William Penn Life, 2017 (52. évfolyam, 1-12. szám)
2017-10-01 / 10. szám
Moneywise with Bob Bisceglia, National Sales Director M on Social Security myths ... and planning for health care needs in retirement IT'S HARD FOR ME TO BELIEVE that it's October. Fall, already? It seems like just yesterday we were saying Happy Easter, and this month we'll be saying Happy Halloween, and soon Happy Thanksgiving and Merry Christmas! (I know, don't rush it!) After a busy summer, we're ready for a fantastic fourth quarter in the Sales Department. After my article about Social Security myths and facts was published in our August issue, I was surprised by the number of calls I received regarding the article. Many asked when I would be running part 2. Never being one to disappoint our membership and readers, I decided to accelerate the article and get it into this issue. In August, I discussed six common myths surrounding Social Security; in this edition, I'd like to expand on another large myth, and discuss a few issues that retirees and pre-retirees will face in retirement. Myth #": Getting Social Security means you don't have to worry about spending a lot of money on health care since you'll be getting Medicare, too. Well, let's talk about this one. Acknowledging that health care planning and expenses are quite complex, the bottom line is that expenses are going up, that's for sure. For example, Medicare Part B premiums increase every year. While Social Security payments are adjusted for inflation (in most years), those increases are typically eaten up by the increase in Medicare premiums. Retiree health care costs depend on a variety of factors, including whether or not someone has a chronic condition such as diabetes, COPD, high blood pressure, etc. The current cap on out-of-pocket expenses with Medicare Advantage plans ranges between $3,400 and $6,700 per year. People that don't take care of themselves and suffer from a variety of health problems are likely to pay more out of pocket for health care costs. At the same time, those who do take care of themselves can expect to live longer, and should plan accordingly. According to a recent study by the Nationwide Retirement Institute, four out of five pre-retired people cannot accurately estimate how much they expect to pay for health care in retirement, even though health care costs will be one of their largest expenses. Many people do not understand the risk these costs can pose to their retirement plans, and they simply aren't planning for them. Every conversation I have ever had with a client considering early retirement (before age 65) starts this way: Let's begin by talking about your health care. What plans have you made for this? Will your current employer allow you to stay on their plan? If you can convert under COBRA, do you know what your cost will be? Have you priced health insurance in the marketplace, and budgeted for this expense? These questions and others can be very eye opening. I've seen a few clients who, after answering these questions honestly, decided that they could not afford to retire early like they wanted and decided to keep working until alternative plans for health care could be found (or afforded). While Medicare and retiree health insurance benefits may cover a portion of your expenses in retirement, many people will still pay a significant amount of their health care costs out of their own pocket. Add to this challenge the rising cost of health care and the likelihood of needing long term medical care, and it becomes clear that planning for health care expenses is a vital part of overall retirement planning. The Nationwide study also uncovered a few other alarming statistics. According to the study, a retired couple at age 65 should plan for total out-of-pocket health care expenses of between $260,000 and $395,000 over their anticipated life span (or roughly $13,000 to $20,000 per year over 20 years). Included in these expenses are premium payments for Medicare Parts B and D, out-ofpocket drug expenses, deductibles, copays and a variety of miscellaneous medical expenses, such as dental and vision 4 0 October 2017 0 WILLIAM PENN LIFE Photo © Can Stock Photo Inc./ zimmytws
