If you are approaching the age of 65 or already an eligible beneficiary, open enrollment for 2020 Medicare health benefits starts soon. For new enrollees over 65 or turning 65 and don’t have medicare, you can sign up from October 15th to December 7th of this year. Existing enrollees will receive information including a notice of annual changes and evidence of coverage the beginning of October. Whether you are an existing or a new enrollee, it is better to prepare yourself for Medicare Open Enrollment. First, learn what Medicare means if you are a new enrollee, how to change existing plans, and how to get insurance coverage.
Medicare is a health insurance for individuals turning 65, or the age of 65 and older. People with a disability under 65 or end-stage renal disease are also eligible. The healthcare program offers Medicare Part A and Part B plans for hospital and medical insurance coverages.
The costs in premiums vary based on the net income of eligible enrollees. This year, the changes to Medicare applied to high income earners resulting in new and increased premiums for Part A and Part B. There was a small increase in Part B premiums for most plan participants. For an example, an enrollee with a net income of $499,999 pays $433.40 in monthly premiums, in 2019. If the income is over $500,000, monthly premium costs is $460.50.
Changing Existing Medicare Plans
The only time you can change your existing medicare plan is from October 15th, to December 7th. From October 1st to the 14th, you should have an Annual Notice of Change and Evidence of Coverage from your plan providers of Medicare Advantage and Medicare Part D. You can change healthcare and prescription drug coverage plans during the annual enrollment time frame mentioned above.
When you receive your Annual Notice of Change, make a note of any changes. If dissatisfied with your plan and you want to change your Medicare plans, do it before December 8th. An enrollee can switch from Medicare Advantage to Original Medicare from January to the end of March in 2020.
People who didn’t enroll by December 2019 can sign up for Part A and Part B Medicare plans from January to March 31st. There are penalties of 10 percent of the yearly premiums you were eligible for and did not enroll in Medicare Part B. Part A is normally free for individuals or their spouses who contributed to Medicare taxes during employment, but there is a late enrollment penalty.
Qualifying for Medicare
New enrollees can sign up for Medicare benefits through Social Security Administration (SSA) if you are not receiving benefits. SSA will process your application after reviewing your information and let you know if you qualify for Medicare. You can sign up online or visit your local Social Security office.
Medicare Coverage Plan Options
The two medicare coverage plans are Original and Advantage. Original Medicare includes Part A and Part B plans which allows you to use any physician or hospital accepting Medicare. You have the options of getting drug coverage and a supplement insurance plan. For drug coverage, you will have to get Medicare Part D Prescription Drug Plan.
If you need help with additional costs in the Original plan, Medigap is an option for supplemental insurance. To get full coverage, Medicare Advantage is the best solution for health insurance. It includes Part A, Part B, and/or Part D which provides extra benefits for dental, hearing and vision.
Now that October is approaching, you have time to prepare for Medicare open enrollment. If you are a new enrollee, learn more about enrollment and changes to Medicare visit Medicare Resources today.
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September is Life Insurance Awareness Month which gives us a reason to talk about a subject that some try to avoid. Life insurance can conjure up dark images. Many people are jarred into realizing the importance of buying life insurance after a close friend or family member has passed away or even after hearing a news story about a tragic death that hit close to home. The reality is that we are all mortal, and there will very likely come a time when your loved ones will be left to fend for themselves without you. Consider these important questions to determine your need for life insurance.
How Will Your Loved Ones Live Without Your Income?
Many households are run on a paycheck to paycheck basis. Some people may have a modest amount of savings, but it may take two incomes to pay the monthly bills. Your spouse and children may quickly run out of money without your income to support them. Life insurance benefits are most commonly used to supplement lost wages and to eliminate debts after an income-producing adult passes away. By eliminating debts with insurance proceeds, your loved ones will need less money to live off of each month. Some people will purchase enough insurance to pay off all outstanding debts including the home mortgage. The surviving spouse may even be able to support the family through his or her income alone after the debts have been eliminated. Others will purchase enough coverage so that the proceeds can be invested to generate supplemental income.
How Will Your Spouse Be Able to Retire?
