Answers to Your Questions About Finances, Health Insurance, and Returning to Work

By Alyssa Banotai

'I can't foresee me being able to live a nice retired life without continuing to work in some way.'

'I am nearing retirement. Although I have a part-time job lined up, I'm not sure how long that will last.'

Like many professionals, speech-language pathologists and audiologists are beginning to face daunting concerns about life approaching—and after—retirement. The comments above were among the many responses ADVANCE received when we solicited reader input about retirement via our e-newsletter earlier this year.

Similar concerns are echoed on a larger scale by the American Speech-Language-Hearing Association (ASHA), which must work to address the "graying of the professoriate" and the effects of retirement on the two professions.

"As we continue to recruit new members to the association and individuals who are practicing in the professions, we're going to find two areas that retirements will have a significant impact in terms of increasing the number of positions available," Lemmietta McNeilly, PhD, CCC-SLP, chief staff officer at ASHA, told ADVANCE. "One is with individuals delivering services directly to the public, and the other is persons working in the academic arena."

'How does one have enough to cover the rising costs of medical expenses?'

'I will be retiring in the next five years and have a young child with special needs. Are there any affordable health care options?'

When ADVANCE solicited questions and comments about retirement from readers, we were overwhelmed by the number of responses we received. We took your concerns about health insurance, returning to work, savings options, and the unique needs of private practitioners to the officials of two professional organizations and a certified financial planner to open a discussion on retirement.

Rising health care expenses are a growing concern for clinicians approaching retirement.

"Health care is a major problem," said certified financial planner Kristina Sommerkamp, ChFC, CFP, MSFS, owner of Sommerkamp Insurance & Financial Services in Boca Raton, FL. "If we retire after 55, we all have something wrong with us; so most of us don't qualify for regular health insurance because of our pre-existing conditions."

She suggested that retirees research any health care options their state of current or future residence may offer. North Carolina and Pennsylvania, for example, offer guaranteed issue-like policies to residents, while California, Florida and New York have very high health insurance costs.

"You can't just retire and then look into these things," Sommerkamp said. "You have to figure them out beforehand. Some of my clients have to continue working just to get health benefits."

ASHA does not offer any specific health insurance options for retired members. Dr. McNeilly urged clinicians to look beyondSocial Security and Medicare benefits.

"It's important that those individuals who are either working as an employee or in private practice where they're the sole practitioner put aside money or enroll in a health care plan that accommodates retirees," she said.

Retirees often overlook the large role that health care expenses play in their future, said Sommerkamp, who admitted there are few concrete numbers to place into a health care savings equation.

"We know it's a bad situation, but nobody has the numbers to show how bad it is," she said.

She urges her clients to look ahead and pay forward some future costs, such as long-term care. People who buy into long-term care at a young age have an advantage over those who purchase a policy when they're older.

"There's no guarantee on premiums in long-term care unless you buy a policy that you can have paid off by the time you retire," she said. "That's a cost you can protect in retirement."

Private practitioners face additional challenges concerning health care coverage in retirement, particularly if they participate in a group health plan. Clinicians who sell their practice are eligible for federal health care coverage offered under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), but this coverage ends 18 months after leaving their job.

Clinicians who close their practice are ineligible for COBRA coverage. Individual practitioners may continue to be covered by a health care policy if it has a retirement provision.

To offset health costs, private practitioners who work in the same geographical area should consider pooling resources and forming a cohort that an insurance company would recognize as a cohesive group eligible for coverage, Dr. McNeilly urged. The group could seek out a plan that includes an option for retirement coverage.

"They would need to organize themselves so that an insurance provider would be able to recognize them as a group rather than individual practitioners for the purposes of enrolling in an insurance plan," she said. "Most insurance companies determine what their fees are going to be based on the cohort of individuals that are enrolling."

ASHA is exploring the feasibility of offering health coverage options to members in private practice in order to enable clinicians to obtain health benefits as part of a larger, and therefore moreaffordable, cohort.

"We're investigating whether there is anything we can offer to members using membership [in ASHA] as the cohort," said Dr. McNeilly, who noted there currently are no definite plans on the issue.

'What are ASHA's requirements for maintaining a license in retirement, just in case I plan to work 10 or so hours a week?'

