Insurable Interest Canadian Insurance Blog

What You Need to Know Research highlights challenges facing certain demographics, particularly single women and people of color. Baby boomers and Gen Xers are up against shorter accumulation periods in workplace retirement plan savings. Consistent participation in retirement plans helps all groups achieve greater readiness. A detailed new retirement readiness model created by researchers at Morningstar confirms that defined contribution plan access provides a big boost to retirement readiness for a given individual, but the work also lays bare some major gaps in readiness among certain demographic groups. Specifically, lower-income workers are at a considerably higher risk of retirement insecurity — especially if the funding woes of Social Security aren’t addressed — as are baby boomers and members of Generation X who face shorter accumulation periods in workplace retirement plan savings. The findings from the new “stochastic decumulation module” are detailed in a white paper put together by Spencer Look, an associate director of retirement studies, and Jack VanDerhei, director of retirement studies. Look and VanDerhei suggest that the new model offers an improved understanding of U.S. retirement readiness thanks to its explicit breakdown of many important post-retirement considerations, such as longevity risk, investment risk and the risk of catastrophically expensive...

Fortunately, research has shown that lifestyle changes can go far in delaying the onset of symptoms and reducing their severity when present. A proper diet, no drinking or smoking, moderate exercise, ample sleep, low stress and strong relationships have proved helpful. The key, though, is to incorporate this lifestyle as early as possible. A new study from the New England Journal of Medicine reveals that people might have Alzheimer’s 20 years before they develop symptoms. The U.K. set a goal to diagnose two-thirds of patients early, but that remains elusive. This is why financial advisors must engage with clients on this important topic. In addition to the emotional toll, the financial burden is often devastating. Round-the-clock care can cost $150,000 per year. Spouses often find themselves forced to forgo promotions and shift to part-time work — or leave the workforce entirely — to serve as caregivers. Children spend an average of $7,200 annually on caring for a parent. What Advisors Can Do An advisor is the individual best positioned to alert clients that their future is likely to involve dementia or Alzheimer’s. This can include being persuasive in helping them decide to improve their lifestyle, and to increase their savings or alter their...

What You Need to Know The historically high estate tax exemption could fall by about 50% at the end of 2025. Planning may be especially apt for private equity principals holding carried interests. Clients who wait too long to engage legal and accounting experts may find themselves out of luck. Clients with a substantial portion of their legacy wealth tied up in private equity investments have less than 18 months to prepare for the sunset of key provisions of the 2017 tax overhaul known as the Tax Cuts and Jobs Act — particularly the reduction of the estate tax exemption. “That is just not a lot of time to get some potentially complex planning done,” warned Mike Kirkman, a partner and certified public accountant at Cherry Bekaert. “Specific strategies such as lifetime gifting and vertical slice planning can be very effective for wealthy clients looking to mitigate their estate taxes, but they aren’t straightforward.” Adding more pressure is that legal and accounting professionals with the expertise to help clients enact these and other wealth-protection strategies are already in sky-high demand. So much so that clients who wait too long may find themselves out of luck. “This is the busiest time...

What You Need to Know The bill phases out the cap on wages subject to the FICA taxes that fund Social Security. It also would use the Consumer Price Index for the Elderly (CPI-E) to calculate the relevant COLA. Under the bill, the Social Security system would pay scheduled benefits in full and on time for an additional 19 years, lawmakers said. New legislation would phase out the wage cap on the payroll taxes that fund Social Security over the next seven years and encourage contributions “above the cap in exchange for additional benefits.” Phasing out the cap on wages subject to Social Security contributions would ensure “that all benefits can be paid in full and on time for the foreseeable future,” according to Sen. Mazie K. Hirono and Rep. Jill Tokuda, the Hawaii Democrats co-sponsoring the Protecting and Preserving Social Security Act, introduced on Aug. 2. The Hirono-Tokuda bill would also use the index formerly known as the Consumer Price Index for the Elderly (CPI-E) to calculate the relevant cost-of-living adjustment (COLA), rather than the more generic Consumer Price Index for Urban Wage Earners (CPI-W). Sen. Bob Casey, D-Pa., chairman of the Senate Special Committee on Aging, introduced similar legislation in March, the Boosting...