HEALTHCARE: HEART ATTACKS

Heart Attacks

 

Sometimes referred to as the “silent killer,” heart disease is officially the leading cause of death, claiming over 700,000 people a year.  A single EKG’s and MRI can cost over $5,000, hospital stays can average over $20,000, angiograms can be as much as $30,000, and a heart bypass can cost over $70,000. Drugs can be very expensive, not to mention rehabilitation and ongoing maintenance.  The CDC Foundation estimates that we spend over one billion dollars a day treating heart disease and strokes, with one out of every six healthcare dollars spent on heart care.  The U.S. spends more on healthcare than any other country, estimated by CNBC to total over $3.4 trillion dollars a year with an average of over $10,345 per person.

 

Over 155 million people are covered under an employer sponsored heath insurance plan.   However, the Kaiser Family Foundation reported that over 27 million Americans don’t have health insurance, with the Hispanic community making up the largest demographic without insurance.  The leading reason that people don’t have health coverage is that it was unaffordable, and with healthcare costs continue to increase at alarming rates, it will only become more prohibitive.

EMERGENCY CASH FUND

Besides budgeting, debt management, and educating ourselves on “understanding our money,” having an emergency cash fund is the first place to start saving money.  The temptation may be to invest in the stock market,  or invest in your company’s retirement plan–but the emergency fund is arguably the most important piece of getting your finances in order.  An account that is used to stave off unplanned expenses that can often cause financial turmoil. When we have some money put away for a “rainy day” or to handle unexpected financial curve balls, it provides a safety net and peace-of-mind. The money should be readily available and safe to be used specifically for emergencies, i.e. an emergency fund.  How much we put away really depends on us, what we can afford, and what’s sufficient to cover our expenses for a period of time.  A good rule of thumb is to have 3 to 6 months of expenses set aside.   Obviously, if we have unpredictable income, such as commissions, seasonal income, concerns about our employment, a lay-off, or possible job change, then we may want more.  Also, if we are having health concerns or potential needs with other loved ones, consider that as well.  There are no set rules, but the goal is to make the unpredictable expenses more predictable, and feeling less stressed. Ideally, this money should be in a safe, accessible place, such as a savings account, money market, or in 3-month T-Bills.  Most mutual fund companies have a money market option available, but beware of any service fees that may be charged if we don’t maintain a proper account balance.   Unfortunately, there are also many examples where people get into a financial bind, and take a loan from their retirement 401(k) as their emergency fund.  This isn’t what the retirement monies are to be used for, because they can come with potential fees and penalties, income tax consequences and are supposed to be earmarked for long-term retirement needs.
A couple of examples may help further illustrate: If our monthly budget totals roughly $2,100, then we should shoot for having about $6,300 in an emergency fund.  Also, in this same example, let’s say that we have a leaky roof that needs about $1,700 to fix. Then our emergency fund should be $8,000, ($6,300 + $1,700).
As with any saving’s goal, getting started and sticking with it is the best plan for success. Having an emergency fund gives us flexibility and reduces stress.

THE PROBLEM

The state of financial preparedness is frightening when you consider the statistics about how
people handle their finances, savings habits, and what we do with our money.

Over 82% of people cite financial stress as the #1 distraction in their lives, but yet 48% don’t
save anything. According to the Social Security Administration, 68% of adult Americans have
NO savings for an emergency. It is also the #1 cause of divorce.

The average credit card debt is over $ 16,000 per household. Student loan debt averages over
$36,000, with 40% of people behind on their payments.

Our National debt is over $19 trillion dollars last year, which is more than our annual GDP, or the
value of all goods and services sold in a year. Estimates are that underfunded liabilities for
Social Security and Medicare could be over $90 trillion dollars. According to the Social Security
Administration, over 34% use social security as their only income, and 31% of people claim to
have NO retirement savings at all! The average retirement savings balance is only $ 104k, or
roughly 2 to 3 years of most traditional income needs.

According to several statistics on Disability, a 35 year old has a 50% chance of a disability
lasting longer than 90 days before age 65, but only 2% of people believe it will happen. 90% of
working people feel that “earning a paycheck, or income” is their most important asset.
However, over 100 million workers have no long-term disability insurance. 90% of disabilities
are caused by illness, not accidents, but 14% of disabilities will last over 5 years, 24% for 3
months, and 38% of people couldn’t pay their bills for 3 months. Some 46% of people have
never discussed disability planning, but consider that the #1 cause of bankruptcy is unplanned
medical bills or illness/disabilities.

50% of people have no budget, but over 80% feel that it would help. Most people don’t realize
the power of saying a little every month, with most experts feeling 10 to 20% annually of your
paycheck a great place to start. Senator Elizabeth Warren has the 50/20/30 plan, 50% for
necessities, 20% for savings, 30% for discretionary spending. Over use the 4% rule as the
withdrawal factor of your money for retirement, such as 4% of $ 500,000= $ 20,000 of annual
income..it starts with SAVING!

