Although many people believe that financial planning is an exact science, the market meltdown of 2008 proved that idea untrue. When it comes to retirement, many people have been led to believe that saving is also an exact science. With so many retirement calculators online, people feel that deciding how much to save should be determined that way. However, these calculators are not able to assess each person’s complete situation. For example, two retired couples with the same income and debt amounts may differ greatly. One of the individuals may have a rare health condition requiring treatments that are not fully paid for by insurance.

It is not completely accurate to use an online calculator’s suggestions. Nobody can predict the uncertainties of the future. Fortunately, there are other options. One possible solution is to buy insurance against uncertainty. To determine what is best, individuals must decide if they want to live it up now or take a more conservative approach with a goal of building a reliable source of income for the future. People who pass their life expectancy may not know what to do for money. To successfully plan for retirement, take a deeper look at some of the common questions used by a Life insurance calculator.

How Long Will You Live?

Life span is the biggest uncertainty in retirement planning. If people knew their exact date of death, financial planning would be a breeze. However, there is one beneficial product that assures income regardless of lifespan. It is called an immediate annuity*, and it is available from life insurance companies. Keep in mind that immediate annuities are different from deferred annuities. There are also some drawbacks. The most significant detriment is that the money invested cannot be passed to heirs. Once the money has been paid, it cannot be refunded to the contributor. This means it is best to avoid using a complete retirement nest egg for an immediate annuity. As a rule, put enough into an annuity to cover fixed monthly expenses.

How Much Will Investments Earn?

Unfortunate investments during the decade of 2000 to 2009 proved that unpredictable markets can affect retirement planning significantly. When this question is faced on a retirement calculator, one solution is to enter very low returns. Some planners do not ask about long-term returns on investments. In place of personal data, they use a special formula based on past market performance. However, we believe the best way to stay on track is to monitor the plan regularly and make adjustments.

To learn about more options and issues, discuss them with an Insurance Professional today!

*Single Premium Immediate Annuities make fixed payments for a contracted timeframe. Payments, which consist of principal and interest, are typically not adjusted for inflation so the buying power of the payments issued may erode over time. Please note the decision to annuitize is irrevocable, and principal cannot be withdrawn at a rate grater than the contracted payout rate. All guarantees are subject to the claims paying ability of the issuing insurance company.

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP nor its subsidiaries or affiliates offer tax or legal advice. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance does not guarantee future results.

Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

Securities & Investment Advisory Services may be offered through Representatives of NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Highland Capital Brokerage is an affiliate of NFP Securities, Inc. and a subsidiary of National Financial Partners Corp. (NFP). Not all of the individuals listed on this site are registered to offer securities products or advisory services through NFP Securities, Inc. NFP and its subsidiaries.

This blog is published for residents of the United States only. Registered Representatives and Investment Adviser Representatives of NFPSI may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the NFPSI Compliance Department at 512-697-6000.

A research study conducted by Fidelity, Putnam and the Employee Benefit Research Institute revealed that most workers, even those rapidly approaching retirement, haven't prepared a retirement budget or created a plan to ensure they'll have enough income. Having this kind of take-it-as-it-comes attitude can lead to many unpleasant surprises down the road.

It's a better idea to plan now for what could lie ahead. Here's a checklist to get you started:

10 years prior

• Consider moving to a cheaper community so that your retirement assets last longer. Your geographic location has a significant impact on your expenses.
• Think about how you will spend your time. Your activities also influence how much money you'll need.
• If you're not already contributing the maximum to your 401(k), IRA, and other retirement savings vehicles, now is the time to up the ante. Your chances of living to a very old age are better than ever, that's why many financial planners now use age 95 as their default life expectancy.
• Think about paying down your mortgage before you retire. Not having a mortgage means drawing less from your retirement accounts, letting them to continue to grow tax-deferred, and reducing your overall taxes.

