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Can You Reduce Your Lifetime Health Care Costs by Staying Healthy?

Photo: Pexels

–Elaine Floyd, CFP®

An apple a day keeps the doctor away – and spares you the bill for medical services. Does this logic carry over into lifetime health care planning? Can you reduce your lifetime health care costs by staying healthy?

 

Apparently not. The Center for Retirement Research at Boston College has revealed the counterintuitive finding that married couples who are the healthiest at age 65 – that is, those with no chronic conditions such as diabetes, cancer, or heart disease – end up spending more on health care over their lifetime than their unhealthy counterparts.

 

The brief, “Does Staying Healthy Reduce Your Lifetime Health Care Costs?,” shows that although the current health care costs of healthy retirees are lower than those of the unhealthy, the healthy actually face higher total health care costs over their remaining lifetime.

 

A 65-year-old couple in which one or both spouses have at least one chronic condition can be expected to pay about $220,000 in lifetime health care expenses. These include Medicare premiums, supplemental insurance, copayments for covered doctor visits and medications, and payments for services not covered by Medicare, such as dental care, vision care, and long-term care. The comparable cost for a couple free of chronic disease is substantially higher at $260,000.

 

These are average numbers. Some couples will pay far more. In fact, researchers found that there is a 5 percent chance that unhealthy couples will pay $460,000, while healthy couples will pay as much as $570,000.

 

Why is this? The researchers cite three reasons: First, people in good health can expect to live significantly longer, so they are at risk of incurring health care costs over more years. Second, many of those currently free of any chronic disease will succumb to one or more such diseases at some point before they die. And third, people in healthy households face an even higher lifetime risk of requiring nursing home care than those who are not healthy, reflecting their greater risk of surviving to advanced old age, when the risk of requiring such care is highest.

The Center’s conclusion: “When deciding how much to save for retirement, and how rapidly to draw down their wealth during retirement, households need to consider what risk they are prepared to accept of having their assets substantially depleted by health care costs, whether they are above or below the average risk of incurring exceptionally high costs, and whether they should insure against health care costs by purchasing long-term care insurance.”

 

That said, staying healthy is never a bad idea. Here are some wellness tips to consider as you grow older: Get your free Medicare screenings. Once you go onto Medicare you can get free screenings, such as mammograms, prostate cancer screenings, colorectal cancer screenings, bone density scans, and more. If you’ve been putting off going to the doctor because your prior insurance had a high deductible, take advantage of your free “welcome to Medicare” exam and save future costs by getting preventive care now. Most medical conditions are more easily treated if they’re caught early.

 

Eat right, exercise, etc. You know the drill. Exercise is especially beneficial as you grow older. According to the U.S. Surgeon General’s Report on Physical Activity and Health, inactive people are nearly twice as likely to develop heart disease as those who are more active.  Lack of physical activity also can lead to more visits to the doctor, more hospitalizations, and more use of medicines for a variety of illnesses.  Reduce stress. Chronic stress can lead to heart disease, sleep problems, digestive problems, depression, obesity, and memory impairment. One way to reduce stress in retirement is to have a financial plan in place so you can relax and feel confident that money will not be a problem.

 

Consult your doctor for specific advice on staying healthy in retirement. And, of course, talk to your financial advisor for help budgeting for future healthcare costs.

 

Elaine Floyd, CFP®, is the Director of Retirement and Life Planning, Horsesmouth, LLC., where she focuses on helping people understand the practical and technical aspects of retirement income planning.

 

Registered representatives offer securities through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC. Investment advisor representatives offer advisory services through Mutual of Onaha Investor Services, Inc.  Horsesmouth, LLC, Family Wealth Management and Mutual of Omaha Investor Services, Inc. are not affiliated.  Copyright © 2017 by Horsesmouth, LLC. All rights reserved.

IMPORTANT NOTICE This reprint is provided exclusively for use by the licensee, including for client education, and is subject to applicable copyright laws.
Unauthorized use, reproduction or distribution of this material is a violation of federal law and punishable by civil and criminal penalty. This material is furnished “as is” without warranty of any kind. Its accuracy and completeness is not guaranteed and all warranties expressed or implied are hereby excluded.


20 Ways to Use Up Your Flexible Spending Account

By Tim Parker

 

The end of 2017 is almost here. If you have a flexible spending account (FSA) – there are two kinds: one for health and medical expenses and one for dependent care expenses – this means that you’re likely up against a use-it-or-lose-it scenario. It’s possible that your company might offer you a rollover of $500 or a grace period in which to use up your leftover funds, thought it can’t offer both, but whatever they offer.
Read the full article here!


Estate Planning: An Introduction

Estate Planning: An Introduction

 

Prepared by Broadridge Investor Communication Solutions, Inc.,

 

By definition, estate planning is a process designed to help you manage and preserve your assets while you are alive, and to conserve and control their distribution after your death according to your goals and objectives. But what estate planning means to you specifically depends on who you are. Your age, health, wealth, lifestyle, life stage, goals, and many other factors determine your particular estate planning needs. For example, you may have a small estate and may be concerned only that certain people receive particular things. A simple will is probably all you’ll need. Or, you may have a large estate, and minimizing any potential estate tax impact is your foremost goal. Here, you’ll need to use more sophisticated techniques in your estate plan, such as a trust.

To help you understand what estate planning means to you, the following sections address some estate planning needs that are common among some very broad groups of individuals. Think of these suggestions as simply a point in the right direction, and then seek professional advice to implement the right plan for you.

