Triple play for retirement planning

“Convergence” is becoming a hot concept in benefits management.

Patrick Cunningham, CEO of a Manning & Napier, a large investment and benefits management company in upstate New York, used the term to describe the coming together of an employee’s financial retirement plan and his or her health care plan.

That has become fairly obvious as Health Savings Accounts have grown to 20 million and some HSA accounts have accumulated to more than $100,000.

HSAs and their cousin HRAs (Health Reimbursement Arrangements) operate side-by-side in many companies with defined contribution retirement plans, primarily 401k plans. The unused totals in the personal health accounts are available when an employee decides to stop working, so they have come to be viewed as an additional retirement asset.

It actually goes deeper than that. If an employee has a proactive health plan, he or she stays healthier than less attentive people, and everyone knows that healthy people cost less than unhealthy people.

It follows, then, that the absence of medical issues in retirement becomes a huge financial plus. Health, in effect, is a positive financial asset.

Look at this contrast: Manning & Napier cites 2008 studies that say a healthy retiree will spend $210,000 on health care expenses for a family of two throughout retirement.

Unfortunately, the average savings for retirees in the country are only $125,000. That’s quite a gap, but it is much more pronounced in absence of good health.

For an unhealthy couple, the estimated health costs during retirement are $338,000.

Clearly, good health is not only an asset in terms of quality of life, but also a financial asset.

Manning & Napier, which brought me to upstate New York to talk about how to get health costs under control for employees and employers, has a number of web-based tools that help employees and spouses make the right decisions about building financial assets.

The time is right because million of boomers are retiring and because the average life span of Americans is now 78. Financial stress will rise because of the added years that have to be paid for.

One obvious answer is to work longer in life. Another is converging strategies on financial and health plans.

Ideally, a proactive company would help employees with three types of personal planning:

* A personal development plan for education, training and job experiences to lead to promotions and higher pay.

* An investment plan for stocks, bonds and other financial assets to buttress Social Security in retirement years.

* A personal health plan for employee and spouse to keep them healthy and out of hospitals during and after their careers.


That three-way planning process would be rare in most corporations, but the time has come for bring the three strands of personal prosperity together.

Tax laws already favor such investments. A convergent personal plan would pull all the elements together so retirement years can be more golden.


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