Medicare

Countdown to Retirement with Three Simple Questions

To help plan for retirement, it helps to move from asking global questions, like “Can I afford to retire?” to more specific questions, like “What’s my monthly cost of living right now?”

Sometimes retirement planning is so overwhelming that people just shrug their shoulders and hope that things work out. That’s a terrible way to plan for the last two or even three decades of your life. Plus, says Motley Fool in a recent article titled “Don't Even Think About Retiring Until You Can Answer These 3 Questions,” if you can’t answer three basic questions, maybe you’re not ready to start thinking about retirement.

MP900384841Can you believe that just 38% of Americans say they have a long-term financial plan, according to a recent survey? Let’s look at three important planning questions.

When to claim Social Security. Many people think that retirement and claiming Social Security benefits occur at the same time. However, they don't have to. You could elect to retire at age 60 but wait to claim your benefits until you reach 65. Remember that the amount of money you get in benefits is linked to the age at which you start claiming them. Age 62 is the earliest you can claim Social Security. However, if you do, your benefits will be reduced by up to 30% of what they could be. For every month you wait, you'll receive slightly more with each check up to age 70. Your full retirement age (FRA) is the age when you’ll get 100% of the benefits to which you’re entitled. Waiting can have its advantages, but there's no single right answer for when you should start claiming. It all depends on your personal circumstances.

Will your retirement savings last? Take a look at how far your savings will last during retirement. To determine how far your money will go, calculate the amount you'll need each year to get by during retirement. With a number in mind, you'll be able to better determine how long your current savings will last. You might realize that you need more than you anticipated, especially if you're going to be spending several decades in retirement.

Paying for healthcare costs. Healthcare costs are one of the largest expenses in retirement. Know that the average retiree spends about $4,300 per year on out-of-pocket healthcare expenses. A total of two-thirds of that is spent on premiums. It’s important to understand that Medicare will help cover many healthcare expenses you'll face, but it doesn't cover everything.

Circumstances often dictate when people retire; they lose a job in their mid to late 60s or illness prevents them from working. However, even when that is the case, understanding where you are from a financial perspective can help make your retirement work in your favor.

Reference: Motley Fool (October 9, 2018) “Don't Even Think About Retiring Until You Can Answer These 3 Questions”

Medicare Facts and Penalties You Need to Know

Make sure to review your coverage and plan in advance to avoid any penalties.

Start with the basics, to make sure you’re making informed decisions.

Bigstock-Senior-Couple-8161132Created in July 1965 as part of the Social Security Act, Medicare is how most adults over age 65 cover their healthcare costs. Medicare has four parts. They are Part A: Hospital, Part B: Outpatient Services, Part C: Medicare Replacement and Part D: Prescription Drugs. This useful article from Think Advisor, “Essential Medicare Facts & Penalties Advisors Should Know on One Page,” covers Medicare fundamentals.

As a general rule, if you are 65 and you or your spouse have paid Medicare taxes for at least 10 years, you may enroll in the program. Those under 65 may also enroll, if they are disabled or have end stage renal disease.

Let’s look at the different parts of Medicare:

Part A is free for most people. If you didn’t pay Medicare taxes, you may be able to enroll and pay for Part A. If you’re under 65 and didn’t pay into Medicare, you may be eligible if you have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months or you are a kidney dialysis or kidney transplant patient.

Everyone is required to pay a premium for Medicare Part B, which is deducted from your Social Security retirement payment. If you’re eligible but haven’t yet begun to receive a Social Security retirement benefit, Medicare will send you a bill.

Part C is also known as a Medicare Advantage plan. It’s issued by a Medicare-approved private insurer. Even if you choose Medicare Part C, you still are required to pay a Part B premium. Although these plans cover all services in Part A and Part B, they frequently have other benefits like vision, dental, hearing, and prescription drugs.

Part D covers prescription drugs. Each Medicare drug plan list its approved drugs and a “tier” for them. A lower tier drug will generally cost less, and a higher tier drug will cost more.

