Let’s Talk webcast recap

Let’s talk! I know I sound like Mike Meyers’ mother-in-law (actually that would be “tawk”) but that was the title of the webcast I hosted last week for Wells Fargo. We did talk, for a good hour, about the two most important financial topics I can think of: retirement, healthcare and how you can keep your head up when it comes to both. Here’s what I learned:

  • A quarter of a million dollars for healthcare may not be enough. I had previously seen an Employee Benefit Research Institute survey that suggests a 65-year-old couple should set aside an additional $250,000 just for unreimbursed healthcare expenses, above and beyond their retirement needs. That works out to about $10,000 a year. Karen Wimbish, Director of Retail Retirement for Wells Fargo said that even newer research suggests a couple like this might need $376,000. What does that mean? If there’s a year where you’re able to sock more into savings, consider doing it! You’ll likely find you need it later on.
  • There are ways to save money on healthcare without sabotaging quality. Nancy Davenport-Ennis, cancer survivor and founder of the Patient Advocate Foundation suggested there are three ways to do this. First, understand your current health plan and how to use it. Second, understand what counts for you as an out-of-pocket cost. And third, understand what fundamental benefits you receive. This includes knowing whether there are caps on your plan and whether drugs you need are included in your formulary. If the plan isn’t working for you, open enrollment time for many people – can be the time to shop for a new plan.
  • “Healthcare is not where you want to buy the least affordable option.” That’s a direct quote from Davenport-Ennis who was talking about how to make your decisions at open enrollment time. She suggested taking a good hard look at your family history as that is likely to determine the medical benefits you’ll need in the future.
  • Medicare will likely exist, but it will likely be different than today. What happens to our social safety net? Wells Fargo Economist Paul Christopher noted that today’s Medicare appears to be unsustainable. “Medicare expenses have been outstripping income since 2008,” he said. The solution to the problems lies in how we answer the question about how we’re going to tackle the cost of medicine. So what do we do until that happens is the all important question that has yet to be answered.
  • Where your finances are concerned Christopher says: Understand that you need to be diversified even more than was necessary in the past. And be careful about keeping too much in cash. Cash is a relatively expensive form of insurance or protection. It’s understandable that you want to protect your money, but inflation is running at 2.5% a year. Cash is costing you 2.5% of your capital every year if you aren’t putting it to work.It is important to understand however, that investing involves risk including the possible loss of principal and that diversification does not guarantee profit or protect against loss in declining markets. Since each person’s situation is different you should review your specific investment objectives, risk tolerance and liquidity needs with your financial advisor before selecting a suitable investment strategy.
  • And where your health is concerned, Davenport-Ennis suggests: Live a healthy lifestyle. Stay informed. Get checkups. Eat well. Shop for very good physicians and understand what it will cost you to see those doctors.
Jean Chatzky

About Jean Chatzky

Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, and a contributing editor for Fortune magazine. Jean is a best-selling author; her eighth and most recent book is Money Rules: The Simple Path to Lifelong Security. She believes knowing how to manage our money is one of the most important life skills for people at every age and has made it her mission to help simplify money matters, increasing financial literacy both now and for the future. In April 2013 Jean launched Jean Chatzky's Money School , a series of college-style, interactive online personal finance courses that give men and women across the country the opportunity to learn from and interact directly with her. Jean lives with her family in Westchester County, New York.
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