Retirement

Long-Term Care Costs Complicate Retirement

December 4, 2017 By Twila Van Leer

When retirement looms and you have to give serious thought to your changing personal finances, don’t forget to add the potential costs of long-term care to the mix. It’s a fact that many retirees will at some point need long-term care, but too few people facing the end of their working careers make that reality part of their planning.

It’s rare that a family does not have one or more parents, spouses or even children suffer debilitating illness or injury. In one way or another, it’s a problem that virtually every American family faces, said a spokesman for the SCAN Foundation, which researches such topics.

Among people aged 65 today, some 70 percent will need long-term care before they die, according to U.S. government studies. In many cases, the need will not be for medical care, but for assistance with such daily tasks as bathing, food preparation, shopping and other necessary chores. Often, these needs arise after a medical event, such as injury in a fall or a major illness.

The costs of such care can quickly outstrip what has been saved for retirement. A person who is 65 can expect to incur $138,000 in long-term care costs, according to a 2017 Bipartisan Policy Center report. Other studies determine that few people in the 40-year age range have included provision for such care in their retirement plans.

The AARP, which serves people 55 and older, has a long-term care calculator that shows average costs for different types of services by state and metropolitan region. The most expensive is nursing home care, which now averages $97,000 per year, according to a 2017 survey conducted by Genworth Financial. Assisted living facilities average about $45,000 per year. Adult Day Care centers charge an average of $70 per day.

Too many people facing retirement believe that Medicare will pay for such services. But the federal medical program does not pay for nursing home stays or non-skilled living assistance, which make up the majority of the services needed to care for the elderly. More than 50 percent of those who need these services end up paying out-of-pocket, according to the Policy Center report. The figure rises to 70 percent for those who have more severe long-term needs. Saving are quickly depleted.

Many of the elderly are forced to turn to state Medicaid, programs that supplement health care costs. Rules vary from one state to another, so a review of what your own state provides should be part of your retirement planning. You may be required to spend down your savings to qualify.

Only 11 percent of older Americans have private long-term care insurance. Premiums are prohibitively expensive for most people, the Policy Center said Insurance companies have found that their estimates of how lucrative such policies would be were not correct and the number of companies offering the policies has declined dramatically.

Bottom line: Begin early to look realistically at your retirement provisions and don’t get caught flat-footed when the time comes. If you begin early to purchase long-term care insurance, your premiums will be lower. But you must consider how tight your retirement income will be post-retirement if you expect to continue to buy the insurance when it is most likely to be needed.

Ready for Retirement?

November 10, 2017 By Twila Van Leer

Saving for retirement is getting harder. Not many Americans are accumulating the amount of money the experts say they will need to tide them over the remainder of their lives, and the U.S. Congress is taking steps that complicate the process further.

The idea is circulating in D.C. that the tax breaks associated with 401(k) savings should be curtailed. As our representatives look for ways to adjust taxes, that idea is still on the table.

Most Americans facing retirement become painfully aware that they will need a substantial amount of savings as well as Social Security payments to get by. The cost of health care is a bug-a-boo for too many as they age and general inflation takes a swath out anything that is set aside for the future. Here are some things to consider:

About half of Americans have a retirement account such as a 401(k) provided by an employer or and Individual Retirement Account (IRA), according to the Federal Reserve.

Not all jobs offer the 402(k) option. Only 35 percent of low-income working households have the job savings plan or anything similar that automatically sets money aside for retirement. For high-income households, the figure is about 80 percent, according to a study by the U.S. Government Accountability Office.

The average savings of most households that have a savings account is $60,000, but there is a wide range on both sides of the average. The typical household headed by someone under 35 had savings of only $12,300 last year, if they had savings at all. The savings cushion ranges from $403,000 at the top to a median of $25,000.

Millennials have more tucked away than their parents did at the same age, Compared with 1989, when a family headed by someone under 35 had just $7,500, today’s family in the same age group has $12,300, after accounting for inflation.

The age at which individuals can qualify for Social Security is rising. Sixty-six is now the threshold for receiving full retirement benefits. The figure is slated to go up slowly until it hits age 67 for those born in 1955.

The average life span is increasing. A woman at 65 can expect, on average, to live another 20.6 years. For men, the figure is 18 years. Retirement income has to last longer for most Americans.

Projections for health care costs are scary. A 65-year-old couple will need some $275,000 to cover medical needs through retirement, according to Fidelity. That doesn’t take into account nursing home or long-term care if necessary.

Fewer companies are offering formal retirement plans for employees. Only 13 percent of private-sector workers were enrolled in such a plan in 2014, says the Employee Benefit Research Institute. In 1979, the figure was about triple that number at 38 percent.

All of these factors suggest a more careful analysis of your prospective retirement income, with adjustments if necessary.

