Expecting the Unexpected When It Comes to Retirement Planning – Wall Street Journal – 04/30/13

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The Wall Street Journal

MarketWatch – The Personal Finance Report – April 30, 2013

Expecting the Unexpected When It Comes to Retirement Planning

By Elizabeth O’Brien

Add one more item to the bucket list—this time at the urging of some financial advisers.

The latest research underscores the importance of putting retirement assets in the right places. One strategy: an “emergency bucket” to cover unexpected expenses, especially medical costs.

Fidelity Investments estimated that a 65-year-old couple retiring in 2012 would need $240,000 in savings to pay for out-of-pocket health-care costs. That estimate excludes long-term care, which can cause overall costs to surge even further: The median annual cost of private-room nursing-home care in the U.S. is $83,950, up 13% from 2009, according to Genworth’s 2013 Cost of Care Survey.

Comments April 30, 2013

Fidelity Investments’ estimate of $240,000 excludes the $83,950 median annual cost of private-room nursing-home care. Since the average stay in a nursing home is three years, the cumulative cost for a 65 year old couple can exceed $500,000 (if the care is needed in 2013).

Leaving $100,000 in a money market account or short term bond fund earning less than 1% will provide little more than $100,000 for long term care needs. Like homeowners insurance and automobile insurance, long term care insurance provides larger benefits than the premiums paid to the insurance company.

For example, two Traditional Long Term Care Insurance policies priced at a combined $2,600 annual premium can provide a 65 year old couple a combined $480,000 for long term care. As another example, two Combination Life Long Term Care Insurance Policies priced at a combined $125,000 one time premium can provide a 65 year old couple a combined: $490,000 for long term care, $164,000 death benefit or $125,000 refund of premium if they cancel the policy.

Since pricing can vary greatly between carriers, work with an independent insurance specialist that is contracted with numerous carriers and offers both Traditional and Combination policies. Let us research the market and design a long term care solution to meet your needs and budget at:

http://skloff.com/services-ltci.htm

Aaron Skloff, AIF, CFA, MBA
CEO – Skloff Financial Group

 

Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA) charter holder, Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a NJ based Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.

 

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