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mark diamond arizona, mark diamond senior education counsel, Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Changing the Way You Think about Retirement

When it comes to retirement planning, what comes to your mind? It may require changing the way you think about retirement to best protect and preserve your wealth. You might be familiar with Social Security benefits, 401k, annuities, etc. You might even have taken a couple of seminars or is reading articles from various websites on what it takes to retire. For most people, retirement is a scary subject. Especially with the amount of money that you are “supposed to” target before retirement, people mostly shake their heads and sigh deeply.

Here is a new way to look at retirement that might revolutionize your planning thought process: stop thinking about the net worth of your retirement savings. If you successfully put away the amount of retirement savings that you planned to, what will be your monthly income? According to a Harvard Business Review article by Dr. Robert Merton, professor at MIT Sloan School of Management, what’s most important in approaching retirement is not the net worth but the monthly income.1

So what does this mean? According to Dr. Merton, you should be investing in a mix of both risk and risk-free assets that increases the chance of achieving your goal. Risky assets are mainly equities that are looked at in terms of income, and the risk-free assets should be annuities.1 This does not mean that you need to purchase annuities right away, but that you have your portfolio managed well enough to purchase the annuities on retirement, irrespective of inflation or interest. With retirement comes your retirement savings. Following this strategy will allow you to plan out a retirement that helps you to achieve the desired monthly income during retirement.

References:

  1. Merton, R. C. 2014. The Crisis in Retirement Planning. Harvard Business Review92(7/8), 42-50.
  2. Mark Diamond, National Speaker and Senior Advocate
Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Options for Long Term Care?

Senior couple educating themselves on long term care optionsLifespan has exponentially increased with the advancement of science and technology. While some people can maintain their health for many years, with greater longevity comes the need for better and longer care. This means as people age, there is a greater demand for social programs designed to act as a safety net, such as Medicare and Social Security, as well as strategies to cope with the increased cost of living longer. So, what options do I have for long term care?

The following are five ways to cover the costs of long-term care:

1) Medicare / Medicare Supplements: For those looking to mitigate the costs of their long-term care, one possible avenue is relying on Medicare and Medicare supplements. Medicare can pay for up to 20 days of health care, per condition, per lifetime, and some Medicare supplements can cover up to 80 days. However, participants should check their contracts to make sure these are available.

2) Self-Funded: If you’re lucky enough to have a sizable nest egg, retirement fund, 401 (k), or some other pool of saved money, self-funding or private care might be an option. This is referred to as “spending down.” That said, this could be a costly option, especially as both life expectancies and the odds of needing more involved long-term care increase.

3) Veteran’s Administration: For those who have served in the military, the Veteran’s Administration offers a number of different options for long term care. However, a common problem is that many veterans do not qualify for nursing home benefits, making this option even more precarious and narrow. The best course of action is to consult a VA attorney.

4) Insurance: Long Term Care Insurance offers a great deal of options, protecting against a wide range of needs attached to longer life and extended health concerns. Insurance can be obtained for everything including home health care, assisted living, residential care facilities, and a skilled nursing facility.

5) Medicaid: The 5th and final option in many cases is seeking state paid assistance via the Medicaid program. Those who would utilize Medicaid will have to navigate an application process that includes medical eligibility, a comprehensive financial review of your assets and resources, income eligibility that includes share of cost as well as potential state recovery.

Ideally, you’ll want to come up with a plan for paying for long term care well before you need it. The language used for policies and programs can be tricky and difficult to understand. Sources such as Mark Diamond and Senior Education Counsel have the expertise to help assist you in determining which option is best.

Reference:

  1. Mark Diamond, National Speaker and Senior Advocate