of who I am and I spend a lot of time each week, you know, just like Evan, working with folks and doing what we do and learning something new every day, which keeps our mind active as well, and so it's hard for me to imagine that. Now some people are very proud to say I'm retired, but I bet they come back around to saying, well, what did you used to do, you know, and it kind of comes back to that. I've heard that many times as well, so I think that's a great point. I really do.

Evan Fricks:

Well, the next is related as well from leaving an employer in a social circle, that's, social isolation. Without the built-in social interaction of work, retirees feel lonely or disconnected. The fear of losing social ties, becoming isolated, is a real concern for many. The loss of coworkers as daily companions, along with friends or family members who are still working, can leave people feeling like they have fewer folks to rely on. And it's true. Our communities have become more and more limited to our employment and churches, things like that. But those are not built in necessarily. You have to go out and be active in those communities.

Mark Fricks:

Yeah, and you know, Evan, that's really changed since COVID as well. Now more people are working at home and so there's less of that. So I don't know what the effect of that is and we may not know the effect for a while, but hopefully people have learned to be involved in other places if you are working at home most of the time. But also I had this discussion with someone the other day and started reading up on it. Social gatherings have become less and less. Like a lot of our clients, either their friends have passed away or maybe even they've passed away. A lot of people aren't doing funerals anymore. They're doing maybe just six or eight or family members around a grave or whatever, as opposed to 200 people in a church or something. Even reunions I'm seeing less and less high school and college reunions happening. It's almost like people are less desiring to get together with other folks, and I'm not sure if that's because it became a habit? Maybe, I don't know, that'd make for a great theme paper or term paper or something, but that's happening as well. So I think you have to try even harder in retirement to get involved, and I have a lot of my clients and your clients tell us about volunteering I think that's a great thing because you do get that gratification or doing something where you make a little bit of money but still stay involved in more than one thing.

Mark Fricks:

I think it needs to be more than just one activity. Whether it be your neighborhood, some of these senior neighborhoods, they all become a group. I was just talking to a couple this morning and they sit on their front porch and just have neighbors walk back and forth, stop by, have a glass of wine with them, chat what's going on, just being social. And especially if you're single, if you're widowed or divorced and retired, that can be almost dangerous and you really need to make a conscious effort to get out there. So I do want to remind you real quickly of our website. Yes, just like most folks, we have a website, but it's more of a resource. It is a retirement resource. I hope you'll visit it, bookmark it, because there's always something new MasterPlanRetire. com. There are guides, there are checklists about retirement, there is information about upcoming classes, both in person, face-to-face, but also video, zoom-oriented type of thing. But also there's a little button that says schedule a meeting and you say, well, what's that for?

Mark Fricks:

Well, we do offer a complimentary consultation. It starts with a chat 30 minutes. Again, what Evan mentioned earlier your thoughts, your fears, your goals Some people have never thought about them before and then, based on that conversation, we will run a series of reports anywhere from six to nine reports to see where you're at now and how to get you where you want to be. And then we stress, test it what happens if taxes go up? What happens if your spouse predeceases you? All of these different categories, because if you don't again confront the problem, you can't have a solution for the problem. So we want to find out where that wound is, where that high blood pressure is, where that high cholesterol is, and treat it and have a plan for it. So again, masterplanretirecom, or give us a call at 770-980-9262, option two, if you can remember that or there is a nice phone tree that will guide you but that will give you a chance as well to schedule something with one of us.

Evan Fricks:

Absolutely. The previous two points, as well as this one, all circle around not having purpose or lacking purpose in one's life. This next fear is just right out of that same topic. It's boredom or, more importantly, lack of fulfillment. If you haven't planned your time carefully, retirement can quickly become monotonous. You might fear becoming bored, losing the motivation to stay active. We talked about health. Not having anything meaningful to do, period, Something to get you out of bed in the morning. Many people also worry they won't find new hobbies or passions to replace the ones that work used to provide, and we know when we don't have purpose. So many of these things are affected by something that simple your social circle, your depression, your health physical and emotional. Yeah, lack of fulfillment.

Mark Fricks:

And some of our clients we do see deteriorate quicker than others, and I think these are the clients that aren't doing what we're talking about today. I mean, we can actually see over the course after their retirement and you've heard this before that many folks pass away after retirement. There's a reason for that. It's not because they retired, it's because they didn't enter retirement with these thoughts in mind. So don't think I can't retire because I'm going to pass away. Just make sure that you shift and transition into that new phase appropriately and make sure that these things we've talked about today that you've taken into heart and really done something about them.

Evan Fricks:

Yeah, so previously, the very first fear we discussed was running out of money. Now, this next fear is a very specific way of running out of money, and that's outliving your savings, which is also known as longevity risk.

Mark Fricks:

Yes, and this is increasing every year. And as it increases, it not only and of course now we're talking, you know, if you're a couple, you know one of you is probably going to live to age 85 or 90, right, maybe both of you like again my parents but this is increasing almost every year. And not only are we having to have more years of money, but inflation always outpaces Social Security, it always outpaces pensions, so we're falling further and further behind, plus the health care costs increasing. All of this coming together and the fact the longer you live, the more likely you are to have additional health issues.

Mark Fricks:

So, you know, sometimes our clients jokingly say I'm going to live to age 85, and then you know I'm going to put a pillow over my face or something, and that's horrible, you know. But they, yeah, something like that or I don't know, let's not get into that today, but they say jokingly, but they're scared of aging. And again, if you've got this other stuff going on and you've got a circle of friends, then it does help all of this, even with, you know, when you have bad health, you know if you've got a neighbor that come by and check on you because you've created a social circle. They care about each other, you care about them, you take them a meal if they need it, all of this kind of circles around Sometimes it's a church organization or their volunteer organization where you become close to people that care about you and I think, again, that just comes back to all of this.

