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15 Most Expensive States for Long-Term Care: 2017

Are you reaching retirement? Then, perhaps, you've already looked into the affordability of long-term care, and - well - it's not as affordable as you thought. If you're looking to get the most out of your retirement budget, then you may want to stray away from these 15 most expensive states for long-term care, as of 2017.

This article is brought to you by Think Advisor, and it was written by Marlene Y. Satter. You can read the full article here.


Genworth’s annual study on the cost of care nationwide, which includes home care, assisted living facilities, etc., is not reassuring

The price of long-term care insurance is high—for everyone involved. Not just the patient but also the caregivers pay in more than money to make sure that the person in need of care is given the best care they can manage.

In this year’s version of Genworth Financial’s annual study on the cost of care nationwide—not just in nursing homes, which are less and less on the forefront, but also care provided at home, adult day care and assisted living facilities—the news is not reassuring. Costs have risen steadily, with those for licensed homemakers—those who provide what the study calls “hands-on personal care” for patients still in their homes—rising the fastest, increasing 6.17% just since last year.

And of course since people would prefer to stay in their homes, that’s going to hit a lot of people hard.

Less-skilled “homemaker care,” such as cooking, cleaning and running errands (not included in the breakdown that follows) has risen pretty quickly as well, increasing by 4.75% since last year. But both versions of homemaker assistance are at the low end on the price scale, coming in at $21 for homemaker care and $22 for licensed homemaker care. The big bucks are elsewhere.

They may not have risen as quickly percentage-wise as the two already mentioned, but adult day care increased by 2.94% since last year to a national median rate of $70 per day. Assisted living facilities now average a median monthly rate of $3,750, an increase of 3.36% from last year, while nursing homes, at an increase of 5.50% for a private room, now run a median daily rate of $267. No matter how you look at it, that’s a lot of money.

And caregivers often sacrifice their own financial well-being to care for their family members, forking over an average of $10,000 out of their own pockets for expenses that range from household expenses, personal items, or transportation services to payment of informal caregivers or LTC facilities.

A whopping 62% are paying for these expenses out of their own retirement funds; 45% have seen those costs cut their basic quality of living; and 38% have cut the amount they devote to savings and retirement to meet the costs of care.

And another sad side effect of all this stress is that 27% say it’s had a negative impact on their relationship with the person they’re caring for.

The penalty for all this devotion is that absences, reduced hours and chronic tardiness can end up cutting a caregiver’s pay. About a half of caregivers estimate that they lost approximately a third of their income.

Check out the 15 most expensive states for LTC.

Seven Foot Knoll Lighthouse at the Inner Harbor in Baltimore.

15. Maryland

Average Annual LTC Cost: $60,305

  • Adult day care: $2,150
  • Licensed home care: $52,281
  • Assisted living: $49,800
  • Nursing home (private room): $118,990

Prospect Terrace Park in Providence.

14. Rhode Island

Average Annual LTC Cost: $60,789

  • Adult day care: $19,500
  • Licensed home care: $57,772
  • Assisted living: $61,860
  • Nursing home (private room): $104,025

Hollywood Blvd in Los Angeles.

13. California

Average Annual LTC Cost: $61,239

  • Adult day care: $20,020
  • Licensed home care: $57,200
  • Assisted living: $51,300
  • Nursing home (private room): $116,435

Seattle Sea Seahawks Fans (Photo: AP)

12. Washington

Average Annual LTC Cost: $61,704

  • Adult day care: $16,900
  • Licensed home care: $60,632
  • Assisted living: $55,920
  • Nursing home (private room): $113,362

Skier on the slopes at a Killington Resort. (Photo: AP)

11. Vermont

Average Annual LTC Cost: $63,139

  • Adult day care: $34,320
  • Licensed home care: $57,200
  • Assisted living: $49,527
  • Nursing home (private room): $111,508

State Capitol in Bismarck. (Photo: AP)

10. North Dakota

Average Annual LTC Cost: $64,010

  • Adult day care: $25,480
  • Licensed home care: $63,972
  • Assisted living: $36,219
  • Nursing home (private room): $130,367

Lobster boats in Portland.

9. Maine

Average Annual LTC Cost: $64,423

  • Adult day care: $28,080
  • Licensed home care: $53,768
  • Assisted living: $58,680
  • Nursing home (private room): $117,165

Times Square, New York City.

8. New York

Average Annual LTC Cost: $65,852

  • Adult day care: $20,800
  • Licensed home care: $54,340
  • Assisted living: $47,850
  • Nursing home (private room): $140,416

The Corbin Covered Bridge in Newport, New Hampshire. (Photo: AP)

7. New Hampshire

Average Annual LTC Cost: $66,044

  • Adult day care: $18,720
  • Licensed home care: $60,357
  • Assisted living: $58,260
  • Nursing home (private room): $126,838

Old Capitol building in Dover.

