HealthView Retirement Planning

Corn Fields and Nursing Homes - Iowa is #1 for Nursing Home Care Availability and Choice

The cost of long term care continues to rise, and this is an issue that you can not ignore since two-thirds of people over age 65 will need long term care at some point in their lifetimes.

Genworth Financial released their national cost of care survey today, and here are some of the key findings, taken directly from their press release, that you may find interesting:
 
“Genworth's Choice & Affordability Index highlights the great disparity nationwide between regions with many alternatives for affordable nursing home care and those with more limited options. According to their Choice & Affordability Index, the top 10 states for nursing home care availability and choice include:

1. Iowa   
2. South Dakota
3. Kansas   
4. Nebraska  
5. North Dakota   
6. Oklahoma  
7. Missouri   
8. Arkansas
9. Wyoming 
10. Louisiana

The cost of care in a nursing home or assisted living facility continues to rise at a rate nearly twice that of the median annual inflation rate of 2.3 percent over the same period of time, measured using the Core CPI (which excludes food and fuel) reported by the U.S. Bureau of Labor Statistics. The annual cost for a private nursing home room is $74,208, or $203 per day, representing an increase of 4 percent annually since 2005. At this rate, the cost is expected to exceed $270,000 a year in 30 years, when the nation's youngest baby boomers will be in their mid-70s. According to the Centers for Disease Control and Prevention, more than 76 percent of nursing home residents are 75 years of age or older.”

Do you the cost of care in your state? Check out Genworth’s interactive map of the cost of care.

I encourage you to discuss your options for planning for long term care services with your financial advisor.

When to Retire or When Not to Retire

Emily Brandon has an informative blog titled “Planning to Retire” on the US News & World Report web site. Her post today  is about her mother’s recent decision to retire.

She discusses the importance of employer-sponsored health care coverage and reminds her readers that Medicare is not available until you turn 65. In other words, if you retire at 64 you most likely will not have the employer-sponsored health care coverage that you had when you worked. Ms Brandon writes, “It’s also often worth it to try to keep your employer-sponsored health insurance until Medicare eligibility kicks in at 65. Less than a third of large companies provided retiree health benefits in 2008, according to a Kaiser Family Foundation survey, and only 4 percent of small firms offer them.”

The following HealthView example underscores the magnitude of health care expenses and the importance of employer-sponsored health care.

64-year old male who retires at 64 (one year before he is eligible for Medicare)
His annual medical expenses including premiums and out-of-pocket expenses = $6,160

64-year old male who is working at 64, and has employer-sponsored health care
His annual medical expenses including premiums and out-of-pocket expenses = $2,643

HealthView data is based on proprietary medical underwriting guidelines and an in-depth analysis of U.S. nationwide average health care costs. Calculations assume 64 year-old male is healthy. The working male has group coverage through his employer and pays 75% of premium.

Plan for Medicare Costs with HealthView

In Emily Brandon’s The Chicago Tribune article, “8 tips on paying for health care in retirement”, she offers the following 8 “tips on how to cope with health care expenses in retirement”:

1 Don't count on employer benefits
2 Try to make it to Medicare
3 Plan for Medicare costs
4 Consider working longer
5 Factor in long-term care
6 Consider long-term care insurance...carefully
7 Go it alone - treat your chronic conditions
8 Invest in your health

Number 3 on her list, plan for Medicare costs, is where HealthView can help. HealthView provides personalized information that individuals need to plan for their health care in retirement. This is important since health care costs in your retirement will most likely be your #1 or #2 greatest expense.

HealthView starts with a simple 3-part questionnaire with questions on your health status, lifestyle and history of medical conditions. This is a critical first step for planning. You will receive a HealthView Report that offers suggestions for decreasing health risks. Your report may identify areas of health concern or risk and provide suggestions for preventive actions as well as tips for maintaining and improving health. You will see in the HealthView Report that some risk factors can be controlled or changed.  Others cannot. For example, lifestyle can have a great impact on your risk for developing cancer. Studies have shown that making healthy choices can potentially prevent over 50% of new cancer cases in the country.

Your HealthView Report includes the impact of your health and your health risks on your life expectancy and future healthcare expenses. It provides projected out-of-pocket healthcare expenses based on your medical coverage and age of retirement.

Your HealthView Report will help you and your financial advisor determine what you need to invest today to fund your health-care costs during retirement. HealthView also provides interactive tools that allow for “what-if” scenarios. For example, how will a change in your year of retirement affect your out-of-pocket health-care costs?

HealthView provides financial advisors and their clients with the information needed so that you can prepare and plan to have the funds needed to cover the most important expense you will have in retirement.

The Impact of Health Care Expenses on Your Retirement Budget

In order to understand the overwhelming impact of health care expenses in retirement, it makes sense to analyze health care expenses in relation to a basic retirement household budget.