While some life insurance is needed to help your loved ones to survive on a monthly basis, you also need to think about the future. Your income may currently be instrumental in your spouse’s ability to fund a retirement account. Without your income, your spouse may be forced to work for many years past the traditional retirement age. this can create an unnecessary hardship on him or her. It is wise to purchase extra coverage to fund a retirement account.
Do Your Kids Need Financial Assistance Getting Their Adult Lives Started?
If you have kids, you may be well aware of their financial dependence on you, and this will often not simply evaporate when they turn 18. Many children need financial assistance buying their first car, paying for their wedding, paying for college and more. Some parents will purchase additional death benefits so that their kids’ lives are not financially impacted by a death.
How Much Coverage Do You Need?
Life Insurance, It’s Not For You!
This is a complicated question that often requires you to create a solid financial plan for the future. Funds can be used strategically in different ways, such as to purchase income-producing assets, to pay off debts and more. Your current lifestyle, debts and assets all must be taken into account. It is wise to work with an experienced life insurance expert to review your financial needs.
Death is something that can unfortunately happen at any time. Some people will live well into their 90s or beyond, but others have a life that is cut short far too soon. Because you cannot predict what will happen or when life insurance benefits will be needed, it can be a smart decision to purchase coverage as soon as possible.
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There has been a lot of chatter recently by economists and news outlets using the word “recession”. Understanding that it could happen and understanding how to handle it are different matters. If you are one of those nearing retirement or in retirement that has no strategy, you may be right to worry. Planning for a recession involves making a plan for other financial eventualities. If you prepare, you can face the future with more confidence. When the threat of a recession exists, recall there are two retirement variables within our control. How long we work and how much we save. Within this framework, there are several other things to consider about recessions and retirement.
The first point to remember is to live within your means. Depending upon your lifestyle going into the recession, it might require preparation and practice. Spending as much as your income needs to stop. This may require figuring out exactly where your money goes. When you know this, easier to trim your budget. Less spending might not be fun, but spending is always in your control. This is important as you head into a recession and your income will be less.
A second element is to potentially reduce your budget. Once you have trimmed the obvious low hanging fruit, you can focus on bigger ways to reduce your spending if need be. You need not make these bigger cuts now. For instance, could you cut out your Starbucks excursions once per week? Twice per week? Could you also cut other nonessential services such as eating out or buying that new television or entertainment center? Could you lower transportation expenses? These will no doubt require sacrifice. Ensure that your spouse or other partner agrees and will work with you.
A third item to remember during or to prepare for a recession is to devise a plan to accumulate cash reserves. The point of building up cash reserves is to keep you from having to liquidate your stocks. I am sure we can all recall the advice of well-meaning investment planners: have an emergency stash with several months of expenses. This stash should carry us through losing our job or another financial emergency. In retirement, more cash reserves are necessary to ensure against an economic downturn. Remember that regardless of what financial markets do, you still have the responsibility of food, housing, transportation, and healthcare. You do not want to decrease your savings and outlive your money.
A fourth point to remember is to be patient with the market. It is tough to see losses on paper. But, remember that the loss is only on paper and that it is not gone until you withdraw it. Realize that the market comes back, so if you sell, you will not see the benefits of the recovery. Know the market is cyclical and will (eventually) recover.
A fifth factor to consider is to work a few extra years before retirement or work a part-time position during retirement. Crunch the numbers and determine what benefits you could receive if you worked a year or two longer. Consider that any work you do before/in retirement increases your retirement money.
Last, consider that an annuity combats recession. Annuities are referred to as “protected lifetime income”. Annuities are insurance that pays a set amount regardless of the market’s performance. Annuities can also give comfort because one can keep his/her current lifestyle through their life expectancy.
We are here to help you plan for your retirement, regardless of the market or economy. Let’s focus on your savings and your goals.
Sources:
https://www.investopedia.com/articles/retirement/08/retire-in-a-recession.asp
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Raising children is something often done by parents in the prime of their life, typically between the ages of 20 and 50. By the time retirement comes around, most of the children are off on their own, leaving the parents to finally take a well-deserved rest.
Aside from occasional contact with their young grandchildren, grandparents are usually able to live their lives free of the responsibility of raising youngsters. But what happens when the grandparent suddenly becomes the primary caregiver for their grandchild or grandchildren?
