ICMA-RC Asset Allocation

Investment Portfolio
Bonds (40%)	$4,000
Stocks (60%)	$6,000
Cash (0%)*	$0
Total	$10,000

This calculator uses the estimated annual health care cost of an age 65 male as a starting point. This number is adjusted up or down based on the age, gender, location, and other demographic factors you select, and estimated medical trend is applied to determine your projected annual costs in each year from now until the life expectancy you choose.
Assumed medical cost increases (the expected annual increase to medical costs due to inflation, technology changes and other factors) of 8.79% in 2015, ultimately decreasing to 4.48% in 2038 and beyond.
Monthly premiums for Medicare Part B are included in your cost estimate and are assumed to grow at the rate of 3% for all projected years.
Estimate assumes that your Medicare coverage will begin at 65, if you indicate that you will be Medicare eligible at 65.
Calculations involving both Medicare coverage and employer provided coverage assume that Medicare applies first. Height and weight inputs are used to calculate BMI; the formula for this calculation can be found on the world health organization’s website
Cost adjustments by state based on data from centers for medicare & medicaid services
If you indicate an annual funding amount for your HSA, you are assumed to contribute this amount, plus an additional 3% each year, until retirement age. Once you reach retirement age, you are assumed to spend the same amount of HSA dollars each year, with no money left over once life expectancy is reached.

Use the asset allocation tool as a starting point. You may wish to adjust your allocation based on:

Your comfort level with risk
How dependent you will be on your RHS account for your expected health costs. For example, if you are not Medicare eligible when you begin using this RHS Asset Allocation Tool, remember to run the Tool again once you become Medicare eligible, as your estimated withdrawal amounts may change.

Using the tool is also a good opportunity to reflect more on how you will use the account. For example, consider that:

It may be to your advantage to use the assets sooner rather than later, since they can only be used for expenses incurred by you, your spouse, or qualifying dependents
(
The definition of dependent is determined by IRS rules, but generally include individuals who meet the following criteria:
An eligible dependent is (a) the Participant’s lawful spouse, (b) the Participant’s child under the age of 27, as defined by IRC Section 152(f)(1) and Internal Revenue Service Notice 2010-38, or (c) any other individual who is a person described in IRC Section 152(a), as clarified by Internal Revenue Service Notice 2004-79.
)
. Or, if you are not yet age 65 and don’t have retiree health insurance through your former employer, the account may serve as a useful bridge until you are Medicare-eligible.
Or, it may make sense to set aside the assets for later; for example, to cover your own long-term care insurance premiums or late qualifying medical expenses for your retirement health needs, or to provide for a surviving spouse.

Assumptions

Investment Portfolio: The RHS Asset Allocation Tool allocates RHS participant assets across Cash, Bonds, and Stocks based upon the following assumptions:

Cash: For assets that will be disbursed within three years, this RHS Asset Allocation Tool prioritizes liquidity and capital stability rather than return. Therefore, the tool results in a cash allocation for assets that the RHS participant expects to disburse over the next three years or the total account balance, whichever is lower.
Bonds and Stocks: The RHS Asset Allocation Tool allocates the remaining non-cash assets (total assets less three years of expected disbursements) to underlying bond and stock investment mixes. The allocation to these investment mixes depends on total assets and expected annual disbursements.

Next Steps

If you decide to rebalance your portfolio, you should log in to Account Access (www.icmarc.org/login) to review the available investments within your plan and consider all applicable investment risks before making a change.

Be sure to revisit the tool every year, or sooner, as your circumstances change.

Questions about your RHS account? Contact your ICMA-RC representative.

Please enter your current RHS account balance and your best estimate of the average annual amount you expect to withdraw from the account each year below to see the results on the right.
Please enter your current RHS account balance (If you do not know your RHS account balance, you can log in to www.icmarc.org/login) $
Please select your best estimate of the average annual amount you expect to withdraw from this account each year over the next 3 years: (Based on an analysis of historic RHS distribution trends, annual distributions average around $3,000.)
Note: It is generally recommended that you review your RHS account asset allocation anytime your circumstances change, and no less than annually. You can then revisit the Tool to enter your current RHS balance, and estimate of annual withdrawals to get updated results. The RHS Asset Allocation Tool is for educational purposes only. It is a great place to start your analysis, but it should not be considered an individualized recommendation or personalized investment advice. The allocation strategies provided are based on general assumptions and may not be suitable for everyone. We do not guarantee their applicability or accuracy in regard to your individual circumstances.

Asset Allocation Tool

Inputs

Results

Inputs

Results

Is this asset allocation tool right for me?

Assumptions

Next Steps