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Five Things to Watch Out for When Buying Long-Term Care Insurance

You’ve researched long-term care insurance (LTCI) and are seriously thinking of buying a policy. Just make sure you’re doing it for the right reasons–don’t be swayed by unsubstantiated sales pitches. Here are some claims you’ll want to think twice about.

A long-term care policy is a great tax write-off

Though it’s true that premiums paid on a tax-qualified LTCI policy can reduce your tax burden, you must itemize deductions to be eligible. When you’re older, perhaps you’ll no longer itemize deductions. And even if you do, LTCI premiums fall under the write-off for medical and dental expenses, which is limited to expenses that exceed 10 percent of your adjusted gross income. So, for example, if your adjusted gross income is $60,000, you are able to deduct only that portion of your unreimbursed medical and dental expenses (including LTCI premiums) that exceeds $6,000.

And there’s another caveat. Even if your LTCI premiums exceed 10 percent of your adjusted gross income, you can’t include all of the premiums in your deduction for medical and dental expenses. Instead, your premiums are deductible according to a sliding scale that depends on your age. So what might look like a great tax write-off at first glance may not be so great after all.

Note: The threshold is 7.5 percent for those age 65 and older until 2017, at which time it increases to 10 percent.

You should buy a policy now so you can lock in the price forever

With most LTCI policies, your age at the time you purchase the policy is a factor in determining your premiums. However, this doesn’t mean that your premiums will stay the same as long as you own the policy. In fact, your premiums can increase if your insurance company establishes a rate increase for everyone in your class, and that increase is approved by the state insurance commissioner.

As a relatively new type of insurance, LTCI may be particularly susceptible to rate increases, because insurance companies lack a sufficient amount of underwriting data to predict the number and size of claims they can expect in the future. And unfortunately for you, if your insurance company does raise your premium, it may not be so simple to take your business elsewhere. Any premium on a new LTCI policy will still be based on your age, which will be higher, and your health, which may be worse. So no matter when you buy your policy, make sure you can afford the premiums both now and in the future.

It doesn’t matter how the policy defines “facility”

Currently, there are no national standards on what constitutes a long-term care facility. This means that an “assisted-living facility” or “adult day-care facility” may mean one thing in a particular policy or state and another thing in a different policy or state. This can pose a problem if you buy the policy in one state and then retire to another state–there may be no facilities in your new state that match the definitions in your policy. To protect yourself, make sure you understand exactly what types of facilities the LTCI policy covers before you buy it.

It’s not necessary to check the financial rating of the insurance company

A large number of unexpected long-term care claims could potentially devastate an insurance company that isn’t financially strong. So before you buy an LTCI policy, it’s always a good idea to check the company’s financial rating by using a rating service like Standard & Poor’s, Moody’s, A. M. Best, or Fitch. You can also check with your state’s insurance department for more specific financial information on particular companies.

You should get rid of the policy you have now and buy a new one

Although in some cases a new LTCI policy might have an attractive added benefit that your old policy doesn’t, red flags should go up if an insurance agent encourages you to ditch your old policy for a new one without providing a clear explanation of the added benefits. For one thing, your premiums are based on your age and your health at the time you purchase the policy, so all other things being equal, your new policy will be more expensive. For another, you run the risk that a pre-existing condition won’t be covered under the new policy.

If you’re unhappy with your current policy, an alternative may be to upgrade it rather than replace it (though the agent earns a larger commission if you replace it). Unfortunately, there are unethical agents who make misleading comparisons of LTCI policies in an attempt to get you to switch policies for no reason other than their commission. If you’re considering switching policies, make sure you understand exactly what the new policy offers, whether this additional coverage is important to you, and what you’re giving up.

 

Important Disclosure

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60% of Nurses Between 45 and 60 Haven’t Prepared For Retirement. But Why?

We hear so much about the woes of Social Security and what will happen to future generations, that we sometimes forget about today’s retirees. Are they going to have enough for retirement today or in five years?

One such survey, by the Center for American Nurses, paints a bleak picture for nurses. The survey states that 60% of nurses, between 45 and 60, have done nothing – not one thing – to get ready for retirement.

At first look, this might be a startling fact.

How can so many nurses – a group that is educated, responsible and logical, ignore the inevitable? But, upon, closer inspection this number isn’t so shocking after all. And here’s why:


The median amount – all families in the United States have saved – is $5,000, according to the Economic Policy Institute.1


This is not much at all… so maybe it’s not odd that nurses haven’t planned either. Or do they have their own reasons – that might be different from other non-saving Americans?

Nurses Assume They Will Work For a Long, Long Time. But They Shouldn’t.

According to the survey results, reasons nurses are not prepared for retirement are similar to Americans in other industries and careers:

  • Lack of Time
  • Lack of Resources (Who Can Help Me? What Do I Do?)
  • And Putting Others Needs First (Paying for kids’ college before funding your own retirement)

But perhaps one of the most telling reasons nurses aren’t getting their ducks in a row is because they assume they’ll be working into retirement age.


