As Healthcare, Retirement, and Insurance costs continue upward trend Fixed Indexed Annuities can provide relief
Hospitals, care facilities and other providers are all facing:
- Increased competition
- Affordable Care Act regulations, and
- Cuts in reimbursement from insurance companies.
This translates to retirees and those approaching retirement spending more and more of their income and savings on medical and other care.
In addition to medical and other costs taking a greater percentage of our budgets, we are all living longer. While it’s good news that many seniors are now enjoying longer and more active retirements, one change we can expect to see is insurance companies adopting new “mortality tables.” For instance, American Equity and some other carriers have announced new mortality tables will be introduced in 2016.
What is the practical impact of the new tables? Because people are living longer insurance companies are faced with paying out more dollars to policyholders who purchased products such as Fixed Indexed Annuities and Long-term Care insurance. To address the increased costs we expect insurance companies to offer lower monthly payments to policyholders.
We recommend retirees and those near retirement take a proactive approach, and consider purchasing Annuities and Insurance now – before Annuity payouts decrease and Insurance premiums increase – in the New Year.
While in the longer term we expect the upward cost curve to bend (and maybe even level off in a few decades) we do not foresee any actual reduction in medical and other costs while the baby boom generation moves into and through retirement.
July 28, 2015