Don't let a chronic illness or another non financial issue derail your retirement savings! Please make sure you have Living Benefits

1. Preparing For Non-Financial
Retirement Risks
PRESENTED BY:
Katherine Wichmann Zacharias
KSWZ Insurance Services
www.KatherineZacharias.com
619.208.7717
© 2016 Prudential Financial, Inc. and its related entities.
0242306-00007-00 Ed. 10/2016 Exp. 07/20/2018
The Prudential Insurance Company of America, Newark, NJ.

2. Click icon to add picture
• Pre-retirement
shocks
• Health care costs
• Longevity
• Alone late in life
• Chronic illness care
Agenda: Building a pyramid of need
2

3. 3
•
Pre-retirement shocks
Building a pyramid of need

4. Pre-retirement shocks are common
4
•
Serious health problems
•
Job loss
•
Alone as you approach retirement
•
Frail parents or in-laws
•
Children born later in life
•
Adult children
•
Grandchildren

5. Click icon to add picture
Almost 5 in 10 people
retire earlier than planned,
mainly because of:
Helman R, et al. The 2016 Retirement Confidence Survey. Employee Benefit Research Institute. March 2016, p.29.
Postponing retirement may not be an option
5
• Poor health
• Job loss; or
• Need to care for
spouses or other
family members
Our financial
obligations don’t end
at a milestone age of
60, 65, or the day we
retire. Our obligations
continue for as long as
the people we love
need our help.

6. 6
•
Pre-retirement shocks
•
Health care costs
Building a pyramid of need

7. Click icon to add picture
Health Care Costs for Couples in Retirement Rise to an Estimated $260,000. Fidelity
Investments. August 16, 2016. Based on a hypothetical 65-year-old couple with average life
expectancies of 85 for a male and 87 for a female, with costs in 2016 dollars.
Estimated average
out-of-pocket medical costs
for a 65-year-old couple
retiring in 2015
7
$260,000
… and even more if
chronic illness care is needed
Medicare won’t pay all the bills

8. Click icon to add picture
2016 Retirement Health Care Costs Data Report. HealthView Insights. May 16, 2016, p.6, 8.
Medical costs are even higher for some
retirees
8
•
Healthier retirees may
have higher cumulative
health care costs because
they are more likely to live
beyond average life
expectancy.
•
Out-of-pocket health care
spending increases
throughout retirement.

9. 9
•
Pre-retirement shocks
•
Health care costs
•
Longevity
Building a pyramid of need

10. Expected longevity of 1,000 healthy 65-year-
old individuals
10
2015 Valuation Basic Table, Nonsmoker Select and Ultimate mortality rates, Age Last Birthday Basis. American. Academy of
Actuaries and Society of Actuaries. Base rates were adjusted to estimate mortality improvement over time.

11. Expected longevity of 1,000 healthy 65-
year-old couples
11
2015 Valuation Basic Table, Nonsmoker Select and Ultimate mortality rates, Age Last Birthday Basis. American Academy
of Actuaries and Society of Actuaries. Base rates were adjusted to estimate mortality improvement over time.

12. 12
•
Pre-retirement shocks
•
Health care costs
•
Longevity
•
Alone late in life
Building a pyramid of need

13. Many older people, especially women, live alone
13
Medicare Current Beneficiary Survey. Demographic and Socioeconomic Characteristics of Noninstitutionalized Male and Female Medicare Beneficiaries, by Living
Arrangement and Age, 2013. October 30, 2015. Table 1.4b, p.46; Table 1.4c, p.48.
Because women
generally live longer
than men and are
more likely to be
widowed, there are
more than 3 women
living alone at age 85+
for every 1 man living
alone.

14. 14
•
Pre-retirement shocks
•
Health care costs
•
Longevity
•
Alone late in life
•
Chronic illness care
Building a pyramid of need

15. The 5 Ws of chronic illness care
15
Who
Why
WhereWhen
What
duration
5 Ws
of
chronic
illness care

16. Who will need chronic illness care?
16
Who
Why
WhereWhen
What
duration
5 Ws
of
chronic
illness care

17. Half of 65-year-olds will likely need
chronic illness care later in life
Based on the HIPAA definition of long-term care, half
(52%) of 65-year-olds will need chronic illness care
later in life.
Definition requires a need for assistance with:
•
at least two activities of daily living (ADLs)
that is expected to last at least 90 days, or
•
need for substantial supervision for health and safety
threats due to severe cognitive impairment.
17
Favreault M, et al. Long-term Services and Supports for Older Americans: Risks and Financing. ASPE Issue Brief. Department of Health and Human Services. July
2015, p.3, 9. HIPAA is the Health Insurance Portability and Accountability Act. The definition excludes services that are strictly short-term, post-acute care

