The Integrated Story of Health and Wealth

by Kim Ciccarelli Kantor

Quality of lifestyle and enjoyment of work and family is no accident. It is a purposeful quest that requires well-being, good health and finances. Great health and financial wealth to live well and make a difference is the excellence we strive for. Our father would share, money is relatively unimportant, but in order to keep it this way we have to plan our financial future appropriately. This keeps our other priorities in perspective.

Planning your financial future appropriately is the question that many seek to answer. Related to health, as will be covered in a first of a series of financial columns, the answer is difficult to define. Our U.S. Census tells us an American turns 50 every 7 seconds – this is 12,500+ people per day celebrating a 50th birthday. The age 55+ group controls more than three-fourths of America’s wealth (U.S. Census and Federal Reserve). More stats could be quoted, but these can be looked up, so I will defer this to you with one exception; according to the National Institute for Care Management 1% of the population accounts for 21.8% of all healthcare expenditures, and 5% accounts for 49.5%. Bridging what you are paying for and what you receive is another topic for the healthcare industry.

As financial portfolios and retirement plans are made and sought to be preserved, housing is a number one concern, healthcare closely follows. Most may prefer a better than “fix me” solution, meaning a well balanced diet and exercise routine. A “thrive” versus “survive” level is sought beyond traditional annual physicals and health insurance coverage items, just covering future premiums and out-of-pocket medical expenses not covered by Medicare. A couple retiring at 65 could, according to Society of Actuaries, need a present lump sum of $293,000. With the speed health care costs are rising, this number I believe to be dangerously low. Fidelity estimates their number at $240,000 in 2012 and both numbers do not account for long term care, supplemental assistance or skilled nursing homes. None account for cost of “Lifestyle Communities” which are a real part of an age 80+ age group and growing. Isn’t age 80 the new 65? What will retirees face today and 20+ years out into the future?

Taxes play a role regardless of your stage in life, and today it takes a longer vision to plan for minimizing future taxes. Little relief is afforded, if trying to move quickly, to reduce a tax liability today. Paying for health, education, lifestyle, family and legacy with after tax dollars makes the responsibility of financial success even more difficult. Charity and spirituality fortunately do afford us alternative tax planning options.

Be mindful of your healthcare status, your tax liability and what it takes to responsibly care for yourself and family. This holds true whether you are actively seeking to retire early or at normal retirement age. Whether planning at age 45 or 75; there is much we could talk about.

What are the issues? Should portfolios be managed differently if carving out to support this area? We see most baby boomers spending $32,000-$80,000 annually in health related costs…..it doesn’t come knocking only when entering your 80s. What can you do, for yourself, your children, your grandchildren? Perhaps like education, healthcare should be funded early and in a meaningful way. Inherited legacies by baby boomers who plan well, are more often being set aside as their “healthcare fund”. $500,000 is not unreasonable if you consider a “spend down” philosophy on this lump sum versus a 3-5% annual withdrawal distribution to use. Your questions will evolve over time and should be discussed with your financial advisor.

The normal standard is to move from accumulation to distribution of assets in retirement, but this all changes with health. It’s a value system; plan well to achieve what is most important to you.

Kim Ciccarelli Kantor, CFP® CAP™ is president and

Co-founder of the Family Focused Wealth Management

Independent RIA firm, Ciccarelli Advisory Services, Inc.

CAS has a team of family members and professional

advisors serving clients and communities from Naples,

Florida and Rochester, New York offices for 30+ years. www.

CASMoneyMatters.com

Ciccarelli Advisory Services, Inc. is located at 9601

Tamiami Trail N. in Naples, FL 239.262.6577

Investment advisory services offered through Ciccarelli

Advisory Services, Inc., a registered investment adviser

independent of FSC Securities Corporation. Securities

and additional investment advisory services offered through

FSC Securities Corporation, member FINRA/SIPC and a

registered investment adviser.

The views expressed in this newsletter may not reflect the

views of FSC Securities Corporation