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Prepare for health care costs during retirement

Scott-Johnson---HeadAs you save and invest for retirement, what are your ultimate goals? Do you plan on traveling the world? Purchasing a vacation home? Pursuing your hobbies? People often think and plan for these costs. Yet, too often, many of us overlook what potentially could be a major expense during our retirement years: health care. By preparing for these costs, you can help yourself enjoy the retirement lifestyle you’ve envisioned.
Many of us may ignore the impact of health care costs because we just assume Medicare will pay for everything. But that’s not the case. In estimating health care costs during retirement, you may find that $4,000 to $6,000 per year per person for traditional medical expenses is a good starting point, although the amount varies by individual. Furthermore, this figure does not include the costs of long-term care, which can be considerable. To illustrate: The national average for home health aide services is nearly $45,000 per year, and a private room in a nursing home is nearly $84,000 per year, according to a recent survey by Genworth, a financial security company.
So what can you do to help cope with these costs? Here are a few suggestions:
• Estimate your costs. Try to estimate what your out-of-pocket health care costs might be, based on your health, your age at retirement, whatever supplemental insurance you may carry and other factors.
• Know the key dates. Things can change in your life, but try to identify, as closely as possible, the age at which you plan to retire. This will help you spot any coverage gaps before you become eligible for Medicare at age 65. Also, be aware of the seven-month window for enrolling in Medicare, beginning three months before your 65th birthday.
• Review your insurance options. Medicare-approved insurance companies offer some other parts to Medicare, including Part D, which covers prescription drugs; Medigap, which covers gaps in Parts A and B (in-hospital expenses, doctor services, outpatient care and some preventive services); and Part C (also known as Medicare Advantage, which is designed to replace Parts A, B, Medigap and, potentially, part D). You have several options for Part D, Medigap and Medicare Advantage, each with varying coverage and costs, so choose the plans that best fit your needs. (To learn more about Medicare and supplemental insurance, go to www.medicare.gov.)
• Develop a long-term care strategy. To meet long-term care costs, you could self-insure or purchase insurance coverage. To learn about long-term care insurance solutions, contact your financial advisor.
• Invest for growth and rising income. Health care costs typically rise as you move further into retirement, so make sure that a reasonable portion of your assets is allocated to investments with the potential for both growth and rising income.
• Think about health care directives. If you were to become incapacitated, you might be unable to make health care decisions — and these decisions may affect not only your quality of life but also your financial situation, and that of your family. Talk to your legal advisor about establishing a health care directive, which allows you to name someone to make choices on your behalf.
Health care costs during your retirement may be unavoidable. But by anticipating these costs, you can put yourself in a position to deal with them — and that’s a healthy place to be.

  Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

Mini-heart monitor a new medical wonder

It’s a third smaller than a pencil-thin triple-A battery, 1 mini monitormonitors heart rhythm continuously for up to three years and was recently implanted in a patient for only the second time in Illinois by a physician at Advocate Christ Medical Center.
  Called an “implantable loop recorder,” the device can be pushed through a small puncture hole in the skin and positioned at a 45-degree angle on the rib cage over the heart in a procedure that takes less than 10 minutes and requires little or no sedation other than a local anesthetic at the site of the puncture, said Jeffrey Neiger, MD, a cardiologist who specializes in electrophysiology and who performed Christ Medical Center’s first implantation of the device. “Patients do not even feel it’s there.” he said.
  The mini-monitor is proving most effective for patients who experience episodes of syncope (fainting spells) or who have suffered a cryptogenic stroke (stroke with no identifiable cause), because a heart rhythm abnormality that could be causing these problems might only be detectable during an extended monitoring period, Dr. Neiger explained.
  “Until now, monitors were limited. The external holter monitor, which has to be worn and records heart rhythm through electrodes placed on the skin, is bulky, sometimes irritating to the skin and provides data for only 24 to, perhaps, 72 hours at best. Another external monitor, called an event monitor, is worn for up to a month. And, the older, implantable monitor is about as large as a pack of gum, heavier than the newer model, and requires a lengthier procedure to implant,” Neiger said.
  “For a person who experiences only a few episodes of syncope during a 12-month period, a few days, even a month’s worth, of heart monitoring may not prove sufficient to pinpoint the problem,” he said.
  The mini-monitor wirelessly signals a small unit, about the size of a land-line phone handset, which is simply plugged into an outlet in the patient’s home. The unit then uses the cellular phone network to send the patient’s heart rhythm information to a computer server for later downloading and review by the patient’s physician. The unit can be programmed to send an alarm when an adverse heart rhythm is detected.
  The system’s use of wireless, cellular networks also ensures that the heart-monitoring data being recorded and sent is of higher quality than what the older monitors can provide, Neiger said.
  Christ Medical Center was only the second institution in the state to implant the new heart monitor after its approval by the federal Food and Drug Administration earlier this year, Neiger said, adding that the device took him only about 10 minutes to insert and position in his first patient. “I anticipate eventually being able to perform the procedure in about five minutes,” he said.
  Because of the ease in implanting the new device, its convenience to patients and its ability to collect heart data during a several-year period, Neiger anticipates that, one day, physicians in a hospital emergency department may be able to implant these mini-monitors when a patient arrives for treatment following a syncope episode.
  “For patients who have experienced a stroke with no immediate, attributable cause, these new monitors should prove especially important,” he stated. “Up to 30 percent of patients who have suffered a cryptogenic stroke have been later diagnosed with A-fib (atrial fibrillation, a condition that causes abnormal heart rhythms).”
  Neiger added that the device is made to continue monitoring even when a patient travels internationally.
— Advocate Christ Medical Hospital

