PAYING FOR HEALTH CARE IN RETIREMENT

Plan ahead. It wasn't raining when Noah built the ark.

It would be nice to believe that health care cost increases were a temporary phenomenon. Unfortunately, that's not the case - the cost of medical care has outpaced inflation for the past 20 years and predictions are that medical and long-term care costs will continue to escalate as much as 10% to 15% per year into the future.

The decisions we make as to how and where we live in retirement are unique to each individual or couple. The options open to us, however, are frequently determined by our financial resources...our ability to pay. This review of the various ways to pay for health and long-term care costs during retirement is offered in the hope that it will be of assistance to you as you make decisions regarding your retirement plans.

The options available to pay for medical and long-term care costs in retirement include the following:

Retiree Health Insurance Plans: If your company provides retiree health care benefits, make sure you know how much of the premium you will be required to pay, as well as deductible and co-payment requirements. Retiree health insurance plans are generally designed to coordinate with Medicare benefits. Caution: Even if your employer currently provides retiree health care benefits, there is no guarantee those benefits will be available when you retire. The escalating costs of medical care, combined with the "Baby Boom effect"...a large "bubble" of people who will make a substantial contribution to the size of the aging population... are causing employers to rethink their retiree health care plans. Some companies are requiring that retirees pay a higher share of the premiums to cover themselves, their spouses and any dependents. Other companies are implementing higher co-payments and/or deductibles. Still other companies are discontinuing retiree health insurance plans altogether.

Medicare and "Medigap" Insurance: Most people qualify for Medicare insurance when they reach age 65. Medicare helps to protect you from the costs of medical care during retirement. One fact, however, is evident...there is no "free lunch." You will have costs related to medical care and the likelihood is that those costs will continue to increase each year.

Medicaid: Medicaid is a joint Federal and state program that helps with medical costs for some people with low incomes and limited assets. To qualify for Medicaid, federal poverty guidelines for income and assets must be met. In addition, there are state requirements for Medicaid eligibility. Medicaid is essentially a safety net for those who didn't adequately plan for their financial needs in retirement, or who encountered unexpectedly large expenses that depleted their financial resources.

Long-Term Care Insurance: Long-term care insurance can put you in control, preserving your dignity and allowing you to select the type of facility and setting in which you want to receive long-term care services, if needed. Long-term care insurance also helps protect your personal assets, preserving them for your use or as an inheritance for your family. Suggestion: Check with your employer...your company may offer long-term care insurance as a voluntary or supplemental employee benefit!

Personal Savings: Review your retirement plan to make sure that it adequately takes into account the potential costs of medical care and long-term care in retirement. If you find a shortfall, you may want to increase your personal savings now in order to have sufficient funds available after you retire. Some experts suggest setting up a separate fund or account specifically to pay for health care needs in retirement. This approach adds focus to your plan and better enables you to assess your progress.

Home Equity: Many retired people have built up substantial equity in their homes. There are a variety of ways to tap that equity if needed to pay for health care costs in retirement, including selling the home, arranging a home equity loan or line of credit or using a reverse mortgage to supplement your retirement income.

Going Back to Work: When it comes to planning for health care needs as we age, it's time for a reality check. It's fine today, when our health is good, to state the intention to return to work if financial needs arise, but how many 70+-year-old people with health problems really want to be out looking for a job? In reality, planning to return to work in order to pay for health care needs during retirement isn't so much a plan as it is a hope - a hope that we won't face substantial health care costs as we age.

Don't wait until it rains to start building your ark - plan ahead while the choices are still yours to make!

Contact my office if we can help.

MESSAGES
from the Masters.....

CONSIDER THE CONSEQUENCES

by Brian Tracy

The mark of the superior thinker is his or her ability to accurately predict the consequences of doing or not doing something. The potential consequences of any task or activity are the key determinants of how important it really is to you and to your company. This way of evaluating the significance of a task is how you determine what your next frog really is.

LONG TIME PERSPECTIVE

Doctor Edward Banfield of Harvard University, after more than 50 years of research, concluded that "long-time perspective" is the most accurate single predictor of upward social and economic mobility in America. Long time perspective turns out to be more important than family background, education, race, intelligence, connections or virtually any other single factor in determining your success in life and at work.

Your attitude toward time, your "time horizon," has an enormous impact on your behavior and your choices. People who take the long view of their lives and careers always seem to make much better decisions about their time and activities than people who give very little thought to the future.

THINK ABOUT YOUR FUTURE

Successful people have a clear future orientation. They think five, ten and twenty years out into the future. They analyze their choices and behaviors in the present to make sure that they are consistent with the long-term future that they desire.

In your work, having a clear idea of what is really important to you in the long-term makes it much easier for you to make better decisions about your priorities in the short-term.

DETERMINE THE CONSEQUENCES

By definition, something that is important has long-term potential consequences. Something that is unimportant has few or no long-term potential consequences. Before starting on anything, you should always ask yourself, "What are the potential consequences of doing or not doing this task?"

The clearer you are about your future intentions, the greater influence that clarity will have on what you do in the moment. With a clear long-term vision, you are much more capable of evaluating an activity in the present and to assure that it is consistent with where you truly want to end up.

MAKE IT A TOP PRIORITY

If there is a task or activity with large potential positive consequences, make it a top priority and get started on it immediately. If there is something that can have large potential negative consequences if it is not done quickly and well, that becomes a top priority as well. Whatever your frog is, resolve to gulp it down first thing.

KEEP MOTIVATED

Motivation requires motive. The greater the positive potential impact that an action or behavior of yours can have on your life, once you define it clearly, the more motivated you will be to overcome procrastination and get it done quickly.

Thinking continually about the potential consequences of your choices, decisions and behaviors is one of the very best ways to determine you true priorities in your work and personal life.

ACTION EXERCISES

Review your list of tasks, activities and projects regularly. Continually ask yourself, "Which one project or activity, if I did it in an excellent and timely fashion, would have the greatest positive impact on my life?"

Whatever it is that can help you the most, set it as a goal, make a plan to achieve it and go to work on your plan immediately. Remember the wonderful words of Goethe, "Just begin and the mind grows heated; continue, and the task will be completed!"

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QUOTES
from the Masters...

On Self-Confidence

"Too many people overvalue what they are not and undervalue what they are."

-- Malcolm Forbes

"Better keep yourself clean and bright; you are the window through which you must see the world."

-- George Bernard Shaw

"If you have great ideas and no confidence to share them, you will not get credit for having them."

-- Patricia Fripp

"Self-confidence comes naturally when your inner life and your outer life are in harmony."

-- Brian Tracy

On Vision

"Yesterday's passions may not serve tomorrow's goals."

-- Frederic Hudson

"I think all of us are looking at the future with yesterday's eyes."

-- Dan Burrus

"Achieving your vision doesn't mean you've reached the end of the line. It simply means that you've come to a new starting place."

-- Nido Qubein

"Develop a clear vision for your organization. Where do you want to be in five years?"

-- Brian Tracy