Five years prior

• Consider decreasing your portfolio risk by decreasing the amount of company stock and stock options in your portfolio. Talk with a CPA about the tax implications of such a move.
• Contact Social Security for an estimate of your monthly benefits.
• Gather info for any pension benefits you have accrued and how much you can expect to receive.
• Estimate available investment income based on the future value of your assets.
• Think about healthcare and long-term care expenses. Medicare isn't an option until you reach age 65. You may also need a Medicare supplement to cover what Medicare doesn't. Also keep in mind that even if your employer offers retiree health coverage now, it may not in the future or it could become unaffordable, so have a backup plan in place.
• Start putting together a budget based on your anticipated income and expenses.

Two years prior

• Refine your budget and your asset allocation. If retirement doesn't seem financially possible, consider working a little longer.
• Reconcile your Social Security estimates to make sure your wages have been reported properly over the years.
• Take a few extended visits to the area where you plan to retire. Be sure you visit during different seasons to see if you'll like living there.

One year prior

• Decide whether you will leave your 401(k) and other retirement accounts where they are, or roll them over into an IRA.
• Update your budget and review your asset allocation.

Three months prior

• Make arrangements for your rollover to be sure the money is available when needed.
• If you're moving, perform any necessary repairs to get the house ready to be sold, and start packing.
• You must apply for Social Security three months before you want to start receiving benefits. Medicare requires you to enroll three months prior to your 65th birthday. If you're already receiving Social Security, you will be enrolled automatically. Otherwise, you should enroll online or by phone with the Social Security Administration.

For more information on your Retirement Plan, contact your Insurance Professional today!

Using asset allocation as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss of principal due to changing market conditions.

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP nor its subsidiaries or affiliates offer tax or legal advice. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance does not guarantee future results.

Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

Securities & Investment Advisory Services may be offered through Representatives of NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Highland Capital Brokerage is an affiliate of NFP Securities, Inc. and a subsidiary of National Financial Partners Corp. (NFP). Not all of the individuals listed on this site are registered to offer securities products or advisory services through NFP Securities, Inc. NFP and its subsidiaries.

This blog is published for residents of the United States only. Registered Representatives and Investment Adviser Representatives of NFPSI may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the NFPSI Compliance Department at 512-697-6000.

One of the most important things you can do to help your aging parent is help plan their estate. This will clarify their wishes and help ensure that they receive quality care without placing a heavy financial burden on you and the rest of your family.

Planning for your elderly parents may be a daunting task, but it is essential to get done as early as possible. Ideally, your elderly parents will be open to the idea of planning for their golden years—before retirement begins.

A discussion with immediate family will give you an idea of your parents’ wishes for their future and give a basic understanding to family members. You will need to ask difficult questions, but the end results will benefit you all. Including your siblings or other family members to participate in the planning process will help avoid unnecessary conflict when dividing the estate takes place because the siblings have a preconceived idea of what to expect.

Ask your parents to share as much of their financial information as they are willing to. Do they have a will or trusts in place? Get a financial picture. If they are not comfortable talking to you, bring an attorney in to complete a plan that makes them comfortable. Placing the ground work will give them an opportunity to control their future.

Talk to your parents about signing a durable power of attorney before anything happens. A durable power of attorney appoints an agent to handle specific legal, medical and financial responsibilities. Put this in place while your parents are in good health. It ensures they are assigning the power of attorney to someone they trust. If the time comes that your parents can no longer care for themselves, their guardian can take over for them.

Develop a plan to keep a continuous cash flow for your parents. If necessary, don’t hesitate to seek financial advice based on what your parents can afford. You will need to determine if they can afford long-term care if the situation arises. Ask your parents about insurance and retirement funds. You may need to consider moving back in with your elderly parents or bringing them into your home.

For more information on helping your parents plan their future, contact an Insurance Professional today!

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP nor its subsidiaries or affiliates offer tax or legal advice. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance does not guarantee future results.

Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

Securities & Investment Advisory Services may be offered through Representatives of NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Highland Capital Brokerage is an affiliate of NFP Securities, Inc. and a subsidiary of National Financial Partners Corp. (NFP). Not all of the individuals listed on this site are registered to offer securities products or advisory services through NFP Securities, Inc. NFP and its subsidiaries.

