“Retirement” – it’s a term we’ve redefined over the years. This phase of life differs greatly from what our grandparents experienced.

For most of us, retirement will be a time we replace working with living life.

Home improvement projects you’ve put off because of working long hours can now be tackled.

Trips you wanted to take but couldn’t because of work demands can now be taken.

That career you really wanted to pursue but didn’t because you needed a steady income can now be pursued.

Seeing your grandkids more is now feasible because you don’t have to work.

Volunteering for that organization you feel passionate about is now possible.

Retirement allows us to maximize our life … as long as we can afford it.

Looking at the longevity in your family history is a good indicator for how long you could live. While genetics is part of the equation, improvements in health care and living a healthy lifestyle are other factors to consider.

From your family history, you may find you could live 20+ years in retirement. That’s a long time!

When planning for retirement, segment it into three stages: active, moderately active, and nonactive. Another way to think of these stages are the “go-go” years, the “slow-go” years, and the “no-go” years.

To ensure you’re saving enough money for retirement, estimate how much you will need in these four areas: annual spending, major repairs/replacements, health care, and long-term care.

1- Annual spending

How much do you spend annually? If you don’t know, then it’ll be difficult to calculate if you are saving enough money for retirement.

Once you know how much you spend annually, then adjust that amount to include new activities during your active retirement years.

Most retirees tend to spend more money in their active retirement years with new hobbies and travel interests than they spent while working full-time.

2- Major repairs/replacements

During retirement, you may have large one-off expenses for major repairs or replacements. For example, you may need a new car.

If you plan to live in your home as long as possible, you may need a new roof or water heater. Your appliances may also need replacement during your retirement years.

If there is a change in your mobility, you may need to relocate your master bedroom to the main level or install a stair lift to assist with going up a staircase.

Creating a property maintenance schedule for your home will help you identify the timeframe and estimated cost for each major home repair or replacement.

3- Health care expenses

At age 65, you will be eligible for Medicare, however, it only covers 62% of estimated health care expenses.

Also, there are income thresholds for Medicare Part B and Part D resulting in a surcharge that increases premiums for those with higher income levels.

Based on a Fidelity Benefits Consulting study, the average cost for health care in retirement is approximately $5,238 annually. Depending on your lifestyle and genetics, this cost may be higher or lower.

If you retire before age 65, you’ll need to explore health care insurance options to bridge the period before you are eligible for Medicare.

4- Long-term care expenses

Long-term care (LTC) is not covered by Medicare and becomes necessary as we live longer. LTC includes home care, adult day care, and nursing home care.

It’s estimated 70 percent of those age 65 and older will need some long-term care in their lives. When care is needed, the average length of time is 2.2 years for men and 3.3 years for women.

LTC expenses average $41,400 per year based on a published LTC Cost research by Genworth Financial. Costs vary depending on the quality of the facility and where you live.

There are a lot of unknowns when planning for 20+ years in retirement. Segmenting your retirement years into three stages (active, moderately active, and nonactive) simplifies planning for this part of life.

As you move into your less active years in retirement, money used for entertainment and travel will shift to cover your health care and long-term care expenses. To ensure you can afford your retirement lifestyle, start the planning process early enough to allow time to adjust your saving strategy and expectations.


Niv Persaud, CFP®, CDFA™, RICP®, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing spending plans, comprehensive financial plans, divorce financial reviews, retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”