Grandparents raising grandchildren is a scenario that often arises due to an unforeseen circumstance involving their adult children – whether it be their untimely passing, a drastic life change like a divorce or a move, or an unfortunate occurrence like incarceration or hospitalization. When this happens, everyone involved faces many challenges as they struggle with handling their new lifestyle.
Emotional Challenges
When a grandparent becomes the primary caregiver for their grandchild or grandchildren, many emotional challenges can arise. There may be feelings of loss or devastation if a death or medical emergency led to the change in circumstances. Children may be coping with feelings of abandonment and experiencing separation anxiety.
The lives of everyone, including the grandparent, may remain in a state of upheaval for several months or even years. While dealing with their own emotional challenges, the grandparent can be faced with the difficult task of raising their grandchild or grandchildren at an advanced age.
Counseling with a licensed therapist, support groups, teachers, coaches, and fellow grandparents can all be great assets during this time of transition. The sooner help is sought, the sooner healing can begin.
Financial Challenges
When planning for retirement, finances are often carefully calculated to include the expenses of only one or two people – depending on if a spouse is involved or not. Adding in one or more children can create a huge financial burden on the grandparent that was completely unexpected.
Financial extras like a larger grocery bill, medical expenses for the child, back to school supplies, the cost of sports and hobbies for the child, and potential college funds are all things that can arise while caring for the new members of the household.
Meeting with a financial expert immediately can be the best way to handle the financial changes that can occur when a grandparent becomes responsible for raising their grandchild or grandchildren. They can plan out a budget and correctly allocate assets where they need to be.
Physical Challenges
There’s a reason most people choose to have children when they are younger. As the body ages, keeping up with little ones becomes increasingly difficult.
It’s important that grandparents keep their health always at the forefront of their minds, even if their time is now mostly consumed with caring for their grandchildren. Staying active, eating healthy, getting enough rest, taking prescribed medications, and visiting the doctor regularly are all excellent ways to keep the mind and body in tip-top shape while raising kids.
Finding time to stay fit may seem impossible, but fitness centers often offer daycare at their facilities, giving grandparents plenty of opportunity to exercise. Check with local churches and recreation centers for babysitters when the need arises, as well.
Challenging But Rewarding
Grandparents raising grandchildren can come with many challenges, but it also offers countless rewards. Being able to spend so much one-on-one time with grandchildren can keep a grandparent youthful and happy, no matter how difficult the situation was that led them there. The added bonus of having experience raising children can make this time around much more enjoyable.
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Looking back at the past few weeks, the market has made some investors nervous. Market volatility can lead to some serious stress but what are the best ways to respond to this uneasy feeling? When dealing with market volatility, it’s important to keep several things in mind to avoid making major mistakes.
Have a Plan
It’s frequently said that those who fail to plan are planning to fail. When investing, it’s important to have a plan. If your plan is to put $1,000 or $5,000 a month stick to it. Slow and steady wins the race. Sticking with your plan will allow you to take advantage of the periods when the stock market is down.
Keep Reinvesting
Dividends and interest tend to keep coming whether the Dow Jones Industrial Average is down 500 points or it’s up 300 on a given day. It’s true that there are situations that will lead some companies to cut or suspend their dividends. However, most companies will keep paying out dividends as long as possible because a cut is a sure-fire way to lose investors and see the price of your company’s stock drop like a rock. Dividends from stocks and interest from bonds are two of the best ways to deal with volatility. You should keep reinvesting the capital your investments throw off. When the market is down, you’ll be able to buy more shares, and this will add to your flow of dividends and interest. By reinvesting during periods of volatility, you’ll be able to increase the power of compounding greatly.
Don’t Sell
Many financial professionals will tell you to avoid selling your investments at the worst possible time is a part of sticking with your plan. Often times, this is an ideal strategy. It can be tempting to sell when the market is down 10% so that you can avoid the next 20% loss. This is generally a bad idea. Time in the market will usually beat attempts to time the market. Although, one exception would be drawing down some money strategically during your golden years. You’ll probably want to make quarterly or annual withdrawals regardless of what the market is doing in that case so that you can fund your living expenses.
