Monthly Archives: September 2016

How Much Will Health Care Cost in Retirement?

Retired Couple at Health Care Visit Looking at Prescription

The average 65-year-old couple retiring this year will need an estimated $260,000 to cover health care costs in retirement.

On top of that, it will cost $130,000 to insure against long-term care expenses.

That’s upwards of $400,000 for health care in retirement, according to the latest estimate from Fidelity Benefits Consulting1.

And that doesn’t include the cost of nursing home care, if you should need it.

How are health care costs potentially going to affect your retirement?

If you haven’t planned for these costs ahead of time, you or your financial advisor may need to look to other sources of income to support the rising costs of health care during retirement. This may mean you continue to work, tap into investments, or other strategies.

According to the Washington Post2, 75 percent of Americans say they plan to work “as long as possible” in retirement. Thirty-five percent of those respondents plan to work because they need the money.

To accommodate the rise of health care costs in retirement, you may also need to create a brand new budget. If you do not plan on working once you retire, you may be able to cut some of your current expenses to pay for your medical care.

Whatever your plans for retirement, you’ll want to discuss the costs of health care with your financial advisor. This way, you can plan around the inevitable and try to live the lifestyle you desire.  

Looking for more answers?

Retirees or soon-to-be retirees can find more information on our retirement planning section.

The information in this material is for general information only and is not intended to provide specific investment advice for any individual.

1 https://institutional.fidelity.com/app/item/RD_13569_29195/retiree-health-costs-rise.html

2 https://www.washingtonpost.com/news/get-there/wp/2016/09/10/7-of-10-americans-plan-to-work-in-retirement/

What’s the Difference between a Bull Market and Bear Market?

Bull and Bear in front of Stock Market

Our clients often ask us about the difference between a bull market and bear market for stocks and what it can mean for their finances.

The good news is it’s pretty easy to clarify the terms. The challenge is in knowing how to react during each period.

What is a Bull Market?

Bull markets happen when there is optimism in the market. People are buying more stocks, and prices are rising. Here in the U.S., we have had a bull market in stocks ever since the beginning of the recession in 2008.

What is a Bear Market?

Bear markets are the opposite of bull markets. They happen when there is widespread pessimism in the market. People are selling their stocks, and prices are falling. Officially, a bear market kicks into gear when prices have dropped by 20 percent.

How Can the Bull and Bear Markets Affect Me?

One of the most interesting differences between a bull market and bear market is the way people react to them.

For example, investors may sell more stocks during a bear market, because the prices are falling and they don’t want to lose money. Conversely, they may buy more stocks during a bull market, because the prices are rising and they want to make money.

By reacting in these ways, it can cost more money to buy stocks during a bull market and may cost less to buy during a bear market.

While we generally encourage investors to stay the course through the ups and downs of the market, there may be adjustments to make if you are nearing retirement or have already entered this phase of your life. Likewise, if you are younger and have more time to let investments grow, your approach may vary.

For more information on the difference between a bull market and bear market and how it may affect your financial plans, feel free to reach out to us. We’re here to help.

The information in this material is for general information only and is not intended to provide specific investment advice for any individual.

How Life Insurance is Changing in Illinois

Life Insurance Umbrella Over Family

If you live in Illinois, you may be the beneficiary of a life insurance policy and not even know it.

According to the Illinois Treasurer, more than $550 million in death benefits have gone unpaid by life insurance companies in the state. And that’s just since 2011.

The problem? Companies may be failing to notify beneficiaries when they are eligible for a payout. Families that could be getting help to pay for funeral costs, daily living expenses, mortgages, etc. may not be getting what belongs to them.

Bringing Down the Hammer

To manage the situation, Illinois Gov. Bruce Rauner recently signed new legislation – called the Unclaimed Life Insurance Benefits Act – that will require life insurance companies to check if any policyholders have passed away.

Twice a year, companies will run their database of policyholders against the Social Security Administration’s death records. If any of its policyholders are a match, the company will be required to notify the beneficiary on how to make a claim.

The new law goes into effect on January 1, 2017.

In the meantime, if you want to see if you are the beneficiary of a life insurance policy in Illinois, you can check the treasurer’s list of unclaimed property.

 
The information in this material is for general information only and is not intended to provide specific investment advice for any individual.

The Real Effects of Interest Rate Changes

Ever since the Fed raised the interest rates last December, there has been a lot of chatter about the next rate hike. Some thought it might happen this month, yet the odds of that happening appear to be one in four (marketwatch – Greg Robb). Regardless of a rate hike or not, this past year has many people wondering about the real effects of interest rate changes.

Will it change their financial future? How does it affect their credit cards or mortgages? Should they be skipping those morning cappuccinos?

While we’re not here to assess your coffee drinking habits, we do want to help set the record straight on what an interest rate change may imply. So we’re keeping it simple by explaining the differences in high and low interest rates.  

Higher Interest Rates

When the Fed increases the interest rate, such as they did last December, it generally means the economy is growing. Employment rates are higher, companies are thriving, and consumers are spending more money.

When the interest rate is higher, banks are sometimes willing to pay more interest on their deposit accounts. The flip side is the cost of borrowing money may be higher.

So while it may not affect your credit card interest rates as much, where you may see a bigger difference is when you go to borrow a large amount of cash – such as with a mortgage or significant business loan.

Lower Interest Rates

When the Fed lowers the interest rate, it means the economy is slowing. Consumers are spending less and unemployment is rising.

When the interest rate is lower, banks may not be as willing to pay more interest on your deposit accounts. However, one of the other effects of this kind of interest rate change can be lower borrowing costs. If you are in a position to purchase real estate, this may be a better time than when interest rates are higher.

The Takeaway

While it is important to keep tabs on the interest rate, small changes may not affect your financial situation in a big way. However, when big changes are made, it may be time to look at making adjustments – and perhaps making your cappuccinos at home.

What other questions do you have about the real effects of interest rate changes? Let us know in the comments.

 

The information in this material is for general information only and is not intended to provide specific investment advice for any individual.