The Real Cost of Not Having a Financial Plan
At Gates Pass Advisors, we meet many couples in their 50s and 60s who have saved diligently yet still feel uncertain about retirement. And it’s no wonder. Without a comprehensive financial plan, it’s difficult to know whether your savings will last, how to minimize taxes, or how to cover rising healthcare costs.
The truth is, not having a financial plan isn’t just risky — it can cost you hundreds of thousands of dollars over your retirement. Let’s break down how.
1. Outliving Your Money During Retirement
Without a clear plan, you might underestimate how long your money needs to last. Life expectancy continues to rise — many couples today will have at least one partner live into their 90s.
Risk: Outliving your savings.
Example: A couple needs $120,000/year in retirement. With $1,500,000 saved and no strategy in place, they could run out of money in as little as 10-12 years.
Impact: Loss of lifestyle, dependence on children or government programs.
2. Social Security Mistakes
When and how you claim Social Security can be one of the most important financial decisions you make. Yet many people claim too early, often out of fear or misinformation.
- Claiming at 62: ~$2,200/month
- Claiming at 70: ~$3,800/month
- Lifetime Difference (if living into your 80s): Over $230,000 in lost benefits for a couple.
3. Higher Taxes in Retirement
Your tax situation doesn’t end when your paycheck does. In fact, without a tax strategy, you could pay far more in retirement taxes than necessary.
Risks:
- Required Minimum Distributions (RMDs) pushing you into a higher tax bracket
- Higher taxable income increases Medicare premiums
- Missed opportunities for Roth conversions or tax-efficient withdrawals
Example: A couple entering retirement with $1 million in tax-deferred savings (such as a traditional IRA or 401(k)) may end up paying $250,000 to $500,000 in federal taxes over their retirement. (1)
4. Healthcare & Long-Term Care Costs
Healthcare is one of the biggest unknowns in retirement, and one of the most expensive.
- Medicare doesn’t cover everything.
- 70% of retirees will need some form of long-term care. (2)
Impact: A 3-year stay in a nursing home in California averages $100K/year, resulting in $300,000 or more in uncovered costs. Without a plan, this could erase your nest egg. (3)
5. Poor Investment and Inflation Protection
Keeping your money “safe” in cash or CDs may seem wise until inflation eats away at your purchasing power. On the other hand, taking on too much investment risk without a plan can lead to losses at the worst possible time.
Impact: If inflation averages 3%, your purchasing power could drop by over 44% in 20 years, meaning that you would need $216,732 per year to maintain the same purchasing power as $120,000 today.
6. Estate Planning Pitfalls
No will? No trust? No named beneficiaries? Are beneficiaries and successor trustees outdated? Without acurrent estate plan, your family could face:
- Probate costs (3–5% of your estate)
- Unnecessary taxes
- Unnecessary challenges in the event of incapacity
- Family conflict over assets
Example: In California, a $500,000 estate could lose $26,000–$50,000 to various probate and legal fees.
How to Fix It — Starting Now
The good news? You can avoid these risks, but it starts with action.
At Gates Pass Advisors, we help couples prepare for retirement with confidence by creating personalized, proactive financial plans to help protect their wealth, lifestyle, and legacy.
Don’t Let a Lack of Planning Cost You
You’ve worked hard to build your savings. Don’t wait until it’s too late. The best time to plan is before the cost becomes real.
Ready to take the first step? 👉 Schedule your no-obligation consultation today
Citation 1:
Morningstar 2023 Retirement Tax Planning Guide
https://www.morningstar.com/lp/tax-planning-guide
Michael Kitces, Roth Conversion Timing Strategies
https://www.kitces.com/blog/roth-conversion-before-required-minimum-distributions-pre-tax-ira-tax-efficient-withdrawal-strategy/
Citation 2:
U.S. Department of Health and Human Services / Administration for Community Living (ACL)
Center for Retirement Research, Boston College
InsuredAndMore.com