Unsure whether it’s a good option for you? Check out this video to learn why it’s important to begin building your nest egg early in life.
Ever wondered if you should invest globally or keep all of your investments domestic? This PDF to shares valuable information on this topic.
It’s no secret. Americans are living longer than ever and could spend 30 years or longer in retirement. Sounds great, doesn’t it? While you may be mentally prepared to kick back and enjoy life without work, are you financially equipped for a retirement that could last that long?
For women, preparing for retirement is no easy task. Cindy Hounsell, executive director of the Women’s Institute for a Secure Retirement, warns, “Women are twice as likely as older men to become poor. Women have a lifetime of lower earnings, so their retirement income is lower, including pension benefits, 401(k) distributions, and Social Security payments.” Consider these statistics:
In addition to lower earnings and lower retirement income, women face another challenge: Making the assets they do have last as long as they live. On average, women live five to seven years longer than men and, if married, are more likely to become widowed–another obstacle in achieving secure retirement.
According to the Center for Retirement Research at Boston College, non-married women are the most vulnerable in becoming poor in old age. However, even though married women tend to fare better financially in retirement than those who never marry or divorce, married women who depend on a spouse’s retirement benefits suffer severe income decline after the husband’s death: Social Security benefits are cut up to one half and income from a spouse’s private pension benefit is either reduced or terminates.
Whatever your situation, there are steps you can take to secure your future. First, participate in any retirement savings plan available through your employer, such as a 401(k)-type plan, and then determine how much additional savings you can put aside for retirement.
When looking at additional retirement savings options, consider the annuity. An annuity is a financial product that allows you to save for your future on a tax-deferred basis and then provides you with a steady paycheck in retirement that you cannot outlive. It is a contract written by life insurance companies and sold by life insurers, as well as banks and brokerages. An annuity has certain benefits other retirement planning tools may not, including:
There are a variety of things to consider before purchasing an annuity including the different types, as well as purchasing and payout options. Talk to your financial planner, insurance agent, or company representative about what type of annuity may be right for your retirement portfolio.
Learn more about annuity basics in the brochure, The Individual Annuity: A Resource In Your Retirement, produced by the American Council of Life Insurers.
Having children is often the ‘catalyst’ for buying life insurance, as young parents recognize the awesome, life-long responsibility they have assumed.
When purchasing life insurance, consider covering both spouses – even if one stays at home and is not employed. In the event of the stay-at-home parent’s death, the surviving spouse will need to shoulder all the responsibilities of the household.
Here are some tips to prudently control life insurance costs:
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Making $ense of Health Insurance After Retirement
Don’t forget to add health care expenses to your nest egg’s sum total.
You’ve calculated how much income you’ll need in retirement and are making plans to enjoy your next chapter. But have you accurately considered how much you’ll likely spend for post-retirement medical costs? Seniors spend more on out-of-pocket health care than any other age group. Health care costs will likely be a large part of your budget and should be calculated into your financial plan. Take control of your retirement finances by researching your options now.
Start by assessing your health care costs:
•Do you have significant health issues? What are your current costs? What will they likely be in 10, 15 or 20 years?
•Understand that Medicare covers about 51 percent of health care expenses in retirement but it’s not free. You’ll pay premiums for Medicare Parts B and D as well as co-pays and other out-of-pocket expenses depending on the treatment.
•Consider other expenses such as prescriptions, items like a wheelchair or even modifications to your home to help you age in place.
Early retirement: if you’re under 65 years old
Under the Affordable Care Act (ACA), all Americans are required to have health insurance or face paying a penalty. After retirement, medical and health insurance from your prior job is typically available for up to 36 months through COBRA. Some employers do allow retirees to retain group medical coverage in retirement but there’s no guarantee that coverage will be available indefinitely.
If you’re under 65 years old, you can search for and purchase health insurance from the Marketplace. Check to see if you qualify for a subsidy by using calculators on the Marketplace. If retiring early, you may be eligible for tax credits if you purchase your health insurance through the Marketplace and your income meets the poverty level threshold.
The variety of health coverage options on the Marketplace can be confusing so you should carefully consider your personal needs and finances. You may also qualify for a special enrollment period if you lose coverage from a job, meaning you won’t have to wait for the open enrollment period.
Medicare, Medicare Supplement, Medicaid
Medicare is an insurance program managed by the federal government that provides health coverage to Americans 65 and older and some people with disabilities. Medicaid is an assistance program managed by states and federal government that provides health coverage for those with very low income. You can find more information on these two programs from the Department of Health & Human Services.
Medicare is a federally funded insurance program for eligible participants 65 and over and for some people with disabilities.
Medicare has four basic forms of coverage:
•Part A: Pays for hospitalization costs (this is the “free” portion of Medicare supported by a payroll tax you paid during your working years).
•Part B: Pays for physician services, lab and x-ray services, durable medical equipment and outpatient services.
•Part C: Medicare Advantage Plan (like an HMO or PPO) offered by private companies approved by Medicare. The cost of Part C depends on the plan you choose and may be cheaper than other options.
•Part D: Assists with prescription drug costs.