6. Delaware

Average Annual LTC Cost: $68,472

  • Adult day care: $18,850
  • Licensed home care: $50,908
  • Assisted living: $72,180
  • Nursing home (private room): $131,948

Atlantic City Beach.

5. New Jersey

Average Annual LTC Cost: $68,833

  • Adult day care: $23,400
  • Licensed home care: $52,624
  • Assisted living: $69,732
  • Nursing home (private room): $129,575

Waikiki shoreline in Honolulu.

4. Hawaii

Average Annual LTC Cost: $71,820

  • Adult day care: $18,200
  • Licensed home care: $59,488
  • Assisted living: $51,000
  • Nursing home (private room): $158,593

A statue of the Spirit of Victory in Bushnell Park in Hartford. (Photo: AP)

3. Connecticut

Average Annual LTC Cost: $72,671

  • Adult day care: $20,800
  • Licensed home care: $52,624
  • Assisted living: $55,200
  • Nursing home (private room): $162,060

Beacon Hill in Boston.

2. Massachusetts

Average Annual LTC Cost: $73,307

  • Adult day care: $16,900
  • Licensed home care: $59,488
  • Assisted living: $67,188
  • Nursing home (private room): $149,650

Crabbers on the fishing grounds in southeast Alaska. (Photo: AP)

1. Alaska

Average Annual LTC Cost: $117,800

  • Adult day care: $43,709
  • Licensed home care: $63,492
  • Assisted living: $72,000
  • Nursing home (private room): $292,000

You can read the full article here.

Source:

Satter M. (2 October 2017). "15 Most Expensive States for Long-Term Care: 2017" [Web Blog Post]. Retrieved from address http://www.thinkadvisor.com/2017/10/02/15-most-expensive-states-for-long-term-care-2017


The Risk of Being Uninsured (and the Hidden Bargain in Addressing It Now)

Are you aware of all the risks associated with being uninsured? Take a look at this great column by Erica Oh Nataren from Life Happens and find out how you are putting yourself in harm's way by being uninsured.

With all the expenses of everyday living, it’s tempting to think of insurance as just another cost. What’s harder to see is the potential cost of not buying insurance—or what’s known as “self-insuring”—and the hidden bargain of coverage.

The Important vs. the Urgent
We’ve all experienced it: the tendency to stay focused on putting out fires, while never getting ahead on the things that really matter in the long run. For most people, there are two big things that matter in the long run: their families and their ability to retire. And being properly insured is important to both those concerns.

Life Insurance: a Hidden Bargain?
It’s exceedingly rare, but we all know it can happen: someone’s unexpected death. Life insurance can prevent financial catastrophe for the loved ones left behind, if they depend on you for income or primary care—or both.

The irony is that many people pass on coverage due to perceived cost, when in fact it’s far less expensive that most people think. The 2016 Insurance Barometer Study, by Life Happens and LIMRA showed that 8 in 10 people overestimate the cost of life insurance. For instance, a healthy, 30-year-old man can purchase a 20-year, $250,000 term life insurance policy for $160 a year—about $13 a month.

Enjoy the Benefits of Life Insurance—While You’re Alive
If budget pressures aren’t an issue, consider the living benefits of permanent life insurance—that’s right, benefits you can use during your own lifetime.

Permanent life insurance policies typically have a higher premium than term life insurance policies in the early years. But unlike term insurance, it provides lifelong protection and the ability to accumulate cash value on a tax-deferred basis.

Cash values can be used in the future for any purpose you wish. If you like, you can borrow cash value for a down payment on a home, to help pay for your children’s education or to provide income for your retirement.

When you borrow money from a permanent insurance policy, you’re using the policy’s cash value as collateral and the borrowing rates tend to be relatively low. And unlike loans from most financial institutions, the loan is not dependent on credit checks or other restrictions. You ultimately must repay any loan with interest or your beneficiaries will receive a reduced death benefit and cash-surrender value.

In this way, life insurance can serve as a powerful financial cushion for you and your family throughout your life, in addition to protecting your family from day one.

Disability Insurance: For the Biggest Risk of All
The most overlooked of the major types of insurance coverage is the one that actually covers a far more common risk—the risk of becoming ill or injured and being unable to work and earn your paycheck.

How common is it? While no one knows the exact numbers, it’s estimated that 30% of American workers will become disabled for 90 days or more during their working years. The sad reality is that most American workers also cannot afford such an event. In fact, illness and injury are the top reasons for foreclosures and bankruptcies in the U.S. today. Disability insurance ensures that if you are unable to work because of illness or injury, you will continue to receive an income and make ends meet until you’re able to return to work.