The window to enroll in Medicare starts on the first day of the third month prior to your birth month and ends on the last day of the third month following the month of your birth.

There is a separate “late enrollment” penalty, if you go 64 continuous days or more beyond the end of your initial enrollment period and did not have a Medicare Prescription Drug Plan, a Medicare Advantage Plan (Part C) and another Medicare plan that offers prescription drug coverage, including a plan through an employer or union.

Make sure to review your coverage and plan in advance to avoid any penalties. If you make a mistake, you may end up paying a premium for certain types of coverage, for as long as you have Medicare.

Reference: Think Advisor (July 31, 2018) “Essential Medicare Facts & Penalties Advisors Should Know on One Page”

What Should a Financial Plan Include?

You may need a guide—but how do you know who to choose?

Hit a spring pothole and you can lose a tire. But hit a pothole with your financial plan, and you may be in for a bigger problem than replacing a tire.

MP900398819Do you have an up-to-date roadmap to your retirement? Keeping your finances, investments and retirement plan on a smooth road has become more and more challenging. Every day seems to bring a new regulation, investment product, or app that claims to offer the best route. You may need a guide—but how do you know who to choose?

Kiplinger’srecent article, “5 Bases You Need Covered With Your Retirement Plan,”says there are plenty of financial professionals today who can get you started down the right path with investment advice. However, a professional who limits his or her professional life solely to investing advice, isn’t going to get you comfortably and confidently to your retirement goals. Be sure you have someone who will concentrate on these five key areas of your financial life:

Income Planning.Your retirement could last for decades. You must be certain that you’ll have reliable income streams to pay your monthly expenses. This area typically should cover things like Social Security maximization, income and expense analysis, inflation, a plan for the surviving spouse, longevity protection and investment planning. Once your income plan has been created, you need to analyze your remaining assets (those that you won’t have to draw from every month). This should cover your risk tolerance, adjusting your portfolio to reduce fees, volatility control, ways to reduce risk while still working toward your goals and comprehensive institutional money management.

Tax Planning. Your comprehensive retirement plan should include strategies to decrease tax liabilities, such as determining the taxable nature of your current portfolio, possible IRA planning, looking at ways to include tax-deferred or tax-free money in your plan, prioritizing tax categories from which to draw income initially to potentially reduce your tax burden and considering ways to leverage your qualified money to leave tax-free dollars to your beneficiaries.

Health Care Planning. Retirees today must have a plan to address rising health care costs with little expense. Strategies should include examining Medicare Parts A, B, and D, reviewing options for a long-term care plan and legacy planning.

It’s critical that your hard-earned assets go to heirs and loved ones in the most tax-efficient manner possible. Your financial adviser should work collaboratively with a qualified estate planning attorney to help with these tasks:

  • Maximize estate and income tax planning opportunities;
  • Protect any assets in trust and ensure that they’re distributed probate-free to beneficiaries and
  • Prevent your IRA and other qualified accounts from becoming fully taxable to beneficiaries upon death.

Your estate planning attorney should be able to give you some recommendations for trustworthy and respected professionals. You’ll also need to do your homework, and interview more than two or three to make sure that it’s a good fit. Ideally, this person will work with you, your estate planning attorney and your CPA, as part of a team, for many decades.

Reference: Kiplinger(May 4, 2018) “5 Bases You Need Covered With Your Retirement Plan”

Work Requirements from Medicaid May Harm Some Seniors

States that have opted to require Medicaid recipients to work, will put some seniors at risk of losing healthcare coverage.

States that have opted to require Medicaid recipients to work, will put some seniors at risk of losing healthcare coverage.

Bigstock-Senior-couple-standing-togethe-12052331A recent article from US News & World Report, “How Medicaid Work Requirements Could Hurt Older Americans,”explains how the new requirements for Medicaid recipients to work or meet “community engagement” requirements may create hardships for some seniors. Many lower income Americans depend on Medicaid for healthcare, including adults age 50 to 64, who often suffer from chronic health conditions.

