At least 40 percent of retirees are at risk of running out of money for health care, long-term care or daily spending, according to the Employee Benefit Research Institute.
"People act on emotion and make impulsive and oftentimes costly decisions when it comes to their finances," says Craig J. Ferrantino, president of Craig James Financial Services in Melville. He aims to help clients take the emotion out of decision-making to achieve their retirement goals.
He learned to advise his high-net-worth clients while working at firms such as Smith Barney and AG Edwards before launching his own firm in 2007.
This year, Ferrantino, 54, received the Integrity Award from NEXT Financial Group for his work as a volunteer EMT with Southampton Ambulance and the 25 years he has volunteered with youth ministry programs through Long Island churches. His radio show, "It's All About Retirement," airs Saturdays at 10:30 a.m. on LI News Radio (103.9 FM).
You've said on your show that household income of $200,000 is not a lot on Long Island. Could you explain?
Let's say you're living in Levittown and you paid $350,000 for the house with a mortgage. Maybe your taxes are $13,000, and let's say you have two kids. After taxes and normal living expenses -- sports, clothes, food, maybe a camp for the summer, fuel, car leases and college in the future -- and you're putting 15 percent into an IRA . . . [you're] not living high on the hog.
According to a Fidelity Investments survey, an average couple needs to save $250,000 for health care costs in retirement. Is that good advice?
Yes, very much so. People are draining Medicare and Medicaid much faster than they are draining Social Security. I think [in the future] there's going to be more of a contribution by the individual to pay for health care.
What do Long Islanders overlook when it comes to retirement planning?
[Often] I find things aren't structured correctly. For example, beneficiaries aren't changed when there is a divorce. Unfortunately, a lot of the places where people store their money don't give a lot of advice on it. [You should ask]: Should I make this account a trust or a transfer on death, do I make it a joint with my spouse?
What's a ballpark figure for a couple to retire on comfortably?
Somewhere between seven and eight figures, depending on lifestyle.
What's the best hedge against future tax hikes?
The Roth IRA. As it stands, no matter how much you make in a Roth, when you take the money out, you will never pay taxes on it again. And your children will inherit it without any taxes.
There's been a rise in automated "robo-advisers" in your industry; how does that change things?
Some organizations or firms are not in the person business. They're coming up with some sort of algorithm that fits certain clients based on how they answer certain questions. I think that's disingenuous. It's still a person-to-person business. It's about trust; it's about putting a plan together and revisiting the plan and making changes as you go.