It’s tempting to cross your fingers and hope misfortune skips over you. But when you look at the facts, it’s easy to see: getting proper coverage against life’s risks is not just important, but a bargain in disguise.

See the original article Here.

Source:

Nataren E. (2017 May 11). The risk of being uninsured (and the hidden bargain in addressing it now) [Web blog post]. Retrieved from address http://www.lifehappens.org/blog/the-risk-of-being-uninsured-and-the-hidden-bargain-in-addressing-it-now/


7 Social Security facts Americans need to know

There are millions of  Americans who depend on Social Security to fund their retirement. Many of the people who depend on social security for their retirement funding tend to overestimate how much money they will receive, or how long the money will last. With the many changes that have occurred to Social Security over the years many Americans are out of touch with how the program works and how it fits into their overall retirement strategy.  Here is a great list compiled by Marlene Y. Satter from Benefits Pro on the top 7 things Americans need to know about Social Security and how it can impact their retirement.

7. Monthly benefits are based on the age at which you collect and the average of your highest 35 years of earnings.

How many years have you paid into Social Security?

The SSA will take your 35 highest paid of those years and average them to come up with what your monthly benefit will be.

Then, depending on whether you decide to go for early retirement (age 62), full retirement age (currently age 66, but rising to 67) or keep working till age 70, that will determine your benefit.

If you retire at age 62, your benefit will be reduced. At the full retirement age you’ll get your full benefit, but if you work till 70 the benefit will keep increasing.

The longer you work and don’t claim, the higher your benefit will be, but it stops growing once you hit age 70.

6. Claiming too early can cut your benefits for life.

If you decide to collect Social Security when you’re 62 (or, for that matter, any time before you hit age 70), your benefit will be paid at the minimum level you earned through your career and won’t rise (except for cost-of-living raises) at all.

If, on the other hand, you can wait till age 66, you’ll get at least a third more in those monthly checks than you would at 62.

But if you wait till age 70, your benefit will be at least 75 percent higher. That’s according to the Social Security Claiming Guide from the Center for Retirement Research at Boston College.

Oh, and the same goes for your spouse. If you claim early and die, your spouse will be restricted to that smaller benefit for life as well—unless said spouse has a separate career and benefits to draw on.

5. Widows and widowers can claim on their deceased spouses’ records to delay claiming on their own.

A widow or widower can claim a survivor benefit on their late spouse’s record in order to postpone claiming their own benefit—which can be very helpful should they want to delay claiming till age 70.

And, as the Claiming Guide points out, since most survivors are women and women’s benefits are generally lower—thanks to a range of reasons, including less time in the workplace and lower salaries—a husband’s benefit will generally be higher.

If, however, a woman’s benefit would be higher than her late husband’s, claiming on his record would allow her to delay claiming until age 70 to maximize her own benefit.

That said, survivor benefits are available as early as age 60, or age 50 if disabled, but they’re reduced up to 28.5 percent if claimed before the recipient’s full retirement age.

Survivor benefits can also be claimed by a divorced spouse as long as the marriage lasted at least 10 years.

4. Husbands can boost wives’ survivor benefits by delaying claiming.

Since most women survive their husbands—by an average of 6 years, in fact—a husband who wants to maximize his wife’s survivor benefit in the event of his death can delay claiming his own benefit as mentioned earlier.

In fact, a husband can increase the monthly benefit his wife gets as his survivor by more than 20 percent if he delays claiming Social Security until age 66 instead of doing so at age 62, if he waits till age 70 to claim benefits, that rises to 60 percent.

3. Continuing to work after claiming before full retirement age will cost you.

It might seem like a terrific idea to claim Social Security early and just keep working; after all, what’s not to like?

You gain another source of income, you’re still making money and maybe you envision just socking the extra money into savings for later in retirement.

But there’s one (not-so-)little flaw with that idea: Social Security may giveth, but it will also taketh away.

If you did that last year and weren’t already at the full retirement age, you’ve already learned to your sorrow that for every $2 above $15,720 you earned in calendar year 2016, Social Security withheld $1.

And Social Security will do that every year till you hit full retirement age; in that year, it will keep $1 for every $3 you earn above $3,490 each month.

If you wait to pursue that strategy till the year after you’ve hit full retirement age, however, it won’t withhold anything.

The good news is that you don’t actually lose that money; it’s restored to increase your monthly benefits later.

2. Social Security provides half the income for 61% of seniors.

It’s all very well to say that seniors will have Social Security to depend on, but the majority of seniors have few other resources to draw on.

report on Madison.com highlights how essential Social Security is to the majority of seniors, regardless of how long they’ve worked or how much they’ve saved, with some statistics from Social Security itself—and one of those is just how important Social Security is to people’s financial well-being during retirement.