This blog is published for residents of the United States only. Registered Representatives and Investment Adviser Representatives of NFPSI may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the NFPSI Compliance Department at 512-697-6000.

With the high rate of divorce and remarriage that has swept across America, blended families are becoming a norm. A blended family is a family that consists of two previously married parents and the children of the former marriages. These blended families can create some unique situations when creating an Estate Plan. The love for one’s current spouse and their mutual children may cause conflict with the natural desire to provide for the children of the previous marriage.

Children usually go through many emotions when divorce strikes their family causing issues with their new family. Even step-parents may have issues with their new step-children. This is where issues usually arise when creating your Estate Plan. For example, if you leave all of your assets to your previous children, there may not be sufficient assets remaining to provide for the current spouse or family. On the other hand, if you leave your assets to your current spouse, your previous children may not be provided for as you would like. To add to that, say your spouse dies after you are long gone and leaves her assets to her children and nothing to yours because they have no legal obligations to your children.

Even with pleasant blended families, lack of planning can lead to unexpected problems. If there is no will or trust in place before death, statutory intestacy rules may remove from the current marriage up to two-thirds of the estate and give it to the children from the previous marriage.

At a minimum each spouse should have a will or trust in place. Otherwise assets will more than likely be distributed to heirs in a manner that can cause unnecessary turmoil.

For more information on your Blended Family Estate Plan, contact an Insurance Professional today!

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP nor its subsidiaries or affiliates offer tax or legal advice. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance does not guarantee future results.

Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

Securities & Investment Advisory Services may be offered through Representatives of NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Highland Capital Brokerage is an affiliate of NFP Securities, Inc. and a subsidiary of National Financial Partners Corp. (NFP). Not all of the individuals listed on this site are registered to offer securities products or advisory services through NFP Securities, Inc. NFP and its subsidiaries.

This blog is published for residents of the United States only. Registered Representatives and Investment Adviser Representatives of NFPSI may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the NFPSI Compliance Department at 512-697-6000.

Objective:

Two equal owners, having been in business for over 12 years together, need to set up and fund a buy/sell agreement. They would like to have flexibility, cash and tax deductions in having this plan in going forward.

Facts:

The agent sat down with the owners and their accountant to determine the fair market value of their business. Once that was established, then the agent described to the group various ways that could be used to accomplish these objectives. Health issues were a significant problem factor since one partner smoked and the other did not. In addition, due to the economic environment and uncertainty in their industry, they had a lesser amount of money to use than they originally thought. They understood that they needed to start a funded program immediately to have something in place and then expand it later on. All parties agreed that this would be the approach to take.

The agent realized that they would be able to do this using a more sophisticated approach to achieve these objectives. He then proceeded to present the basics of The Dolgoff PlanTM to first see if it met their objectives and desires. It was particularly important to get the involvement of their accountant. Starting with the figures that the agent was given, a customized plan was then presented.

Solution:

Two brokerage accounts were set up equally for each owner, both accounts owned and controlled by the company. After margining the investments, each owner would own the other’s policy for the funding of the buy/sell agreement. Even though there were health issues, the whole life policies set up with the Paid-up Additions riders were able to be tweaked to have the differential of the death benefit less than $15,000. In addition, each owner was able to also have an additional 10 year Guaranteed Level Term policy for substantial amounts where they could name their own beneficiary and own those policies separately.

Outcome:

The two owners accomplished even more than they sought out to do. They set monies aside, which they had never done before for themselves, but always with the ability to use those monies for their company should they need to. They were able to fund their buy/sell agreement with no out-of-pocket cost to either of them and were able to provide their company with substantial current tax deductions. Best of all, they had established a second insurance policy for each owner, also at no out-of-pocket cost, that they could use outside of the corporate structure.

This plan was put into place in 2011.

The hypothetical case study results are for illustrative purposes only and should not be deemed a representation of past or future results. This example does not represent any specific product, nor does it reflect sales charges or other expenses that may be required for some investments. No representation is made as to the accurateness of the analysis.

