Products March 2, 2010

Russell Sets Index Reconstitution Schedule

Russell Investments has announced the schedule for its annual index reconstitution process, which it says will “capture and reflect the past year’s shift for equity markets globally.”
Reported by

The index provider said it will post lists of probable additions and deletions for the Russell Global Index, U.S. broad-market Russell 3000 Index and Russell Microcap Index on its Web site, www.russell.com/Indexes/, after the U.S. market closes on Friday, June 11.

Updated lists, if necessary, will be posted there on June 18 and June 25. Membership changes to Russell’s family of indexes will take effect as markets close that final Friday of June and remain in place for the ensuing 12-month period, according to an announcement.

On June 28, Russell will post official new membership lists for the Russell Global Index, Russell 3000, and Russell Microcap, as well as these leading U.S. benchmarks: large-cap Russell 1000 Index, small-cap Russell 2000 Index, and Russell Midcap Index.

More information is available here.

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Data & Research March 2, 2010

Average Cost of Retiree Health Care: $260,000

Health-care costs for retiring Americans, including nursing home care, average $260,000 and can exceed $500,000, according to research conducted by the Center for Retirement Research (CRR) at Boston College and underwritten by Prudential Financial.
Reported by

According to the study, “What is the Distribution of Lifetime Health Care Costs from Age 65,” based on more than 300,000 simulations, a typical married couple ages 65 will have an average of $197,000 in lifetime health-care expenditures not covered by insurance. However, the study noted, the amount represents the average present value of the couple’s premiums for Medicare and private insurance, out-of-pocket payments, and home health costs—and a typical household has a 5% risk that the present value of its lifetime uninsured health-care costs will exceed $311,000.

When nursing home costs are included, the amount a typical couple will need for health care expenses increases to $260,000, with a 5% risk of exceeding $570,000.

The report noted that less than 15% of households approaching retirement have accumulated that much in total financial assets.

The CRR undertook the study to better determine the risk American households face of incurring exceptionally large health-care expenses in retirement. “The objective of the analysis was not to calculate how much households spend on health care in practice, or even how much households should optimally choose to set aside to cover health care costs—but to quantify the magnitude and distribution of potential lifetime expenditure,” said Anthony Webb, associate director of research for the CRR, in a news release.

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