Benefit Life Stage Examples

Transcription

1 Benefit Life Stage Examples Older, Empty Nesters - Ages 61 and 60**: Overview: Grant and Katie are married and have three children, ages 31, 28 and 26, all of whom live on their own. One tends to come back like the tide every now and then. They are concerned for their future retirement and hope to be able to travel later in life. Housing: They have a mortgage on a home with five years left and a monthly payment of $1,320. This is within 25% of their monthly take-home pay and leaves room for other goals. Debt: They have little credit card debt ($957). They both have cars, one is paid off and the other has a payment of $498 per month. Savings/Investments: They have $6,412 in their bank savings account. Grant has a 403(b) worth $173,675 in a diversified portfolio of low-cost mutual funds and Katie has accumulated $68,213 in her 403(b) plan mutual funds. Katie has 60 sick leave days accumulated. Grant has 24 sick leave days, many used when he had recent open heart surgery. They have done a moderate job in their investing programs and are looking hopefully to a comfortable retirement with many vacations. Health: Linda gets regular checkups and is in good health currently.

2 Jack is overweight and has recently had open heart surgery to repair a valve in his heart. His cholesterol is extremely high and he is currently under numerous medications. He tries to exercise under a highly monitored schedule. Katie s mother is 81. Her father is deceased. Grant s parents are both deceased. Recommendations: Employee benefits: Medical Insurance- Grant and Katie should select their Medical Benefits as they may need them for many reasons. The most pressing are their ages and health issues. Hints on Choosing the Right Option for You and Your Family Think about how you use health insurance. Ask yourself... How often do I (and/or my dependents) go to the doctor (for illnesses, preventive care, etc.)? How often do I (and/or my dependents) need prescription medications? Which networks do my doctors participate in? Do I (and/or my dependents) want to go to the doctor I choose, when I choose, wherever I may be at the time? (Often, this is a very expensive choice) What preventive services (Such as immunizations, checkups, colonoscopies, etc.) will my family need this year? Can I live by the rules of an HMO, or do I need more flexibility?

3 What deductible can I live with? What co-pays can I budget? Weigh both the premium and out-of-pocket costs against the benefits the plan will provide for your family. Their need for Disability Income Insurance is not very great. The reasons are as follows: Long Term Disability- Their years of service being 31 for Grant and 30 for Katie have them able to fully retire with no reductions in pension income. They will have until age 62 before they may begin collecting Social Security at REDUCED amounts. Their children are grown and gone. No financial responsibilities for others. Their debt payments are within reason and will be even on their teacher retirement income. They should look to rid all debt payments before reaching retirement. Group disability would reduce with their pension payments. Once an employee has years in retirement services, they should begin to analyze their Long Term Disability needs. However, absent the participation in Long Term Disability insurance, Katie could be forced to retire. She should consider whether this risk is worth taking. Life Insurance- Neither Grant nor Katie has a great need for life insurance. This should remain unless they will want to take on more debt (such as a beach home or a business) for other goals in the future.

4 Children are gone and are financially self-sustaining. They have savings accumulated in their retirement accounts to selfinsure burial needs. Retirement/Saving- Remain diligent in their emergency fund of at least four months living expenses. During retirement, out-of-pocket needs for medical expenses, trips and dinners can strain many budgets until a routine is established. This could be accumulated in a credit union, savings account, money market mutual fund or short-term bond fund.* They should take an UPDATED Investment Risk Tolerance Questionnaire to check their levels of investing comfort in this stage of their lives.* Look at their investment portfolios to determine if a shift to a more conservative investment mix is warranted. But REMEMBER, too safe is too risky. Life spans are increasing and people are spending more time in retirement. Our dollars have to work hard, even in retirement.* Katie should strongly look at the advantages (and any potential disadvantages) of investing in mutual funds as a more efficient longterm method of accumulating funds in retirement.* Other Insurance Benefits coverage- Look into Long Term Care insurance, either on a group basis with their employers (if offered) or individual plans. They will have the income and assets to pay for this coverage, and this could keep a long term illness from eroding their life savings. This will also allow them to be independent of the financial support of others, get care where they prefer and leave an inheritance for their children. Check to see if their employer-sponsored Dental Insurance is available in retirement or on COBRA. Consider their impending dental work and make sure to get this work done, as most dental insurance terminates after 18 months under COBRA laws.

5 Vision Insurance- Look into their company-sponsored Vision Insurance to get work done that they may need. Also, like dental, vision insurance may be maintained after retirement under COBRA for up to 18 months. Look to their Flexible Spending Accounts to help with out-of-pocket expenses for items such as dental and vision visits, medical deductibles, co-pays, etc. Look at having wills drafted or updated. Review any other benefit options offered by your employer. **This document is intended to be informational and does not constitute legal or financial advice regarding any specific information. It is not intended to be used to avoid tax-related penalties or to promote and market or recommend any transaction to another party. Due to the comprehensive nature of many benefit programs and individual circumstances, it is recommended to review and consider all benefits offered by your employer before making final selections. Remember, past performance of an investment product does not guarantee future results. Investors should carefully consider the investment objectives, risks, charges and expenses of their investments before implementing their decisions. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money. You should seek the help of a qualified professional before making financial or legal decisions.