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Using Data to Make a Difference

Data

Traditional health care plans failed to incorporate variables such as longevity, health care costs, and long-term care into retirement plans; however, the financial industry is evolving, and many firms are now utilizing these data points to create a more holistic approach to planning.

 

With just a few client inputs, you can create personalized reports that provide life expectancy, lifetime health care costs (Medicare Parts A and B, Medicare Part D, supplementary insurance, dental, and out-of-pockets), Social Security income, and long-term care expenses.

 

Your Role

Simply put, Americans nearing retirement have questions about Social Security and health care.  Advisors who gain expertise and initiate client conversations will not only be able to provide answers and solutions, but also generate new and sustainable business for their practice.

 

By using actuarial data, advisors can illustrate the impact of health care costs on retirement budgets, introduce the potential savings gap, and discuss strategies to fund the expense.

 

While other determining factors must be weighed, the basic planning process is quite simple.

  • Estimate life expectancy.
  • Calculate Social Security PIA.
  • Review filing options.
  • Project health care costs (including how much will be deducted from Social Security).
  • Uncover savings gap.
  • Review and estimate retirement income sources to account for means testing.
  • Offer products to address the gap.

 

Additional reports provide advisors with important information about the impact of Medicare means testing and long-term care costs.

 

Utilizing the Data

 

Here is a small example of the data you will receive.  This table represents a 55-year-old male living in Massachusetts.

Age 55
Retirement age 65
Retirement state MA
Life Expectancy 87
Projected health care costs for

Medicare Parts A, B, D, and supplemental insurance

$366,293
Medicare Part B deductions from Social Security $108,262
Unfunded health care costs $258,031
One-time Investment (earning 6% annually) $68,215

 

As the data reveals, this person will need almost $260,000 to cover basic health care (not counting out-of-pockets) throughout retirement.

 

That may sound like a lot of money, but an educated advisor can make the difference.

The platform provides a series of funding options – including increasing Social Security contributions – to help ensure your client is prepared.  This is where your expertise in product management will emerge.  When clients realize how much health care is going to cost in retirement, it will be up to you to provide stable investment solutions to offset this expense.  (It is important to note that the software has a host of variables that can be manipulated to create a funding plan, including risk tolerance, investment time horizon, and contributions from pensions and working in retirement.)

 

Here is the difference an advisor can make:

Age 55
Retirement age 67
Retirement state ME
Life Expectancy 87
Projected health care costs for

Medicare Parts A, B, D, and supplemental insurance

$321,359
Medicare Part B deductions from Social Security $103,391
Unfunded health care costs $217,968
One-time Investment (earning 6% annually) $55,299

 

As the table indicates, by delaying retirement for two years and retiring in Maine instead of Massachusetts, the client saves around $45,000 in health care costs, and fund these impending expenses with an investment of around $13,000 less.

 

Download "Using Data to Make a Difference"

These articles will appear every other Tuesday on our Building Retirement Knowledge page. Check in bi-weekly for the latest post.

 

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HealthView Services, Inc.
150a Andover Street
Danvers, MA 01923
Phone: 855-339-2842
sales@hvsfinancial.com