Whether they’ve managed to save more in 401(k)s, IRAs or even an actual pension plan, seniors are still deriving much of their income from those monthly Social Security checks.

1. Social Security provides at least 90% of income for 43% of unmarried seniors.

Lest you think that Social Security is just one leg of the proverbial three-legged stool, keep in mind the statistic above.

Without additional sources of income, unmarried seniors who are almost, or completely, dependent on Social Security checks will almost certainly not have a pleasant retirement—or a healthy one.

See the original article Here.

Source:

Satter M. (2017 August 29). 7 social security facts americans need to know [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/08/29/7-social-security-facts-americans-need-to-know?ref=mostpopular&page_all=1


4 Reasons Employers Should Offer Supplemental Life Insurance

Is life insurance included in your employee benefits program? For many employees, their only form of life insurance they have is the basic group life plan provided by an employer. This standard version of life insurance is usually not enough to maintain most employees financial wellness. Supplemental life insurance plans can enhance the standard coverage provided by most employers by providing employee financial security for their futures. While these plans can be a great way to boost an employees financial wellness only about one-half of employers across the nation offer supplemental life insurance with their employee benefits. Take a look at this great list put together by Mike Wozny from Think Advisor and find out the top 4 reasons why you should be offering your employees supplemental life insurance.

Depending on an individual family’s needs, supplemental life insurance can build on the employer-provided life insurance benefit, and helps employers give their employees the future financial security their employees need. For those employers who are not currently offering supplemental life, here are four key reasons they should start:

  • Many employers can offer employees the financial security of supplemental life insurance without increasing their benefits budget. Because supplemental life insurance is opt-in and chosen by individual employees as appropriate for their situations, employers can offer supplemental life insurance as an option at no additional cost to the employer. Employees can then customize their coverage to their needs depending on their financial responsibilities.
  • Many group carriers offer employers help in enrolling employees in supplemental life. Employers can host on-site enrollment sessions lead by a life insurance expert or hold a webinar led by the carrier followed by online enrollment. Many carriers even offer customized enrollment materials for each employee — all without adding to the employer’s human resources teams’ workload.
  • Financial security is tied to employees' productivity. The Consumer Financial Protection Bureau has found that when employees have to spend time and energy worrying about providing for their families, they are more productive. Appropriate life insurance is a key factor in overall financial health, and provides employees with the peace of mind that lets them focus their energy elsewhere.
  • Comprehensive benefits packages contribute to higher employee satisfaction and retention.The Society for Human Resource Management has also found that benefits offerings are important to employees’ decisions about what companies to work for and how long to stay. Offering a benefits package that includes supplemental life insurance coverage allows employees to customize benefits to their own needs.

With the loss of a loved one, many families also lose their income, which can be not only emotionally devastating, but financially devastating as well. When employers offer a complete benefits package, including one that promotes financial wellness, it gives their employees peace of mind, and helps attract and retain top workers.

Though life insurance is rarely a topic that families want to think about, employers can help employees obtain the right amount of insurance to protect their finances by offering supplemental life insurance options. For those employers who are not currently offering these benefits, in many cases they can be added at no expense, with little additional time required to administer them, and at great potential benefit to both the company and its employees.

See the original article Here.

Source:

Wozny M. (2016 October 19). 4 reasons employers should offer supplemental life insurance [Web blog post]. Retrieved from address http://www.thinkadvisor.com/2016/10/19/4-reasons-employers-should-offer-supplemental-life


5 Things Millennials Need to Know About Life Insurance

As millennials grow older and start planning for their futures, one thing they will have to think about is life insurance.  While access to the internet and mobile data has made learning about life insurance easier than before many millennials still have many unanswered questions when it comes to planning for their life insurance policy. Take a look at his great column by Helen Mosher from Life Happens and find out the top 5 thing Millennials need to know about life insurance.

 

1. Life insurance is a form of protection. If you Google “life insurance” you’ll get a slew of ads telling you how cheap life insurance can be, without nearly enough information about what you need it for. That’s probably because it’s not terribly pleasant to think about: this idea that we could die and someone we care about might suffer financially as a result. Life insurance provides a financial buffer for the people you care about in the event something happens to you. Think just because you’re single, nobody would be left in the lurch? Read the next point.

2. College debt may not go away. Did someone—like your parents—co-sign your student loans through the bank? If so, the bank won’t discharge that debt upon your death the way that the federal government would with federal student loans. That means your parents, or others who signed the paperwork, would be responsible for paying the full balance—sometimes immediately. Don’t saddle them with the bill!

