In the context of retirement planning, most people are naturally drawn to talking about travel, hobbies, grandchildren, and leisure activities. And for good reason – that’s what retirement is supposed to be all about! There is a necessary distinction between retirement and retirement planning, however. Planning must go beyond the ‘fun’ items and consider all expenses we may incur over time and throughout life. One of those expenses – and a major one – is the cost of health and home care later in life. [+] Read More

Many experts expect healthcare costs will continue to rise, making it important that advisors help their clients plan ahead. According to the Kaiser Family Foundation, health care has become somewhat less affordable, even among those with health insurance. Since 2015, larger shares of people with health insurance say they have a difficult time affording their healthcare costs: from 27% to 37% for premiums; 34% to 43% for deductibles; and from 24% to 31% for copays and prescription drugs. Some experts estimate that a 65-year-old couple who retired in 2016 will need $260,000 to cover just healthcare costs in their golden years—6% more than the previous year's estimate of $245,000. That’s the highest estimate since such projections started in 2002, and chances are repealing and replacing the Affordable Care Act, not to mention the high cost of pharmaceuticals, could push retiree healthcare costs even higher. All of which highlights the need for advisors to discuss with clients the flexibility and power of Health Savings Accounts (HSAs). Read on for a summary of their analysis, or view the entire document here. [+] Read More

When you encounter articles focused on retirement planning, the subject matter is generally about how to invest—what strategies are good for growth vs. income, what products are useful for different investment and tax objectives, and so on. Often left out are insights about how to spend, which is an equally—if not more—important aspect of planning. An investment plan that does not adequately account for how cash flow needs and expenses change over time could put an investor at risk of running out of money too early. [+] Read More

Back in 2013, we wrote about the differences between Medicare Parts A and B, as well as supplementary coverage options to help readers with their retirement planning. Given recent legislative changes to Medicare, we feel it’s time to revisit the topic. Discussing medical costs and coverage with your financial advisor is wise because medical costs can constitute a sizable portion of post-retirement budgets. As changes are made to programs like Medicare, it’s important to stay abreast of developments and integrate changes in to your wealth planning strategy. One of the difficult aspects of planning for the future is trying to anticipate unknowns such as medical costs. You never know if you’ll enjoy perfect health in the coming year or if you’ll find yourself at the doctor’s office frequently. Insurance like Medicare helps to temper the risk of the unknown, but you should still be prepared for out-of-pocket costs. [+] Read More

Research shows that at least 70 percent of people over 65 will need long-term care services and support at some point in their lifetime.1 Does that mean you should purchase long-term care insurance? Long-term care insurance can be a significant retirement expense, but it can also help protect your nest egg in the event you need additional health care. It’s an important financial decision for you which you should discuss with your financial advisor in addition to a long term care insurance expert who will help you decide on the plan itself. To help you get started, here is a general overview of some potential benefits and risks of long-term care insurance. [+] Read More

If you’re thinking about moving to a different state, it’s important to consider how your health care costs could change depending on where you end up. The average cost for Medicare, Medigap and nursing homes could become cheaper, or more expensive. The following two maps of the United States illustrate the average cost for each based on state. On one level, the cost of Medicare and comprehensive Medigap plans varies from state to state. Medicare and Medigap Average Annual Cost per State at Age 65 (Click image for larger version) Source: JP Morgan Asset Management. SelectQuote, 2013. Traditional Medicare costs are based on national average cost estimates for Medicare Parts A, B, D and Medigap Plan F. Vision, dental and long-term care expenses are not included. Not shown on the chart: costs for Medicare Advantage. Medicare Advantage costs may vary from less than $500 per year to more than $10,000 per year. Data for Alaska and Hawaii not available. [+] Read More

Total health care spending is expected to reach $4.8 trillion in 2021, up from $2.6 trillion in 2010 and $75 billion in 1970. As consumers of health care, it’s everyday investors that have to absorb these rising costs over time.1 What investors need to do: factor rising health care costs into your investment plan, so you can measure how these expenses could affect your retirement income and portfolio growth over time. An Investment Portfolio Designed to Keep Up With Rising Health Care Costs The simple fact is, most investors need growth in their portfolio to keep up with rising health care costs. This growth becomes even more critical as health care costs become a larger percentage of living expenses with age. [+] Read More

What is Medigap? Medigap is private insurance you can purchase to help cover some or most of your out-of-pocket expenses associated with Traditional Medicare. It doesn’t replace your Traditional Medicare, it just helps you pay for it. You’d still get all of the coverage associated with Plans A and B. What Does Medigap Cover? The out-of-pocket expenses Medigap helps you pay for: Part A hospital deductibles, Part B outpatient co-pays, out-of-country medical emergencies, and fees not covered by Parts A and B.1 Why Do People Purchase Medigap? People looking to reduce out-of-pocket healthcare costs are usually the ones to purchase Medigap. There are ten Medigap plan options, and all of them are standardized by law, so the benefits of each is the same regardless of which insurer sells it. The only difference between the ten plans is the cost (it can be expensive), so shopping around is crucial.2 [+] Read More

In our previous post on Medicare Parts A and B, we outlined some of the basic features of Traditional Medicare, which provides hospital and medical coverage to those enrolled. While Traditional Medicare will cover many of your basic medical needs, some people choose to explore other types of healthcare plans because of various costs and different types of coverage available. In this piece, we’ll explore Medicare supplemental insurance plans as available through Medicare Advantage and Medicare Part D. Both are offered through private insurers, and most plans require premiums, co-payments and deductibles. Medicare Part C (Medicare Advantage): Costs and Benefits Medicare Part C is an alternative to Medicare Parts A and B, and it must by law provide coverage “equivalent” to Parts A and B.1 If you purchase a Medicare Part C plan it will replace your coverage through Medicare Parts A and B. With a Medicare Part C plan, you don't have to pay Medicare Part A and Part B deductibles and co-payments, because Medicare Part C plans have their own deductibles and co-pays. You would, however, still have to pay Part B premiums.2 [+] Read More