Money Monday with Brian Thomas and Nathan Bachrach





A new survey reveals the top 2 retirement concerns for pre-retirees: future healthcare costs… and changes to Social Security. So here's the Simply Money advice.

According to our number crunchers at Simply Money Advisors, the average 65-year-old couple will need about $350,000 for healthcare costs in retirement (this includes inflation and the assumption both will live into their 90s)

Knowing this number ahead of time can help you establish a plan to cover those costs (this is where a personalized financial plan helps!).

Saving in a Health Savings Account now can also help (if you're eligible) - money goes into this account tax-free, it grows tax-free, and you don't pay taxes on withdrawals if used for qualifed medical expenses

Even better, once you turn 65, unqualifed withdrawals don't come with a penalty and are only taxed at your income tax rate - basically turning your HSA into a defacto 401(k)

And don't forget about long-term care needs. It's estimated that 70% of people 65 and over will need some type of long-term care in their lifetime, and applying for insurance early will not only increase your likelihood of getting approved, but snagging a health-based discount on your premium costs.

As for Social Security, it's not "going broke." As long as there are current workers paying into the system, it can't go broke. The program is, however, facing a serious shortfall that, if left unaddressed, could slash benefits by up to 23% as early as 2034.

So don't go into retirement thinking Social Security will cover all your bills. The program is only designed to replace about 40% of your pre-retirement income. You need to be saving on your own as well - Social Security should just be one stream of retirement income.

How can you save more? Take advantage of catch-up contributions in your 401(k) and IRA once you turn 50… get a "side gig" now to bring in more income… try working longer, or working part-time in retirement (though that's not always possible, so that shouldn't be your "Plan A")


If you plan appropriately, healthcare costs and Social Security don't have to be a retirement concern for you.



#2: Personal finances

It's that time of year when freshly-minted college grads get released into the "real world!" (UC just had its graduation over the weekend; NKU's is this weekend; Miami and Xavier's are in a few weeks)… so Simply Money wants to share a few "money rules" that your new grad should start following:

Create a budget: OK, you'll probably get a few eye rolls with this one. But this is the build block for being financially smart and responsible. Help them figure out wants vs. needs and emphasize the importance of monitoring accounts. Simply Money has an easy rule to follow: 50/30/20 (50% of take-home pay to "needs;" 30% to "wants;" 20% to savings)

Yes, saving 20% is a lot… but that should be the ultimate goal. Work up towards it.

Save for emergencies… and for the future: So that 20% of savings should include saving in an emergency fund and saving for retirement. Emergency fund money can go in a simple savings account (want it to be easily accessible). If they have a job that offers a 401(k), make sure they're saving SOMETHING every paycheck... using a Roth 401(k) is even better (tax-free growth!)

No Roth 401(k)? Use a Roth IRA

Understand student loans payments: Remind your child that all those student loans they took out aren't free money. As part of the budgeting process, it’s a good idea to sit down and help them do the actual math of how they'll start paying off the debt. Consider figuring out how much they'll save by increasing monthly payments by different amounts.

Your child can treat the loan like a mortgage: pay more each month to reduce the principle; or make payments every two weeks rather than monthly

Credit cards are OK, as long as used responsibly: There is an entire industry trying to get your kids in debt, and KEEP them in debt. But credit cards aren't necessarily the most evil money tool of all time, assuming they're used properly. Using a credit card responsibly can help your child build a stronger credit score, which will serve them will as they go through life. Must dos: pay on time and in full, and use no more than 20% of credit on a monthly basis 


If your adult kids can get into responsible money habits NOW… they'll be better off down the road.