Part of a Cure – Over 70% of people in the Personal Finance Employee Education Foundation
survey desire basic financial education in the workplace. Over 47% of employees spend more
than 3 hours a week at work thinking or trying to solve their financial problems. According to
the Federal Reserve, this causes businesses about $ 5000 a year in lost revenue, totaling over
$300 billion in lost productivity. The American Medical Association feels stress related diseases
runs into the billions each year.
The Problem…..We Need To Change!

How to Pay for Long-Term Care

Are you retiring anytime soon? Are you worried that you will have enough money? What happens to your money if you get sick, or need long term care during retirement?

The statistics are from 35% to as much as 70% may need some form of long term care before they pass away, and the costs could run in the tens of thousands of dollars.  Many people don’t want to get long term care insurance because they may not use it, and like a lot of insurance programs, you end up paying a lot of money for something you may never use!  It’s a roll of the dice, but there are alternative ways to get some long term care protection.  In particular, a “hybrid” insurance approach could be a great way to have LTC protection, but still have significant benefits if you don’t need to use.  Best of all, some of these policies can even include coverage for critical illnesses, like cancer, heart attack, or stroke, which can also be financially devastating.   We wanted to share this article that was presented on NBC’s Today show, January 10th.

Read the Today Show Article (includes informative videos):

If you don’t have $250,000 to spare, how to pay for long-term medical bills?

If you want to have a healthy retirement, there’s a big wild card you need to be prepared for: health care expenses. Medical costs, especially unexpected ones, can add up. A 65-year-old couple will need an estimated $260,000 to pay for unreimbursed medical expenses through retirement — and that doesn’t include long-term care, according to Fidelity Investments…  READ MORE >

When Buying Life Insurance…

1.) Don’t be intimidated by the fee structure-

The fees associated with life insurance actually decrease over the long term, and can even be considerably less expensive than those charged by an advisor, or a mutual fund.  According to an article in Forbes, mutual funds are actually charging on average 2.75% because of trading costs, which don’t have to be reported.  In the article, “Busting the Biggest Myth of Modern Finance,” after 20 years, a dividend-paying whole life policy fees equated to what would be a mutual fund with annual fee of .50% in a side by side comparison.  As a matter of fact, a mutual fund with a “little” annual 1.5% fee could cost as much as 8 times more than a life insurance policy over time!  Don’t let the fees distract you from buying cash value life insurance.

2.)  Do consider the “living benefits”-

Many people don’t realize that life insurance can provide access to your death benefit to pay for heart attack, cancer, stroke, Alzheimer’s, and even long term care.  Almost 70% of bankruptcies and foreclosures are related to medical expenses.  Does your policy provide living benefits protection?

3.) Don’t undervalue yourself and your spouse-

What is your life really worth? Don’t underestimate the full potential of your earnings power.  If you have a life insurance policy worth $ 200k, then in essence you are saying that if I die my life was worth only $ 200k!  According to numerous statistics, over 58% of the people feel they are under-insured.  Furthermore, often there is insurance on the primary bread winner, but nothing on the stay-at-home spouse, who is working just as hard to take care of the family.  According to salary.com, the cost to replace someone to take care of child care and other house responsibilities would be over $ 100,000 per year.  Also, your spouse runs the same risks of needing “living benefits” protection as well.

4.) Don’t believe in buying term and “investing the rest”-

Mainly because you won’t!!  Research has shown that less than 1% of people actually end up investing the rest.

5.) Don’t buy life insurance over the internet-

Most people don’t realize that it doesn’t cost you any more commissions to work with an insurance specialist.  With all the products available, and numerous planning possibilities, why wouldn’t you work with someone to design an insurance program that is tailored to meet your specific needs?

6.) Do consider a cash value policy-

Guess who is the largest purchasers of cash value life insurance…banks and corporate America.  If it’s good enough for them, then it might be good enough for you to consider.  It’s not a short term play, but cash value insurance can increase dramatically over the longer term..10, 15, 20 years.  Historically, a equity index universal life policy has averaged as much as 8% a year. It tracks it’s performance against the S&P 500 index, which traditionally has been a good place to consider investing a portion of your money.  Also, because of the way the product is designed, it doesn’t lose money if the market goes down.  As a matter of fact, during the stock market correction in 2008, it didn’t lose anything!  Cash value life insurance can provide tremendous flexibility.  It can be used for numerous financial goals such as college planning, retirement, asset protection, and even tax reduction strategies.

Life insurance gets a bad rap, but it stems from a lack of education.  It can be a great way to cover a lot of financial bases, provide diversification, and protect you and your family.

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