By: Amy HerrickcloseAuthor: Amy Herrick Name: Amy Herrick
Member: Member Paladin
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Email: rher86@aol.com
Site: http://paladinregistry.com/external/beaninformedinvestor/advisor_profile.php?advisor_id=1258
About: I have been in the financial services industry for over 23 years achieving the Chartered Financial Consultant (ChFC) and Investment Advisor Representative (IAR) designations. For the benefit of my clients, I am a licensed Life, Health, Critical Illness, Long Term Care and Disability Insurance Agent in multiple states. I believe in giving back to the community supporting ministries of the Light of The World Christian Center, Couple to Couple League, The Helping Hands of Goodwill Industries and other non-profit organizations on a local or global level Compliance Disclosure: Amy Rose Herrick, ChFC, Investment Adviser Representative is a Registered Representative of and offers Securities and Investment Advisory Services through Woodbury Financial Services, Inc., Member FINRA, SIPC and Registered Investment Adviser branch office 4536 SE 37th Street Topeka, KS 66605-9141 785-379-0586See Authors Posts (18) | November 18, 2009 | Investor Information

Often when we are looking into retirement we put on the rose colored glasses and sadly some Advisors do to.

We carefully set up a realistic current budget, perhaps choose pension payout options we will live with for the rest of our years, determine our Social Security benefits, secure health insurance or supplements, set up regular income streams we could count on, planned some long vacations, downsized… moved….changed our pace of daily life ….now we dream….we volunteer…we move to another phase of life. Sigh!

We determine our assets should last and they are “enough” whatever that is, or we adjusted our lifestyle to make it “enough” and all is well, now we can retire and relax and not worry about money anymore. Sigh! Maybe not.

You are wearing those rose colored glasses and forgot a big part of your risk and perhaps your Advisor did too. Take them off!

From the statistics I have seen 60% of you reading this are in for a rude awakening when new ongoing living expenses are a reality in your retirement. What new expenses? The Federal Office of Personnel Management findings in 2003 concluded a sobering 60% of the population will need some type of long term care. 60% of you reading this, over half will need to figure out how to pay for a huge ongoing new living expense you never even budgeted for or thought about in your income needs planning.

Another facet of this trend to ignore the issue in the planning industry I have witnessed firsthand is the omission of this very real long term care retirement income threat from the continuing education (CE) courses curriculum planners use to keep knowledge bases up to date. Licensed individuals with designations often have regular CE requirements to maintain their professional titles. They must take specific courses to requalify periodically. I was appalled that one of the CE courses I completed recently was wearing those rose colored glasses in all the retirement income planning examples in the course and not once was one dime of long term care expense occurring ever mentioned in the income planning examples as a possibility that would alter income streams. Not once! Every case study used was a rosy scenario when statistics tell me 60% of those case studies were in for a rude financial awakening and would be back for additional emergency financial planning help when it was too late!

If your Advisor has not factored in how to absorb or pay for a long term care need in your current and future expenses, you missed a lot and so did your Advisor. Maybe you jeopardized your retirement income security you thought you had by a glaring long term care threat common omission.

How would you financially keep your carefully crafted existing budget intact plus add the ongoing expense or perhaps someone coming into your home and helping you to avoid a nursing home even for only a few hours a day? You do the math.

The National average median hourly rate for a Home Health Aide (charged by a Medicare Certified agency) costs $46.22 an hour according to the Summary of 2009 Findings compiled by Genworth Financial, how will you pay for even 4 hours a day of help with bathing, dressing and transferring? For one year that is a tidy $67,481 more income you need than you planned for in your rosy scenario…after taxes.

If you prefer to try ands save a few dollars by using a non-certified individual who can do only personal and no medical care, then it will only be on average $18.50 an hour.

Sure the additional new medical deductions on your schedule “A” will help reduce the tax load on those dollars, but they will almost certainly not all be tax free. You still have to get the money from somewhere. Family members and spouses can only do so much each day.

Perhaps you needed a nursing home level of care. What if that necessary care cost you over $74,208+ a year for example according to the same Genworth report above for a private room at an average of $203.31 per day, how will you pay for it? That is just the room cost, medications and other needs will add to this figure.

Remember your healthy spouse still needs or wants to live in the paid off family home. Many month to month expenses do not go down because the number of people in a home has reduced.

Long term care is a reality and a major threat to otherwise comfortable retirements. If you or your Advisor chose not to include this very real income replacement issue into your retirement plan, you need to take of the rose colored glasses and look at the quality of your planning again.

From my view, no current or future retirement plan is complete without addressing the impact of any long term care needs no matter how young or old the client is.

After all it is only money…YOURS!

Amy Rose Herrick, Investment Adviser Representative, Agent and Author
4536 SE 37th Street
Topeka, KS 66605-9141
785-379-0586

Economic Consulting services available in all 50 states.

Investment and Insurance Services are available only in the jurisdictions where licensed to do business.

Current licensing as of 9/20/2009 held in some form for: Arizona, Arkansas, California, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Missouri, Nebraska, Oklahoma, South Dakota, Texas, Virginia, Washington & Wisconsin. Additional states will be added as needed.

Amy Rose Herrick, ChFC, Investment Adviser Representative is a Registered Representative of and offers Securities and Investment Advisory Services through Woodbury Financial Services, Inc., Member FINRA, SIPC and Registered Investment Adviser branch office 4536 SE 37th Street Topeka, KS 66605-9141 785-379-0586

Neither Woodbury Financial Services, Inc. nor its registered representatives or employees provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Opinions expressed here are those of Amy Rose Herrick and not necessarily those of Woodbury Financial Services, Inc. or its affiliates.