Parts B and D are not free. Premiums are income-based and do not begin until you qualify for Medicare. Medicare is valuable but will not pay for everything which is why Medicare Supplement Insurance should be considered.
Medicare Part C (Medicare Advantage plans)
Medicare Advantage Plans bundle parts A, B, and D coverages. These plans often cost less because they generally require you to use doctors and hospitals who participate in the plan’s network. Check which plan best meets your financial needs. You can find plans in your area on Medicare.gov.
Medicare Part D (Prescription Drug Coverage)
Medicare Part D is a voluntary prescription drug program for Medicare beneficiaries. Prescription drug plans are sold by private companies and must be approved by Medicare. Before you purchase a prescription drug plan, make sure it is approved by Medicare. Drug plans have rules about what drugs are covered in different categories, so verify any medications you currently take.
You can find Medicare Drug Plan information on the Prescription Drug Coverage page.
Medicare Supplement Insurance (Medigap)
Because Medicare does not cover 100 percent of all costs, Medicare Supplement Insurance policies are available for purchase and used in concert with traditional Medicare to help offset costs. To purchase Medicare Supplement Insurance you must be enrolled in both Medicare Part A and Part B. Medicare Supplement Insurance (also known as Medigap) provides coverage for gaps in medical costs not covered by Medicare, such as coverage for medical care when you travel outside the U.S. Medicare Supplement plans are standardized and offer various benefits to help offset your health care cost.
The Choosing a Medigap Policy Guide can help you find information on Medicare Supplement Insurance, the names of companies authorized to sell policies and premium comparisons. Supplemental coverage may also be offered through your employer. And Medicaid will supplement Medicare for low-income individuals.
Medicare deadlines are extremely important. If you decide Medicare is right for you, it’s better to sign up at the right time than be subject to late penalties, which can be significant. The initial enrollment period lasts seven months – from three months before the month of your 65th birthday to three months after that month.
Medicaid provides health care to more than 4.6 million low-income seniors and 3.7 million people with disabilities. Some people are enrolled in both Medicaid and Medicare. Medicaid is administered by the states and rules vary in each state. This fact sheet explains the differences between Medicare and Medicaid.
If you have questions related to Medicare, contact Medicare or your local Senior Health Insurance Program (SHIP). Medicare and You is Medicare’s official guide to the Medicare program. For information on Medicaid, visit the official Medicaid website.
For more information, contact your state insurance department.
About the NAIC
The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. For more information, visit www.naic.org.
When Nancy Thomas began her career as a teacher, she was single and knew she needed to plan for her financial security. That’s why she protected her income with Individual Disability Income from Principle Life Insurance Company.
Knee problems ended her teaching career
Nancy maintained her Individual DI insurance policy for 19 years. “Once you start paying the premiums automatically each month, you don’t miss the additional money,” she says. Many years later, when Nancy developed osteoarthritis in her knee, she faced a difficult time at work. Her school had multiple floors and no elevator which made it difficult for her to escort students. Despite knee replacement surgery, she continued to be in pain and decided to retire early. Not realizing she had a claim, Nancy contacted her insurance agent to cancel her Individual DI insurance policy since she was no longer working. Her agent explained that Nancy was actually eligible to file a claim and helped get the process started.
Help for bridging the gap in retirement savings
Nancy is grateful for the benefits her policy provides. She explains, “The disability payments have helped me bridge the gap of losing out on some of my
retirement benefits because of retiring early. It gives me a lot of comfort knowing they’re there.” Nancy is very glad she made the decision to purchase Individual DI insurance many years ago. She explains, “I was in good health when I purchased my policy, but you never know what life’s going to
throw at you.”
An annuity is an insurance contract. An insurance company agrees to make a series of income payments to you in exchange for a premium (or premiums) that you pay.
As with any major purchase or financial decision, it’s important to evaluate your needs and options carefully. Because an annuity contract is a long-term commitment, thoroughly review your current finances, retirement goals, and expected future needs before you buy. Below are tips to help you with your discussion and to discuss with your financial planner or insurance agent.
Familiarize yourself with the different types of annuities. There are two basic types of annuities: An immediate annuity turns assets into steady income right away; a deferred annuity lets savings grow tax deferred and pays income to you at a future date. With a deferred annuity, you choose how your savings accumulates: at a fixed rate, index rate, or a variable rate based on the performance of stock and bond markets.
Evaluate your retirement needs. Do you need less income in the early years of your retirement than you will in the future? What is your tolerance for risk? Do you need to ensure income or asset protection for a spouse after your death? There are different types annuities and features to meet a variety of income needs in retirement.
Understand the language describing the annuity. If you are unsure about the type of annuity you are considering or the terms used in the annuity contract, ask your financial planner or insurance agent to explain the terms. Never agree to terms you don’t fully understand.
If you are buying a fixed annuity, ask about the current credited interest rate, how often it changes and the minimum guaranteed rate.
If you are buying an index annuity, find out about the index, formula, and conditions applied to the interest period. Ask how often indexed interest is credited, how factors might change, and the level of minimum guaranteed values set forth by the contract.