3. If you don’t know anything about life insurance, it’s probably better if you don’t buy it off the internet. It’s what we’re used to: You find the thing you need or love on Amazon or Ebay or Etsy, click a few buttons, and POOF. It arrives at your door. But life insurance is a financial planning product, and while it can be as simple as a 20-year term policy for less than a cup of coffee each day (for real!), going through your options with an insurance professional can ensure that you get the right amount for the right amount of time and at a price that fits into your budget. And many people don’t know that an agent will sit down and help you out at no cost.

4. Social fundraising only goes so far. This relatively recent phenomenon has everyone thinking that they’ll just turn to GoFundMe if things go awry in their lives. But does any grieving person want to spend time administering a social fundraising site? The chances of going viral are markedly slim, and social fundraising sites will take their cut, as will the IRS. And there is absolutely no guarantee about how much—if any—money will be raised.

5. The best time is now. You’ll definitely never be younger than you are today, and for most of us, the younger we are the healthier we are. Those are two of the most important factors for getting affordable life insurance coverage. So don’t delay. And if you don’t have an agent, you can also use our Agent Locator. The key is taking that first step.

See the original article Here.

Source:

Mosher H. (2017 July 5). 5 things Millennials need to know about life insurance [Web blog post]. Retrieved from address http://www.lifehappens.org/blog/5-things-millennials-need-to-know-about-life-insurance/


Life Insurance Adds Value to Employer Provided Benefits

Are you looking to add more value to your employee benefits package? Adding a life insurance policy can be a great way to increase the value of your employee benefits program. Take a look at this article published by Susan M. Heathfield from The Balance and find out why you should include life insurance in your employee benefits program.

Life insurance is an employee benefit frequently offered by employers. Life insurance is an insurance policy that provides, in exchange for monthly, quarterly, or annual premium payments, a lump sum of money to the designated beneficiary of an employee who dies.

Life insurance marks an employer as an employer of choice when desirable candidates select job opportunities. It is one of the comprehensive set of benefits that employees look for when they job search and choose an employer.

Especially employees with families like the security of the safety net that life insurance provides.

Life insurance provides peace of mind for an employee who is concerned about how his or her family, or heirs, will make out financially in the event of his or her death. Life insurance provides a certain financial cushion for the employee's survivors if the employee's death is not due to his fault.

For example, life insurance carriers generally exclude some deaths, including death by suicide, civil commotion or riots, death occurring during military service, and other events that vary by policy.

Life insurance is purchased through a vast variety of options.

Term Life Insurance

Term life insurance, in which the insured or his employer pays a monthly, quarterly, or annual fee for the stated amount of insurance coverage is typical. No investment or cash value accumulates or is built up in a term insurance account, but the account pays out the insured value at the death of the employee.

Some term life insurance policies have a time limit. Others increase their premium fee annually as an employee grows older. Other policies have expiration dates such as at age 70. Many financial advisors recommend term life insurance as most other insurance options cost more and involve an investment component that muddies the waters.

Permanent life insurance policies that build up cash value in the policy over time are available and are more costly. Older participants pay a substantial premium in return for the benefits as time is not available to build up the cash value of the policy.

Types of Permanent Life Insurance

The most common forms of permanent life insurance are whole life, variable life, and universal life.

Whole life insurance is insurance that you purchase as an investment because it accumulates money that you can withdraw if you experience an emergency. Whole life insurance covers your for your entire life as long as you pay the premium.

You may also cash in your policy before you die and this would cause the policy to end or no.longer cover you in the case of death. Most investors regard these policies as a bad investment. Despite the fact that you can cash them in, their rate of return is typically small.

Variable life insurance provides money to your beneficiaries when you die. What makes it variable is that it allows you to allocate part of the premium you pay to a separate account that is composed of various investment funds provided by the insurance company.

These may include a stock fund, money market account, and/or a bond fund.

They differ from whole life in that their value fluctuates based on your investments with usually a minimum guaranteed by the insurance company.

Universal life insurance has a savings component that grows on a tax-deferred basis. A portion of your premium is invested by the insurance company in bonds, mortgages and money market funds. The investments'  return rate is credited to your policy on a tax-deferred basis.

A guaranteed minimum interest rate provided by the policy, which is usually around 4%,  means that, no matter how the company's investments perform, you are guaranteed a minimum return on your money.

Understand more about the differences in these life insurance policies by reading Understanding and Choosing Life Insurance.

Life insurance is an appreciated employee benefit. Sought after employees expect life insurance as a component of a comprehensive employee benefits package.

See the original article Here.

Source:

Heathfield S. (2016 October 13). Life insurance adds value to employer provided benefits [Web blog post]. Retrieved from address https://www.thebalance.com/life-insurance-adds-value-to-employer-provided-benefits-1918177


pill bottle/money

How Rising Healthcare Costs are Changing the Retirement Landscape

Has rising the rising cost of healthcare impacted  your plans for retirement?  Here is a great article by Paula Aven Gladych from Employee Benefit News on how healthcare is reshaping the way people are planning their retirement.

