SOURCE: HealthView Services

HealthView Services

August 09, 2011 14:52 ET

HealthView Services Shows How Your State May Impact Your Retirement Planning

DANVERS, MA--(Marketwire - Aug 9, 2011) - The economic downturn of the past five years, the precarious states of Medicare and Social Security, and the impact of new healthcare legislation have left 78 million Baby Boomers feeling vulnerable and unprepared for the future.

They're not the only ones.

Financial advisors must also adapt to this landscape by re-prioritizing client needs. Traditional plans are being supplanted by the need to address the single most important factor in achieving stability during retirement: healthcare costs. In a recent study conducted by Credit Suisse, seniors over the age of 60 spend 33% of expenditures on healthcare while housing and food account for 23% of consumption.

Let's examine this chart compiled by HealthView Services, the only software platform that generates a comprehensive health expense report for retirement planning. HealthView's newest features calculate out-of-pocket expenses by state and include the legislative changes that will require additional contributions to Medicare based on income, as seen below:

Estimated Healthcare Expenses: Healthy Couple -- Age 65-90

Modified Adjusted Growth Income (MAGI) Level Residence:
(2nd Least Expensive)
(National Average)
(Most Expensive)
Under $170,000 $560,410 $649,520 $689,210
$214,000-320,000 $853,547 $942,934 $974,253
$320,000-$428,000 $1,030,995 $1,120,549 $1,146,710
$428,000 + $1,280134 $1,297,854 $1,318,887

In five years, a 60-year-old couple living in one of the least expensive states at the lowest MAGI level will have to spend over $500,000 dollars to stay healthy. If the couple moves to Florida, premiums rise 23%. At the highest MAGI level, a healthy Florida couple will need an estimated $1.3 million in retirement to pay for healthcare!

As a result, advisors collaborating with clients on a portfolio that focuses on saving for healthcare costs needs to become a priority. To that end, here is an emerging philosophy: those entering retirement can buy a less expensive car, downsize their home, or take fewer vacations, but they cannot eliminate medications or cut back on health services.

Notice how an advisor can help a client who expects to earn less than $170,000 a year during retirement by recommending changes in retirement date, residency, and type of health coverage.

Current Age Retirement Age Coverage Total Cost in Retirement Savings Required
7% Pre-retirement, 5% in Retirement
Pre-retirement Savings
60 65 All expenses $560,410 $198,819 $0
60 65 Doctors/Drugs $305,560 $108,041 $0
60 68 Doctors/Drugs $291,030 $92,794 $0
60 68 Doctors/Drugs $291,030 $60,847 $5,000

By utilizing HealthView's data, the advisor can offer options such as targeting part of a portfolio with regular contributions to afford quality physicians and medications.

Since healthcare in retirement is now means-tested, advisors will play an important role in managing high net-worth client income levels because their possible expenses could rise dramatically, depending upon their MAGI level. The crippling cost of healthcare in retirement is likely to exceed that of housing, which makes it vital for advisors to create client stability by integrating healthcare costs into retirement plans.

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