If you are purchasing a variable annuity, review the investment options and read the prospectus for each subaccount. A prospectus, which is required by law to be given to potential buyers, outlines objectives and risk levels, as well as operating expenses and financial statements.
Ask if there are fees or charges if you withdraw some or all of your money from your deferred annuity. Find out how much the fees are and for how long they apply. With most annuities, the charge decreases each year and after a period of time set by the contract disappear altogether. Most annuities let you take a certain percentage (usually 10%) of your money out each year during the accumulation phase (when you’re still paying premiums and haven’t started to receive payouts) at no cost.
Ask if there is a guaranteed death benefit. Some deferred annuities include death benefits that exceed the value of the annuity; some do not. Know what benefit is guaranteed, how and when it will be paid, and whether increased death benefits can be purchased.
Ask how long the “free-look” period is. This is the time you have to review the annuity contact and return it if you have made the wrong choice. If you decide to cancel, the company then voids the contract and refunds your initial contribution or the market value of the contact. Free-looks usually last at least 10 days, but rules vary from state to state and not every state guarantees free-look rights.
Compare similar contracts from several companies. Features, terms, and conditions vary from company to company.
Beware of offers for free products. There are no free financial products or contracts. Free lunch or dinner “seminars” are sales presentations.
Make sure your agent is licensed to sell annuities. A professional must be licensed by your state insurance department to sell insurance products. To sell a variable annuity, he or she must also be a registered representative of a broker-dealer who’s a member of the Financial Industry Regulatory Authority (FINRA). Don’t be reassured by credentials suggesting an agent has special certification or training in advising retirees until you check them out. Some credentials have little meaning while others represent hours of training.
If you think your retirement is going to look like your parents’ or grandparents’ retirement, think again. Here are three things you should be considering:
1. The Bank of Mom and Dad won’t always be open. There are two sides to this. If you’re currently supporting your adult children, you’re not alone. According to a BMO Wealth Institute study, 81% of parents say they have provided their adult children with some financial support. However, you’ll want to evaluate if that’s possible to sustain in the long-term. Ask yourself: Will helping my adult child (buy a house, afford a vacation, transition to a new job …) put my own financial future in jeopardy?
If you answer, “No, it won’t harm my financial well-being” then it’s OK to continue your support, as long as you have the assets to back it up and your financial position doesn’t deteriorate in the future. But if you realize that continuing to support your children means financial sacrifices on your part and lowering your own standard of living, then you need to have a frank conversation with them. I’d also like to suggest that financially supporting your adult children long term sends the message that you really don’t have confidence in them.
Now, the other side of this. If you are on the receiving end of money from your parents, just know that the escalating costs of health care in retirement, market volatility and other factors, may shut down your parents’ largesse, or potentially wipe out any inheritance they might have liked to pass along, whether you or they like it or not. Fewer than half of the BMO study respondents said they would sacrifice their own financial well-being to financially support their children. Bottom line: Relying on your parents is not a solid financial plan.
2. Health care costs are going to be a major factor in retirement. This year the premiums for Medicare went up significantly, while Social Security benefits went down for anyone who is making more than a specific, although limited, amount of money. I’ve found that most people have not planned for the rapidly escalating cost of medical care in retirement. A person’s future medical expenses are going to be the great unknown. But here is a figure that can help you put things into perspective. Fidelity’s Retirement Health Care Cost Estimate shows that a couple, both aged 65 and retiring this year, can now expect to spend an estimated $245,000 on health care throughout retirement. Are you prepared for this?
3. You may—or may not—need life insurance. If you have enough assets, and are not looking to replace them if you or your spouse or partner were to die, you may not need as much life insurance as you once had. But when looking at the direction of the economy, you’ll need to ask yourself, “If something happens to me, will my spouse or partner have to change their lifestyle due to insufficient assets?” If so, keeping your life insurance may make sense. Think of it this way: by having the life insurance it puts you in the position of “being the bank” instead of “having to go to the bank” when the need for money arises.
The bottom line is that as you approach retirement, you need to look at the future with clear eyes, considering all the “what ifs.” Then be sure to sit down with an advisor or agent who can help you mitigate those what ifs with the proper type and amount of insurance and planning.
January 26, 2016 | Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of Life Happens
Infant, convertible, or booster seat? At NHTSA, we know that finding the right car seat and installing it correctly is no easy task. Then there’s the question of when to transition your child to another type of car seat. Follow these steps to help you through the decision-making process and keep your child safe.
Find the right car seat based on:
Car Seat Types – Learn about the four types of car seats.
Age & Size Recommendations (from birth to age 13) – Follow these recommendations for selecting a car seat based on your child’s age and size.
Find a Car Seat – Compare car seat makes and models using our Car Seat Finder tool.
Car Seat Ease-of-Use Ratings – Evaluate car seat features using our car seat ease-of-use ratings.
Install your car seat correctly
Follow these car seat installation tips to keep your child safe.
Register your car seat
Don’t delay—register your car seat today to receive car seat and booster seat recall notices.
Get recall notifications on your car seat
Sign up to receive e-mail alerts about car seat and booster seat recalls from NHTSA.
Blog credit: NHTSA http://www.safercar.gov/parents/CarSeats/Car-Seat-Safety.htm