Wild Card blog 4

Today I read an interesting article titled "Will Your Next Egg Last as Long as You Do?", at Marketwatch.com

(1) http://www.marketwatch.com/news/story/Will-Your-Nest-Egg-Last/story.aspx?guid=%7BB7B5A6BD-FB85-48DE-9BB8-2CC5A556053E%7D

The article really got me thinking about my long term financial positions and what kind of costs I should anticipate for retirement.  I know that when the time comes for retirement I hope to have enough funds so too avoid outliving my savings.  That is why now during this economic downturn instead of selling, or sitting on the sidelines, I have decided to invest what I can, when I can.  I have stopped making any unnecessary purchases, and directed those funds into stocks.  The way I see it, I have 20-30 years to ride the profit wave up from historic lows.

The marketwatch article provided some examples of  high vs. low vs. national average cost of living in retirement situations.

They are as follows:

In Home care: National average -- $24,375. 

Lowest, Louisiana -- $19,296.

Highest, Alaska -- $30,849

Assisted-living facility: National average -- $38,529. 

Lowest, Missouri - $25,900.

 Highest, Maine - $65,700.

Nursing home (semi-private): National average -- $66,367.

 Lowest, Texas - $37,960.

 Highest, Alaska - $161,450.

Nursing home (private facility): National average -- $74,368.

 Lowest, Louisiana - $40,241. 

Highest, Alaska - $177,634.

With todays retirement averages you can come close to a prediction of what it will cost you at the time of your desired retirement.  By using Time Value of Money and factoring in rate of inflation at 3% you can determine Net Present Value.  The example I used to calculate was 20 years from now using todays national average @ 3% rate of inflation which provided Future Cost Prediction of:

In Home Care National Avearge 20 years from now = $44, 023

Assited Living National Average 20 years from now = $69,587

Nursing Home (semi private) National Average 20 years from now = $119,866

Nursing Home (private) National Average 20 years from now = $134,306

As you can see in just 20 years time the costs jump dramatically.  And that is given the rate of inflation does not exceed 3%, which everything the treasury and fed are doing right now point to figures higher than 3% over the next couple years.

Listen to your elders; its never too early to start saving for retirement.