The Retirement Experience: Men vs. Women
Do men and women see things differently? At least on the topic of retirement, the answer may be yes. A recent study commissioned by Ameriprise Financial reveals that gender may play a significant role in how we feel about and prepare for this major life event.
According to findings from the New Retirement Mindscape IISM study, women tend to have a more positive outlook towards retirement, while men are more likely to feel financially ready for it. The study also found that the recession has impacted men and women differently, a fact that may account for dissimilarities in the way they plan and prepare for retirement. For those in a couple, these differences could cause some major bumps on the road to a shared retirement. Financial pitfalls and stress on your relationship are just two of the potential fallouts you and your spouse or partner could encounter if you fail to communicate effectively about your plans and goals for retirement.
The Findings: Understanding the Gender Split
In 2005, Ameriprise Financial commissioned the New Retirement Mindscape® study, which examined how Americans ages 40-75 view retirement. Five years later, prompted by the seismic shift in the economy, Ameriprise revisited this research to discover how the retirement landscape has changed for U.S. consumers. Findings from the New Retirement Mindscape II study demonstrate that men and women continue to approach retirement differently, and that the recession may have actually made the contrast starker.
If you tend to feel more excited about retirement than your spouse or partner (or vice versa) you’re not alone. In 2010, pre-retired women are much more likely than men to feel “enthusiastic” about retirement (74% vs. 65%). They’re also more likely to feel “excited with anticipation” about the day they retire than men (53% vs. 38%). Meanwhile, among retired men, fewer express that they “enjoy retirement a great deal” in 2010 (56%) than they did in 2005 (67%), while the percentage basically has held steady for retired women (57% in 2005 vs. 56% in 2010).
Why the gender enthusiasm gap? If you’ve read the newspaper recently, you might guess one possible reason: men have been hit harder by the recession. According to the Bureau of Labor Statistics, men account for nearly two-thirds of the jobs lost between late 2007 and December 2009. With such lopsided economic fallout, it’s perhaps no wonder that men report feeling less excited about retirement than women.
There’s the old joke about men being reluctant to stop and ask for directions. In fact, when it comes to financial planning, this may hold true. Despite having been hit harder by the recession, men in general are less inclined to seek guidance from a financial advisor. Both genders are more likely to work with a financial advisor in 2010 than they were in 2005; however, women do so at a higher rate (46% vs. 38%).
What’s more, it appears that men and women may be planning for a different type of retirement. More pre-retired men expect to work—either part-time or full-time—in retirement than pre-retired women (38% vs. 27%). Meanwhile, pre-retired women appear to place importance on being able to volunteer (31% vs. 22%) and spend time with family (77% vs. 68%) during retirement.
Time to Talk Retirement
The study’s findings paint a complicated picture for anyone who’s planning to retire with a spouse or partner. What if you’re planning to retire next year and your mate wants to keep working for another decade? What if you envision a retirement filled with travel and your spouse or partner wants to stay close to home? What happens if you disagree about whether or not you can even afford to retire?
To avoid any unfortunate surprises as you approach or enter into retirement, open up the lines of communication with your spouse or partner about their hopes, fears and level of preparedness for retirement as early as possible. Discussing how you want to spend retirement is not only important from an emotional aspect, but also a financial one. Establishing your goals for the future will help you determine how much money you need to save in order to fund them.
A financial advisor can assist you with writing a financial plan that weaves together your financial objectives and your partner’s. In addition to providing a roadmap to your financial future, it can be an opportunity to learn how he or she envisions retirement. The process may be eye-opening.
Paul A. Pouliot CFP®, CHFC®, CASL®, Senior Financial Advisor, An Ameriprise Platinum Financial ServicesSM practice, Ameriprise Financial Services, Inc., 116 South River Road | Bedford, NH 03110 / Office: 603.296.0030 | Fax: 603.296.0028 – paul.a.pouliot@ampf.com / www.ameripriseadvisors.com/paul.a.pouliot
Disclaimer: This communication is published in the United States for residents of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA only and this advisor is licensed only in the states of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA
The New Retirement Mindscape IISM and New Retirement Mindscape® studies were commissioned by Ameriprise Financial, Inc. and conducted by telephone by Harris Interactive in May 2010 and August 2005 among 2,007 (2010) and 2,000 (2005) U.S. adults age 40-75. The sampling error for the 2010 study is +/-2.5%. The 2005 study was conducted in conjunction with Age Wave and Ken Dychtwald, Ph.D.
