It’s safe to say that 2024 was a pretty unexpected year for many of us. As we turn the calendar and look forward to getting back to a bit of normalcy, some of us may start to make New Year’s resolutions.
So what’s on your 2025 to-do list? Is it to get healthier? Or to put yourself in a better financial position for retirement?
What if I told you that working on your health goal could help you with your retirement goal?
80 is the New 70
According to the World Bank, since 1960, the average life expectancy of people in the United States has increased from 70 years old to 77 years old in 2022.
According to the Social Security Administration (SSA), “About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.”2
This is great news, but it comes with a bit of an issue. Living longer means needing to pay for more things, like housing, utilities, food, and clothing. If you decide to retire at 65, that means there’s a 25% chance you’ll need to have at least 25 years of money for retirement stashed away.
Let’s do a quick exercise to figure out exactly how much that could be. The US median household income in 2015 according to the US Census Bureau was $55,775.3 Some financial advisors estimate that you’ll need about 70% of your annual income each year in retirement, which means a couple earning exactly the median income should aim for approximately $39,000 per year.
Now, multiply $39,000 over 25 years, and we get $975,000. And this is if we want to keep our current lifestyle. If you decide to travel more or buy a vacation home, you could be looking at upwards of $1.4 million or more.
Rising Costs of Healthcare
If you’re struggling to make ends meet and save enough for retirement now, you’re going to have to figure out how to cut out expenses down the road. So how do we do that so we can feel more secure and have more fun?
One of the biggest expenses people have as they age is healthcare. While the uninsured certainly have lots to lose by not staying healthy, the insured aren’t completely off the hook.
According to research from the Henry J. Kaiser Family Foundation, those with employer-sponsored healthcare plans have been shouldering more of the burden over the better part of the last two decades. On average, covered workers contributed $1,368 and $6,296 of the cost of family coverage.
While there may be hope that some of these costs will plateau at some point, nothing on the horizon tells us that they’ll be reduced any time soon.
Getting Active is a Method of Saving
One of the best ways to ensure you can enjoy many, many more years is to become healthier. First and most importantly, it’s crucial to consult your physician before you start any fitness regimen or diet.
But after your consultation, try to stay out of your doctor’s office for maladies that can be prevented. You’ll not only feel better, but you’ll stand a better chance of avoiding higher ticket health-related costs down the road.
In a recent study published in the Journal of the American Heart Association, researchers were able to put a dollar figure on what we spend and save relative to our physical activity levels and cardiovascular disease.
(“For cardiovascular health, the American Heart Association recommends at least 30 minutes of moderate-intensity aerobic activity five days a week, or at least 25 minutes of vigorous aerobic activity three days a week, or a combination of the two.”)
The study first looked at people who had cardiovascular disease already. What researchers found was that those who met exercise guidelines could save $2,500 over those who didn’t.
What’s more, people without heart disease could also stand to save money. Those with at most only one heart disease risk factor who exercised under the guidelines were found to save $500 a year over those in the same group who didn’t meet the exercise guidelines.
What does this mean for our average retired couple? Well, if both had heart disease and were staying active, they could save up to $5,000 per year, which is almost 13% of their annual retirement budget. This is not insignificant money we’re talking about here.
But even if both were healthy, they’re still saving at least $1,000 per year, which is enough for a great long weekend away and then some.
The best part? Many of the recommended activities are free. Fast walking, lawn mowing, and even “heavy cleaning” are all considered moderate forms of exercise, while vigorous activity would be actions such as running, race walking, lap swimming, or aerobics.
Next Steps
Talk to your doctor and assess your health risks. After this conversation, speak with your financial advisor. With this information, you can establish or refine your retirement plan based on your health assessment. It may also be a good idea to consider some long-term care insurance as well.
Now that the holidays have settled down and we’re getting back to our routines, it’s the perfect time to get proactive about your health and your finances. Who knew you could get two resolutions accomplished at once? Contact us today to get started.
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