Margin borrowing considerations:

1. Consider your risk-tolerance and investment goals. Remember, margin borrowing increases your level of market risk, so the value of your investments can go down as well as up. You must repay your margin loan, regardless of the underlying value of the securities you purchased.

2. Maintenance margin requirements may change at any time without prior notice.

3. If the equity in your account falls below the minimum maintenance requirements, your B/D will issue a maintenance call requiring you to deposit additional cash or acceptable collateral. You are not entitled to an extension of time on a margin call.

4. If you fail to meet a maintenance call, your B/D may be forced to sell some or all of the securities in your account to protect its loan, with or without your prior approval.

This material is for informational purposes only and is not meant as Tax or Legal advice. Clients should consult with their individual tax and legal professionals prior to entering into such transactions. NFP and its subsidiaries do not offer tax or legal advice. All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies. Loans and withdrawals may generate an income tax liability, reduce available cash value and reduce the death benefit or cause the policy to lapse.

All optional benefits such as riders and bonuses are available for an additional cost.  The guarantees associated with optional benefits are backed/subject to the claims-paying ability of the issuing insurance company.  It is important to weigh the costs against the benefits when adding such options to an annuity/life insurance contract.  The cost for riders varies widely but is generally between .15% to .75% of the account.

All guarantees are subject to the claims paying ability of the issuing insurance company.

The Dolgoff Plan is not available to retail clients through Highland Capital Brokerage.

Wayne Rooney, 45, recently lost his father and started thinking about his own mortality. He wondered if he had the proper plans in place to take care of his family and his business should something suddenly happen to him.

Wayne owns a sail making business with Ron Jacobs. He and Ron have been partners for almost 10 years, and about five years ago, Wayne was approached by his life insurance representative who asked him a few simple questions about his business:

1. Do you have a buy-sell agreement with your business partner?

2. Do you know what you could sell your business for today?

3. How would you protect your family in the event of your death?

4. Would you want to be partners with your deceased partner’s widow?

5. How would you protect your family in the event you become disabled?

With the help of a life insurance representative, Wayne and Ron put a buy-sell agreement in place, but it hasn’t been reviewed since. In the original agreement, the business was valued at $2,000,000, which was the book value at the time, but the book value has now grown to $2,750,000. Wayne assumed that this would be the right value for the business, but wasn’t sure. Also, Wayne and Ron assumed that there would be enough excess income from the business in order to make installment payments if the agreement was triggered, but after recently discussing this with their insurance representative, realized there could be cash flow issues in the future if there was another economic downturn.

Fortunately, through their insurance representative, they have access to buy-sell review and informal business valuation services. Through these services, they were able to determine that the more appropriate value of the company was $4,074,924 based on an average of five valuation methodologies:

Book Value: The value at which the business is carried on a balance sheet, with all assets adjusted for fair market value.

Straight Capitalization: The amount of capital that would have to be invested at a specified rate to yield the current average net annual earnings of the business.

Earnings Capitalization: Assumes that part of earnings are attributed to the assets of the business (book value). Remaining earnings are capitalized at a rate consistent with the relative risk of the business. The result is then added to book value.

Years’ Purchase: A conservative rate (the pure money rate for an investment with generally accepted lower risk) is used to determine the earnings attributed to assets. The balance is assumed to be provided by goodwill. The earnings provided by goodwill are then multiplied by the number of years for which goodwill is expected to be valuable to purchaser. The result is then added to the book value to obtain the valuation.

Discounted Future Earnings: Projected future business earnings are forecasted, and then discounted using an appropriate rate which reflects the return from the next best investment opportunity with a comparable level of risk. The sum of the discounted future earnings is the current valuation.

*Definitions provided by Principal Financial Group

Wayne and his business partner revised the agreement and decided to purchase insurance on each other for $2,000,000 each in case of an early death. In addition, they are looking into options concerning disability, and Wayne is also considering putting a supplemental retirement income plan in place, all as a result of reviewing and revising his business’ buy-sell agreement.