This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. Neither Ameriprise Financial nor its advisors or representatives provide tax or legal advice. The views expressed may not be suitable for every situation.
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
File #108719
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By Paul A. Pouliot
Roth IRA conversion decision deadline approaches
2010 marks the first year that many individuals are able to convert existing IRAs (or workplace savings plans) to a Roth IRA. Income limits that previously prevented individuals or couples with Adjusted Gross Incomes of more than $100,000 from completing a conversion no longer exist. The opportunity is now open to everybody to potentially benefit from tax-free growth of earnings. If you haven’t taken a closer look at a Roth conversion, now might be the time to do so. It could allow you much more flexibility in managing cash flow needs in a more tax-efficient way when you reach retirement.
What’s the appeal?
Perhaps the most attractive feature of a Roth IRA is that earnings grow on a tax-deferred basis and distributions are tax-free. This could be particularly advantageous if you anticipate that your tax bracket will be higher than it currently is by the time you begin withdrawing from the account.
Contributions will be taxed at your current tax rate when you make the conversion, but you will be able to recuperate all of the investment growth you accumulate in the account, tax-free, once holding period requirements are met. (If requirements are not met, taxes and penalties may apply).
The Roth IRA may also be a useful instrument in estate planning. Because income tax is paid on contributions upon conversion, they may be passed onto your beneficiaries income tax-free. (Estate taxes may still apply to Roth IRA assets).
However, while a Roth IRA can provide you with significant tax advantages when the time comes to take distributions, there are current tax consequences when converting. Generally, a conversion to a Roth IRA from your traditional IRA or other eligible retirement plan will be taxable. If your traditional IRA or workplace retirement plan contains after-tax dollars, money is distributed pro rata. Check with your tax advisor to help estimate the actual tax liability that would apply to your conversion.
The coming deadline
Under current law, the ability for anybody to convert regardless of income level is a “permanent” change in the tax law. But a deadline of December 31, 2010 is fast approaching for those making a conversion who want to capture a significant, one-time tax advantage. A conversion completed in this calendar year qualifies for a special deferral of payment of the tax due as a result of the conversion.
You can choose to claim the income from the conversion on your 2010 tax return. Alternatively, you can claim half of the income generated by the conversion on your 2011 tax return (in 2012), and the other half on your 2012 tax return (filed in 2013). This not only allows you to delay tax payments, but by spreading out the impact on your total income, may create the potential to retain a lower tax bracket in both of those years, reducing your overall tax liability.
The actual tax you pay could be subject to many variables, including potential changes to tax rates in future years and the possibility that other forms of income may increase significantly in 2011 and 2012, pushing you into a higher tax bracket for purposes of calculating your Roth conversion tax liability.
Future tax risks
Some are concerned that the government’s desire to find new sources of tax revenue to offset current debt and future demands on programs will result in changes in tax policy. Could this mean that Congress will require that Roth IRA distributions lose their tax-free status? Nobody can predict for certain what would happen. It is just as possible that Congress could decide to alter the rate of taxation levied on distributions from traditional IRAs or workplace savings plans (such as 401(k)s). In other words, making decisions today about your financial future can’t be based on sheer speculation. You have to use the best available information that exists today. That means your interests will be best served by working with the tax laws as they are currently defined rather than trying to predict future actions of Congress.
Paying for the conversion
A key hurdle to making the decision to convert is the tax issue. You must come up with money to cover the tax liability. The conversion is most likely to work to your long-term benefit if the tax bill can be paid utilizing dollars available in existing taxable accounts. This allows you to maximize the tax advantages of your Roth IRA by keeping your retirement savings invested.
