NEW YORK (MainStreet)—It's no wonder baby boomers worry about outliving their retirement savings. One out of four 65-year-olds today can expect to live past 90, and if they're married, one of every four will live even longer.

With 10,000 boomers turning 65 every day, it's a big worry for 26% of the U.S. population.

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Even if you plan to continue some kind of work post-retirement, it's imperative to plan ahead for the day you can't work.

"People deserve the freedom to make choices about how they'll spend their last 20 or 30 years especially if they've spent 45 years going to work every day," said Rao Garuda, president and CEO of Associated Concepts Agency, which specializes in seniors, high net worth business owners and professionals. "That's part of the American dream."

The average 65-year-old retires today with $500,000 to $1 million in assets, and while that might sound like a lot to a 20-year-old, it isn't. Garuda's tips for saving include:

  • 1. Save first then spend. Most people spend first then try to save what's left. The secret is to put saving first. "The people who save first will always be the people who are employing everyone else," Garuda says.
  • 2. Take advantage of tax-free savings. Taxes are the biggest expense anyone has. Besides federal, state, city and death taxes, there are 59 other different ways your money is taxed, according to Garuda. With tax-free compounding, a relatively small amount of money saved can yield huge returns years from now. "Planning can put Uncle Sam on hold for about two generations," he says.
  • 3. Decide how you'll manage risk. There is risk in everything. Those who simply choose to ignore risk do so at their own peril.
  • 4. Create tax-free income through Roth IRAs, life insurance, tax-free bonds and annuities. "An indexed life insurance policy protects your money while offering a lot of benefits," said Garuda.

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In 2040, 9.1 million will suffer from dementia, up from 3.8 million in 2010. The cost of care is expected to mushroom to a range from $379 billion to $511 billion in 2040, up from $159 billion to $215 billion in 2010, according to a study by RAND Corporation published in the New England Journal of Medicine.

"The biggest concern for boomers is living too long, or getting sick and running out of money," Garuda said.

Dementia causes memory and other faculties to decline. Sufferers become dependent on others for help with eating, bathing and other tasks of daily living. If these duties fall to a family member, that person may be forced to leave a paying job or neglect their own household duties or lives to care for an ailing parent.

With dementia cases and care costs set to double by 2040, LTC Financial Partners introduced a long term care solution for affected families. "With any or a combination of these solutions, Americans can breathe easier but they should remember to get protected while memory still serves," said Denise Gott, LTCFP's National Sales Manager.

LTCFP's solution consists of:

  • 1. Long-term care insurance to cover care expenses for disabilities including dementia.
  • 2. Reverse mortgages to provide funds for long-term care while remaining in one's own home.
  • 3. Life insurance policies with long-term care riders.
  • 4. Annuities that include integrated long-term care coverage.
  • 5. Critical illness insurance available for a variety of health issues including cancer, heart disease and dementia.

--Written by Juliette Fairley for MainStreet

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