It used to be that having one million dollars was the mark of true wealth. While it is still a lot of money, the truth is that having a million dollars no longer makes you rich. In fact, as hard as is it to believe having a million dollars might not even be enough to retire. With that in mind, here are five reasons why a million dollars isn’t what it used to be.
Even if you have ‘money’ being sick in the U.S. is not cheap and it is not just the poor who know this. Before the Affordable Care Act, the cost of healthcare was the leading cause of bankruptcies in the country.
While this has changed in recent years the cost of care has continued to rise. In fact, one day in an intensive care unit can cost $10,000 or more. That’s intensive care. Now imagine you needed to spend the last year of your life in a full-time care facility? The bill could be $300,000 or more.
Let’s face it, we all want the ‘best’ care available. But that care comes at a price and for most of us, it is something that we can’t afford. As such, the high cost of healthcare is one reason why having a million dollars isn’t what it used to be.
- Long-Term Care
Now if the cost of acute care – that is a healthcare emergency – wasn’t bad enough, imagine death by a thousand paper cuts. That is basically what needing long-term care is like.
In 2016, a study from Genworth found that the average cost of one year in an assisted living facility was nearly $80,000. This is more than what most people make in a year and remember it is the average, if you live in a high-cost area it could be much more.
Here is the deal with long-term care – most patients tend to remain there for five years or more. That means that you could end up spending $400,000 or more and that does not include additional charges or expenses.
What does this mean for today’s millionaires? For starters, don’t assume you have enough money. Once that is out of the way, then you want to have a clear plan for how to handle healthcare-related expenses as you get older. This should include supplemental and long-term care insurance as both will help you to hold on to your fortune a little bit longer.
You’ve got a million dollars in the bank, you can drive a new car every year and you’ve got a McMansion to come home to every night. You might think you have made it and are ‘living the dream’?
However, the reality is usually something different. Even if you are lucky enough to have a million dollars sitting in the bank, odds are that your liabilities devour most of what you have saved up.
Translation – you can only afford to live the millionaire lifestyle if you keep earning enough money. Many people learned this the hard way during the dot-com and housing bubbles. So, learn from their mistakes and start making lifestyle choices which will help you to get the most out of that million bucks.
One such example could be a reverse mortgage. While this is not for everyone, these vehicles will help you to effectively freeze your monthly mortgage payments for as long as you live in your home. The upside is that you can take use the case that was going to service debt and invest it in a fund which will help you prepare for retirement. If this sounds of interest, then you might want to check out this lender for more information.
- The ‘I’ Word
What is the ‘I’ Word – inflation of course. Even while it remains relatively tame, over time that 2% inflation rate will eat into your savings. As such, you need to channel your money into investments which are safe and consistently outpace inflation. This is not an easy thing to accomplish as the higher the expected return, the higher the risk. However, you will need to inflation-proof your million dollars if you want it to last.
- The Taxman
While the roots of the American Revolution might have been taxes, the truth is that there is no escaping the tax man. It doesn’t matter if you are a millionaire or not. You will need to work out a tax plan which lets you keep as much of your money as possible without getting into trouble. If not, then all your hard work to get to a million dollars will be for naught.