Here is a way to justify a Roth conversion in today’s market. An extended period of market volatility has resulted in a number of investors keeping money on the sidelines in cash-equivalent investments. Rather than wait to reinvest these dollars in the market at a later date, consider using those funds today to pay the tax on a Roth IRA conversion. This has the effect of investing that money today in return for tax-free withdrawals from a portion of your savings in retirement.
One more reason to convert before the end of the year – if you change your mind before October 15, 2011, you can “recharacterize” your Roth IRA, returning the money to a traditional IRA and avoiding the tax consequences of conversion. This opportunity for a “do-over” reduces the risks involved with giving a Roth conversion a try this year.
Paul A. Pouliot CFP®, CHFC®, CASL®
Senior Financial Advisor, An Ameriprise Platinum Financial ServicesSM practice, Ameriprise Financial Services, Inc. – 116 South River Road | Bedford, NH 03110 – Office: 603.296.0030 | Fax: 603.296.0028 / paul.a.pouliot@ampf.com - www.ameripriseadvisors.com/paul.a.pouliot
READ MORE OF PAULS ARTICLES – CLICK HERE
Disclaimer: This communication is published in the United States for residents of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA only and this advisor is licensed only in the states of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
Ameriprise Financial does not provide tax or legal advice. Consult your tax advisor or attorney.
© 2010 Ameriprise Financial, Inc. All rights reserved. File # 106910
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By Paul A. Pouliot
Healthcare in Retirement: What health care benefits are available in retirement? We already covered Medicare and Medigap.
Medicaid
In general, Medicaid provides medical assistance to aged, disabled, or blind individuals, or to needy, dependent children who could not otherwise afford the necessary medical care. Medicaid pays for a number of medical costs, including hospital bills, physician services, home health care, and long-term nursing home care. Each state administers its own Medicaid programs based on broad federal guidelines and regulations. Within these guidelines, each state performs the following: (1) determines its own eligibility requirements; (2) prescribes the amount, duration, and types of services; (3) chooses the rate of reimbursement for services; and (4) oversees its own program.
Applying for benefits
To apply for Medicaid, you must use a written application on a form prescribed by your state and signed under penalties of perjury. Give the application to your state Medicaid office. Typically, you will need to provide proof of age, marital status, residence, and citizenship, along with your Social Security number, verification of receipt of government benefits, and verification of your income and assets. A responsible individual can complete the application on behalf of an incompetent or incapacitated individual.
Eligibility
To qualify for Medicaid, you must meet two basic eligibility requirements. First, you must be considered categorically needy because of blindness, disability, old age, or by virtue of being the parent of a minor child. Next, you must be financially needy, which is determined by income and asset limitation tests. States have much discretion in determining which groups their Medicaid programs will cover, but as participants in Medicaid, they must provide coverage for all residents who are considered categorically needy.
Caution: State and federal rules regarding Medicaid eligibility change frequently.
Transfer of assets
Because Medicaid eligibility is based on your income and other resources, state Medicaid authorities are interested in knowing whether you have tried to transfer assets out of your name in order to qualify for Medicaid. When you apply for Medicaid, the state has the right to examine your finances and those of your spouse as far back as 60 months before the date you applied for Medicaid. Only certain transfers are prohibited. Fair market transactions will typically be considered legitimate, but if you transfer assets for less than fair market value around the time you apply for Medicaid, the state will presume that the transfer was made solely to help you qualify for Medicaid.
Planning goals and strategies
As mentioned earlier, the state has the right to look into your financial transactions to determine whether you have transferred assets solely to qualify for Medicaid. However, the state may count only the income and assets that are legally available to you for paying your bills. Consequently, several methods have been developed to help you shelter your assets from the state and facilitate Medicaid qualification. Proper planning can help you to qualify for Medicaid, shelter “countable” assets, preserve assets (including the family home) for loved ones, and protect the healthy spouse (if any).