'I'm retired and desire to re-enter the field as a practicing SLP after 25 years of being an administrator. I maintained my C's and license. Where do I begin?'

Recent updates to maintaining ASHA certification requireclinicians to complete 30 hours of continuing education over each three-year period of certification. The association also introduced a retirement certification option for members. Those who choose toretire with the certification are able to maintain the CCC-SLP or CCC-A designation after their name, with "Retired" written after it.

"They are retired certified," Dr. McNeilly explained.

To be eligible for this option, members must have practiced or held their certification for 25 consecutive years and be age 65 or over. They also must sign an affidavit affirming that they are not actively engaged in clinical practice or the supervision of someone engaged in clinical practice and do not plan to practice or supervise in the future.

"That's the piece that's really important," she said. "They can't reinstate their C's by simply paying a fee. They would have to reapply for certification based on the current standards, so it's very important to understand the difference."

Since ASHA standards for certification have changed over the past 25 years, members who have opted for the retired C's and wish to re-enter the profession essentially would have to reapply for certification. To start the process of reapplying, they would need to obtain their original transcripts and copies of certified clock hours.

"Even the course requirements are different from what they were before," Dr. McNeilly stated. "I can't imagine that someone who practiced in this field for 30 or 40 years and then decided to come back after having retired their C's would feel good about needing to go through that process."

She advised clinicians who are considering retiring their C's to participate in the new continuing education provision for a few years post-retirement until they are sure they want to leave the profession completely.

"They have to be absolutely confident that there is no possibility they will practice or supervise someone else again five or 10 years from now," she said.

Part-time retirement may help clinicians save extra money for when they retire full-time.

"Your goal should be to have enough money saved to have the choice to retire full-time," Sommerkamp said. "Where I see people working part-time is usually to pick up health care options."

'I'm not near retirement age, but I am concerned. With my expenses I'd have to be a millionaire.'

'It would be interesting to see what a recommended retirement savings would be, given the average lifetime salary for an SLP.'

"There's really no average figure," Sommerkamp said. "Everyone has different goals for what they want to do in retirement. Some want to sit on their porch, and others want to play golf and travel the world, which is much more expensive."

Clinicians should consider how many years they likely will spend as retirees and factor their lifestyle choices into that time frame, Dr. McNeilly suggested. "That could be 30 or 40 years, a very long time, for some–equal to the amount of time they spent working. You have to put away enough money while you're working to stretch it across that amount of time."

Clinicians should take advantage of various saving options, such as an individualized retirement account (IRA) or a 401k or 403b plan. People who participate in a 401k can save up to $44,000 a year. This sum may be comprised of their own funds as well as a matching contribution from their company, if available.

"A lot of people say they can't afford it, but saving $100 only costs you $70 out of your paycheck since the taxes are deferred on that money," Sommerkamp said.

A traditional IRA is tax-deductible for those not already participating in a 401k individually or whose spouse is not participating in a pension plan. A Roth IRA has an income limit and is not tax-deductible.

"The Roth is not deductible, but it's tax-free when you take your money out in the future," Sommerkamp explained. "With a traditional IRA, I'm deducting it off my tax returns. When I take it out later, I'm paying tax on it."

People can use a combination of IRAs, she said. "You can have both a traditional and a Roth, but you're limited to only contributing $4,000. You might be able to put $2,000 into a traditional IRA and $2,000 into a Roth, depending on your income situation and what your spouse is doing."

Clinicians may put themselves at risk for a major financial blunder if they change jobs and cash in their 401k rather than rolling over the money into an IRA, she cautioned. "Too many times I see people pay 10 percent plus taxes on the money. Don't cash it out; it's too costly."

A change in federal law, which went into effect on Jan. 1, could benefit people who inherit IRAs. Inherited money from these accounts can be rolled over into the account of the beneficiary with minimum required distributions on the money.

Clinicians who are the only employee in a private practice can enroll in a solo 401k, Sommerkamp said. "There are some very sophisticated programs that work in a small business environment that don't work with big companies."

Private practitioners also can enroll in a simple IRA if their employees choose not to participate in a 401k.

"The simple IRA still allows the employer to defer $10,000 a year, even if the employees don't participate," she said. "The company then matches 3 percent of their pay."

As a financial planner, Sommerkamp often dispels misconceptions about her job.