18. Why will chronic illness care be needed?
18
Who
Why
WhereWhen
What
duration
5 Ws
of
chronic
illness care

19. Conditions that require chronic illness care
19
SHORT-TERM CARE1
(Generally refers to skilled nursing care
for up to 100 days)
LONG-TERM CARE2
(Care needed for many months, years,
or the remainder of life)
Cancer Alzheimer’s disease
Heart attack and heart failure Serious stroke
Minor stroke Crippling arthritis
Fractures and joint replacement Brain and spinal cord injuries
Accidents and hospitalizations
where recovery occurs
Degenerative neurologic conditions
Short-term care generally refers to short-term services
for conditions that are expected to improve, such as
physical therapy to help regain function after a fall or
stroke.
Long-term care refers to a disability that meets the new
HIPAA definition: a need for assistance with at least two
activities of daily living that is expected to last at least 90
days or need for substantial supervision for health and
safety threats due to severe cognitive impairment.
1 U.S. Department of Health and Human Services. http://longtermcare.gov/medicare-medicaid-more/medicare/ (Accessed June 23, 2016).
2 Favreault M, et al. Long-term Services and Supports for Older Americans: Risks and Financing. ASPE Issue Brief. Department of Health and Human
Services. July 2015, p.2.

20. Where will chronic illness care be
provided?
20
Who
Why
WhereWhen
What
duration
5 Ws
of
chronic
illness care

21. Most chronic illness care is provided at
home
21
Freedman VA, et al. Disability and Care Needs among Older Americans. The Milbank Quarterly. Vol.92, No.3, p.509 – 41, August 26, 2014.

22. Families pay for most chronic illness care
22
1 2015 White House Conference on Aging: Final Report. December 29, 2015, p.5-6. 2011 is the last year for which complete government data were
available.
2 Hagen S, et al. Rising Demand for Long-Term Services and Supports for Elderly People. Congressional Budget Office. June 26, 2013, p.2. The dollar
amount for informal care was determined by multiplying $21 per hour (the average wage of a home health aide in 2011) by the approximately 11.2 billion
hours of informal provided by family and friends in 2011.
2
Of every $100
spent on
chronic illness
care at ages 65
and older,
$63 is paid
by families.

23. Who will care for the elderly of tomorrow?
• Because of demographic changes, there will be fewer people age 45 to
64 who are potential caregivers for someone age 80 and older.
•
Instead of 7 potential caregivers for seniors who turned 80 in 2010,
people age 67 in 2017 will have only 4 potential caregivers when
they turn 80 in 2030, and people age 47 in 2017 will have only 3
potential caregivers when they reach age 80 in 2050.
23 Redfoot D, et al. The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers. AARP
Public Policy Institute. August 2013.
There were 7 potential caregivers for seniors who turned 80 in 2010
but only 4 expected in 2030
and 3 in 2050

24. When will chronic illness care be needed?
24
Who
Why
WhereWhen
What
duration
5 Ws
of
chronic
illness care

25. Chronic illness care is more likely at
older ages
25
Drabek J, et al. Measuring the Need for Long-Term Services and Supports. ASPE Research Brief. Department of Health and Human Services. July 2015. P.2;
Table A.2., p.10.

26. What duration of chronic illness care will be
needed?
26
Who
Why
WhereWhen
What
duration
5 Ws
of
chronic
illness care

27. Duration of chronic illness care
27
Favreault M, et al. Long-term Services and Supports for Older Americans: Risks and Financing. ASPE Issue Brief. Department of Health and Human Services.
July 2015. Table 1, p.4.
For those who
need care, the
average duration
of care is projected
to be 3.2 years for
men and 4.4 years
for women.

28. Will you want to be cared for at home?
By family members? For how long?
Question: When planning for
chronic illness care that might be
needed for many months, years, or the
remainder of life, and at a time 20 years
or more in the future where your
circumstances could be far different
than today, what will you want?
28
Answer: Maximum flexibility and the
freedom, choice, and control to be cared for
as you think best at the time.

29. Will you want to leave a legacy?
Question: After experiencing
challenges such as pre-retirement
shocks, health care costs, longevity,
being alone late in life, and chronic
illness care, will there be enough money
left to leave a legacy for children,
grandchildren, or your favorite charity?
29
Answer: Speak with your financial advisor
about this concern.

30. AgeLess: a prescription for successful
aging
30

31. Questions?
31

32. 32
Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities.
Investment and Insurance Products:
Not Insured by FDIC, NCUSIF, or Any Federal Government Agency. May Lose Value. Not a
Deposit of or Guaranteed by Bank, Credit Union, Bank Affiliate, or Credit Union Affiliate.