It’s hard enough getting employees to save for their retirement. It’s even harder to get them to think about how much they need to save for medical expenses in retirement.

“Most Americans don’t think about what the medical component will be for them,” says Robert Grubka, president of employee benefits at New York-based Voya Financial. “They often think that Medicare and government-provided healthcare is enough and what people quickly find out is, it is helpful but it doesn’t mean it’s enough.” When people think about their retirement plan, the medical piece is “one of the most surprising aspects of it,” he says.

But talking about managing healthcare costs during post-work years is now a vital element of retirement planning. And it’s one employers need to consider, especially as new statistics shed light on the seriousness of the issue.

As a person’s retirement savings shrinks in retirement, their medical expenses continue to increase, according to Voya Financial’s report “Playing the long game – Understanding how healthcare costs can impact your retirement readiness.” Healthcare costs rose 6.5% in 2017, but inflation only went up 2.4%, Voya found.

“The rapid rise of healthcare costs could have a large impact on quality of life in retirement,” according to the report. Forty-two percent of pre- and post-retirees say that healthcare is their biggest concern, especially since nearly half of retirees or their spouses experience a serious or chronic health problem.

Meanwhile, Medicare data finds that those in their 70s spend about $7,566 per person in healthcare costs annually. That figure more than doubles to $16,145 by the time a person reaches age 96. According to Voya, Medicare will only cover about 60% of all retirement healthcare costs, which means people need to figure out a way to cover that other 40%.

The Employee Benefit Research Institute estimates that the average couple will need $259,000 to cover their out-of-pocket medical expenses in retirement. That figure includes premiums and costs related to all Medicare plans and the cost of supplemental insurance. When asked how much they should stock away for medical expenses, 69% of baby boomers and 66% of retirees thought they needed less than $100,000.

As the retirement industry has shifted away from defined benefit pension plans to defined contribution plans, employers have tried to compensate for some of the missing perks of having a pension plan. That includes offering options like life insurance, disability insurance, accident insurance, critical illness insurance or a hospital confinement indemnity.

A 2014 report by the Council for Disability Awareness found that more than 214,000 employers were offering long-term disability insurance plans to their employees in 2013, a slight increase from the previous year.

The other component that is relatively new is the high-deductible health plan that usually comes with a health savings account. The money saved in an HSA can be used for medical expenses in retirement if a person doesn’t use up their balance every year. Any extra funds are invested, just like they would be in a typical retirement plan.

High-deductible health plans make the plan participant more responsible for how those health care dollars are spent. It also has “sped up the recognition of the healthcare issue,” Grubka says.

According to the 2016 Employer Health Benefits Survey by the Kaiser Family Foundation, 29% of covered workers are enrolled in a high-deductible plan with a savings option. Over the past two years, enrollment in these high-deductible plans increased 8 percentage points as enrollment in PPOs dropped 10 percentage points, the report found.

Many times, individuals must pay out most or all of their deductible at once, which could be $2,500 for an individual or $5,000 for a family. That’s when people start taking loans from their retirement plan to help cover costs.

That’s why some of these ancillary products, like critical illness or disability insurance, are so important.

“It is so people can get through the chunky expenses and not get to the point where they have to tap their savings or their retirement plan,” Grubka says.

It’s critical that employees try and determine what all of their expenses will be in retirement. Individuals must try and determine how long they will live, by looking at their family history and making an educated guess. Then they should calculate their projected monthly Social Security payment by setting up an account with the Social Security Administration. They should then add up their expected monthly living expenses like rent/mortgage, groceries and utilities and any healthcare expenses that are not covered by Medicare to come up with a target number.

They should base how much they set aside for retirement on that figure.

See the original article Here.

Source:

Gladyech P.  (2017 July 4). How rising healthcare costs are changing the retirement landscape [Web blog post]. Retrieved from address https://www.benefitnews.com/news/how-rising-healthcare-costs-are-impacting-retirement-planning


3 Key Points for Choosing a Wellness Provider

Are you in the process of searching for a new wellness provider? Take a look at this article by Rick Kent from Employee Benefit Adviser and check out these 3 great tips on what you should be looking for when searching for your next  wellness provider.

Saddled with low savings rates and high household indebtedness, many American workers are relying on company-sponsored retirement plans like 401(k) programs as their last great hope for retiring with dignity someday. Unfortunately, rapidly escalating costs and tougher regulatory obligations have made supporting such plans among employers and third-party benefits consultancies a far more complex task than ever before.