Nurses reported they planned on working full-time past 66, while others stated they would work part-time.2


So, instead of imagining tropical vacations and sleeping in, most nurses polled don’t envision retirement as anything more than an abstract concept. Something other people do.

The thing is, nursing is not easy work. It requires physical and mental stamina. As nurses age and younger nurses come on the scene, it will be harder to compete in terms of ability and pay. At some point, nurses must think about their financial future – even if they do hang in the workforce longer than others.

Why Wait?

Waiting to save money for retirement is like waiting to jump on a life boat from a sinking ship. The longer you wait, the further and harder you have to swim to get to the boat. Don’t make it that difficult.

Make a commitment today that you will do these three things:

  • Figure out a good age to retire – at lease within a 5-year range (66-71)
  • Get your budget in order – what are you making vs. spending
  • Meet with a financial advisor – find one who comes with good recommendations and is a fiduciary

You can’t take care of others, if you don’t take care of yourself! Start today, you won’t regret it.

 

 

1http://www.epi.org/publication/retirement-in-america/#charts
2https://www.wiserwomen.org/images/imagefiles/wiserNurseInvestorRptMay2012finalRev.pdf

 

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Money Confidence for Nurses: Take Control in 5 Easy Steps

When it comes to being tough, smart and capable, female nurses (and women, in general) have proven they can be all three–and then some. Women are more likely than men to have a college degree1, women outlive men and women bring less credit card debt into relationships3.

But despite these powerful tendencies, women get tripped up when it comes to retirement planning.

Nurses Can Tackle Medical Emergencies, So Why Not Finances?

According to a recent survey “Money FIT Nurses Study” by Fidelity Investments, more than half of nurses lack the confidence to make financial decisions4. Given that about 90 percent of nurses are women5, it’s safe to assume that the people without financial grit are mostly female.


Women aren’t scared of money – in fact, 80 percent of household-buying decisions are made by women.6

Women are savvy with getting deals, they price compare, clip coupons and frequent discount websites to save a few dollars. So why do so many women – and nurses, in particular, have a hard time dealing with their financial future?

A Big Problem, With Even Bigger Consequences

The bottom line: there’s no one-size-fits-all answer. For some women, financial decisions might be left to their husbands, while others blindly trust their financial advisers – often too scared to ask questions or be proactive with their money.

For nurses, taking care of financial business can be tricky. Many nurses report not having the time to devote to retirement planning. After all, who wants to sit down in front of a spreadsheet filled with numbers on a day off? Not many people.

But, if you devote some time to understanding your finances, you can change the outcome of your retirement drastically. In short, it’s worth the challenge, because the reward is huge.

Let’s take a look at how you can get a grip on your retirement investments in 5 easy steps.

STEP 1: SET A RETIREMENT AGE GOAL

The first step in retirement planning is knowing when you can retire. The operative word here is “can” because some people may need to work longer due to limited financial resources.

  • The earlier you begin saving for your retirement, the better off you’ll be.

As you get closer to retirement age, adjust your exposure to risk.

  • If you have more than 30 years until retirement, then you can afford to gamble with riskier retirement vehicles – since you have the time to grow your money.
  • Those who are nearing retirement want to focus on safer instruments so that they won’t have a disruptive impact on your savings. 

STEP 2: MAKE A BUDGET

A thoughtful budget is your spending blueprint for retirement. Here’s where you’ll figure out how much money you need for:

  • Fixed expenses (mortgage, health insurance, car payment, loans)
  • Variable expenses (food, gas, entertainment).

Your fixed expenses usually don’t fluctuate from month to month, whereas variable expenses can change.

TIP: Be practical with your budget – don’t underestimate your spending, otherwise you might find yourself in a pickle after you retire.

STEP 3: UNDERSTAND YOUR RATES OF RETURN

If you want to live off your retirement savings, then you have to understand rates of return. Seriously. Although the sound of “rates of return” is enough to put you in a deep sleep, it’s important to get a basic idea of what this means.

  • In today’s market, a reasonable rate of return for a 30-year Treasury bond is just 3 percent. This means if you have $1 million invested in bonds, your yield will be about $30,000 per year. 7

STEP 4: SEEK HELP FROM A RETIREMENT INCOME PROFESSIONAL

Now that you’re equipped with the building blocks of your retirement plan, it’s time to talk to a pro. A retirement income professional will help you come up with a sound strategy for executing your retirement plan. Like any other profession, not all are created equal. Some will be proactive and invested in your financial health, while others will operate on autopilot. You don’t want the latter.

What to watch out for in a financial advisor:
  • If an advisor promises sky-high returns, a red flag should raise.
  • Is your financial advisor a fiduciary? It means he or she has pledged to operate to the highest ethical standards. Much like the nurse’s “Nightingale Pledge,” fiduciaries have a “duty to care” about their clients’ investments, which includes monitoring their financial situation along with investments.
  • Finally, you can find out if your adviser has had any rulings against him or her through a simple SEC search. This will take just a few minutes and can save you a lot of time and headache down the road. 

