According to the American Heart Association and the American Stroke Association, costs for stroke care are likely to increase. Experts suggest that by 2030 stroke-related medical costs will rise to $240.67 billion, a 129% increase from 2010. Stroke prevalence is expected to increase in the United States by 21% by 2030. Additionally, direct medical costs for older stroke patients are also expected to increase between 172% and 182%. More here
According to estimates from Fidelity Investments, the amount needed to cover medical expenses after retirement has dropped from last year by 8%. Fidelity expects medical expenses for a couple retiring in 2013 at age 65 to be approximately $220,000, not including any nursing home costs or long-term care. The executive vice president of Fidelity, Brad Kimler said, “unlike other needs like housing or food, many drastically underestimate health-care costs and therefore don’t incorporate it into their overall retirement plan.” More here
Working during retirement has become extremely common over the last decade. Many retirees are searching for ways to make a larger yearly income while avoiding the typical 9-5 job. Some have developed an interest in starting and managing their own business. Although this may sound like a good idea, experts are advising that those pursing entrepreneurship during their retirement years be particularly careful when making any financial decisions. A business mentor for Score, Nancy Strojny said, “When it comes to finances, be conservative, we don’t recommend doing anything with retirement savings lightly.” There are a few nationwide organizations that offer free financial advice before, during and after the business creation process. More here
According to a study led by Dr. Susan Lakoski of the University of Vermont, men who are physically active can protect themselves from cancer even more than 20 years after fitness. The study consisted of more than 17,000 men who took fitness tests. The study found that men who were considered fit at age 50 are less likely to suffer from heart disease and cancer later in life. The ASCO president, Dr. Sandra Swain said, “this important study establishes cardiorespiratory fitness as an independent and strong predictor of cancer risk and prognosis in men.” Experts suggest that the study’s findings may be relevant to women as well, but more information is needed. More here
The president of asset management and corporate services for Fidelity Investments, Ronald P. O’Hanley, explained results from recent research conducted by Fidelity regarding the financial situation facing individuals in retirement. On average, four out of every ten households with retirees do not make enough money to pay monthly expenses. O’Hanley suggests that if Americans do not start actively saving larger amounts of money, future retirees will have significant financial problems. Not only will individuals entering retirement have a financial catastrophe to handle, but also subsequent generations of retirees will not have sufficient funds to pay for their health care and living needs. O’Hanley said, “the impact on our citizens, our economy and our national security could be catastrophic—and not something we could solve for most retirees after the fact.” O’Hanley listed 4 recommendations to put retirement back on a positive track. More here
Many financial experts are suggesting that it be a requirement for all U.S. employers to put aside money to go towards retirement for their employees. Australia has a similar plan called the superannuation system where all employers contribute 9% or more of their part-time and full-time employees income saved into a separate account for the employee. The head of the world’s largest asset manager, Laurence D. Fink said, “the current system is not working and we need a comprehensive approach that includes some form of mandatory savings in addition to social security.” More here
An interesting thing happened in states that expanded their Medicaid offerings to provide health insurance to poor citizens: fewer people died.
A new study conducted by researchers at Harvard’s School of Public Health examined the relation between mortality rates and Medicaid coverage. It compared states that have expanded their Medicaid offerings – New York, Maine, and Arizona – with states that have not done so – Pennsylvania, Nevada, New Mexico, and New Hampshire.
During the study period, death rates actually decreased within the three states that had expanded their Medicaid coverage. In the states that had not, death rates increased. In the states where death rates had declined, the decline was greatest among the groups most affected by the Medicaid expansion such as nonwhites and the economically deprived. The study results are at odds with opponents of Medicaid, who claim that the program worsens patients’ health.
This new data comes at a time when states are considering whether to accept a Medicaid expansion under the Affordable Health Care Act. The expansion was expected to extend Medicaid coverage to 17 million people, however the Supreme Court ruled in June that the states have the option of opting out.
Read: Medicaid Expansion May Lower Death Rates, Study Says in The New York Times.
Centers for Medicare and Medicaid Services (Medicaid administrator) logo (Photo credit: Wikipedia)
Medicaid has not been unaffected by the recent State budget shortfalls. States are proposing cuts to many aspects of Medicaid, including routine dental care in nursing homes. Some states are even attempting to recover Medicaid expenses from the estates of those who used Medicaid to fund long-term care.
While Medicaid currently covers 40% of long-term-care spending in the United States, general eligibility requirements are making Medicaid harder to tap. In many states, to be eligible for Medicaid, you cannot have over $2,000 in cash and investments. Those who know they will need Medicaid coverage but may not qualify may take some “Medicaid planning” steps. The goal of these steps is to preserve your assets, while putting yourself in a position to meet the Medicaid qualifications.
First, it is vital to speak with a lawyer who specializes in elder law in your jurisdiction. Through meeting with a lawyer, you can determine exactly what the eligibility requirements in your state are, and options for you to legally meet them. Homeowners who plan to enter a nursing home and have cash in savings may consider transferring their home to their children. This puts people in a position to qualify for Medicaid coverage, while also ensuring that they have cash for nursing home care. Other options include long-term care insurance, and creating an irrevocable, asset-protection trust.
Read: Medicaid Gets Harder to Tap in The Wall Street Journal.
The home foreclosure rate for senior citizens is rising quickly, surpassing that of any other age group. Since 2007, over 1.5 million older Americans and senior citizens have lost their homes. Studies show that people aged 75 and older have the highest foreclosure rate of all citizens.
Home foreclosure in Greeley Colorado (Photo credit: david_shankbone)
Before the housing market collapsed, many parents used their home equity to pay for their children’s college education or weddings. After the market went sour, these parents were not able to rebuild the equity they once had. Now senior citizens, many of these parents are finding that although they worked and saved money their entire lives, they are nonetheless facing foreclosure.
The importance of home equity for senior citizens is emphasized by AARP Executive Vice President for Policy Debra Whitman, who explained, “Older homeowners often rely on their home equity to finance their needs in retirement – things like healthcare, home maintenance and other unexpected needs.” Whitman describes the large number of older Americans without home equity as “troubling.”
Senior citizens are not without options, however. The housing industry has already responded to the growing number of seniors who will need to move in with their adult children by building multiple-generation homes. For those seniors who still have home equity, they may be able to obtain a reverse mortgage to pay their expenses. Finally, purchasing insurance on your portfolio is a great way to ensure that you will not be left with nothing in the event that your portfolio runs out.
Read More Clients May be Taking Care of Mom and Dad in Financial Advisor Magazine.
Within the next 30 to 40 years, the baby boomer generation will leave their children $30 trillion. While many of the recipients will inherit modest sums, a select few will be fortunate enough to have a fortune waiting for them. Many of them, however, will be ill-equipped to handle the windfall.
A recent survey reveals the importance of discussing your children’s inheritance with them during your lifetime. Many respondents revealed that their parents never spoke to them about money, so when they finally received their inheritance they felt ill equipped to handle it. Furthermore, respondents reported that receiving their inheritance made them feel isolated from their peers.
To properly prepare your children for their inheritance, the most important thing parents can do is to speak with them openly about money. Many parents avoid such discussions because they are concerned that if their children know they will one day inherit a windfall, it may stifle their motivation. However, having no communication whatsoever can lead to them being unprepared.
Beyond speaking with your children, Director of Solution Development for SEI Private Wealth, Jeff Ladouceur, suggests that parents give their children a small amount of money early in their adult lives, and observe how they react and what they do with it.
Read When to Tell the Children About Their Inheritance and When in The New York Times.