Rob Baldwin, CLU, CFP ®, your local Highland Capital Brokerage Sales Vice President, understands business insurance planning and is very excited to partner with Principal Financial Group ®, a leader in providing solutions for the business market.

 Contact Rob Baldwin – 213.640.4356 or rbaldwin@highland.com - TODAY to get your complimentary Informal Business Valuation or Buy-Sell review!

The hypothetical case study results are for illustrative purposes only and should not be deemed a representation of past or future results. This example does not represent any specific product, nor does it reflect sales charges or other expenses that may be required for some products. No representation is made as to the accurateness of the analysis. All guarantees are subject to the claims paying ability of the insurance carrier.

This material was created by NFP (National Financial Partners Corp.), its subsidiaries, or affiliates for distribution by their registered representatives, investment advisor representatives, and/or agents. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP nor its subsidiaries or affiliates offer tax or legal advice.

Common failures usually make themselves known at death, such as having assets becoming subject to probate or having a noncitizen spouse not qualify for the unlimited marital deduction, having immediate and costly consequences. Even client’s heirs may face issues and negative consequences that may not be so clearly linked to the estate plan, but can be avoided with proper planning.

Surviving family members often have emotions of hate, greed, suspicion, distrust and disloyalty toward one another. The deceased never plan for that to happen. Proper planning is a key component to avoid tearing the family apart in these stressful times.

Three of the most common problems include:

1. Partition Sales or Sibling Rivalry: Parents die and leave their home to their adult children each getting an equal portion. One child wants to sell while the other(s) want to keep mom and dad’s home for sentimental reasons. The child that wants to sell goes to the courts for relief. The court can grant a partition sale of the home where the proceeds will be divided among the children evenly without the ones who don’t want to sell consent.
2. Poor Choice of Trustee or The Lack of Accountability: A family loses a parent that leaves them a million dollar insurance policy. The trustee decides to invest with a person the “guarantees” a prosperous return percentage. The investor goes to prison for embezzlement and the family is out their life savings because of this.
3. Lack of Planning for the Family Business: Children of a successful business man work in the family business until their father dies. The father’s intention, which he never formally included in his estate plan, was for the family to continue the business in the event of his death. His young wife does not share the same vision and sells the business, remarries and moves away. The new owners have no obligation to keep the children of the late owner and terminate them. The children lose everything.

How to Prevent These Failures

When clients meet their agents, the planning process should be done taking your time. Clients must be fully aware of what the estate plan can and cannot achieve. To establish an effective estate plan, a Highland Capital Brokerage advisor must ask the right questions and become knowledgeable of the client’s situation.

The client also needs to be properly educated about their estate plan. They must be given clear explanation of options in order to make informed decisions. After the client understands the estate plan Highland Capital Brokerage advisors should give the client their options as to how the estate plan can be customized to the client goals.

To ensure your estate plan is not doomed, talk with an insurance professional today!

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP nor its subsidiaries or affiliates offer tax or legal advice. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance does not guarantee future results.

Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

Securities & Investment Advisory Services may be offered through Representatives of NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Highland Capital Brokerage is an affiliate of NFP Securities, Inc. and a subsidiary of National Financial Partners Corp. (NFP). Not all of the individuals listed on this site are registered to offer securities products or advisory services through NFP Securities, Inc. NFP and its subsidiaries.

This blog is published for residents of the United States only. Registered Representatives and Investment Adviser Representatives of NFPSI may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the NFPSI Compliance Department at 512-697-6000.

The number of Americans with Individual Life Insurance Policies has dropped in the last 50 years and 30 percent of Americans have no Life Insurance at all.

The figures come from the "Trends in Life Insurance Ownership" study. The survey reports that the percentage of households with life insurance has declined since 2004, from 78% to 70%. Of the 35 million American households without life insurance, 11 million include children under 18.