Medicaid qualifying trusts
To qualify for Medicaid, both your income and the value of your other assets must fall below certain limits (which vary from state to state). A trust helps you to qualify for Medicaid because it can shelter your income and assets, making them unavailable to you. The state Medicaid authorities cannot consider assets that are truly inaccessible to the Medicaid applicant. Therefore, anything that stays in an irrevocable trust will lie outside of your financial picture for Medicaid eligibility purposes. If you are looking for a strategy to shelter your resources, one of the following may be appropriate: (1) an irrevocable income-only trust, (2) an irrevocable trust in which the creator of the trust is not a beneficiary, (3) a Miller trust, or (4) a special needs trust.
Protection of principal residence
In certain cases, the state may be entitled to seek reimbursement for Medicaid payments by forcing the sale of your principal residence if you are a Medicaid recipient. Medicaid planning tools have been devised to protect your home, but their effectiveness varies. Therefore, it is important to weigh the costs and benefits of each device carefully. If you are looking for a strategy to preserve your home for loved ones, one of the following four methods may be appropriate: (1) an outright transfer or gift of the home, (2) a transfer subject to life estate, (3) a transfer subject to special power of appointment, or (4) a transfer in trust.
Medicaid and long-term care insurance
Long-term care (LTC) insurance can be useful as part of your Medicaid planning strategy. Your LTC policy can subsidize your nursing home bills during the Medicaid ineligibility period caused by your transfer of assets to third parties. Thus, it may be possible for you to give your assets away to loved ones, have the security of paid nursing home bills during the ineligibility period, and qualify for Medicaid when the LTC policy runs out.
Medicaid liens and estate recoveries
Federal law requires states to seek reimbursement from Medicaid recipients for Medicaid payments made on their behalf. Cost-recovery actions against the assets of Medicaid recipients may come in two forms: (1) real or personal property liens and (2) recovery from decedents’ estates. A Medicaid lien makes it impossible for you to sell or refinance your house without the state’s knowledge and ability to collect what it is owed. As for recovery from decedents’ estates, states also can seek reimbursement from your probate estate after you die. States have the option to expand the definition of estate to include all nonprobate assets as well.
Divorce and Medicaid
From a purely financial perspective, divorce can be a practical move and may actually be used as a Medicaid planning tool. When a spouse enters a nursing home and applies for Medicaid, the couple’s assets must be pooled together and totaled to determine what portion the healthy spouse may keep. After this Spousal Resource Allowance has been determined, the Medicaid applicant must transfer assets representing the amount of the allowance to the healthy spouse. The remaining assets must be spent on the institutionalized partner’s medical care. A divorce court order can supersede the normal Spousal Resource Allowance rules prescribed under state Medicaid regulations. You should consult your legal advisor for further information.
For more information: Contact: Paul A. Pouliot & Associates; Paul A. Pouliot, Senior Financial Advisor, 116 South River Rd, Coldstream Park, Bldg E, Bedford NH 03110. PH: (603) 296-0030 or Toll Free: (888) 810-8590. Email: paul.a.pouliot@ampf.com / www.ameripriseadvisors.com/paul.a.pouliot
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By Paul A. Pouliot
Healthcare in Retirement: What health care benefits are available in retirement? We have already covered Medicare, Medigap and Medicaid.
Military benefits
Disability benefits, health-care benefits, and long-term care benefits are available through various military as the Veterans Administration. Health care for veterans is typically available at VA hospitals and health-care facilities. In general, active service members, retirees, and veterans other than those who were dishonorably discharged are eligible for military benefits. Survivors of servicemembers and veterans are also generally eligible for some of the same benefits. However, the rules surrounding these benefits can be complex and may change frequently. It is best to check with your military personnel office or local VA office if you have questions about any of these benefits.
Choosing a continuing care retirement community
Continuing care retirement communities (CCRCs) are retirement facilities that offer housing, meals, activities, and health care to their residents. These communities appeal to people who are currently in good health but who worry that they may need nursing care later on. The CCRC and the resident sign a contract guaranteeing that the CCRC will provide housing and nursing home care throughout the resident’s life and that, in return, the resident pays an entrance fee and a monthly fee. In choosing a CCRC, you should consider factors such as the entrance fee and monthly fees, insurance requirements, the financial stability of the CCRC, its facilities and activities, and the quality of medical care provided to residents. (Click Here for More Information on CCRC’s)
Choosing a nursing home
A nursing home is a licensed facility that provides skilled nursing care, intermediate care, and custodial care. Although you may prefer in-home care, you may have to enter a nursing home if you need round-the-clock care, especially if you can’t get help from family or an in-home caregiver. When choosing a nursing home, you should consider factors such as the cost of the home, the quality of medical care provided, the appearance and the safety of the facilities, the ratio of staff to residents, and recreational opportunities. (Click Here for More Information on Choosing a Nursing Home).
