Life Insurance
Your projected expenses include your
insurance needs. As you near retirement,
your needs for life insurance may change and this is the ideal time to evaluate your circumstances and make necessary adjustments.
To help determine whether you need life
insurance, consider these questions.
- Are your children grown?
- Have you reduced your debt?
- Do you have a good pension?
- Do you have investment income?
If you have permanent insurance,
you might use your cash value to buy
a paid-up policy. A paid-up policy will
eliminate premium payments and should still provide an adequate amount of life insurance.
Most retirees maintain enough coverage to pay funeral and burial expenses to cover the cost of a final illness or estate taxes,
to make a charitable contribution or to provide money for children and grandchildren.
Health Insurance
If you retire before you become eligible
for Medicare and are not covered by
another new employer's health-care
policy, you may need to investigate
continuing health-care coverage
available under two federal laws.
- Under the Consolidated Omnibus Budget
Reconciliation Act (COBRA), employees may continue group
health-care coverage for themselves for up to 18 months
and for their families for up to 36 months following
retirement or layoff.
- Once COBRA benefits end, the Health
Insurance Portability and Accountability Act (HIPAA)
of 1996 prevents group health plans from denying
you coverage based solely on your health and
limits exclusions for pre-existing medical
conditions. This law also protects you if
your only option is to buy an individual health policy.
Carefully consider your health insurance options before you retire.
Medicare
Medicare is the federal government's health
insurance program for individuals age 65 or older,
some disabled individuals under age 65 and individuals
of all ages with end-stage renal disease.
Often referred to as "Original Medicare,"
the traditional delivery program for Medicare
benefits offers fee-for-service or indemnity
coverage and allows significant latitude in
your choice of health-care providers and
facilities. At the same time, Original
Medicare does not cover all medical services
or supplies, and you are required to pay
substantial coinsurance fees, co-payments
and deductibles for medical expenses you incur.
Long-Term Care Insurance
Long-term care is a type of health-care
service that is designed to help anyone
with a disabling or chronic condition who
can no longer care for themselves. There are
choices among living and care arrangements
that can be offered in one's own home or
in a health-care facility.
It is a good idea to consider long-term
care insurance during preretirement planning.
Long-term care costs can be expensive. It is
important for you to protect your hard-earned
life savings and standard of living.
Cost for long-term care will vary among
facilities and geographic locations. According
to an April 2009 report from the American
Association of Home and Services for the Aging,
the national average annual cost for a private
room in a nursing home is almost $80,000. Like
life insurance, you are likely to qualify for
better rates when you are younger and in better
health.
Wills
In addition to insurance, a will is a necessary
part of good financial management. If you do
not have a will, a state court finalizes your
affairs upon your death and charges your
estate for the expenses. Your remaining assets
are divided among your relatives according
to state law. If you are unmarried and have
no blood relatives, the state may take your property.
Powers Of Attorney
With a power of attorney, you can give another
individual the legal authority to act on your
behalf for a purpose you designate, such as paying your bills, managing your personal affairs or handling your finances.
You must be of sound mind and not under
mental duress to prepare and execute any of
these documents. Unless it is a durable power
of attorney, a general power of attorney expires
if you become incapacitated.
For More Information
The USAA Educational Foundation publication, Estate Planning, offers
more information.
Basic Money Management
Basic Money Management
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