Tag Archives: costs

The college tuition hurdle gets higher

Posted on January 16, 2013 | Leave a comment

FrugalDad.com compiled this infographic that summarizes the growing expense of paying for an education.

Washington state colleges have contributed to the problem as the state legislature has allowed state universities to raise tuition over the past four years by 13.1%, 13.1%, 19% and 16%. That means every $1,000 of tuition from the 2008-09 school year now costs $1,766.

And now, Washington legislators are seriously considering the closure of the Guaranteed Education Tuition (GET) program.

~ Gary Brooks, CFP® – Brooks, Hughes & Jones — Partners in Wealth Management, Tacoma, WA

www.BHJadvisors.com

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Tagged college, costs, inflation, tuition, university, Washington

GET requires understanding premium, investing early

Posted on November 2, 2012 | Leave a comment

The Washington state Guaranteed Education Tuition (GET) program opened its annual enrollment period November 1 with a new per unit price of $172.

We’ve written here, here and here about historical rate increases and the underfunded program but the state continues to assure investors that there is a very low likelihood of the program failing to meet future obligations.

In order to meet guarantees to keep up with tuition increases, the current unit price includes a large premium over the 2012-13 school year payout value of $117.82. This year’s purchase price of $172 means a 46% premium over today’s cost.

“This ‘premium’ over current tuition assures stability for the program,” GET material indicates. “It will take about four or five years to realize a gain on your investment, but GET’s increase in value is steady and guaranteed over the years.”

Because of this premium, in order to get a worthwhile return on participation in the program, it’s beneficial to invest only while future college students are young. The GET program material is even making it more clear that savings after the elementary school years won’t be as valuable as contributions made early in life.

GET material says: “If you begin saving with GET before your kids or grandkids reach middle school (the earlier the better), you will save substantially on future tuition costs and benefit from the security of the guarantee.”

State actuaries estimate that tuition increases at Washington state universities (which the value of GET units are based on – even if the student redeems GET units to fund costs at a private or out-of-state college) are expected to continue 10% annual increases over the next few years.

Annual Washington state colleges tuition increase

Based on tuition and state-mandated fees at the most expensive Washington public university, generally either the University of Washington or Washington State University.

The rapid rise in costs for GET units and the underfunded nature of the program have led to some speculation that a GET version 2.0 may be unveiled. It would have a different pricing structure and could have its coverage reduced.

Do you own GET units?

Do you expect the value of GET units to keep up with their rising costs?

What concerns do you have about funding college costs?

By Gary Brooks, CFP® — Brooks, Hughes & Jones, Partners in Wealth Management – Tacoma, WA

www.BHJadvisors.com

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Tagged college savings, costs, GET, inflation, tuition, Washington

Long-term care costs … still expensive, but growing slower in some cases

Posted on April 20, 2012 | Leave a comment

The cost of long-term health care services has historically advanced at a fast pace. When we consider long-term care costs and insurance policies in our comprehensive financial plans, we assume those costs will double general inflation and grow approximately 6% per year.

According to Genworth’s 2012 Cost of Care Survey, long-term care expenses have moderated a bit for in-home care and nursing home care. These costs have lessened moreso nationwide than in Washington state, however.

Some interesting numbers courtesy of the Genworth study, as relayed by the South Sound Business Examiner:

Most people prefer in-home care whenever possible. The cost of in-home health aide services in Washington has risen only slightly over the past five years. As the need for these services has grown, competition to provide service has increased keeping prices in check.
Nationally, the median hourly cost for home health aide services is $19. In Washington it is $22 per hour. The cost reflects an increase of less than 1% over the past five years.
The median annual cost for care in an assisted living facility is $39,600 nationally. The comparable cost in Washington is $51,000. The national yearly cost for assisted living has increased 5.7% a year over the past five years, while long-term care costs in Washington have increased 7.2% a year during the same time period.
Nationally, the median annual cost for a private nursing home room rose 4.3% annually over the past five years to $81,030, while costs in Washington increased 4.6% a year during the comparable time period to $96,842.