Paying for nursing home care
Nursing home care can be extremely expensive, and paying for this care is a problem that weighs heavily on the minds of older Americans and their families. There are several resources you can use in planning for this expense, including self-insurance, long-term care insurance, Medicare (limited benefits), Medicaid, and military benefits.
Choosing a Private Pay Home Care Agency
In-home care may be suitable and affordable for you. It is important you do your research.
For more information: Contact: Paul A. Pouliot & Associates; Paul A. Pouliot, Senior Financial Advisor, 116 South River Rd, Coldstream Park, Bldg E, Bedford NH 03110. PH: (603) 296-0030 or Toll Free: (888) 810-8590. Email: paul.a.pouliot@ampf.com / www.ameripriseadvisors.com/paul.a.pouliot
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By Paul A. Pouliot
Spanning the globe to find investment opportunity
One of the keys to long-term investment success is to capitalize on economic growth. Most investors looking to accumulate wealth make an effort to identify where growth opportunities exist. As nations outside of the U.S. experience more economic development, a number of growth opportunities are emerging in overseas markets.
The growth of the global economy is not new, but in general, it is a fairly recent development. Even into the 1980s, investors putting money to work overseas concentrated most of their opportunities in developed countries like Japan, Germany, France and Great Britain. Other countries such as China and India had little economic development in place. Many smaller countries were only in the early stages of incorporating capitalism as part of their economic system.
A global shift
Much has changed in that time. The U.S. remains the largest economy in the world, but that may not be the case for long. Most dramatically, a number of so-called “emerging” markets, nations that are relatively new to economic development, may become among the world’s biggest in the next 40 years. China recently supplanted Japan as the world’s second largest economy, and may take the top spot from the U.S. in the coming decades. Other developing nations like India, Brazil, Russia, Indonesia, Mexico and Turkey are projected to be listed among of the world’s largest economies over the next 40 years.
The rise of international markets doesn’t mean that all of your money should be invested overseas. But, depending on your situation and tolerance for investment risk, there may be advantages to having some global representation in your portfolio.
Diversification value
Along with tapping into the world’s growth potential, there is another important potential benefit to having a global presence in your portfolio – diversification. Global markets often don’t, over extended periods of time, perform in line with the U.S. market. In the five-year period ending Sep. 30, 2010, the U.S. stock market (as measured by the S&P 500, an unmanaged index of stocks) returned 0.64% on an average annual basis. During that same time, stocks of developed overseas markets returned nearly 2% per year, while emerging market stocks generated annualized returns of 12.7%.
The benefit of diversification can be having some of your investments hold steady or gain ground at a time when other investments are losing money. The gain in one can offset the risk of loss in another, helping to stabilize the portfolio.
Managing the risks
Growth potential and diversification are two good reasons to consider global investments in your portfolio. Yet some caution is advised. There are unique risks to international investing.
One is that many of these markets are less established than is the case with the U.S. This is particularly true of emerging markets such as China, India and Brazil and smaller countries. Their returns tend to be much more volatile over the short term. The risk of a sudden and dramatic loss can be greater than with more conservative investment options.
Another factor is that returns on overseas investments are affected by currency fluctuations. If the dollar loses value in comparison to the currency of the nation where you are investing, it tends to boost your net return. If the dollar gains strength, that typically reduces returns on overseas investments. Currency markets can be wildly unpredictable, so that adds to the potential volatility of international investments.
Consult your financial advisor to determine whether global stocks and bonds fit with your risk tolerance and overall investment goals.