Rebalance
Another important step to take when the market is showing extreme volatility is remembering to rebalance your portfolio periodically. You may have a strategy of rebalancing quarterly, semiannually or yearly. If you have a target allocation of 75% of your portfolio in stocks and 25% in bonds, a major drop in stocks could leave you with 65% in stocks and 35% in bonds. In this instance, you’d sell a chunk of your bonds and move the money into stocks. If you’re still in the accumulation phase, you could stop contributing to bonds and put all of your money in stocks until you reach your targeted balance. This will keep you from becoming too overweight in one area and allow you to maintain the proper level of diversification.
One big piece of advice that’s important to remember during market volatility is to stay the course. If you have a plan, stick to it. This includes making periodic investments as you would if the market were at record highs. Real money is made during market downturns. If your portfolio gets out of balance, it’s a good idea to rebalance it in the event of a major market downturn to take advantage of the sale price on stocks. If you have cash sitting on the sidelines, volatility to the down side can be a great time to put that money to work.
Planning your retirement means diversifying to reduce the risk to your overall retirement plan. We are here to help guide you to and through a successful retirement.
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When couples get married the finances are typically left to one person. It is rare for both parties in a marriage to handle the finances together. In some cases, it is the wife that is leaving the husband to handle all financial issues. This may be common in some relationships, but it is not exactly a sound approach to managing the money in every case.
Difference In Opinion
The trouble that can stem from this type of one sided financial domination are the differences in opinion on things, and the person that is ruling the checkbook is typically going to have the final say. In some instances where women may want to do different things with the money that they both make it can be hard to find an even compromise. Men that are in this position of managing the finances may feel that they know what is best for the household because they are the ones that are looking at the numbers. This can cause conflict. It may become harder to resolve when both parties are not taking a conscious effort to look at what is being spent. It essentially causes more trouble because there going to be times where a joint decision needs to be made. There are a few times where a single person can make a decision for two people without some type of conflict becoming the result of this decision.
Long Term Planning
When one person in the relationship it can become harder for the woman to justify what is considered essential. There may be things for the children that couples disagree on. This can cause problems in a marriage. I t builds walls where the husband and wife may be in constant conflict. Working together to achieve long term goals will likely lead to better planning for the spouse left behind after one passes.
Divorce
When the husband has been in charge of the finances things get very tricky during divorce proceedings. This is what many women have not give much thought to. They can assume that the vows that they have taken certifies the spouse to be in a position of authority when it comes to financial matters. The trouble is this line of logic does not play out very well in court during the divorce proceedings.
It is better to know what is going on at all times when money is the issue at hand. No wants to walk away from the divorce without the ability to sustain themselves if the marriage comes to an end. Unfortunately, women that let their spouses handle all the money decisions could find themselves in this type of situation.
Death Of A Spouse
Most women would rather not think about it, but the death of a spouse can result in total chaos when it comes to financial issues. When the husband is the one that is tending to retirement plans, investing and household expenses the wife may be on autopilot. She may have the slightest idea on what her next step will be if she is put in a position where she has to handle any of these things.
A shared role when it comes to finances will result in both a husband and wife making decisions together. This will results is better goal planning, expectations of savings and budgeting (especially in your retirement years).
If this process is uncomfortable in your relationship, work with a financial professional to lay out a well thought out plan that can take the guess work out of your finances and future in retirement.
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This topic is not comfortable for everyone to talk about but planning now can make a world of difference later. More than a third of long-term care residents are younger than 65 years of age. This statistic reminds us that we should prepare for the future, and the earlier you start preparing, the better. Here are some steps you should take to prepare for your golden years.
Draw up a Will
You’ll want to decide how your estate gets divided up. If you don’t decide while you’re alive, the state will do it for you. That’s why it’s important to draw up a will. It’s estimated that only 40% of Americans have a will or estate plan set up. Not only will you avoid having the state decide how your estate is divided up, your family will not have to worry as much if you’ve given them clear instructions as to what should happen when you die.
Draw up a Living Will
Another issue that the state or your family could decide is how to administer your end-of-life care. A living will gives directions as to how much medical care you’ll receive beforehand. You might not want to deal with heroic medical care if you’ve passed 80 years of age. You can let your family and medical providers know your wishes. Absent such a directive, doctors will frequently administer expensive and invasive treatments that are not likely to work on elderly patients.