Let’s revisit John and Mary, a healthy 57-year old couple who plan to retire at 67. Even though they will be fully insured (Medicare A,B,D and Medicare Supplement), they will need a total of $322,699 at the point of retirement, compounded at 5% per year, to cover their total out-of-pocket health care expenses of approximately $587,000 during retirement.

John and Mary have decided that while in retirement they will maintain living expenses of less than $30,000 a year. A key point to consider is that statistically over 50% of retirees spend more money in retirement than they did while in the workforce. But, John and Mary are confident that they can live comfortably on a $29,400 budget.

Here is a breakdown of their expected monthly retirement budget:
$800 on Mortgage and Taxes
$200 on Auto
$200 on Insurance Premiums
$500 on Food
$500 on Food and Utilities
$250 on Other Expenses
Total Monthly Expenses are $2,450
Total Annual Expenses are $29,400

Let’s look at the financial impact of this frugal budget in retirement. In year one of retirement, that $29,400 annual household budget will actually be $40,677 based on a 3.2% inflation rate. In addition, they will be spending $9,570 on their medical expenses for a total expected budget of $50,247. That is over a 70% increase in what John and Mary planned to spend in their first year of retirement.

By the time they are both 75 years old, the household budget will grow to $52,741 and health care expenses will be $21,480 for a total budget of $74,221. And remember, John and Mary have not taken a vacation and I did not account for cable TV or taxes!

The moral of the story is that if you can save more, do it today. If you are within 15 years of retirement, meet with a financial advisor, develop a plan and work it. Planning today will pay off in the home stretch.

Celebrate Earth Day, Be Healthy, and Save on Medical Expenses

 

How are you celebrating Earth Day today? Did you know that you can help our planet and yourself by losing weight?

According to The London School of Hygiene & Tropical Medicine’s recently published study, your carbon footprint has a direct correlation to your health status.

The study found that overweight people rely more on cars for transportation. According to Phil Edwards from the London School of Hygiene and Tropical Medicine,

"Population fatness has an environmental impact…We're all being told to stay fit and keep our weight down because it's good for our health. The important thing is that staying slim is good for your health and for the health of the planet."

In addition to decreasing your carbon footprint, staying healthy with an exercise program and proper diet will help reduce the risk of heart disease and other illnesses. Staying healthy also has an enormous impact on your health care expenses. Annual health care costs can vary by 50% based on your health.

Invest in the earth and yourself.

Sixty seven is the New 65

Sixty five is no longer the default retirement age. Many people plan to work beyond their retirement years because we are living longer healthier lives. In addition, many are concerned about not being financially prepared to retire.

 

Another reason 65 is no longer the default retirement age is because Social Security implemented a phased increase in the normal retirement age from 65 to 67. According to the Social Security web site,

Full retirement age (also called "normal retirement age") had been 65 for many years. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959.

Do you know when you will you reach your normal retirement age?

Enter your date of birth in the simple tool on the Social Security web site and it will compute the month and year that you will reach your normal retirement age.

 

You can begin receiving Social Security benefits before your full retirement age. However, if you retire early, your Social Security benefit will be less than if you wait until your full retirement age. You can read more details here.

 

Don’t feel bad if you did not know that 67 is the new 65. You are not alone. Most people are unaware of the phased increase in the normal retirement age from 65 to 67. According to the 2006 Retirement Confidence Survey, sponsored by the nonpartisan Employee Benefit Research Institute(EBRI), "Only 19% of current workers were able to give the correct age at which they will be eligible for unreduced benefits."

Americans do not Feel Prepared to Retire

     

The Employee Benefit Research Institute(EBRI) released their 19th Annual Retirement Confidence Survey yesterday. The percentage of Americans that feel confident about their upcoming retirements continues to decline. Here are some of the key findings of this year’s survey:

13% of Americans are very confident that they will have enough money to live comfortably in retirement. This is down from down 27% in 2007.

20% of current retirees are very confident that they have a financially secure retirement. This is down from 41% in 2007.

13% of Americans feel very confident about having enough to pay for medical expenses in retirement. This is down from 20% in 2007.

I find the following information, that the survey found, very interesting:

Many workers still do not have a good idea of how much they need to save for retirement. Only 44 percent of workers report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire—and an equal proportion (44 percent) simply guess at how much they will need for a comfortable retirement.

The good news is that you can plan for your retirement needs, and there are all kinds of resources available to you - from free financial calculators on the Web to sitting down with a financial advisor. I suggest you get started by creating a budget for your retirement years. You should also learn about the impact that your health care expenses will have on your lifestyle in retirement.

A financial advisor can work with you to put a plan together that will help you prepare financially. It is critical that you know where you stand financially, and what your future financial needs will be in order to properly prepare.

Bo Benefits

A six-month old Portugese Water Dog named Bo is moving in to the white house tomorrow. Watch the Associated Press video.

President Obama is fulfilling a promise he made to his daughters in his acceptance speech. He is also helping himself and his family by bringing a dog into their home.

