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National Retirement Week (NAFA) Webinar – What your clients don’t know will hurt them.

By April 8, 2014October 16th, 2023No Comments
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How does the use of selected Annuities help lower healthcare costs in retirement?

Retirees, in order to receive Social Security must accept Medicare along with having certain premiums and any surcharges automatically deducted from their Social Security benefit.

With Medicare expected to inflate at roughly 2 to 3 times higher than any Social Security COLA retirees need another form of guaranteed income in retirement to offset this loss of income. This is where selected Annuities help reduce healthcare costs.

Why it needs to be an Annuity?

Medicare is means tested: meaning it uses income to determine what you are going to pay in terms of your healthcare, which again is deducted directly from your Social Security benefit and the more income you have the more you are going to pay for your health and your wallet.

Annuities, specifically those that are Non-Qualified or SPIA’ have the ability to generate this much needed income to supplement the loss from Social Security that is excluded by both the IRS and Medicare.
In order to protect your health, your Social Security and your wallet an Annuity must be investigated.

What is the projected Impact of using an Annuity?

If we look at an average 50 year old that is projected to retire at 65 in the year 2029, with his wife retiring 4 years later. This couple estimates they will have approximately $60,000 in income during the first year of retirement. If 100% of the income is in the form of pension, Social Security or other income subject to means testing, they can expect to pay upwards of $1,260,000 in healthcare costs during retirement.(See graph below)

Now, if half of that income is moved into selected annuities, this same couple can expect to reduce projected healthcare costs in retirement by about $60,000.(See graph below)

NOTE: Not all Annuities are exempt from inclusion in means testing, be sure to choose the correct vehicle. The above illustrations include projected costs for both mandatory and non mandatory healthcare expenses in retirement.