Evan Fricks:

But I think Evan and I have a very unique perspective on this, because we are seeing these folks every year to six months and we see some of them progressing much quicker than others. Yeah, the next fear is burdening family. So another common fear is becoming a financial burden on your children or other family members. You might worry about needing care or assistance in your later years, especially if you don't have long-term care insurance or the financial means to support your needs.

Mark Fricks:

Yeah. So a lot of our clients will make it very clear I do not want to be a burden on my children. You know, I want them to enjoy their lives. They're raising children. By the time I pass away, they may be close to retirement anyway. I don't want to be a burden. Now, some of them have a plan. They'll say, hey, we've already talked to my daughter. They have an in-law suite in the basement, they want us to come, they want us to be with the grandkids, all that kind of stuff.

Mark Fricks:

But the problem is is, if you get to a health point, to where they're having to actually take care of you on a daily basis or something like that, that can be really difficult because, as we've seen before a caregiver, the stress of taking care of a loved one, can actually reduce your lifetime, your life expectancy, and so, again, if it's a plan, that's great, but just be careful with this.

Mark Fricks:

Whether it be long-term care tools that we use that can actually double your income if you have a long-term care need, whether it be some other tools we use to make sure those are covered, even if you do end up wanting to move in or the kids want you to move in, you still want to be able to bring in outside help so that they are not hey, what if they've got kids in college and maybe a kid in high school and they're having to help take care of you? To me that's not fair. I would not want to do that to my children for sure. So I want to try to make sure I've got something lined up, but it's a real problem and issue and it's not going to go away.

Evan Fricks:

Yeah, the next fear is not being able to enjoy retirement. So some retirees feel that, despite saving for years, they won't be able to live the life they envisioned during retirement. You know, this could be due to a lot of things. We already discussed unexpected health issues, financial setbacks, or also maybe just realizing retirement isn't as fulfilling as they had hoped. On the financial aspect, one thing that you should do as soon as possible is set up an income plan. That way you know where your income's coming from and you can determine, okay, what actually is my quality of life quotient. Where am I on what I need and how much money I have and how far it can take me.

Mark Fricks:

Yeah, I can't tell you how many times that I'll be meeting with a client and I'll have to give them permission to spend money because we have a plan. They're not used to having a plan like this because when you're working you could lose your job or something like that. But in retirement we set up guaranteed income flows and so you know those aren't going away. So this other money that's designed just to be there, have permission to use it, and we talk about that. And I had somebody just the other day and they're fine, they have a great income plan, they have great guaranteed income sources. They're not going away. If one of them passes away, they continue on.

Mark Fricks:

So why not enjoy some of that money you worked so long for? Take that trip to Europe, take that cross-country RV trip, buy that Porsche I don't know what it might be, but seriously, and we talk about that and I try to give them permission because you know, a lot of the folks we work with have done a good job of saving. Why, how? They've been diligent. So now, all of a sudden, for them to start spending money is almost against their nature, and so we try to give them permission to do that, and how to do it and where to take it from.

Evan Fricks:

Right. The next fear, and we're experiencing this right now market volatility and economic uncertainty, and we're experiencing this right now, market volatility and economic uncertainty.

Mark Fricks:

Yeah, so I saw a great article the other day. It talked about the history of the stock market and how it showed we basically had a I think it was every bear market of correction we had. They occurred like every three to seven years. The average one only lasted nine months, and so you just have to kind of stick with it. That's why we have different what we call buckets of money. Some are going to be available that have a protected principle, so if the market's down, that's where you go for money. The other ones are going to be up and down at different times, but they try to work separately One's up in a good market, one's up in a bad market or whatever to make sure that there's always something available, because we're retirement planners and consultants and we're able to really make sure that our clients are never at a disadvantage, because you don't want to be down 20% when you're retired.

Mark Fricks:

We use a lot of different tools and so we don't get too many phone calls when the markets are bad. Out of our hundreds of clients, I've probably talked to three or four folks and even then they were like I know, I'm okay, I just want to hear your voice and know that we're prepared for this and I said yes because of this, that and the other. And so it's a different way of looking at money. If I'm 35, I let it run, but if I'm in my 50s or 60s or closer to retirement, you want to be set up appropriately for retirement, not for growth. Totally different plan.

Evan Fricks:

Absolutely, and everything we've discussed today are things that we do have conversations with our clients about, and they're ongoing conversations because, just as life has different phases, even retirement has different phases beginning, middle and pre-retirement, and your goals, your dreams, your fears they'll change throughout that process.

Mark Fricks:

So often they change. We'll have a client come in and it's all set up. They've been with us for five years and all of a sudden we've decided we want to move to Costa Rica. They had never talked about it before We've decided. Or this has happened, or now we have to raise a grandchild. There's so many things that can change, which is why our plans are definitely flexible. So really appreciate you guys being with us today. I hope you enjoyed this episode. There's more listed on the website masterplanretirecom. But until we see each other again, remember plan well and prosper. Take care. This was Retirement Roadmap Radio with Mark Fricks of Master Plan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretirecom or call 770-980-9262. Thanks for listening and remember plan well and prosper.

Disclosure:

All matters discussed during this show are for informational purposes only. Thanks for listening and remember plan well and prosper. Advisory services offered by MasterPlan Retirement Consultancy, a registered investment advisor in the state of Georgia. Mark Frick's and MasterPlan Retirement Consultants are not affiliated with or endorsed by the Social Security Administration or any other government agency.