The rate of job loss and companies selling back benefits to employees are the main contributors to the decline of families that have insurance. In a Wall Street Journal article Leslie Scism noted in 2004, one in three households relied on employer-provided Life Insurance. That figure is now one in four households.

Many Americans, 58 percent, believe they need more Life Insurance. Households with children under the age of 18, 40 percent say they would have trouble paying living expenses immediately if the primary income provider died.

To help protect your family from a debilitating financial disaster in the event of your death, contact an insurance professional today!

Some questions are easier to ask when it’s just a conversation. Don’t wait for a crisis to make important decisions about care.

1.)   Do you know how much long term care costs are in your area?

While family and friends provide most of the care for older Americans, people find out very quickly how expensive alternative options can be. The average national price for a single room in a nursing home is about $75,000 annually. The services of a home health aide (to help with personal care such as bathing, dressing, and meals) is about $43,472 annually. As you can see, these costs can quickly add up. (1)

2.)   Do you know whether government programs cover long term care services and, if so, whether you will be eligible in the future?

Many people mistakenly believe that Medicare and private health insurance pay for long term care services on an ongoing basis. But those programs typically only pay for skilled services, such as those performed by a nurse or therapist.

Most people need help with non-skilled care like bathing or dressing. Medicaid pays for these types of services for people with limited income and assets and for those who have spent down their resources because of high medical costs. To qualify, people must also meet certain guidelines, which vary from state to state. (1)

3.)   Do you know the difference between disability insurance and long term care insurance?

People are often confused about the difference between disability insurance and long term care insurance. Disability insurance pays you (usually a percentage of your salary) if you become ill or are in an accident and cannot work. For most people, this type of insurance wouldn’t cover the added cost of long term care.

Long term care insurance pays for some of the costs of services you may need if you develop a disability and can no longer care for yourself. It usually covers care management, home care, assisted living care, and nursing home care.

As with any insurance product, you should carefully examine whether it is of value to you. Consult an independent adviser or your state insurance bureau if you have further questions. (1)

It’s time to question your long term care strategy

4.)   Have you included the cost of long term care when calculating the amount of money you will need for retirement?

Many people underestimate the likelihood of needing long term care. A report found that someone who is 65 years old has, on average, a roughly 70 percent chance of needing long term care. These estimates vary by gender. About 80 percent of women and 60 percent of men at age 65 will need care during their remaining lifetime. Women need an average of 3.7 years of care, and men need an average of 2.2 years.

Out-of-pocket dollars spent on long term care can vary a great deal from person to person, depending on the type and amount of care needed. Since most people rely on family and friends, understanding whether and how your loved ones will be able to support you is important to long term care financial planning. (1)

5.)  Do you know what your retirement income and expenses will be?

Only about 46 percent of Americans have tried to estimate how much they will need to save for retirement. Of those, nearly half responded by adjusting their saving patterns. There are many tools to help you determine how your assets and income will stack up against your expenses in retirement. It’s never too early or too late to get a handle on your money, even if you are at or near retirement age. (1)

6.)   Do you have a long term care plan?

A long term care plan has two objectives. The first is to allow you to remain in the community without risking the emotional and physical well being of those who will provide your care. The second is to preserve your retirement plan so it can execute for the purposes you intended, which generally includes:

• Generating income to support your lifestyle
• Minimizing taxes
• Vitality of your surviving spouse (2)

Would your spouse/family know what to do if you needed care tomorrow?
Would they have to stop working or relocate to care for you?
Would they know what assets to liquidate?
What would the cost of liquidating the assets be?
Are the assets in real estate? If so, how quickly could your family sell that property and at what cost?

If you want to protect your family from the consequences of needing long term care and have a way to protect your assets from potential long term care costs, talk to your insurance professional today!

(1) AARP website,http://www.aarp.org/relationships/caregiving/info-09-2010/women_long-term_care_quiz.html

(2) Harley Gordon, President of The Corporation for Long Term Care Certification, Inc.

This is for general information only and is not intended to provide specific financial advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results. All guarantees subject to the claims paying ability of the insurance company.