Retirement Wisdom From An Expert

July 20, 2016 By Twila Van Leer

Expert advice for successful retirement.

If anyone knows how successful retirement works, it’s Warren Buffet. Over a lifetime he has become a hallmark of profitable market investment. A recent article in The AARP Magazine shares 10 keys to his success.

Keep A Cash Reserve

Keep a reserve of cash for emergencies and for unexpected opportunities. A rainy-day provision is essential, especially as retirement looms. The end of a regular paycheck means changes in cash needs. Now you must rely on Social Security and whatever other nest egg provisions you have made over your work career. Embellish your emergency fund to take care of any financial challenges. Tap the fund to respond to lucrative investment opportunities.

Invest In Companies That Provide Essentials

Boring companies don’t get any attention at parties, but you may find that there are great long-term returns from companies in more mundane industries. You may think, for instance, that toilet paper, baby diapers and soap are not exciting investments, but Buffett has successfully invested in Procter & Gamble, which has become a world leader in this market segment. Those who put $1,000 into P&G stock in 1986 and reinvested their returns would have more than $32,000 to show for it today. Boring companies who become tops in their industry niche often provide better rewards to shareholders than attention-grabbing upstarts.

How Effective Is The Brand?

Brand loyalty is something to look for in wise investments. Loyal customers will pay more for a product they like. Coca Cola is an example. The logo is known around the world, making it the third most valuable global brand in 2015. Its initial success as a soda drink has financed its expansion into other marketing areas. Invest in strong brands to get larger returns.

Look For Good Fund Managers

Good management is a keynote of successful businesses. Buffett notes that most companies eventually have to survive a bad manager, but when there is a great leader, the company prospers. He points to the outstanding examples of Bill Gates at Microsoft, Steve Jobs at Apple and Jeff Bezos at Amazon. A great manager and a strong business model is an unbeatable combination.

Learn From Your Mistakes

Avoid mistakes, but learn from them. Even Buffett admits to investing mistakes. He experienced a loss of about $450 million in a Tesco investment when the company fell afoul of accounting problems. When such things happen, the best way to recoup is to study what went wrong. Search out the warning signs, suck up the loss and use the information to avoid further market losses. Keep a record of mistakes and they’ll be a guide to better investing.

Stick With What You Know

Stick with what you know. The investment market is huge and intimidating, but Buffett believes you can succeed without being an expert. He avoided the technology revolution in the 1990s and so did not lose big in the tech bust that followed. If you are more familiar with particular areas of the market, put your money there.

Increase Your Buying Power

Look for what will increase your buying power over time. Investments that produce consistent income and steady growth are best. In 2011, Buffett looked at gold as an example of a non-income producing asset, overshadowed by such investment opportunities as croplands and petroleum companies. Retirees benefit in particular from income-producing investments that keep up or hopefully exceed inflation and that provide sustained purchasing power.

Buy At The Right Price

Don’t overpay. Even if a company is successful, a share price that is too high is a bad investment. Wait until an industry has settled before investing. Buffett waited on investing in energy companies until stock prices plunged after the decline in oil and natural gas prices. Make a watch list of interesting stocks and see if valuations fall to more suitable levels. Patience is a virtue in the world of investments.

Use A Buy-And-Hold Approach

Don’t make the same decision over and over again. When you are frequently trading, it increases the chances for missteps. The buy-and-hold approach puts more emphasis on what stocks you purchase in the first place. You may not want to hold a stock forever, but minimize the number of decisions you have to make. The more opportunities you allow yourself to make mistakes, the more mistakes you’ll make.

Look For The Spirit Of Innovation

Don’t avoid revolutionary investments. The business world is full of visionary individuals looking for ways to improve things. One for-instance is the forward momentum at General Electric, a long-time leader in world business. The company saw the opportunity for snapping up a leadership role in the wind energy and turbine business and became a pioneer in the renewable energy industry. Look for the spirit of innovation as an indicator of strong investment possibilities.

Medicare Fraud Over $60 Billion

June 29, 2016 By Twila Van Leer

Medicare fraud caused over $60 billion in fraud every year. — Medicare loses over $60 billion in fraud every year.

Medicare Fraud Extensive

Medicare fraud is a huge problem. Thousands of older Americans depend on Medicare to help them meet medical expenses, but fraudsters are taking a big scoop from the federal funds before they get to legitimate health care providers, a recent article in the AARP Bulletin says.

Medicare Fraud Causes Multi-billion Dollar Losses

Medicare fraud is estimated to cause more than $60 billion per year. In one very infamous case, a Texas thief methodically siphoned some $375 million from the fund over a five-year period, using a variety of methods. That man now faces life in prison, but the heavy toll taken by unscrupulous people continues to scrape billions from the heath care program.

