If you are a union worker retiring now, you are exiting the workforce after a gold rush of paid medical expenses and lucrative defined benefit or pension plans. In 2003, the average life span became higher at 77.6 years. Some argue that overweight issues and new illnesses will stop the trend of Americans living longer. Because people are living longer, the financial future of tomorrow’s retirees is at stake.1 When retired, you will have time to mine financial reports, find gold nuggets of understanding about the U.S. economy, and sift through your golden loot with your tax advisor, investment broker, insurance professional, and attorney. It is the right here and now, while you are still swinging the pick axe in your working years, where time can be your best friend and mentor. Know and understand what it is exactly you have stashed away and how you can protect or grow the savings you have worked so hard to get. So when will you call it a “done deal” and let the upper management and human resource department folks know you will retire? In today’s world, it is a “win-win” to have the best financial advice available when considering your retirement options.<\/p>\n
Knowledge is Power<\/p>\n
Before you “turn in your hard hat”, ask your human resource department for a hard copy of your medical benefits, disability, and life insurance benefits, or any other benefit which is offered to you as a retiree. Many employers now allow employees to get this type of information online using a personal computer with a PIN (personal identification number). If you don’t have one, ask your human resource department to help you learn how to get the right information to get your information online. If you don’t feel right getting information online over the computer, ask your human resource department for help.<\/p>\n
Medical Coverage: Are the Big Buck Days Nearly Over?<\/p>\n
General Motors (GM) spent $5.6 billion in 2004 to care for 1.1 million active and retired employees and their dependents. In 2003, health-care spending amounted to $1,525 for every vehicle GM produced in the U.S. 69% of the beneficiaries of medical coverage are retirees.2 If you are getting ready to retire and you are sixty-four (64), you need to look into your medical supplement insurance or Medigap. Be prepared for your union to make future changes, as GM may, to its current medical plan.<\/p>\n
Many families already know about rehabilitation therapy and how important it is for triggering events like stroke or heart attack. In the case of Medicare supplement (or Medigap), Julia Apple (not her real name) was really helped by the policy her company had taken out at her retirement. Julia had a very serious stroke that left one side or her body without any strength and for about three (3) months, she required rehabilitation therapy. The cost of the first one-hundred (100) days of her rehabilitation therapy was covered by her Medicare and Medigap policies.<\/p>\n
The focus areas of medical insurance coverage in your retirement are: Medicare, the government subsidized health insurance for retired workers, Medigap, a privately paid for supplement to government health insurance, and long term care insurance. Medigap insurance may often be taken out by your company when you retire.<\/p>\n
Medigap offers a wide assortment of medical supplemental benefits which Medicare will not, such as rehabilitation. These supplemental benefits are individually categorized as A-J. For each letter, A, B, C, D, E, F, G, H, I, and J, you will find a type of medical care, such as hospice care, for example. A Medigap policy will differ from state-to-state and from insurance-carrier-to-insurance-carrier. In Indiana, consult an independent insurance professional for advice in getting Medigap coverage, or contact your local Senior Health Insurance Information Program (SHIIP) office to get information and referral: 1-800-452-4800 or on the web at: http:\/\/www.in.gov\/idoi\/shiip<\/p>\n
The single most serious financial issue is what to do and how to cope when the Medicare and Medigap policy benefits run out. This is where long term care insurance comes in and provides income to the person being cared for to help offset the out of pocket costs. In 2004, Genworth, a large long term care insurance provider estimated the national average for long term care costs was $75,000.00.<\/p>\n
Life insurance: Is it Fool’s Gold?<\/p>\n
While it may be tempting to respond to direct mail offers you receive in the mail or solicitations on television, there is nothing like a face-to-face conversation with an agent who has the ability to meet you at your home or office to discuss your concerns.<\/p>\n
Many of today’s retirees do not have a permanent life insurance policy. However, they do have term insurance through their employer. Meet with an independent life insurance agent from a firm with good financial ratings and ask them to review or audit the policies you have. You can find out if the insurance you have through your employer is portable and also if it would be affordable for you to convert it to a permanent policy at your retirement. In many cases, a competent insurance professional will be able to assist you with determining the type of coverage that you should have. If you aren’t sure about the advice you receive, seek a second opinion from another representative from a highly rated firm with a local sales office.<\/p>\n
Life insurance is not fool’s gold. It can help your family to have an income if you pass away; it can supplement retirement income, be borrowed against, and can help you minimize financial stress on the people you love at their most critical hour.<\/p>\n
Footnotes<\/p>\n
1 Sage News, A Longer Walk Into the Sunset, March 21, 2005.
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2 Detroit News Auto Insider, April 8, 2005.
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3The American Health Care Association, Contemporary Long Term Care, November 1998.
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4 MetLife Market Institute, July 2000.
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5 Kiplinger’s, Your Money, June 2004.<\/p>\n