Planning For Longevity The Missing Link in Your Retirement Plan

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Planning For LongevityThe Missing Link in Your
Retirement Plan
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• Two-thirds of everyone
• who has ever lived past 65
• in the history of the world are
• alive today. Throughout all of history, most
  people didnt age. They died.
• Ken Dychtwald
• Author, Age Wave

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Aging of America

• Number of Americans over the age of 65 has grown
  from 1 in 40 to 1 in 10. It may grow to 1 in 3
  during the next 30 years.

Average Life ExpectancyQUIZ
Roman Era
22
Renaissance
35
1600s
45-52
1935
61.7
1991
70.5
Presently
78
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Our Greatest Fears About Getting Old
Health Problems Income Problems Being
dependent Dying Being alone
32
19
8
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Health care, insurance costs
3
3
Source The Pew Research Center National poll Nov
9-27, USA Today, March 06
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Aging and Health Changes

• Coronary Heart Disease
• Cancer
• Stroke
• Osteoporosis
• Multiple Sclerosis
• Diabetes
• Parkinsons
• Alzheimer's

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Coronary Heart Disease (CHD)

• Every 29 seconds an American suffers a coronary
  event.
• Each year, 700,000 have their first attack
• CHD is the leading cause of permanent disability
  in the U.S. labor force.
• 22 of men will be disabled with heart failure
• 49 of woman will be disabled with heart failure

Source American Heart Association 2005 Update
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Cancer

• The American Cancer Society estimated that
  1,372,910 men and women (710,040 men and 662,870
  women) will be diagnosed with and 570,280 men and
  women will die of cancer of all sites in 2005.

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Stroke

• Each year 500,000 American suffer their first
  stroke.
• Stroke is the leading cause of serious, long-term
  disability and institutional care is required by
  20 at three months after onset.
• 1/3 of people having strokes are under the age of
  65.

Source American Heart Association 2005 Fact
Book Schrop, Joannie M., Stroke Buster New
Treatments in the Fight Against Brain Attacks,
US News World Report, March 15, 1999
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Osteoporosis

• Often called the Silent Disease
• 10 million already have the disease
• 34 million have low bone mass
• 80 are women
• 50 of woman ages 50 will have an
  osteoporosis-related fracture in their lifetime
• 25 of men ages 50 will suffer the same fate.
• 6 months after a hip fracture, only 15 can walk
  across a room unaided.

Source National Osteoporosis Foundation web
Oct. 2005
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Multiple Sclerosis (MS)

• Affects 400,000 people in the U.S.
• 10,000 cases are diagnosed each year
• Most are between ages 20 50.
• About 25 become wheelchair bound
• 70 eventually have limited capacity

Source Multiple Sclerosis Society Research
Highlights, 2005
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Diabetes

• 18.2 million people in the U.S. have diabetes
• Over 1.3 million new cases are diagnosed each
  year.
• Over 500,000 of new cases are people ages 40-59.
• Risk of stroke is 2x-4x higher for people with
  diabetes

Source American Diabetes Association, Oct. 2005
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Parkinsons Disease

• 1 million Americans suffer from it.
• 40,000 newly diagnosed cases each year
• Usually develops after the age of 65
• 15 of those diagnosed are under age 50.

Source Parkinsons Disease Foundation, Oct. 2005
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Alzheimers Disease

• Est. 4.5 million Americans have it.
• Est. 16 million could have it by 2050
• 1 in 10 over age 65 is affected
• A person with Alzheimers will live an average of
  8 years and up to as many as 20 years from the
  onset of symptoms.

Source Alzheimers Association Fact Sheet, Oct.
2005
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Your Present and Past

• Family History of Health Conditions Requiring
  Prolonged Assistance
• Parents
• Grandparents
• Siblings
• Children

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What is Long-Term Care?

• Long-Term Care is the personal care you may need
  on an ongoing basis due to
• A disabling injury
• Chronic medical condition
• Effects of aging
• Long-Term Care helps people with the essential
  Activities of Daily Living (ADLs) such as
• Bathing, eating, dressing, continence, toileting,
  transferring
• Cognitive disorders such as Alzheimers

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Where Are Long-Term Care Services Received?
87 Home Care, Assisted Living and Adult Day
Care
Source Facts and Trends The Nursing Facility
Sourcebook, American Health Care Association,
2001 Older and Younger People with
Disabilities Improving Chronic Care Throughout
the Life Span, Mental Health.About.com, January
2, 2002
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Could it Happen to You?

• Home care recipients receive an average of 59
  hours of care per week 36 hours of formal home
  care and 23 hours of family care.1
• People age 65 face at least a 40 risk of
  entering a Nursing Facility. 2
• The average Nursing Facility stay is 2.4 years 3
  and 10 will stay five years or longer.2

1. A Descriptive Analysis of Patterns of Informal
   and Formal Caregiving Among Privately Insured and
   Non-Privately Insured Disabled Elders Living in
   the Community, 1999
2. AHIP, Guide to Long-Term Care Insurance, 2002
3. National Center for Health Statistics, US
   Department of Health and Human Services, The
   National Nursing Home Survey, 2002

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Long Term Care Financial Risk
1 Yr of Assistance 3 Yrs of Assistance 5 Yrs of Assistance 10 Yrs of Assistance
Today 54,750 164,250 273,750 547,500
5 Yrs. 69,876 209,629 349,382 698,764
10 Yrs. 89,182 267,546 445,910 891,820
20 Yrs. 145,268 435,804 726,340 1,452,680
30 Yrs. 236,626 709,879 1,183,132 2,366,263
40 Yrs. 385,439 1,156,318 1,927,197 3,854,394
50 Yrs. 627,840 1,883,520 3,139,201 6,278,401
Assume 150 per day 5 Compound annual
growth. Source Actual costs vary by region.
Average daily rate for semi-private room in a
nursing home is 176/day or 64,240 annually.
MetLife Market Survey if Nursing Home Home Care
Costs Sept 2005
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A Glimpse Into the Future

• 25 years from now, you develop Multiple Sclerosis
  and become wheelchair bound.
• Your condition progresses and you eventually
  require 30 months of paid assistance.
• Your care costs 457,157
• How would this affect your retirement plan?
• Impact on spouse and family?