The S&P 500 is an index containing the stocks of 500 large-cap corporations, most of which are American. The index is the most notable of the many indices owned and maintained by Standard & Poor’s, a division of McGraw-Hill.
Morgan Stanley Capital International Emerging Markets index, an unmanaged market capitalization-weighted index, is compiled from a composite of securities markets of 26 emerging market countries.
International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets.
Diversification helps you spread risk throughout your portfolio, so investments that do poorly may be balanced by others that do relatively better. Diversification does not assure a profit and does not protect against loss in declining markets.
Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution and involve investment risks including possible loss of principal and fluctuation in value.
Paul A. Pouliot CFP®, CHFC®, CASL®, Senior Financial Advisor, An Ameriprise Platinum Financial ServicesSM practice, Ameriprise Financial Services, Inc. 116 South River Road | Bedford, NH 03110 / Office: 603.296.0030 | Fax: 603.296.0028 : paul.a.pouliot@ampf.com, www.ameripriseadvisors.com/paul.a.pouliot
Disclaimer: This communication is published in the United States for residents of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA only and this advisor is licensed only in the states of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
File #110119
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By Paul A. Pouliot
Parenting a child with special needs is filled with unique challenges and rewards. As with all parenting, your support and guidance are essential as your child grows. But for your special needs child, full independence may not be possible even in adulthood. For this reason, special needs children should be protected by a comprehensive plan that helps secure their future when their parents are no longer around to oversee their care.
If you believe establishing a will is sufficient security for your special needs child, you may be mistaken. A standard will that assigns assets could prevent your beneficiary from receiving government assistance that may be essential for the level of care he or she requires. Get the help you need to create an effective plan that takes your child’s specific circumstances into account. You will need the advice of a lawyer with expertise in special-needs trust law in your state, a financial advisor and someone familiar with your child’s condition and future care needs to help you develop a well-rounded plan that addresses the legal, financial and medical aspects of future care.
The most critical component of a plan for your child’s future welfare is the special needs or supplemental trust. Through Social Security and Medicaid, the government subsidizes certain services to help care for special needs individuals with demonstrated financial need, but there are strict eligibility requirements. A special needs trust allows you to circumvent income limitations imposed by the government, because money or property left in this kind of trust does not count toward the allowable limits. Why? Because you are not leaving your assets in your child’s control. Rather, the assets are assigned to a trust that is managed by a trustee, who in turn nominates your child as beneficiary while maintaining absolute discretion regarding expenditures from the trust. The trustee can use the assets to pay for necessary services not funded by other sources. Assets can also be used to fund activities that enhance quality of life, for example, to pay for a haircut, a night at the movies or even a vacation.
The trustee you assign to a special needs trust should be a person who is not only trustworthy but also competent to manage finances and follow complex and ever-changing government guidelines. It’s a big responsibility, which is why some parents turn to a financial or nonprofit institution that specializes in trusts to serve as the child’s trustee.
In addition to helping provide supplementary income permissible by government benefit programs — and that can make life more comfortable and enjoyable for your child — a special needs trust also provides other protections. Specifically, it protects your child’s trust assets against creditors if there are outstanding family or individual debts. Within the trust, you can name successor trustees and define end-of-life care.
Take time now to gather a team of experts and create a special needs trust to ensure the future care of your special needs child. With the proper plan in place, you can be reassured your child will receive the appropriate level of care according to your wishes, even in your absence.
Paul A. Pouliot CFP®, CHFC®, CASL®, Senior Financial Advisor, An Ameriprise Platinum Financial ServicesSM practice – Ameriprise Financial Services, Inc. 116 South River Road | Bedford, NH 03110 – Office: 603.296.0030 | Fax: 603.296.0028 / paul.a.pouliot@ampf.com, www.ameripriseadvisors.com/paul.a.pouliot
Disclaimer: This communication is published in the United States for residents of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA only and this advisor is licensed only in the states of AZ, CT, FL, GA, ID, KY, MA, ME, NH, RI, TN, VT and WA
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
Ameriprise Financial does not provide tax or legal advice. Consult your tax advisor or attorney.