While competition has grown due to demand for these services, insuring against the risk of long-term care expenses has gotten a little less competitive. Two years ago, MetLife exited the LTC insurance business. This year, Prudential followed. Because more claims have been filed on LTC insurance policies, the business is less profitable than some insurers would like it to be. Others that have not left the business have revised their pricing significantly.

It’s important to think about the critical role that health care expenses play in your overall financial security. In many cases, protecting against the risk of large expenses is a wise move. Long-term care insurance policies can be designed with many different variables that impact the price and the coverage. It’s important to design coverage that fits with your overall financial plan.

~ Brooks, Hughes & Jones, Partners in Wealth Management, Tacoma, WA

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Posted in Financial planning, Insurance

Tagged assisted living, costs, expenses, financial security, health care, long term care insurance, LTC, nursing home

New analysis of college costs

Posted on November 5, 2010 | Leave a comment

The College Board published its annual Trends in College Pricing report last week. It’s no surprise that higher education costs continue to climb in absolute terms. But for students who receive grants or federal aid, college costs have actually declined over the past five years.

Survey results

4-year public colleges total average cost* for 2010-11 (in-state students) – $20,339

Tuition and fees increased an average of 7.9% to $7,605
Room and board increased an average of 4.6% to $8,535

4-year public colleges total average cost* for 2010-11 (out-of-state students) – $32,329

Tuition and fees increased an average of 6.0% to $19,595
Room and board increased an average of 4.6% to $8,535

4-year private colleges total average cost* for 2010-2011 – $40,476

Tuition and fees increased an average of 4.5% to $27,293
Room and board increased an average of 3.9% to $9,700

*Total average cost includes tuition and fees, room and board, books and supplies, transportation, and other miscellaneous costs.

According to the College Board: “Although average published tuition and fees increased by about 24% at public four‑year colleges and universities from 2005‑06 to 2010‑11, by 17% at private nonprofit four‑year institutions, and by 11% at public two‑year colleges, average net price for full‑time students, after considering grant aid and federal tax benefits, declined in each sector over this five‑year period, after adjusting for inflation.”

The full report is available here: http://trends.collegeboard.org/downloads/College_Pricing_2010.pdf

How valuable is a college education? In 2009, median family income for those with a bachelor’s degree or more was $99,707, compared to $48,637 for those with a high school diploma.

Higher education may be the greatest investment you can make for your children. But we suggest that you save for your own retirement before saving for college. There are other ways to finance an education if necessary. Building financial security that you won’t outlive doesn’t provide many alternatives aside from your ability to save and invest.

~ Brooks, Hughes & Jones, Partners in Wealth Management — Gary Brooks, CFP®, Allyn Hughes, CFP®, CLU, ChFC, Nancy Jones, CFP® — Tacoma, WA

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Tagged college, college board, costs, expenses, higher education, private, public university, retirement, saving, tuition

Continuing-Care Retirement Communities: Weighing the Risks

Posted on September 21, 2010 | Leave a comment

Kelly Greene, who writes retirement-focused personal finance stories for The Wall Street Journal, recently reviewed some of the risks and benefits of an increasing trend among retired Americans.

Continuing-care retirement communities have become popular but should be viewed as an investment with risks. Greene outlines the pros, cons and costs.

In addition to the information presented, we think the following points are important:

1) Many older people move into continuing-care communities for additional benefits:

a. Built in social opportunities

b. No more maintenance on their residence

c. Reduced stress on kids or grandchildren to take care of parent/grandparent.

2) The article says that at least 745,000 older adults live in CCRCs. If, on average, each has 300 residents, that is nearly 2,500 of these facilities. The article doesn’t provide any figures about the percentage of all CCRCs that have gone bankrupt or gone out of business. Instead, it tells about four CCRCs that have filed for bankruptcy.

3) Her suggestions for researching the financial strength of a CCRC that you might be interested in living in are excellent.

Here’s a link to the print-friendly version of her article:

http://online.wsj.com/article/SB10001424052748704499604575407290112356422.html#printMode

~ Brooks, Hughes & Jones, Partners in Wealth Management — Gary Brooks, CFP®, Allyn Hughes, CFP®, CLU, ChFC, Nancy Jones, CFP® — Tacoma, WA

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Posted in Financial planning, Retirement

Tagged assisted living, community, continuing care, costs, long term care, retirement, risks