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Failure to Prepare for the Cost of Long-Term Care
is the Primary Cause of Impoverishment Among the
Elderly.

• 70 of those admitted to a Nursing Home are
  eligible for need based assistance (Medicaid)
  within the first year.
• ½ of all couples with one spouse in a Nursing
  Home are bankrupt

Medicaid Paying for Nursing Home Care, AARP,
October 2002 Baby Boomers to go Broke?!?, PR
Newswire, April 7 2000
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The Big Question

• How will you pay for your Long-Term Care?
• Family assistance
• Personal assets
• Government
• Medicare
• Medicaid (welfare)
• Private Insurance

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Life Insurance
Wills/Trusts
Health Insurance
Retirement Account
Savings
Investments
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Planning for the Unknown Today Tomorrow
Vital Asset Protection Strategy
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Retirement Planning Growth and Protection
Strategies
Stocks Bonds IRAs 401k Mutual Funds Fixed
Indexed Annuity Guaranteed Return Annuity
Accumulation
Protection Security
Emergency Savings Insurance
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It Takes all Three
MONEY
GROWTH
TIME
Starting Later Less Time
Starting Later More Money
Starting Later Less Growth
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Retirement Planning Goal

Retirement Savings
Growth
Years
0 10 20 30 40
50

• For most people with retirement in the horizon,
  they will
• not have enough money to retire comfortably.
• Protection of Accumulation Assets is critical

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The Best Laid Plan

Years
0 10 20 30 40
50

• Catastrophic illness or accident could wipe out
  a lifetime
  
• of savings
• People dont plan to fail, they just fail to
  plan

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Protection with Growth Retirement Security

Retirement Savings
LTC Insurance Protection Grows
Years
0 10 20 30 40
50

• Asset protection is as important as asset
  accumulation
• Your protection is designed to grow in value
  to continue
• to meet your future needs

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The Sooner You Invest The Less Your Investment,
but the Greater Your Return
Example Age 55, 4 Year, 4,500, 5 Comp. Married
Preferred
Today Delayed Delayed
Delayed 5 Yrs
10 Yrs 15 Yrs
Annual Premium Premium to Age 85 Benefit
Account-Yr 10 Yr 20 Yr 30 Yr 40 Yr 50
1,733.67 43,341.75 279,505.66 455,285.27 741,611.
73 1,208,007.37 1,967,716.71
1,383.12 41,493.60 356,727.92 581,072.20 946,505.
38 1,541,757.53 2,511,360.55
2,336.22 46,724.40 219,000.00 356,727.92 581,072.
20 946,505.38 1,541,757.53
3,525.66 52,884.90 Nothing 279,505.66 455,285.27
741,611.73 1,208,007.37
MetLife Ideal II
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Increasing Annual Insurance Leverage
Premium of Account Value (Leverage)
Annual Premium
LTCIA Benefit Account Value
.6 .4 .2 .1 .09 .06
Today Yr 10 Yr 20 Yr 30 Yr 40 Yr 50
1,383 1,383 1,383 1,383 1,383 1,383
216,000 356,727 581,072 946,505 1,541,757 2,511,3
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Assumes 5 compound inflation added.
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Real Cost of WaitingTaking into account age
inflation
Age 50 55 60
Mon. Ben 4500 5700 7300
Premium 1,186.95 1,757.33 2,810.52
From age 50 48 137
From age 55 60
From 50 (prf) to (standard) 74 179
From 55 (prf) to (standard) 88
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Applicants Who Wanted Protection But Ineligible
Due to Health History
Average Age Ineligible
70 34
68 27
64 22
57 18
40 10
Heart Disease, Cancer, Stroke, Osteoporosis, MS,
Diabetes, Parkinsons, Alzheimers, etc.
2005 AIM Experience
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100 Risk Retention Versus Pennies on the Dollar
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Benefits of Ownership

• Peace of mind
• Protection of Retirement Assets and Lifestyle
• Avoid Dependence on Others
• Tax Favored Status
• Freedom and Control of the Future
• Type of Care Received
• Where Care is Received
• Custom Plan Design
• Benefits Right for You
• Invest within Your Budget

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The Walls Around Your Estate
Fire or tornado? Homeowners insurance (1 in 1200)
House/Autos Savings/Investments Income
Car accident? Autoinsurance (1 in 240)
30K Medical Incident? Medicalinsurance (1 in 15)
Long term care? You pay? (1 in 2)
1. Mastering Long-Term Care, Journal of
Financial Service Professionals, July 1999 2.
What Attorney Should Know About Long-Term Care
Insurance, Elder Law Journal, Vol. 7 1, 1999
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Why Wait?If it EVER makes sense, it makes the
most sense NOW

• Will You Get Healthier?
• Will Rates Decrease?
• Will Total LTCIA Values be Higher?
• Would a Tragic Illness or or Accident Affect Your
  Retirement Plan?
• Will Care Costs Go Down in the Future?
• Will you be covered now should an unforeseen
  accident or illness strike tomorrow?

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Next Steps

• Review plan design options
• Select appropriate plan based on budget criteria
• Complete required paperwork to open account
• Attach initial deposit
• Review carrier underwriting requirements,
  timeline and procedures
• Upon approval - keep as ordered, make
  adjustments, return if dissatisfied 30 day
  money back satisfaction guarantee