More than half (52%) of Millennials are very or somewhat
interested in annuities, according to a survey by the Indexed Annuity
Leadership Council.
Millennials said they are interested in annuities because they can
help grow a retirement nest egg and provide long-term financial security. This indicates that the younger investor cohort is looking toward alternative
retirement savings products, the Council said. And among all age groups, 43%
expressed interest in annuities.
“It’s no surprise that Millennials, who entered the workforce after the
tumultuous 2008 economic recession, are interested in products that can provide
certainty against the unpredictability of the stock market,” says Jim Poolman,
executive director of the Indexed Annuity Leadership Council. “And, as other
demographics are also showing interest in annuities, it is clear that
traditional retirement savings vehicles are not meeting the needs of today’s
consumers, and they are looking for a product, like a fixed annuity, which can offer
confidence and security in this new pay-for-yourself retirement era.”
The survey also found that one in three Millennials have no money saved for
retirement and one-quarter of them have more debt that savings. In addition,
nearly 10% of seniors age 70 or older have less than $5,000 in savings.
GfK’s Knowledge Panel conducted the survey for the Council among 6,836 adults
between April and May of 2015.
The costs of health care in
retirement can vary substantially by state, with the most expensive states for key
components of retirement health care being Michigan, Florida, Nevada and Maryland. On the other end of the spectrum are Hawaii, Vermont and Maine—the least expensive states for retirement medical care, according to
the HealthView Services application (app).
The app compares the total cost
of Medicare Part B, Part D and supplemental insurance premiums by state, and
finds they vary more than 30% overall. Medicare supplemental insurance is the
main driver of the cost differences. For example, the app shows that supplemental insurance, which is set at a state
level, is 72% more expensive for a 65-year-old in Maryland than in Hawaii. Medicare
Part D premiums, a smaller component of total costs, vary across states by as
much as 74%. Federally mandated Medicare Part B is the same for all states.
The new HealthView Explorer app,
developed for financial advisers, utilizes HealthView Services adviser- and
physician-reviewed methodology to project retirement health care costs. The app
draws upon data from 50 million health care cases to project health care costs
by age and state for individuals retiring at 65.
Medicare Part B, Part D, and
supplemental insurance premiums protect retirees from the costs associated with
health events. The app shows first-year costs associated with this coverage, as
well as projections over a 20-year retirement, according to Ron Mastrogiovanni,
HealthView Services founder and chief executive. He explains many retirees face important
decisions about where they want to enjoy their retirement years, and this tool can help individuals measure the potential impact on health care costs of
relocating in retirement.
NEXT: Living in Hawaii could
save $40,000 in the cost of retirement over Michigan.
The app reveals that a person
retiring this year at age 65 in Michigan will spend $3,707 in their first year
of retirement, and will have a lifetime projected cost of $152,175 for Medicare
Parts B and D and supplemental insurance premiums, assuming a 20-year
retirement. This is nearly $40,000 more than a retiree in Hawaii, who will pay
lifetime projected costs of $112,528 and a first-year cost of $2,818.
For a 55-year-old living in
Michigan, these costs rise to $6,152 in first-year costs, and $252,915 in
lifetime costs. If the same person were to retire in Hawaii, his costs would be
$4,713 for the first year and $188,575 lifetime, or a difference of $64,340 in
projected lifetime costs. By comparison, a 55-year-old planning to retire in
New York at 65 can expect to pay $5,751 in the first year of retirement on
Medicare and supplemental insurance premiums, and $234,683 in lifetime costs to
age 85. For the same individual retiring in Florida, these costs are $6,104 and
$250,536. The costs for an individual in California are projected to be $5,854
and $239,526.
The Explorer app highlights projected
retirement health care costs as a starting point for deeper client
conversations. For a growing number of retirees, these discussions will need to
include the topic of Medicare means testing surcharges, which are not built
into the app.
Retirees who will receive more
than $85,000 (individual) or $170,000 (couple) in retirement income will be
subject to Medicare surcharges. These additional costs may increase Part B and
D premiums above these projections by up to 200%, notes Mastrogiovanni. It is also important to realize that retirees
will incur significant out-of-pocket costs not covered by Medicare.
The impact of these factors are
accounted for in HealthView’s more comprehensive health care planning tools,
including HealthWealthLink, which can be customized by health condition,
gender, current age, planned retirement age, income and state.
“While many of us may be
reluctant to move, it is crucial to make informed decisions and understand that
retirement health care costs may be reduced by changing your state of
residence,” Mastrogiovanni says. Discussions of health care costs, and what can
be done to plan for and manage them, helps relationships and encourages clients
to increase savings to cover these costs, he notes.
More
information on HealthView Services, a provider
of retirement health care planning applications, including Medicare, long-term
care and Social Security optimization, is here.