Naturally, these events have raised the importance of offering robust financial wellness programs that complement company-sponsored retirement plans. Employees need offerings that provide valuable educational resources, personal finance coaching and relevant benchmarking data to plan participants and plan sponsors.

But how can employee benefits consultancies, already frequently strapped for time, deliver such tools and resources to their clients? Do they need to build this on their own, or should hiring an in-house expert or acquire a smaller provider?

The good news is “neither.”

Over the past few years, a number of dedicated financial wellness service providers for company retirement plans has emerged and are able to serve true third party, turnkey offerings that can be integrated with the offerings of employee benefit consultancies. In many instances, these services can be "white labeled" under the consultancies' own brands.

But caveat emptor: As with capturing any potential growth opportunity with an outsourced provider, it’s important to team up with the right partner.

With that in mind, here are the three key considerations to bear in mind for benefits consultants who are seeking the right third party, turnkey financial wellness provider to partner with and drive greater value for clients.

Look for educational and training materials that are robust and tailor-made to the plan participants. Any reasonably good financial wellness provider should be able to offer educational and training materials that cover a wide range of topics, including basic financial and investing concepts, tips for paying down debt and general keys to improving retirement preparedness. Frankly, that’s easy enough to accomplish, and required nothing more than bit of time and some money.

But what separates great financial wellness solutions from those that are merely good is both the willingness and capability to customize that content to the size of the plan and unique needs, goals and aspirations of the participants. An educated plan participant, one who is armed with information that is tailor-made for them, is far more likely to take the steps necessary to improve their financial wellness.

Demand data analytics programs that can demonstrate ongoing financial health and retirement readiness. It’s one thing for plan participants to have the knowledge they need to understand better what takes to one day retire comfortably. It’s an entirely different thing, however, knowing whether they are actually on track to do that.

That’s why it’s critical for a financial wellness provider to have data analytics programs in place that monitor key metrics and can determine, in real time, whether someone is making the behavioral changes necessary to become financially healthy and retirement ready. Importantly, providers should also be able to aggregate this data for plan sponsors, since that would provide important clues about the overall effectiveness of the plan.

Provide access to financial wellness resources without disrupting or tearing down current technologies. Nearly every benefit company has their own technology portals that allow plan participants to adjust their contribution amount or swap investments, as well as to view balances, statements and other critical information about their account. Obviously, not many companies will want to rebuild or make significant changes to their technology infrastructure to add financial wellness resources.

Therefore, look for providers that can integrate their own turnkey solutions into existing platforms with little, if any, disruption. This includes giving benefit companies the option of white labeling those resources under their own brand.

Not only is there a clear opportunity for employers to invest in financial wellness programs to seek to maximize productivity by minimizing personal finance-related stress in the workplace, but there are also heightened risks of regulatory fines and penalties from the U.S. Department of Labor. These regulations are aimed at company retirement plans that fail to provide plan participants with the tools and guidance they need to make the most of their retirement plan savings and investments.

Given this extra layer of liability, it will be more important than ever for plans sponsors and employee benefits companies to pair up with the best possible financial wellness provider to give plan participants a better sense of their options and better prepare them for the future.

See the original article Here.

Source:

Kent R. (2017 June 21). 3 key point for choosing a wellness provider [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/three-key-points-for-choosing-a-wellness-provider


Unrealistic Expectations Muddy Employee Retirement Planning

Many younger employees have unrealistic dreams when it comes to planning their retirement. Here is a great article by Paula Aven Gladych from Employee Benefit Adviser on what you can do to help your millennial employees plan for their future retirement.

Three generations of U.S. investors accept that they are largely responsible for funding their own retirements. But many of them harbor unrealistic hopes of receiving a sizable inheritance as part of their funding plan.

These were among the conclusions drawn by a recent survey of 750 individual investors with a minimum of $100,000 in investable assets—including 223 millennials, 251 Gen Xers and 236 baby boomers.

The 2017 study was conducted by the U.S. research arm of Natixis Global Asset Management, a French company that is one of the 20 largest asset managers in the world. It found that 78% of investors recognize that more of the retirement funding burden is falling on their shoulders, since their employers have begun offering defined contribution retirement plans in lieu of defined benefit pension plans. And many also believe that Social Security won’t be available to them by the time they retire. But a significant percentage (43%) hope to receive an inheritance that will help them compensate for any savings shortfall.

This is especially true of millennials, who are twice as likely as baby boomers to expect that a financial windfall from their parents or grandparents will play an important role in meeting their retirement needs. Per the survey, 62% of millennials, compared to only 31% of boomers, anticipate receiving an inheritance that will help fund their retirement.

That’s a major disconnect, says Dave Goodsell, executive director of the Natixis Durable Portfolio Construction Research Center, which carried out the research. He points to findings that 40% of baby boomers don’t plan to leave an inheritance and 57% don’t think they will have anything left to pass down to their children or grandchildren. Only 56% even have a will in place.