The Centers for Medicare & Medicaid Services announced in January that states can apply for waivers to implement work requirements for people who receive Medicaid benefits. The waivers have been approved in three states and are pending approval in others. Age limits vary for who might have to fulfill work or "community engagement" requirements for up to 80 hours a month. In Kentucky, Medicaid recipients are exempt at 64. In Indiana, it’s 60, and in Arkansas, 50 is the threshold. Some other states are looking to implement work requirements. They include Arizona, Kansas, Maine, Mississippi, New Hampshire, Utah and Wisconsin.

Beth Kuhn, commissioner of the Kentucky Department of Workforce Investment, notes that most people on Medicaid also receive Supplemental Nutrition Assistance Program (SNAP) benefits—also known as food stamps. For those 80% of Medicaid recipients, she says, work requirements don't apply after age 49.

Community engagement is the prime focus of the new requirements, which entails four facets: volunteering, training and education, work, and caregiving of a family or community member in need.

There are many who are excluded from the requirement, and one group is the medically frail. Medical frailty would be determined by an eligibility specialist.  However, it’s not clear now how chronic medical conditions impacting many beneficiaries, like asthma, diabetes, heart disease, high cholesterol, and hypertension, will be considered.

A group of Kentucky residents receiving Medicaid, are now being represented in a federal class action lawsuit by The Southern Poverty Law Center, National Health Law Program, and Kentucky Equal Justice Center. A joint brief was filed by the National Academy of Elder Law Attorneys (NAELA), AARP, AARP Foundation, Justice in Aging and the Disability Rights Education and Defense Fund.

According to a spokesperson with Justice in Aging, the brief focuses on the elimination of pre-application coverage, elimination of non-emergency medical transportation and the imposition of lockout penalties for various transgressions. With no pre-application coverage, an individual could easily become liable for thousands of dollars of health care costs, if an illness or injury prevented them from filing a Medicaid application.

Reference: US News & World Report (April 20, 2018) “How Medicaid Work Requirements Could Hurt Older Americans”

50 or Older? Here are a Few Retirement Questions Just for You

anyone in their 50s, who wants to have a successful retirement, is advised to start getting their thoughts organized.

You don’t need to create a spreadsheet or write a book-length plan, but anyone in their 50s, who wants to have a successful retirement, is advised to start getting their thoughts organized.

MP900448491Research shows that people who have more specific ideas of how they want to spend this part of their life, end up being more satisfied that those who just wing it. We think that’s because those who create a plan have also devoted some time and energy to considering what retirement means to them, what issues they may face and what is meaningful to them.

Forbesrecent article, “5 Key Retirement Questions You Need To Answer When You're 50 Or Older,”boils it all down to a few key ideas.

How long will retirement last? Your plan will be vastly different, if your life expectancy is 10 years than if it is 30 years. Most folks underestimate average life expectancy, and that can result in financial distress in the later years of retirement. Check online sources to determine the average life expectancy for your age group.

When will you be ready to retire? This answer frequently determines how satisfied you’ll be in retirement. Remember that your age shouldn’t determine your retirement date. It’s retirement readiness that counts.

What are you going to do in retirement? This also includes how you think you’ll spend your financial resources. Create a personalized spending estimate, based on your interests and planned activities. Decide the lifestyle you want in retirement and estimate the current costs. Most people spend less as they age because they’re less active. However, it might increase later in life because of medical and long-term care expenses. Add inflation into your estimates because most of what you’ll spend money on in retirement will go up in price over time.

When will you be able to retire? Being able to retire means your income and assets are enough to let you to maintain the desired standard of living. Unfortunately, the retirement date isn’t always in your control, so add in a contingency that you might retire before you want due to health or layoffs.

It is difficult to estimate medical expenses and long-term care in retirement. Many new retirees underestimate these costs and overestimate what Medicare and other government programs will pay. It’s wise to maximize insurance coverage. Sign up for a Medicare Advantage plan or join traditional Medicare and add a Medicare supplement (Medigap) plan and Part D prescription coverage. Your fixed monthly expenses will be more with the insurance premiums, but your potential maximum out-of-pocket expenses will be less.