Buy Life Insurance
As noted above, no one knows when he or she will die. That’s why it’s important to buy life insurance. This insurance will provide a death benefit, and it can also build cash value over time. The presence of cash value associated with life insurance can be a tax-efficient way to build wealth over time. Additionally, if you die with dependents at home, you’ll be able to provide money to care for them in your absence.
Buy Long-Term Care Insurance
Another option for avoiding major costs in your later years is the purchase of long-term care insurance. About one in eight Americans will wind up in a nursing home at some point. This cost can impact even fairly wealthy families. Long-term care insurance can take care of some of the expense that comes from staying in a nursing home or extended care facility. Medicare does not pay for long-term care, and these costs can definitely add up over time.
Stay Healthy
Staying healthy can be a good way to increase the likelihood you live to old age and avoid some of the costs that are common with aging. Maintaining your health will be easier if you eat well and exercise. Those who take care of themselves are able to stay in their homes longer and are less likely to die young. Also, because you’ll be able to hold off on many of the health issues that lead to long-term care, more of your nest egg will be available for your heirs.
Plan now, your spouse or your executor will be happy you took the time to prepare for your end-of-life details. Additionally, your heirs will be happy you took care of yourself because you can leave more of your nest egg for them.
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With all of the day-to-day demands on your finances, sometimes it is difficult to have a strong grasp on what your overall financial picture really looks like. While many people may be very in tune with one segment of their financial life, you may be inadvertently neglecting other parts. One often-overlooked financial aspect is retirement savings. In fact, you may be surprised to know that according to the Motley Fool, 42% of baby boomers cannot answer the question of “How much have you saved for retirement?”. While this revelation may seem shocking, it is a reality that, for many, immediate financial needs tend to take priority and retirement savings get put on the back burner.
One reason for this may be that saving for retirement is complex. Many people know that they have spent their work life contributing to an employer-sponsored plan and/or IRAs, but they may set their monthly and quarterly statements aside, never really looking at how much their account has grown to. Others may have multiple 401(k)s and other plans with previous employers that they have never combined into a rollover IRA, or that they have lost track of. For this reason, it is imperative that those who are approaching retirement start taking control of their retirement savings by working to create a definitive retirement plan.
Retirement planning allows you to dig deep into what you have saved and calculate your total amount of retirement savings. It also allows you to get an educated estimate of what your expenses in retirement may be, as it would be impossible to know if you have saved enough if you don’t know what you will be spending. If you are an organized, motivated person, you may be able to easily calculate this information on your own using an online retirement calculator. If you need more assistance, or have a complicated financial picture that requires in-depth expertise, then working with a personal financial planner may be more appropriate for you.
Once you have an estimate of what you currently have in retirement savings and what your projected spending during retirement may look like, you will be able to determine if you are ahead of the game or far behind when it comes to additional savings required. You may see that the only way to retire on time is to start contributing more to a retirement plan now and cut back on some unnecessary expenditures. You may also find that you will need to stay in the work force longer than you had wanted or anticipated. Whatever your situation is, starting to work on your retirement plan earlier will give you more time to make up the difference that you need.
If you find yourself in the category of someone who responds with “Um..” or “I’m not sure” when asked how much you have saved for retirement, know that you aren’t alone. Many other people are in the same boat. Luckily, you can start taking control over your retirement savings today by beginning the retirement planning process and getting yourself on track to meet your retirement goals. We are here to help!
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You’ve put your time in and the day you’ve been waiting for has finally come. It’s time to retire! You’re done working 40+ hours a week and ready to enjoy the money you’ve been saving for years. Slow down for a minute, though. It can be tempting after working for so many years to start checking off all the items you’ve been adding to your bucket list throughout the years, but this can lead to some severe overspending. It’s a nice gesture to invite your entire extended family on vacation or help your children pay off some of their debt, but you need to focus on the future.
When you work, you have a steady stream of income along with a healthy savings account to fall back on when unexpected expenses pop up. When you retire, it’s like someone just threw a few hundred thousand or million dollars at your feet and said “have fun!
You can avoid overspending by cutting back on certain luxuries you’re used to having. The balance comes with developing a smart financial plan to ensure you live within your means while still enjoying the quality of life you’re used to. Here are some essential tips to get you started on the right path.
