If you’re a union worker retiring now, you’re exiting the workforce after a gold rush of paid medical expenses and lucrative defined benefit or pension plans. In 2003, the average lifespan increased to 77.6 years. Some argue that weight problems and new diseases will stop Americans from living longer. Because people are living longer, the financial future of tomorrow’s retirees is at stake.1 When you retire, you’ll have time to pull financial reports, find gold nuggets to understand the US economy, and examine your golden swag with your tax advisor, investment broker, insurance professional, and attorney. It is the right here and now, while you are still swinging the ax in your working years, where time can be your best friend and mentor. Learn and understand exactly what you’ve saved and how you can protect or grow the savings you’ve worked so hard for. So when will you call it a “done deal” and inform upper management and the HR department that you are retiring? In today’s world, it is in everyone’s interest to have the best financial advice available when considering your retirement options.
knowledge is power
Before you “turn in your helmet,” ask your human resources department for a printout of your medical, disability, and life insurance benefits, or any other benefits offered to you as a retiree. Many employers now allow employees to obtain this type of information online using a personal computer with a PIN (personal identification number). If you don’t have one, ask your human resources department to help you learn how to get the right information to get your information online. If you don’t feel comfortable getting information online via computer, ask your human resources department for help.
Health Coverage: Are the Days of Big Earnings Ending?
General Motors (GM) spent $5.6 billion in 2004 to serve 1.1 million active and retired employees and their dependents. In 2003, spending on health care was $1,525 for every vehicle GM produced in the US 69% of health coverage recipients are retired.2 If you are preparing to retire and are sixty-four (64) , you should look into your medical supplement insurance or Medigap. Be prepared for your union to make changes in the future, as GM might, to your current health plan.
Many families are already aware of rehabilitation therapy and how important it is in triggering events such as stroke or heart attack. In the case of the Medicare supplement (or Medigap), Julia Apple (not her real name) was helped a lot by the policy that her company had purchased when she retired. Julia had a very serious stroke that left one side of her body without 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.
The focus areas for health insurance coverage in your retirement are: Medicare, the government-subsidized health insurance for retired workers, Medigap, a privately paid supplement to government health insurance, and long-term care insurance term. Often, your company can purchase Medigap insurance when you retire.
Medigap offers a wide variety of supplemental medical benefits that Medicare doesn’t, like rehabilitation. These additional benefits are individually classified as AJ. For each letter, A, B, C, D, E, F, G, H, I, and J, you’ll find a type of medical care, like hospice care, for example. A Medigap policy will differ from state to state and from insurance company to insurance company. In Indiana, consult an independent insurance professional for advice on obtaining Medigap coverage, or contact your local Senior Health Insurance Information Program (SHIIP) office for information and referral: 1-800- 452-4800 or on the web at: http:/ /www.in.gov/idoi/shiip
The most serious financial problem is what to do and how to deal with it when the benefits of Medicare and Medigap policies run out. This is where long-term care insurance comes in and provides income to the person you care for to help offset out-of-pocket expenses. In 2004, Genworth, a major provider of long-term care insurance, estimated the national average cost of long-term care to be $75,000.00.
Life Insurance: Is it Fool’s Gold?
While it may be tempting to respond to direct mail offers you receive in the mail or solicitations on TV, there’s nothing like a face-to-face conversation with an agent who has the ability to meet with you at your home or office to discuss your worried.
Many of today’s retirees do not have a permanent life insurance policy. However, they have temporary insurance through their employer. Meet with an independent life insurance agent from a company 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 when you retire. In many cases, a qualified insurance professional will be able to help you determine the type of coverage you should have. If you are unsure about the advice you are receiving, seek a second opinion from another highly rated company representative with a local sales office.
Life insurance is not fool’s gold. You can help your family have an income if you pass away; it can supplement retirement income, take out a loan, and can help you minimize financial stress for the people you love at their most critical time.
Footnotes
1 Sage News, A Longer Walk Into the Sunset, March 21, 2005.
2 Detroit News Auto Insider, April 8, 2005.
3The American Health Care Association, Contemporary Long Term Care, November 1998.
4 MetLife Market Institute, July 2000.
5 Kiplinger’s, Your Money, June 2004.