© 2010 Ameriprise Financial, Inc. All rights reserved. File # 106866
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By Paul A. Pouliot
Healthcare in Retirement: What health care benefits are available in retirement?
Medicare and Medigap:
Health care in retirement is available from many sources. Government programs (such as Medicaid and Medicare) offer numerous health care benefits. However, you may need to purchase supplemental health insurance or Medigap, as well. Most Americans are eligible to begin receiving Medicare benefits at age 65, but qualifying for Medicaid may require some planning on your part. In addition to these resources, you may also be entitled to military health care benefits if you are a veteran, retired servicemember, or the spouse or widow of a veteran or retired servicemember. Continuing care retirement communities and nursing homes also offer health care services for older individuals. Depending on your specific needs and circumstances, you may use any number of these resources during your retirement years.
Medicare
In general, Medicare is a federal health insurance program created in 1965. Medicare primarily assists those who are 65 or older, but if you are disabled or have kidney disease, you may be eligible for Medicare coverage no matter what your age. Medicare currently consists of Part A (hospital insurance), Part B (medical insurance), Part C (which allows private insurance companies to offer Medicare benefits), and Part D (which covers the costs of prescription drugs), with each part having its own eligibility requirements. You may qualify for one or more parts, or you may choose to accept or decline coverage if you are eligible. Many health policies limit coverage for Medicare-eligible individuals regardless of whether they have accepted Medicare coverage.
Medicare benefits for disabled individuals
Under certain conditions, the disabled are eligible to enroll in Medicare before age 65. If you have been receiving (or have been entitled to receive) Social Security disability benefits for at least 24 months (not necessarily consecutively), you may be eligible to enroll in Medicare. To enroll, you must be entitled to benefits in one of the following categories:
• A disabled individual of any age receiving worker’s disability benefits
• A disabled widow or widower age 50 or older
• A disabled beneficiary who is older than age 18 and receives benefits based on a disability that occurred before age 22 In addition, Medicare may be available at any age if you are disabled as a result of chronic kidney failure requiring dialysis or a kidney transplant.
Qualified Medicare Beneficiary program
If you have limited means, you may be eligible for the Qualified Medicare Beneficiary (QMB) program. Here, your state’s Medicaid program may pay for your Medicare Part B premium, Part A and Part B deductibles, and coinsurance requirements. Eligibility rules may vary from state to state, but in general, you must meet the following three criteria:
• You must be entitled to Medicare Part A
• Your income must be at or below the national poverty level
• The value of your assets must be below a certain level
There are also other related programs that have somewhat less restrictive eligibility requirements.
Medigap
In general, Medigap is supplemental insurance specifically designed to cover some of the gaps in Medicare coverage. Although the name might lead you to believe otherwise, Medigap is provided by private health insurance companies, not the government. However, Medigap is strictly regulated by the federal government. There are 10 standard Medigap policies available. All plans may not be offered in your state, yet all are standardized and certified by the U.S. Department of Health and Human Services so that each plan provides exactly the same kind of coverage no matter what state you live in (except for Massachusetts, Minnesota, and Wisconsin, which have their own standardized plans). Every Medigap policy offers certain basic core benefits, such as coverage of certain Medicare Part A and B coinsurance and co-payments. Other plans offer additional benefits, such as coverage of Medicare Part A and B deductibles, and charges that result when a provider bills more than the Medicare-approved amount for a service.
For more information: Contact: Paul A. Pouliot & Associates; Paul A. Pouliot, Senior Financial Advisor, 116 South River Rd, Coldstream Park, Bldg E, Bedford NH 03110. PH: (603) 296-0030 or Toll Free: (888) 810-8590. Email: paul.a.pouliot@ampf.com /
www.ameripriseadvisors.com/paul.a.pouliot
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By Paul A. Pouliot
It’s a fact: People today are living longer.
Although that’s good news, the odds of requiring some sort of long-term care increase as you get older. And as the costs of home care, nursing homes, and assisted living escalate, you probably wonder how you’re ever going to be able to afford long-term care. One solution that is gaining in popularity is long-term care insurance (LTCI).
What is long-term care?
