Financial Facts: PERS Promotes Profits
Recurring revenue from subscriber monitoring agreements for fire and intrusion alarm systems has traditionally accounted for a significant portion of an alarm dealer’s income. This is a very successful business model and it will continue to be for decades to come.
But now there is opportunity for dealers to also claim a share of the personal emergency response service (PERS) market. By reallocating some time and effort to develop this revenue stream, alarm dealers can realize a good return on investment in the future, especially as more Baby Boomers head into retirement.
Scrambled Nest Eggs
The market shift to alarm dealers as PERS providers could not have come at a better time considering that economic conditions have forced many older people to live on a tapered fixed income and adjust their lifestyle expectations.
The reality is only a small percentage of aging Americans actually has the financial means needed for healthcare and living expenses throughout their golden years. In fact, according to AARP in order for a couple to retire in 2010 at age 65 with an annual household income of $50,000, they must have more than $840,000 in the bank, assuming no pension and the couple brings in $2,500 a month in Social Security. To have an income of $40,000, the same couple must have saved more than $667,000.
Of those amounts, according to Fidelity Consulting Services, they will need approximately $240,000 to cover medical expenses even with Medicare insurance coverage if no employer-provided healthcare coverage exists, which is the case for 59 percent of American workers, according to the 2009 Employee Benefit Research Institute (EBRI) Retirement Confidence Survey. This estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care insurance.
The EBRI Retirement Confidence Survey also states that 35 percent of retirees report they have long-term care insurance (separate from health insurance, Medicare and Medicaid) to help pay for care they might need in a nursing home, assisted living facility or at home. However, estimates by private long-term care insurance providers show that only 10 percent of Americans age 65 and older have private long-term care insurance. This suggests that many retirees are counting on coverage they do not actually have.
Indeed, this is coverage retirees need based on the figures cited in the most current MetLife Market Survey of Nursing Home & Assisted Living Cost. For example, in 2008 the national average cost for a private room in a nursing home was nearly $80,000, while the cost for assisted living rates increased annually to more than $36,000.
Cost-fighting Benefits
Because of these astronomical costs, many Americans will be forced to stay in their homes longer than they intended just a few years ago when home equity could be counted on to fund many retirement dreams.
Fortunately, PERS provides the means for independent senior living by enabling subscribers to call for assistance at the touch of a button that activates a two-way voice communicator. Not only does PERS give confidence to the end-user, but it provides invaluable peace of mind to their families who will often pay for the service themselves.
That’s why alarm dealers should start to cultivate this market now by targeting their existing subscriber base. Just by letting customers know you are a provider of PERS, your recognized local brand will give you the advantage when they choose a company to meet their needs, current and future.
Kevin Lehan is manager of public relations for Chicago-based EMERgency24. A complete archive of “Monitoring Matters” now includes multiple contributors.
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