"I don't tell people how to spend their money," she said. "I look at what they can do to put away some money and start saving a little more than what they're doing. Remember that old saying 'pay yourself first'? People know they should do it; but unless they have someone to be accountable to, they just don't."

Smart retirement planning often starts with making a personal budget. People should consider their income and fixed expenses and determine how much they feel comfortable saving. One rule of thumb is that people in their 20s should save 15 percent of their earnings, and people in their 30s should save 20 percent, with a 5 percent increase every year thereafter.

When planning a personal budget with an eye toward saving for retirement, it's important to strike a balance between smart spending and smart saving, Sommerkamp said. Sometimes the person who earns $50,000 a year is a better saver than the person who makes $300,000, she noted, because the person making $300,000 doesn't think that income is ever going to stop.

Once people begin saving and their account balance increases, they become more motivated, she said. "People get excited when they start seeing their money grow."

'I'd like to hear about SLPs who sold their private practice when they retired.'

'Although I am not nearing retirement yet, as a speech pathologist in solo private practice, I think about it daily.''

For many private practitioners the huge task of running a small business may overshadow the need to do adequate retirement planning.

"Very few of the practices I know have things like 401ks and started early enough to make a difference," said Janet Krebs, MS, CCC-SLP, owner of the Communication Therapy Center, in Ridgewood, NJ, and president of the American Academy of Private Practice in Speech Pathology and Audiology (AAPPSPA).

A number of retirement issues are unique to private practition-ers. One of the biggest decisions is what to do with the practice, said Krebs. Selling it can be difficult.

"Speech-language pathologists–and I'm assuming this is similar for audiologists as well–have patients for a finite period of time," she said. "We might see them for a few months or even a few years; but when they're finished, they're finished. You're selling a reputation and some contacts, but you're not necessarily selling actual patients who will return."

The lack of tangible assets may be a problem for retiring practitioners, but there are steps clinicians can take to make their practice more "saleable."

"Having things like manuals and procedures and position statements is a very good way to organize a practice so that one can get a feel for something tangible that they're taking over," Krebs said. "The more that's on paper, the easier it will be to sell it."

Many years ago she began to document various aspects of her practice, from public relations strategies to new patient procedures. She has found this approach to be beneficial, even in her day-to-day work environment as a learning tool for the therapists she employs.

Potential buyers also will be more attracted to a diverse practice. Employing other professionals—such as occupational and physical therapists, as well as psychologists and learning consultants—can bring in a larger patient base.

"The more varied and diverse your practice is, the more appealing it becomes," Krebs said.

Some private practitioners prefer a more gradual practice turn-over than an outright sale. They may elect to continue on as the owner of the practice and hire someone to replace them in day-to-day management. Remaining an employee of the practice will ease health insurance concerns and allow the practice owner to supervise the transition of power.

"It would also help keep a steady income coming in for a period of time, and the owner would feel that they had some control over the situation," she said. "If things were not going well, they could step back in."

Krebs advises against such an arrangement when owners plan to relocate for retirement. "I don't believe absentee management is the way to go," she stated.

Private practitioners should begin planning for retirement about five to seven years before they pursue any kind of sale or new management arrangement.

"Most of the things you need to consider are probably going to take a number of years," she noted. "Many people who just advertise their practice and try to get somebody to come in and take it over have not been that successful."

Financial planning is important for private practitioners, she said. "Selling a practice—unless it's extremely sizeable—is probably not going to provide you with a nest egg that's going to support you the rest of your life."

Some clinicians choose to sell their practice to a current employee after they jointly determine its value and arrange for the new owner to pay that amount over a certain period of time.

"In essence, what they pay you could be your salary over that period of time until you're ready to pull out completely," she said.

Private practitioners should gather a team of financial and business professionals to ensure they are prepared for retirement and make plans for their practice.

"I've sat down with an accountant and reviewed what type of value my practice actually would have," she said. "It's been important to me to consult with an insurance broker who can handle not only our medical insurance but liability and is aware of some of the investments."

She consults an attorney on an as-needed basis and an additional broker to keep abreast of the latest investment and employee benefit options. She also "picks the brain" of her husband, a sales-marketing professional, on the best PR and marketing strategies for her practice.

"He always asks when I'll be ready to retire," she said. "I always tell him I have a few good years left in me."

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