Most people associate long-term care with the elderly. But it applies to the ongoing care of individuals of all ages who can no longer independently perform basic activities of daily living (ADLs)–such as bathing, dressing, or eating–due to an illness, injury, or cognitive disorder. This care can be provided in a number of settings, including private homes, assisted-living facilities, adult day-care centers, hospices, and nursing homes.
Why you need long-term care insurance (LTCI)
Even though you may never need long-term care, you’ll want to be prepared in case you ever do, because long-term care is often very expensive.
Although Medicaid does cover some of the costs of long-term care, it has strict financial eligibility requirements–you would have to exhaust a large portion of your life savings to become eligible for it. And since HMOs, Medicare, and Medigap don’t pay for most long-term care expenses, you’re going to need to find alternative ways to pay for long-term care. One option you have is to purchase an LTCI policy.
However, LTCI is not for everyone. Whether or not you should buy it depends on a number of factors, such as your age and financial circumstances. Consider purchasing an LTCI policy if some or all of the following apply:
• You are between the ages of 40 and 84
• You have significant assets that you would like to protect
• You can afford to pay the premiums now and in the future
• You are in good health and are insurable
How does LTCI work?
Typically, an LTCI policy works like this: You pay a premium, and when benefits are triggered, the policy pays a selected dollar amount per day (for a set period of time) for the type of long-term care outlined in the policy.
Most policies provide that certain physical and/or mental impairments trigger benefits. The most common method for determining when benefits are payable is based on your inability to perform certain activities of daily living (ADLs), such as eating, bathing, dressing, continence, toileting (moving on and off the toilet), and transferring (moving in and out of bed).
Typically, benefits are payable when you’re unable to perform a certain number of ADLs (e.g., two or three). Some policies, however, will begin paying benefits only if your doctor certifies that the care is medically necessary. Others will also offer benefits for cognitive or mental incapacity, demonstrated by your inability to pass certain tests.
Comparing LTCI policies
Before you buy LTCI, it’s important to shop around and compare several policies. Read the Outline of Coverage portion of each policy carefully, and make sure you understand all of the benefits, exclusions, and provisions. Once you find a policy you like, be sure to check insurance company ratings from services such as A. M. Best, Moody’s, and Standard & Poor’s to make sure that the company is financially stable.
When comparing policies, you’ll want to pay close attention to these common features and provisions:
• Elimination period: The period of time before the insurance policy will begin paying benefits (typical options range from 20 to 100 days). Also known as the waiting period.
• Duration of benefits: The limitations placed on the benefits you can receive (e.g., a dollar amount such as $150,000 or a time limit such as two years).
• Daily benefit: The amount of coverage you select as your daily benefit (typical options range from $50 to $350).
• Optional inflation rider: Protection against inflation.
• Range of care: Coverage for different levels of care (skilled, intermediate, and/or custodial) in care settings specified in policy (e.g., nursing home, assisted living facility, at home).
• Pre-existing conditions: The waiting period (e.g., six months) imposed before coverage will go into effect regarding treatment for pre-existing conditions.
• Other exclusions: Whether or not certain conditions are covered (e.g., Alzheimer’s or Parkinson’s disease).
• Premium increases: Whether or not your premiums will increase during the policy period.
• Guaranteed renewability: The opportunity for you to renew the policy and maintain your coverage despite any changes in your health.
• Grace period for late payment: The period during which the policy will remain in effect if you are late paying the premium.
• Return of premium: Return of premium or nonforfeiture benefits if you cancel your policy after paying premiums for a number of years.
• Prior hospitalization: Whether or not a hospital stay is required before you can qualify for LTCI benefits.
When comparing LTCI policies, you may wish to seek assistance. Consult a financial professional, attorney, or accountant for more information.
For more information: Contact: Paul A. Pouliot & Associates; Paul A. Pouliot, Senior Financial Advisor, 116 South River Rd, Coldstream Park, Bldg E, Bedford NH 03110. PH: (603) 296-0030 or Toll Free: (888) 810-8590. Email: paul.a.pouliot@ampf.com /
www.ameripriseadvisors.com/paul.a.pouliot
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