Improve your own investment environment

Scott-Johnson---HeadOn April 22, we celebrate Earth Day — a day devoted to education and action on environmental issues. As a citizen of the world, you may have a keen interest in protecting your physical surroundings. And as someone trying to reach long-term financial goals, such as a comfortable retirement, you’re probably also interested in improving your investment environment.
So here are a few suggestions:
• Respond to environmental factors. Over the past few years, we’ve had a favorable investment climate, marked by low inflation, low interest rates and generally strong corporate profits. And investors who have taken advantage of this positive environment have, for the most part, been rewarded. But things can change, so it’s always a good idea to understand the current investment environment, as it may affect your investment choices. For example, if it seems likely that long-term interest rates are going to rise significantly, you might need to review your long-term bond holdings, as their price would be negatively affected by a rise in rates.
• Nurture your investments. One area of environmentalism involves planting seeds or saplings and nurturing them to maturity. You can do the same thing with investments — and a good way to nurture them is to give them time to grow in all investment climates. But how long should you hold these investments? You might heed the advice of Warren Buffett, one of the world’s most famous investors, who says this about his investment company: “Our favorite holding period is forever.” It takes patience to follow the buy-and-hold strategy favored by Mr. Buffett — and it also requires the discipline necessary to keep investing through the inevitable downturns you will encounter. But over the long term, your perseverance may well be rewarded.
• Avoid “toxic” investment strategies. Unfortunately, many human activities are bad for the environment. Similarly, some investment strategies are “toxic” for your prospects of success. Consider the pursuit of “hot” stocks. They sound inviting, but, by the time you hear about them, they may have lost their sizzle — and in any case, they might not be right for your needs. Here’s another “poisonous” investment strategy: trying to “time” the market. If you’re always jumping in and out of the market, looking for “low” points to buy and “high” points to sell, you’ll probably be wrong most of the time — because nobody can accurately predict highs and lows. Even more importantly, you may find yourself out of the market during the beginning of a rally, which is when the biggest gains tend to occur.
• Diversify your “species” of investments. Drawing inspiration from Earth Day, the United Nations has designated 2011–2020 as the United Nations Decade on Biodiversity. And, just as preserving the diversification of species is important for life on Earth, the diversification of your investment portfolio is essential for its health. By owning a variety of investments — stocks, bonds, government securities, certificates of deposit and so on — you can help protect yourself from downturns that primarily affect just one asset class. (Keep in mind, though, that while diversification can reduce the effects of volatility on your holdings, it can’t guarantee profits or protect against loss.)
Earth Day happens just once a year — but the lessons of environmentalism can help you, as an investor, for all the days and years ahead.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