STEP 5: DO A YEARLY CHECK-UP

Like your patients, you’ll want to make sure your investments are on track each year. As you get older, it’s smart to check on the following:

  • Asset allocations: Are they still on target for your retirement goals?
  • Risk analysis: As the seasons change, so does your risk tolerance level. It’s important to assess your risk tolerance yearly, and shape your retirement income strategy accordingly.
  • Ensure your beneficiaries are up to date

Keeping track of your retirement accounts is part of your financial health. Even if you have a great financial advisor, ultimately the responsibility is on you to make sure everything is running smoothly and heading toward your goal: a happy and healthy retirement!

 

 

1http://blogs.census.gov/2015/10/07/women-now-at-the-head-of-the-class-lead-men-in-college-attainment/?cid=RS23
2http://www.bbc.com/future/story/20151001-why-women-live-longer-than-men
3https://www.nerdwallet.com/blog/credit-cards/debt-and-relationships/
4https://www.fidelity.com/about-fidelity/individual-investing/more-than-half-of-nurses-lack-confidence-in-making-financial-decisions
5http://nurse.org/articles/161/Male-Nurses-And-The-Profession/
6https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/empowering-women.pdf
7http://money.cnn.com/data/bonds/

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Retirement Planning for Nurses: By the Numbers

As nurses are earning more than ever before, they’re also working past retirement age. Here we explore why nurses are facing a financially shaky future and how they can change their course.

4,011,911 Professionally Active Nurses in the US Today1

There are more than 4 million working nurses in the United States today. That’s almost twice the amount of lawyers and doctors combined. On the front line of patient care, nurses are expected to be compassionate, strong, smart and in control every second they’re on the clock. Lives depend on their abilities.

Average Salary of Registered Nurses: $71,0002

But what happens when it’s time to retire? Who is watching out for their well-being and security?

The answer is not black and white. While many nurses have access to retirement products through their employers – like 401ks and pensions, they don’t always have the time to understand them.

56% of Nurses Report Not Being Confident in Investing Their Money3

An eye-opening report by Fidelity showed that 56 percent of 356 nurses surveyed claimed they lacked confidence when it came to investing their money because they didn’t have the time to learn about it.

Although it seems like a no-brainer to make time for your future financial security, this is easier said than done.

Imagine, for a moment, going on your twelfth straight day of working 10-hour shifts. You have to be alert and on your feet. You’re dealing with sick, hurt and suffering people. You get home late, eat whatever’s around, go to bed and repeat. By the time you have a day off, your laundry is piled up, you have unanswered mail and your spouse barely recognizes you. The last thing you want to do is pore over a bunch of numbers that won’t matter to you for a few more years. This is the life of so many nurses.

The big problem with this, however, is that nurses are pushing back retirement at a higher rate than ever before. Today, 74 percent of nurses are working at age 62 and 24 percent are still working at 69. The median age for retirement, according to a recent Gallup poll, is 66.

Likelihood Of Divorce: 33%4

Compound the problem of busy schedules with other problems, like divorce – the divorce rate for nurses is 33 percent – and it creates a dismal picture for a financially secure future.

How Can Nurses Secure Their Future?

The future does not have to be so bleak. Nurses can enjoy a fulfilling, financially secure retirement – but they must take an active role in their investments and savings.

Four Key Steps In Smart Retirement Planning:

  1. SET RETIREMENT GOALS

Before you do anything, figure out when you would LIKE to retire and how you want to spend your retirement. You have worked hard, you deserve a secure retirement at an age that suits you. In order to get this, you need a strategy – which begins with a goal.

Once you have your retirement age settled and how you want to spend your retirement – i.e. do you want to travel, shop and spend money or will you be happy living more modestly, go on to step #2.

  1. MAKE TIME TO REVIEW AND UNDERSTAND RETIREMENT OPTIONS

This might mean setting up a 401k through your employer or digging deeper into what you already have saved – which brings us to number 2.

  1. TALK TO A RETIREMENT INCOME PROFESSIONAL

Get professional feedback on where you are with your retirement savings and next steps for meeting your goal (your retirement age).

  1. SCHEDULE A YEARLY CHECK-UP

Just like you get your annual medical check-up, you need to get a retirement check-up. Meet with your retirement income professional every 12 months to make sure you’re on the right trajectory to hit your target.

As you near retirement age, you want to reduce exposure to risk and secure your nest egg. A retirement income advisor will make sure this is happening. A bad one won’t even notice if it is or isn’t – meaning, your investments are on autopilot. Be proactive and stay on top of your retirement savings.

1http://kff.org/other/state-indicator/total-registered-nurses/?currentTimeframe=0
2https://www.bls.gov/ooh/healthcare/registered-nurses.htm#tab-5
3https://www.fidelity.com/about-fidelity/individual-investing/more-than-half-of-nurses-lack-confidence-in-making-financial-decisions
4http://www.bmj.com/content/350/bmj.h706