How realistic are your plans regarding managing and spending down your nest egg? The most common mistake retirees make is overspending in the early part of their retirement, which often leads to needing to make major adjustments (or moving in with the kids) later in life. Have an investment strategy that can be modified as circumstances, like health care costs and market swings, require. Be flexible—what works when you are 70, may need to be revised when you are 78. Retirement finances are never “set-it-and-forget-it” plans.

Reference: Forbes(April 3, 2018) “5 Key Retirement Questions You Need To Answer When You're 50 Or Older”

Did you Know that Medicare Provides Free Services?

Ben Franklin said, “An ounce of prevention is worth a pound of cure.” That’s why Medicare provides free screenings and examinations focused on prevention.

Ben Franklin said, “An ounce of prevention is worth a pound of cure.” That’s why Medicare provides free screenings and examinations focused on prevention.

MedicareYes, you still have to spend a lot of out-of-pocket money on healthcare, but a recent article in AARP ,“10 Free Services Medicare Provides,”reports that the Affordable Care Act (ACA) expanded access to free preventive care, including a number of screenings and examinations. These are all helpful to maintaining good health.

  1. A “Welcome to Medicare” Preventive Visit.Available only in the first 12 months you’re on Part B, this visit includes a review of your medical history, some screenings and shots, measurements of vital signs, a vision test, a review of potential risk for depression, the opportunity to discuss advance directives, as well as a written plan detailing the screenings, shots, and other preventive services you should have. This visit is covered only once, but it’s a good perk.
  2. An Annual Wellness Visit.You’re eligible for this free exam, if you’ve had Medicare Part B for more than 12 months. Your doctor will review your medical history, update your list of providers and medications, take your vital measurements and provide personalized health advice and treatment options. Note that while the visit is free, your doctor may order other tests or procedures that might have a deductible or co-pay cost.
  3. Mammogram.An annual screening mammogram is free. If you need a diagnostic mammogram, you’ll pay a 20% copay, and the Part B deductible will apply.
  4. Colonoscopy.A screening colonoscopy once every 24 months is free, if you're at high risk for colorectal cancer. Even if you’re not at high risk, Medicare covers this test once every 10 years.
  5. Diabetes Screening.You can get two free screenings a year, if you have a history of high blood pressure, abnormal cholesterol levels, are obese, or have a history of high blood sugar levels. The screenings are also free, if two or more of these issues apply to you: (i) you’re over 65; (ii) you’re overweight; (iii) you have a family history of diabetes; or (iv) you had diabetes when you were pregnant.
  6. Prostate Cancer Screening.An annual PSA test is free, and a digital rectal exam costs 20% of the Medicare-approved amount, along with the physician services related to the exam. The Part B deductible also applies.
  7. Vaccines.More free stuff! Your annual flu shot, vaccines to prevent pneumococcal infections like pneumonia, and shots for hepatitis B (for those at high or medium risk) are free. The shingles vaccine is not covered by Part A or Part B. However, it may be covered by your Medicare Advantage (MA) plan or your Part D prescription drug plan.
  8. Cardiovascular Disease (Behavioral Therapy).As a Medicare recipient, you also get a free annual visit with your primary care provider to help lower your risk for cardiovascular disease.
  9. Lung Cancer Screening.An annual test with low-dose computed tomography (LDCT) is free, if you’re between 55 and 77, don’t have any signs of lung cancer, are a smoker or have quit in the past 15 years, and you have a tobacco smoking history of at least 30 “pack years” (meaning you smoked an average of one pack a day for 30 years).
  10. Depression Screening.If it’s conducted in a primary care center, where follow up and referrals are available, an annual screening for depression is free. There may be co-pays for follow-up care, but the screening itself is free.

These are important opportunities to continue taking good care of your health, and the fact that they are free, is icing on the cake!

Reference: AARP (November 21, 2017) “10 Free Services Medicare Provides”

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