‘Millennials’ must plan for short- and long-term goals

Scott-Johnson---Head  If you’re one of the “millennials” — the generation that began in the early 1980s — you are still in the early stages of your career. Retirement must seem like a long way off — yet, it’s never too soon to start planning for it. At the same time, though, you may also have shorter-term goals. Can you make progress toward your near-term and long-term objectives at the same time?
  Yes, you can — but you’ll need to match your short- and long-term goals with the appropriate savings and investment vehicles.
  For example, one of your most important short-term goals may be purchasing a house, so you’ll need to accumulate a certain amount of money by a certain time — perhaps in three to five years. Therefore, you won’t want to risk your down payment on an investment whose price will fluctuate — and whose value may be down just when you need the money. Consequently, you may want to look for a shorter-term investment whose objective is preservation of principal. Typically, with these types of vehicles, the shorter the term, the lower the interest rate — but since your goal is basically to have a certain amount of money available at a certain time, you might be less interested in what return you’ll get on this particular investment, as opposed to the return you might hope for from other, longer-term vehicles.
  In fact, while you are saving for your down payment on your home, or for other short-term goals, you also need to be thinking long term — that is, you need to save as much as you can for your eventual retirement.
  Since you are still in the early stages of your working life, you have an enormous asset going for you: time. By starting to save for retirement now, you have more time to save than you would if you waited another decade or so. Plus, since you have so many years to go until you retire, you can afford to put a reasonable percentage of your investment dollars into growth-oriented instruments, such as stocks or stock-based investments. They may carry more risk, including the risk of losing principal, but they also offer greater reward potential than, say, fixed-income vehicles such as bonds. And holding growth investments for the long term can help you look beyond short-term volatility.
  You can start a long-term investment program by investing in your 401(k) or other retirement plan offered by your employer. These plans usually offer a variety of investment options, including several growth-oriented accounts. Plus, any earnings are typically tax-deferred, which means your money could grow faster than if it were placed in an investment on which you paid taxes every year. So try to take full advantage of your employer’s plan — at a minimum, contribute enough to earn a match, if one is offered. Then, every time your salary goes up, boost your contributions.
  With discipline and perseverance, you can move toward both your distant and imminent goals. And that’s the long and the short of it.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

Take steps to protect your family business

Scott-Johnson---HeadThere’s nothing more important in the world to you than your family. However, your family-owned business probably comes in second. So when it comes to protecting both your family and your business, you need to carefully consider your moves.
As you know, you face plenty of challenges to keep your business running smoothly — but it can be even more difficult to pass the family business on to your children or other relatives. In fact, according to the Small Business Administration, only 33% of family-owned businesses survive the transition from first generation ownership to the next generation.

Why is it so hard to keep a family business intact? Sometimes, it’s because no one in the family has an interest in running the business — but many times, family businesses disintegrate because of the lack of a succession plan.
To create a succession plan, your first step — and possibly the most important one — is to collect the thoughts and preferences of family members on their future involvement with your business. It’s essential that you know who wants to really do the day-to-day work and who wants a lesser connection. During these conversations, you’ll also want to discuss other key business-succession issues, such as the retirement goals and cash flow needs of retiring family owners and the personal and financial goals of the next generation of management.
Once you have this knowledge, you can begin to study the various business succession arrangements available to you.

For example, you could consider a family limited partnership. Under this arrangement, you, as general partner, would maintain control over the day-to-day operation of your business, but, over time, you would give limited partnership shares to your family members. Eventually, you would also relinquish control of the business to whoever is going to run it.
Alternatively, you could establish a “buy-sell” agreement, which lets you keep control of your business for as long as you like — for the rest of your life, if you choose. But during your ownership, you can name the buyer for your business — such as one of your children — and establish a sale price. Your child could then purchase a life insurance policy on your life and eventually use the proceeds to buy the business, according to the terms established in the buy-sell agreement.
Keep in mind that we’ve just skimmed the surface of these two business succession techniques. They can be complex, so before choosing either one — or any other arrangement involving the transfer of your business — you will certainly need to consult with your legal, tax and financial professionals. It’s important that you fully understand the tax implications of any succession plan as well as the financial effects of a plan on all your family members.
In any case, once you’ve chosen a succession plan, you’ll need to work with your legal advisor to put it in writing and communicate it clearly to all family members. Surprises are welcome in many parts of life — but not when it comes to transferring a family business.
You want to leave your family a legacy. And if that legacy is the family business, do whatever it takes to pass it on in a manner that benefits everyone involved. This will take time and planning — but it can be well worth the effort.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.