MKA Executive Planners Blog

For most people retirement planning is about the number.  How much do I need to have invested at retirement to support my lifestyle for the balance of my life?  In most cases financial advisors will structure an investment savings program based upon five primary considerations: (1) how long before your retire, (2) how long will you live after retirement, (3) what is an appropriate assumed after tax rate of return on investments, (4) an appropriate rate of inflation, and (5) other sources of income such as social security, or pensions.  This is a daunting task with a number of important variables. 

What is missing here?  What is missing is a consideration of your health both before and after retirement.  We don’t like to think about it, but consider what would happen to the retirement planning projections if you or your spouse were to become disabled, die or need nursing home care?

There are many sources of statistical information that quantify the risk of any these contingencies.

Let’s look at a few:

The Council for Disability Awareness, a trade group backed by the insurance industry, created a calculator called “What’s My Personal Disability Quotient”.  The website is http://www.whatsmypdq.org/.  You should check this out.

In some cases there may be employer provided coverage, but, according to recent research:

• 68% of private sector workers do not have long-term disability insurance as part of their employee benefits package and typical group long-term disability benefits provide for the replacement of about  60 percent of salary.[1]  If group premiums are paid by your employer you will pay federal and state income tax on the benefits.
• More than half (52%) of the survey say they know “not very much” or “nothing at all” about disability insurance.[2]

At least 70% of people over 65 will need long-term care services and support at some point.[3]  The best time to purchase long term care insurance is in your 50’s and early 60’s since cost will increases with age.

There is a comprehensive life expectancy calculator website at http://goss et.wharton.upenn.edu/mortality/perl/CalcForm.html.  Death, in most cases, is the least statistically likely to occur.  Nevertheless, it happens.  There are various types of life insurance products ranging from inexpensive term products to more sophisticated permanent products.

At this point you are probably saying that if you could address all the contingencies you would have peace of mind.  The question maybe one of affordability.  I look at it from a different perspective, and ask how much of my income can I commit to protecting my retirement?  Is it 2%, 4%, 5% or some other percentage?  You would be amazed at the peace of mind insuring your retirement plan might provide.

If you would like more information on this subject, or have a client who might benefit from a discussion about it, please contact Barry Koslow at bkoslow@mkaplanners.com or (781) 939-6050.

Securities offered through Advisory Group Equity Services, Ltd., Member FINRA/SIPC. 444 Washington Street, Woburn, MA 01801 (781) 933-6100. 

This article should not be considered as providing accounting, business, financial, investment, legal, tax, or other professional advice or services.  It is not a substitute for such professional advice or services, nor should it be used as the basis for any decisions or actions that may affect your business or you personally.  This should only be one part of your research.  You should seek authoritative guidance from a qualified accountant or attorney before taking any action.

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