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Financial Literacy - Insurance
MONEY MAKEOVER
Health insurance solution
Work part time to get insurance benefit; reposition portfolio for some growth.
Understanding insurance needs
 
Profile: Jim Miller
The problem:
COBRA coverage is due to expire; the Millers' portfolio is too conservative.
The plan:
Work part time to get insurance benefit; reposition portfolio for some growth.
 
 The plan in 3 steps
 Determine income needs

$3,000 is needed for living expenses each month
Social Security check provides $1,450
Reserve of $30,000 can supplement monthly income for 20 months
Temporary employment with health insurance benefit would supplement income
Tip: Use a spending plan work sheet to figure a monthly budget.
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  The plan

Find part-time work with insurance options
Without a doubt, the Millers' best health insurance option will be for Jim to find part-time work with health benefits before his COBRA benefits expire next spring. Since Jim is younger than 65 and collecting Social Security benefits, he has an income limitation of $12,960 on what he can earn during 2007. For every $2 he earns above that amount he loses $1 of Social Security benefit. Perhaps he can find an employer who will pay a lower salary but cover a higher portion of their health insurance costs.

Determine income needs
The Millers require income of at least $36,000 per year. If Jim does not find a job with benefits and Sandra does not get accepted for Social Security disability, the Millers will find their resources stretched. With $800,000 of total financial assets, the Millers are better off than many of their peers. However, their very conservative asset allocation could be a problem for them in the long run.

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Keys to success

Seek health insurance through part-time employer
Continue to make strong case for Social Security disability
Be aware of impact of employment earnings on Social Security benefit
Understand the erosive effects of inflation on future purchasing power
Take a more balanced approach with investment portfolio




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