Further exacerbating the situation, many of the investors surveyed underestimate the amount of savings they will need for retirement. They assume that they will only need replace 63% of their pre-retirement income, according to Goodsell, which is at odds with the retirement industry’s more conservative target of 75% to 85%.

Looking to the kids

Apart from an inheritance, many of the investors surveyed also believe they can count on their children for some sort of support when they retire, either through shared living arrangements or some type of stipend or allowance. “Retirement has become a multigenerational question,” Goodsell observes.

On the other hand, only 37% of the respondents say they expect Social Security to be an important source of income for their retirement. “There’s a great deal of skepticism,” notes Goodsell, “which should serve as a motivation to plan ahead for retirement and set realistic savings and spending goals.” Unfortunately, he adds, many investors’ decision making is clouded by unrealistic expectations.

Workplace 401(k) plans encourage savings discipline, since they make it easy for employees to save automatically. But in and of themselves they are insufficient, says the Natixis researcher, and employers need to help their employees make better financial determinations by providing them with retirement planning tools, including access to a financial adviser.

“Access is critically important,” he says. “Because responsibility is being shifted off to individuals, we need to make sure they have access to the right resources and understand how to use them.”

Key topics that need to be addressed, according to the survey, include financial planning basics, such as budgeting; how to manage and plan for required minimum distributions; tax, estate and long-term care planning, as well as managing debt and credit cards and understanding investment risk.

See the original article Here.

Source:

Gladych P. (2017 June 25). Unrealistic expectations muddy employee retirement planning [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/unrealistic-expectations-muddy-employee-retirement-planning?brief=00000152-1443-d1cc-a5fa-7cfba3c60000


Rising Healthcare Costs Hurting Retirement Contributions

The rising costs of healthcare are starting to have a negative impact on employees. Find out how employees are having trouble saving for their retirement thanks to the rise of healthcare costs in the interesting article by Paula Aven Gladych from Employee Benefit News.

Rising healthcare costs have had a dramatic impact on the ability of workers to save for retirement and other financial goals.

The latest Bank of America Merrill Lynch Workplace Benefits Report finds that of the workers who have experienced rising healthcare costs, more than half say they are contributing less to their financial goals as a result, including more than six in 10 who say they are saving less for retirement.

What’s more, financial stress also is playing a big role in employee physical health with nearly six in 10 employees saying it has had a negative impact on their physical well-being. This stress weighs most heavily on millennials at 68%, compared with baby boomers at 51%, according to the research.

Because of these dire statistics, more and more employees are looking to their employer to help them through financial challenges.

“We spend a lot of our waking time working and a lot of our finances are made up of the compensation and benefits our employer provides,” says Sylvie Feast, director of financial guidance services for Bank of America Merrill Lynch. “[Employer’s] healthcare and 401(k) plans are really valued by employees. I don’t think it’s surprising that they are looking to their employer that provides essential benefits to help provide access to ways to better manage their finances.”

And because employers offer healthcare and retirement benefits, it isn’t a stretch for workers to expect their employers to offer financial wellness as a benefit as well, Feast says.

“There’s no silver bullet, but a continuing evolution of trying new things to see what works and has an impact with the workforce,” Feast says. “Culture has something to do with it.”

Online tools, educational content, professional seminars in the workplace and personal consultations can be especially effective offerings, Feast says, adding that those options can help employees get more comfortable talking about their finances at work and at home with their family.

“People are pretty private about their finances,” Feast says. “I think there’s this access the employer needs to provide, but there also needs to be an arms-length distance so it is not the employer delivering it.”

Retirement savings is the area most workers want help with, according to Bank of America Merrill Lynch’s survey. More than half of baby boomers (54% ), 53% of Generation X and 43% of millennials say they need help saving for retirement, with 50% of all respondents ranking it as their No. 1 financial issue.

For millennials, good general savings habits and paying down debt were their next most important financial priorities. For Generation X, paying down debt, good general savings habits and budgeting all tied for second, and for baby boomers, planning for healthcare costs and paying down debt were their next biggest financial priorities.

Eighty-six percent of employees surveyed say they would participate in a financial education program provided by their employer, according to Bank of America Merrill Lynch.

Financial education is a slow, but worthy process, Feast says.

“People don’t just automatically start to show an immediate impact to their behavior,” she says. But, “if [employees] take steps, [they] will start to gain control and get more confidence.”

See the original article Here.

Source:

Gladych P. (2017 June 7). Rising healthcare costs hurting retirement contributions [Web blog post]. Retrieved from address https://www.benefitnews.com/news/rising-healthcare-costs-hurting-retirement-contributions