There have been countless studies showing the benefits of living with an animal. Here are a few highlights, from Huffington Post:

Lower levels of cardiovascular disease risk factors 
Reduced risk of heart attack
Improved Immunity
Increased physical activity
Increased social interaction
Benefits to children including reduced risk of allergies
Benefits to seniors including a decrease in loneliness
Higher self esteem
Lower health care costs

My dog stands in front of the door when she wants to take a walk. I always take her for that walk even though I may not feel like it, and lucky for me, I get some excercise.

 

Increase the Value of Your Portfolio

When it comes to investing, financial advisors and investors generally focus on financial goals, and a portfolio’s risk, return, time horizon, and performance. But with health care costs becoming one of our greatest expenses in retirement, you must consider an additional factor. That factor is your health.

Your health has a direct impact on your life expectancy and your medical expenses. Luckily, for some of us, there is good news. Physical activity improves cardiovascular health and leads to a longer life expectancy.

Oscar H. Franco, M.D., Ph.D., of  Erasmus M.C. University Medical Center Rotterdam, the Netherlands and his colleagues analyzed data from the Framingham Heart Study, a well-known research project that followed 5,209 residents of a town in Massachusetts for over 46 years.

Franco and his researchers calculated the effects of low, moderate, and high levels of physical activity. You can read about it on www.scienceblog.com.

Life expectancy and years lived without cardiovascular disease increased proportionally with higher levels of physical activity.

Moderate and high physical activity levels led to 1.3 and 3.7 years more in total life expectancy, and 1.1 and 3.2 more years lived without cardiovascular disease, respectively, for men aged 50 years or older compared with those who maintained a low physical activity level. For women the differences were 1.5 and 3.5 years in total life expectancy, and 1.3 and 3.3 more years lived free of cardiovascular disease, respectively.

I recently spoke at a conference, and an attendee asked me, “How can I substantially increase the value of my portfolio?” I told her to walk two miles a day. You may think that sounds funny but it is the truth. Staying healthy is the best way to save on medical costs, and therefore, increase the value of your portfolio.

Consider the following example of a 55-year old male’s medical expenses for his 55th year:

Healthy male: $2,403
Male with Cardiovascular Disease: $3,333

Annual expenses include premiums (based on an employer-sponsored plan in which the employee pays 25% of the premium), co-pays and deductibles, and medication.

The annual out-of-pocket medical expense for the 55-year old male with Cardiovascular Disease is 38.7% higher than the healthy male.

It is imperative for you and your financial portfolio that you manage your health. Exercise, eat healthy foods, and work with your doctor to manage existing medical conditions. Taking these steps will pay off when you meet with your financial advisor to discuss retirement planning.

Shopping for Health Care and Cars

I learned about the Healthcare Blue Book from Colleen Lamay’s article “Don't buy health care blindly, shop around” on IdahoStatesman.com.

She writes about the new Web-based company that “provides consumers in any zip code nationwide with "fair" prices for medical, hospital, dental, laboratory and other care.” The home page of the Healthcare Blue Book’s web site states that

The Healthcare Blue Book is a free consumer guide to help you determine fair prices in your area for healthcare services. If you pay for your own healthcare, have a high deductible or need a service your insurance does not fully cover, we can help. The Blue Book will help you find fair prices for surgery, hospital stays, doctor visits, medical tests and much more.”

According to Lamay’s article, "The Tennessee-based company makes money by charging employers for services including setting up customized searches for their workers, said Dr. Jeffrey Rice, the founder.”

The Healthcare Blue Book’s web site has a search feature that will help you identify the fair price for medical services. The web site provides prices that “are generally below “billed charges”, they are also generally above standard insurance contract rates accepted by most providers.” They do a good job explaining the different costs that a provider has for the same service.

To test the site, I requested pricing on a Spine MRI (no contrast) for Boston and some of the surrounding towns. The price varied between $545 and $633 based on the location in Massachusetts.

Once you search for a service, the Healthcare Blue Book provides you with a Printable Detailed Pricing Agreement that states

According to the Healthcare Blue Book, the fair price for consumers who pay healthcare providers with cash at the time of service or product delivery is ____$633______. Price includes the total amount for both physician (interpretation) and technical (imaging) fees. Sometimes the test will be billed in two parts but they should add up to the listed price.

The site recommends consumers bring the Detailed Pricing Agreement to their healthcare provider, and ask for a cost estimate.

I hope Healthcare Blue Book helps health care consumers to be informed health care consumers. There are many other factors that go into making an informed health decision, e.g., quality of care at the facility, physician’s experience, etc. Healthcare Blue Book is starting to provide some of the information that consumers need in order to make informed decisions.

I can’t resist the obvious comparison. Would you walk into a car dealership without first visiting the manufacturer’s web site and a site like Edmunds.com that provides pricing, car reviews, ratings and advice to help you get a fair deal?