A 67-year-old retiree with $1.8 million must rebuild their drawdown plan
A 67-year-old retiree with $1.8 million faces a challenge due to long-term-care premiums. The retiree’s portfolio generates $72,000 a year, and another $36,000 from Social Security, totaling $108,000 annually.
The long-term-care insurance premium of $7,200 per year can significantly impact the retiree’s finances over time. Over 25 years, the premium can balloon to $235,000, affecting the retiree’s discretionary income.
Rising long-term-care premiums, which can increase by 0-7% annually, can shrink the retiree’s income faster than their portfolio can grow. To mitigate this, setting aside a dedicated $300,000-$400,000 reserve in dividend-growth assets can help shield the main income stream from rate hikes.