Overview
A page devoted to Seniors on this website may at first seem a bit presumptuous. There are solid reasons for it however. The reader will fall into one or more categories of people who will require this information.
One of a growing number of Seniors who are learning the Internet
One who has parents or loved ones who need this information
One who is starting to plan for their future
One who is in the early stages of retirement
There are four critical categories of insurance that require strategic review as individuals reach retirement age. They are obviously,
Health, Life, Income Protection and Long Term Care .
Within this entire context, one must also review what Social Security and Medicare will and will not provide.
The remainder of this page will examine various insurance products as they relate to Seniors. We will touch upon Social Security and Medicare but will not go into extensive detail since there are better sources of comprehensive information on this topic.
Health Products
Health Insurance for retirees is a significant tactical and emotional issue. The Medicare safety net leaves enormous gaps in coverage. While there is a great deal of political discussion revolving around these needs, chances are that a political solution will either fall short of the need or add tremendous costs to an already limited pool of resources.
There are several strategies one may use to protect themselves. They are:
Medi-Gap policies
Federally subsidized HMOs
Retirement Health Plans
Employment Continuation
Medi-Gap policies
The Federal Government has defined 10 different plans with varying
coverages for people on Medicare. These are purchased just as any other health insurance product. They are designed to supplement Medicare Part A and Part B. Part A is the automatic enrollment into Medicare that is part of everyone's Social Security benefits. (For the purposes of this
discussion, we will not be dealing with government and Railroad employee plans). Part B is optional and is paid for by a deduction from the monthly SS check. This amount has been creeping upwards over the past number of years,
now at $97 in 2007.
The Medicare Supplementary Plans, or Medi-Gap Plans as they have become known, are labeled Plans A - J. By government edict, plans within each category must be alike, that is, meet the defined requirement for benefits. The particular plans and premiums that each insurance company offers are at their option.
The Net of all this is that Medi-gap policies are not inexpensive by any stretch, and even the best one still leaves many uncovered areas. Therefore, Medi-gap plans should be considered only when better alternatives are not available.
Federally Subsidized HMOs
In an attempt to get costs under control and to reduce some of the wholesale fraud that has been associated with Medicare, the government began offer HMOs a subsidy to assume management responsibility for
Medicare. You may have seen some of these plans advertised on television, featuring the "no added premium" aspect.
None of these plans cover all the holes, with prescriptions being a primary example. Furthermore, lately it has been noted that the HMOs are losing a great deal of money with these plans. Quite a few have
discontinued "Health Plans for Seniors" just within the past few years. This has left enrollees scrambling for an ever-shrinking list of providers. It is not hard to project where all this is heading, to a point where soon, this may not be any option at all.
Retirement Health Plans
If your company offers retirement health benefits, consider yourself very fortunate. There is a vast national swing away from this kind of benefit, largely managed through the euphemistic process known as "downsizing". Nevertheless, if this benefit is available to you, it is most likely better than anything else you will be able to find.
Employment Continuation
Working beyond retirement age is an alternative that may be driven by a number of factors. There is financial need where retirement funds are insufficient to support the life style you desire. In other cases, it is a situation where one prefers work over retirement.
But, there is also another reason, and that is to position yourself to be able to purchase a group health plan that will generally provide a great deal more than any Medi-gap plan.
This tactic is subject to the insurance laws and offerings that prevail in each state. In New Hampshire, this is a viable planning tactic. There are several ways to implement this strategy.
As an employee, your company will allow you to continue work
As a business owner, you choose to continue to work
As a retiree, you have a home occupation that qualifies you as a
"Group"
Depending upon the rules of the companies operating within your state, you may find some that will insure workers beyond age 65, treating Medicare Part A & B as primary insurance, and then acting as the secondary insurer. What this means is any needs NOT covered by Medicare WILL be covered by the secondary carrier providing they are normal plan benefits.
Does paying a high health premium on top of Medicare make any sense at all? Well just maybe. If the benefits you derive have a greater value than the cost you would bear without the coverge, then the answer would be yes.
Life Insurance
If you are at retirement age and have planned well, there is a good chance that you no longer really need life insurance at all. Hopefully, the standard requirements for Life insurance, such as covering the mortgage, putting the kids through school, or providing funds for survivor needs are no longer factors in your life.
But, there are some circumstances where Life insurance would still offer some value. If you are still an active principal in a business, there
may be a need to insure to protect the interests of your partners or
heirs.
Depending upon how your final estate will be dispersed, and if your assets are heavily weighted towards real property rather than liquid elements, permanent insurance could protect your heirs from having to liquidate to meet tax requirements.
Consult with your financial planner to determine if life insurance should play any part in your estate management strategy. Otherwise, don't waste your money.
Long Term Care
Do you Even Need It?
If you have a joint net worth of $300,000 or less and are willing to let the state manage your long term care if you require it, then a LTC policy may not make much sense for you.
On the other hand, if you have a substantial estate, and/or wish to pass along assets in-tact to your heirs or even charities, then LTC protection is worth considering. In another case, if you expect that your spouse may have a longer life expectancy, and you don't want to destroy whatever quality of life he or she may have after you are gone, then LTC is critical.
If you are close to or just beyond retirement age, and still in good health, there may still be a chance to acquire LTC protection without breaking the bank. Or, there are plans that will accept one ailing partner providing the spouse is in good health.
Care-Givers
If you are one of the many people today who see a real possibility that you will be the primary caregiver to your parents or other loved ones, you may want to consider purchasing a LTC care policy to protect
your own assets.
The impact of becoming a caregiver cannot be understated. Not only is their a great expense involved, there are many instances today where a second family wage earner has had to give up their job on order to take care of ailing relatives. This is a double-expense, out of pocket costs AND loss of income.
After The-Fact
There is a brand new product designed to help families who already
have a member in a long term care situation. It is a fully paid annuity designed to leverage assets to extend the ability of providing institutional or even home care. This is a special situation
product, but if you are in that situation, then it is clearly worth a few minutes of your time.
Protecting Income With Annuities
First, here are a couple of basics.
The standard advice given to investors is that a percentage equal to your age should be held in stable secure investments while the balance may still be invested in higher to moderate risk growth vehicles. This means if you are age 65, you should have 65% of your investments stashed in protected accounts.
"Qualified" vs "Unqualified" Money confuses some people. It is really quite simple. Any money you have saved which was pre-tax, that is deducted from your income, such as traditional IRAs, (does not include ROTH IRAs), 401Ks, SEPS, etc., is "Qualified" money. That means that as you draw upon it, you are subject to taxes on interest and principle.
"Unqualified" money is money you saved where taxes were already paid. Depending upon the nature of the tool you used to save it, taxes may or may not have been paid on earnings from that money.
Annuities are tools where taxes on earnings are deferred no matter what class the investment money falls into.
Example: Interst from CDs is taxable each year; earnings on Annuities are not taxable until the income is drawn. This difference over time is a powerful wealth accumulation tool due to the power of compounding.
An Annuity is simply an investment vehicle that is designed to provide a steady income stream for the rest of your life. It is the ONLY tool at your disposal where you will never outlive your money, a growing
concern among many seniors today.
Annuities are solid conservative investment options, typically providing greater yields than other secure options, especially savings accounts, CDs, and Money Market funds.
By shifting assets to annuities, you will:
- Stabilize Income Flow
- Insure an income for life
- Enjoy Continued Financial Growth
- Minimize income tax impact
- Simplify Tax Preparation for Qualified Money
- Increase liquidity
- Reduce Risk & Increase Security
Go to the Annuity Page
for more information.
For more detailed information, contact us.
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