By: Laurie Edwards for Diabetes1
Why is retirement such a hot topic today? Consider these numbers. In 2030, when the first wave of baby-boomers hit the age of 84, the number of Americans over the age of 65 will have grown by a staggering 75 percent, to include some 69 million people. While more advanced technology means longer life spans, for progressive diseases like diabetes these long years could also entail enormous medical expenses.
Get Retirement Ready
Not sure about the state of your finances? Make an appointment with a financial advisor, who can help you take stock of your investments and assess your retirement readiness.
Know your numbers – and this means more than blood sugar or cholesterol. Keep track of all of your diabetes-related expenses so you have a realistic number to work with as you plan for retirement.
Confused about Social Security and disability insurance? The American Diabetes Association breaks it down for you here.
True, people with diabetes have many of the same financial concerns as the average healthy person: mortgages, living expenses, pensions, and savings accounts. But you also have the added cost of a disease that requires constant care and supplies, as well as the potential outcome of retiring early or losing wages because of diabetes-related health complications.
Remember that people with diabetes pay about $13,000 annually for health care costs, a figure that is 2.4 times higher than what people without diabetes pay. The good news is that there are many things people can do to be proactive about planning for retirement – and a lot of these tips are especially applicable to people with diabetes.
The Four Pillars of Retirement
In today’s market, the four essential components of retirement planning are Social Security, pension/savings account, earnings, and health insurance. Knowing this, try making a list of goals for your overall financial future, including retirement, home expenses, hobbies, employment, major purchases, and healthcare costs. Estimate the dollar amount you need to reach your goals, as well as how long you think it will take to reach them.
Next, create an inventory of important financial documents and their locations (try to give a copy to a family member or relative or keep it in a safety deposit box). After you’ve prepared all your financial statements and investments, assess your numbers in terms of your ability to meet your projected goals.
Experts estimate that to retire at 65, you need to have enough money to support yourself for 20 to 25 years – and they also estimate that 30 to 50 percent of aging boomers will have to work beyond 65 because they don’t have enough saved to do that.
What does this mean for people with diabetes? Considering the possibility that you may not be able to work well into your 60s and 70s if you have health complications, it means you can’t depend on your income now to provide for you later. The earlier you can bulk up your IRA and other personal retirement accounts, the better.
If you haven’t done so, you may want to look into the cost of acquiring long-term care coverage and familiarize yourself with the standards and requirements for Social Security Disability Insurance.
It turns out, the same things that doctors and specialists tell you are good for your diabetes – eating right, getting regular exercise, keeping up with routine examinations – can help you stave off excess expenses during retirement. For people with diabetes, the benefits are even more pronounced.
“Take care of yourself, because your portfolio will last longer,” said Mark Bass, a financial planner in Lubbock, Texas, in a USA Today article. Many of his clients are surprised by how much healthcare costs can take out of retirement savings. “A lot of folks think they'll be on Medicare and that will be it,” he said. “Medicare helps with a lot, but it won't cover everything by a long shot.”
This is especially true for type 2 diabetes, which is more common among older American. Its progression can be contained well through lifestyle choices like eating habits and exercise, thus reducing costs and complications.
The same article cited a statistic from Fidelity Investments that found that a couple retiring today will need $200,000 to cover health costs for a 15-year period. Prescription drugs represent around one-third of this number, and it does not include the costs of dental care, long-term care, or over-the-counter medicines. People with diabetes can safely assume their needs will be much higher, so whatever you can do in the present to both prepare for and prevent an even more expensive retirement is key.