Create a Budget
You should be no stranger to a budget by the time you retire, but you’ll need to start tweaking it to adjust to your new financial circumstances. Know how much money you’ll have coming in between social security, pensions, and your retirement plans such as a 401k. Split your expenses into those that are required, such as housing, food, and vehicle maintenance, and another category for discretionary purchases like vacations.
Develop a Withdrawal Strategy
Once you know how much you need to live comfortably every month, you can determine how much you need to take from your retirement every month. A standard 4% withdrawal rate should tentatively last 30 years, but this can vary based on your savings, the financial market, interest, and hefty expenses such as healthcare.
Cut Back on Expenses
Cutting back on spending is painful if you’re used to getting what you want when you want it, but it’s a necessary part of smart financial planning. Evaluate whether you can make changes to the two highest expenses: housing and health care costs.
Healthcare: Retirees spend roughly 11.4% of all income on medical care because Medicare only covers 80% of costs. That 20% responsibility can swallow up your income. It also fails to include eye exams, orthotics, and dental care. Find a supplement plan to help ease your financial burden.
Housing: The average retiree 75 or older spends 43% of income on housing and related expenses. It’s beneficial for many to downsize to a smaller home or move to an area which a lower cost of living than where you currently are. The adjustment can free up income for discretionary purposes.
Other basic actions such as not eating out as often or capitalizing on discounts and specials for seniors can also keep your wallet a bit thicker.
Hire a Financial Advisor
Seeing a financial advisor can put financial responsibility in someone else’s hands. They can look at your investments, determine an acceptable withdrawal schedule, and examine your current and past spending to give you helpful tips and advice. It’s smart to fix an overspending problem sooner rather than later, which financial advisors recognize and work quickly to remedy. Their goal should be to help you have the most money to enjoy the golden years that you’ve worked so long for.
We are here to help, contact us, today.
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Building your dream home for retirement is not an uncommon goal many Americans have. However, just because it’s a common dream doesn’t mean it’s an appropriate dream for a large portion of the population. Sure, you may have several hundred thousand or a couple million in your retirement accounts. You’ll still want to think before you build your retirement dream home.
Think Location
Three of the most important considerations to take into account before building a dream home are location, location and location. You’ll want to ask whether the location you’re looking to build on is an up-and-coming destination or one that’s had a downturn for several years. No one knows what the future will hold, but a home in a desirable location is more likely to sell than one in a depressed area.
If your chosen destination, even if it’s near a beach or ski resort, has had stagnant or declining home prices for years, it’s a sign that it might not be a good place to build a home. Another concern would be the average length of time properties stay on the market in a given community. If there’s a low supply of houses and a short turnaround when they go on the market, your chosen location might be a good fit. If houses stay on the market for a year or more, it might be a good idea to look elsewhere.
Think About the Kids
Most people who retire want to spend time with their kids and grandchildren. This might make it seem like buying or building a dream home near the kids would be a good idea. Think again. People move for jobs every day. Sometimes, that move will be from one building across the street to another. Other job moves will require a move across a state or across the country.
Building a dream home close to your kids today does not guarantee it will be close to your kids five years from now. Additionally, dream homes tend to be on the upper end of the price scale, and this can mean they’ll sell less quickly than more affordable homes. Therefore, if your main reason for building a dream home is to be close to your children, it might pay to ponder the decision a bit longer.
Think About Cash Flow
No matter how big your nest egg happens to be, you always need to think about cash flow. This goes if you’re 30 years old or 60 years old. Overspending on a home is bad for cash flow whether you’re making $50,000 a year with no money in your nest egg or making $150,000 a year with $750,000 in your nest egg. If you have a nice chunk rolling in from a pension or Social Security, this might work in your favor for building your dream home. Keep in mind that you might want to downsize your dream home a bit to keep more cash working in your favor regardless of your current financial situation.
It’s also a good idea to remember that most people decline physically over time. This means that a multistory dream home will be less accessible in a few years. If you need to hire some help, that will put additional strain on your cash flow as well.
There’s nothing inherently wrong with building a dream home as long as you can afford it. However, there can be some pitfalls that come from building one for retirement. Most people will eventually have to downsize, and having too much equity tied up in a home can make it more difficult to do so quickly. Taking all facets of building a new home into account is an important step to take before you ever sign on the dotted line to start your build.
Remember, we are here to help you with all aspects of planning your retirement. Contact us, today.
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