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At the turn of the last century (1900), average life expectancy was around 50. Now average life expectancy is approaching 80. It is not unlikely that life expectancy may reach or exceed 100 by the middle of this century.
The use of contingency workers (individuals hired on temporary basis and not receiving employee benefits) is on the rise; currently estimated to be over 25%.
Retirement Planning: Most “Retirement Planning” (formal or informal) has centered around the concept of retirement income to be from three sources: personal savings, employer pension plans, and Social Security.
| Personal savings: personal savings are minimal due to erosion by employer sponsored Savings Plans (see Pension plans below) |
| Pension plans: employers are generally replacing Pension Plans (defined Benefit Plans) with Defined Contribution Plans (401(k)/457/403(b) Savings Plans). |
| Social Security: full-benefit retirement age has started to rise to age 66 (by 2005); in 2017 it will start to raise to 67 (by 2022). |
The Reality piece of “the problem”! Individuals are generally not developing “personal savings” for retirement; Employers are hiring employees on a temporary basis and not providing “pension plans”; and Social Security Funding is in trouble!
A Compounding piece of “the problem”! People are living longer, but are generally not working longer. The net result of this is that funds for retirement need to last longer. This may mean working longer, retiring on less, or increasing the funds going for retirement. IRS regulations have done too little to stimulate the development of savings for retirement.
Health Care Plans
Premium Cost Predictor: Generally premium increases are compounded year-after-year. If you want a "preview" of what your premiums might look like in the future you can divide 72 by the compounding percentage rate of your insurance plan; the resulting number is the length of time (years) it will take for your premiums to "double". Example: If Health premium increases have been projected to be 8.8% per year, the cost of a plan will double in 8.2 years.
The cause of cost increases
Claims costs + Administrative Costs (including risk/profit) = Real Costs
| The more a plan is used (frequency of use), the more "the plan" will cost! |
| The more a plan covers (variety of benefits), the more "the plan" will cost (if used)! |
| The more expensive the treatment (technology), the more "the plan" will cost (when used)! |
| The more complex/labor-intensive the plan is to administer (enrollment and claims processing), the more "the plan" will cost. |
Realistically, to control/reduce the costs of health care plans:
| A collaborative effort will be required on the part of users, providers, and administrators to determine the proper mix and methods of implementing cost control measures. |
| It is going to be a hard (not impossible) issue to resolve because each of the above groups is motivated by a different set of factors that may be at odds with those of the other members of the group. |
| The process of bringing health care issues under control should not involve a political party, or any single group. Consensus decision making (as opposed to a “voting” process) will be needed to bring about a satisfactory resolution. |
| The population at large will need to be educated on all of the above elements to ensure that a “political alternative” is not used to undue the process. |
For assistance in designing "forward looking effective Benefit programs" contact:
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