Over 18

Since incapacity can strike anyone at anytime, all adults over 18 should consider having:

  • A durable power of attorney: This document lets you name someone to manage your property for you in case you become incapacitated and cannot do so.
  • An advance medical directive: The three main types of advance medical directives are (1) a living will, (2) a durable power of attorney for health care (also known as a health-care proxy), and (3) a Do Not Resuscitate order. Be aware that not all states allow each kind of medical directive, so make sure you execute one that will be effective for you.

Young and single

If you’re young and single, you may not need much estate planning. But if you have some material possessions, you should at least write a will. If you don’t, the wealth you leave behind if you die will likely go to your parents, and that might not be what you would want. A will lets you leave your possessions to anyone you choose (e.g., your significant other, siblings, other relatives, or favorite charity).

Unmarried couples

You’ve committed to a life partner but aren’t legally married. For you, a will is essential if you want your property to pass to your partner at your death. Without a will, state law directs that only your closest relatives will inherit your property, and your partner may get nothing. If you share certain property, such as a house or car, you may consider owning the property as joint tenants with rights of survivorship. That way, when one of you dies, the jointly held property will pass to the surviving partner automatically.

Married couples

For many years, married couples had to do careful estate planning, such as the creation of a credit shelter trust, in order to take advantage of their combined federal estate tax exclusions. For decedents dying in 2011 and later years, the executor of a deceased spouse’s estate can transfer any unused estate tax exclusion amount to the surviving spouse without such planning.

You may be inclined to rely on these portability rules for estate tax avoidance, using outright bequests to your spouse instead of traditional trust planning. However, portability should not be relied upon solely for utilization of the first to die’s estate tax exclusion, and a credit shelter trust created at the first spouse’s death may still be advantageous for several reasons:

  • Portability may be lost if the surviving spouse remarries and is later widowed again
  • The trust can protect any appreciation of assets from estate tax at the second spouse’s death
  • The trust can provide protection of assets from the reach of the surviving spouse’s creditors
  • Portability does not apply to the generation-skipping transfer (GST) tax, so the trust may be needed to fully leverage the GST exemptions of both spouses

Married couples where one spouse is not a U.S. citizen have special planning concerns. The marital deduction is not allowed if the recipient spouse is a non-citizen spouse (but a $149,000 annual exclusion, for 2017, is allowed). If certain requirements are met, however, a transfer to a qualified domestic trust (QDOT) will qualify for the marital deduction.

Married with children

If you’re married and have children, you and your spouse should each have your own will. For you, wills are vital because you can name a guardian for your minor children in case both of you die simultaneously. If you fail to name a guardian in your will, a court may appoint someone you might not have chosen. Furthermore, without a will, some states dictate that at your death some of your property goes to your children and not to your spouse. If minor children inherit directly, the surviving parent will need court permission to manage the money for them.

You may also want to consult an attorney about establishing a trust to manage your children’s assets in the event that both you and your spouse die at the same time.

You may also need life insurance. Your surviving spouse may not be able to support the family on his or her own and may need to replace your earnings to maintain the family.

Comfortable and looking forward to retirement

If you’re in your 30s, you may be feeling comfortable. You’ve accumulated some wealth and you’re thinking about retirement. Here’s where estate planning overlaps with retirement planning. It’s just as important to plan to care for yourself during your retirement as it is to plan to provide for your beneficiaries after your death. You should keep in mind that even though Social Security may be around when you retire, those benefits alone may not provide enough income for your retirement years. Consider saving some of your accumulated wealth using other retirement and deferred vehicles, such as an individual retirement account (IRA).

Wealthy and worried

Depending on the size of your estate, you may need to be concerned about estate taxes.

For 2017, $5,490,000 is effectively excluded from the federal gift and estate tax. Estates over that amount may be subject to the tax at a top rate of 40 percent.

Similarly, there is another tax, called the generation-skipping transfer (GST) tax, that is imposed on transfers of wealth made to grandchildren (and lower generations). For 2017, the GST tax exemption is also $5,490,000, and the top tax rate is 40 percent.

Whether your estate will be subject to state death taxes depends on the size of your estate and the tax laws in effect in the state in which you are domiciled.

Elderly or ill

If you’re elderly or ill, you’ll want to write a will or update your existing one, consider a revocable living trust, and make sure you have a durable power of attorney and a health-care directive. Talk with your family about your wishes, and make sure they have copies of your important papers or know where to locate them.

 

IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc., Mutual of Omaha Investor Services, Inc. and its representatives do not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Registered representatives offer securities and investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Mutual of Omaha Advisors is a marketing name for Mutual of Omaha Investor Services, Inc. Mutual of Omaha Investor Services, Inc., Family Wealth Management and Broadridge Investor Communication Solutions, Inc. are not affiliated.

Trading instructions sent via e-mail will not be honored. Please contact my office at the number provided above or Mutual of Omaha Investor Services, Inc. at (800) 228-2499 for all buy or sell orders. Please note that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets.


Walmart Vs Amazon: Best ‘Black Friday’ 2017 Deals

Walmart Vs Amazon: Best ‘Black Friday’ 2017 Deals

By Gordon Kelly

Walmart’s Black Friday 2017 sales are poised to be the highlight of the holiday sales season, but rivals including Best Buy and TargetKohl’s and Costco delivering killer deals to attract your attention. That said it is Amazon which is by far Walmart’s biggest Black Friday rival, so which retail giant really has the better deals? Let’s take a look…

Read the full article here!


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This is not an offer or solicitation in any jurisdiction where we are not authorized to do business. Registered representatives offer securities through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC. Investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Family Wealth Management and Mutual of Omaha Investor Services, Inc. are not affiliated.

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