Fraud Tactics

Fraud and abuse involves such tactics as phantom outpatients, “ghost” clinics, undelivered services, over-billing and identity theft using Medicare information, the AARP reported. The problem is so large the program’s administrators don’t even have a reliable bottom line or a methodology for arriving at the fraud rate. Many experts believe the $60 billion estimate may be too low. They say that fraud could suck off up to 30 percent of the $600 billion per year the program spends.

Large Size Opens Door To Fraud

The problem lies partly in the sheer size of the program, according to Shantanu Agrawal, who is quoted in the AARP article, He is director of program integrity at the Centers for Medicare and Medicaid Services (CMS). He points out the number of claims made every day in the huge system – some 4.5 million. More than a billion dollars are paid out every day.

That volume inherently opens the door to fraud, he said. “We are larger than the largest private payers in the country.” In addition, Medicare is a much more open system than the majority of private payers. Laws required that Medicare admit providers who meet a base set of requirements. They are then allowed to treat patients and bill for those services.

Pre-paying

CMS is trying several methods to ferret out fraud. One approach is by making provider reviews on a pre-pay basis, withholding payment until the applicant has been approved. The agency has made tens of thousands of site visits over the past two years in an effort to close down “false storefronts.” Working with private payers by exchanging data that may identify irregularities has saved the program hundreds of millions, Agrawal said.

Identifying Fake Doctors

The agency also has been more successful in identifying fake doctors. New tools provided by the Affordable Care Act make inroads into the number of unlicensed fraudulent providers. Connections have been made among more than 100 different databases on the state and federal levels. More than 500,000 providers have been removed from the billing system through this effort, he said.

Effects On Medical Research

It is not only patients and legitimate health care providers who suffer from Medicare fraud, experts point out. Medical research that relies on billing data, hospital rankings and cancer studies can be skewed by fraudulent reporting. In some instances, patient deaths have been attributed to fraudulent care.

Legitimate providers are increasingly blowing the whistle on those that they are aware are scamming the system., but they take a risk of repercussions if a case goes against their charges.

Under pressure from critics, program administrators are tightening their oversight, but the challenge is huge and growing.

Medicare Benefits That May Help

June 28, 2016 By Twila Van Leer

Medicare Benefits

Learning about the benefits of medicare can be a daunting process. In the words of Jaryn Laengrich, chief service officer at Cariloop, a Medicare service to help people caring for elderly persons, it is a “sprawling, complicated piece of law” that can be baffling. She notes these little known medicare services that the eligible may find useful.

Medicare Annual Wellness Screening

Medicare benefits allow you an annul wellness screening by a primary care physician. The objective is to prevent illness where possible. It includes an extensive appointment with a thorough review of the patient’s medical history. An Alzheimer’s screening is part of the exam if the physicians thinks it necessary. The wellness screening is offered through Part B.

Alcoholism Screening

Screening and counseling for alcohol misuse. Widowers over the age of 75 have the biggest problem with alcoholism, according to the National Council on Alcoholism and Drug Dependence. More of those in this demographic are hospitalized with alcohol-related problems than for heart attacks. Annual screening is allowed by Medicare, if performed by a primary care physician. Four counseling sessions will be compensated, as well.

Balance Screening

Falls are a serious problem among the elderly. Medicare B will pay for 80 percent of a thorough screening to determine if balance is a problem and what might be the cause.

Obesity Counseling

Those enrolled in Medicare Part B. who have a body mass index score of 30 or higher may receive counseling in a primary care setting. The program also will pickup a major part of the cost of bariatric surgery aimed at reducing obesity. The amount depends on a patient’s Medigap supplement plan.

Shingles Vaccination

Shingles is a painful and distressing disease that can strike anyone who had chicken pox as a child. The coverage is included in Medicare Part D, which provides for medications.

Diabetes Self-Management Training

Medicare pays 80 percent of the cost of 10 training sessions, including one one-on-one visit with a specialist. The remainder are small-group sessions. The intent is to improve diabetes management. The disease can be debilitating and cause severe effects.

Hearing Tests

Although Medicare won’t pay for hearing aids, it will cover examinations to determine hearing loss. Efforts to get hearing aid coverage have failed to pass muster in Congress because of the scope of the problem. An estimated 37 million Americans suffer some hearing loss, but only 30 percent need hearing aids.

Hospice Care

Many Medicare recipients are not aware that they are eligible for end-of-life care. It is focused on palliative treatment, and is available only to those who are believed to be within six months of death. The patient must agree to forego treatment aimed at curing. Care usually is provided in the patient’s home and involves a team that includes a physician, nurse, social worker, chaplain and volunteer. The objective is to provide as much comfort care as necessary for the patient in his or her final days.