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Tag: retirement

Pros and Cons of Working in Retirement

After retirement, many individuals consider going back to work. Whether it’s because they want a little extra income or just need something to keep themselves busy.

There are benefits to working after retirement besides the obvious financial ones. Having a job, even part-time, allows you to slowly ease into retirement. It also helps you feel a sense of fulfillment and purpose. But there can also be some negative aspects to returning to work after retirement.

 Here are a few pros and cons to consider before you commit to starting a post-retirement position:

PROS

  • Provides a sense of purpose
  • Extra income
  • Freedom and flexibility of your schedule
  • Social activity and health
  • Better health insurance options

CONS

  • Less free time
  • Ageism in the workplace
  • Possible impact on social security benefits
  • Risk of higher taxes
  • Less job security

Questions You Were Afraid to Ask #6

Earlier this year, we started a series of posts called “Questions You Were Afraid to Ask.”  We look at a common question that many investors have but feel uncomfortable asking.  Because when it comes to investing, the only bad question is the one left unasked! 

So far, we’ve covered a variety of topics, including:

  • How the Dow Jones, S&P 500, and NASDAQ indices work and which companies they include.
  • How the values of these indices are calculated.
  • How stocks work, and how they differ from bonds.
  • How investment funds work, including the differences between passive and active funds.
  • The pros and cons of mutual funds, exchange-traded funds, and hedge funds. 

As you can see, when it comes to investing, there’s a lot to know, a lot to consider, and a lot to choose from.  And while choice is always a good thing, many investors often come to us with their heads spinning because they’re not sure where to start, what to do, or which option to choose.  They all come with some variation of the same question.  The question we’re going to answer right now. 

Questions You Were Afraid to Ask #6:
How do I know which investment options are right for me?

When it comes to this question, we have good news and bad news. 

The bad news is that there is no one-size-fits-all answer. 

The good news is that there is no one-size-fits-all answer. 

Yes, you read that right. 

To illustrate what we mean, think about your clothing for a moment.  Do you buy one-size-fits-all attire?  Of course not – and there’s a reason for that.  “One-size-fits-all” wouldn’t look very good.  It wouldn’t feel very good.  And it simply wouldn’t work for every person and every lifestyle. 

In life, we have a variety of different clothes we can choose from.  We make those choices based on several factors.  Climate: pants or shorts.  Employment: jeans or slacks.  Occasion: a day at the beach or a day at a wedding.  Personality: colorful vs dark, brazen vs muted.  Figure: from extra-small to extra-large.  You choose your clothes – and your style– based on what’s right for you.  Based on your wants, your needs, your nature.  Investing, believe it or not, is much the same.  There is no one-size-fits-all.  No single “best” option.  Only the best for you, based on your wants, your needs, your nature. 

This might seem like a no-brainer, but it’s critical all the same.  That’s because, as an investor, you will often hear the media say otherwise.  You will hear people claim that the Dow is more important than the S&P (or vice versa).  That stocks are better than bonds, or bonds are safer than stocks.  That passive is better than active (or vice versa), or that ETFs are always better than mutual funds (or vice versa). 

As we’ve seen, the truth just isn’t that simple. 

In these posts, we’ve answered six questions many investors are afraid to ask.  Now, we have six more for you to consider.  Six questions you must not be afraid to ask.  Questions only you can answer.     

Those questions are as follows: Who, What, When, Where, Why, and How. 


Who am I?  Are you cautious by nature or a risk-taker?  Are you a family-oriented person, or more of a lone wolf?  An adventurer or a caretaker?  Someone with a few simple wants, or big, bold dreams?  Or – as many people tend to be – are you a mixture of all these things? 

What kind of lifestyle do I want?  Simple or extravagant?  Always trying new things, or staying in your comfort zone?  One focused on work and personal accomplishment, or one focused on family and community?  Or again – and I can’t stress this too much – a mixture of these things, depending on what stage you’re at in life? 

When will I most need money?  Do you need it soon because you’re buying a new home or starting a new business?  Or do you need it later when you’re about to retire? 

Where do I see myself in ten years?  Or twenty?  Life is all about change and growth.  That means you need to ensure you’re investing for long-term growth to reach your long-term goals. 

Why do I need to invest?  To help send your kids to college?  To retire?  To see the world?  To give to charitable causes?  To feel like you always have a safety net? 

How will I pay for retirement?  This is key.  Because, regardless of your other goals, there’s probably going to come a time when you want to stop working.  But you can’t just pick a day to not show up at work.  Retirement creates a massive lifestyle change, one that will be quite upsetting to your finances if you don’t prepare for it. 


It’s these questions that should determine the right investment options for you.  The types of assets you invest in.  How much risk you take on.  Whether your portfolio is simple or complex.  Active versus passive.  You get the idea.

So, here’s our suggestion: Take some time to think about these questions.  Then, communicate your answers with a professional you trust.  Together the two of you can create an investment plan that’s as specific to you as the clothes you wear.  A plan designed to get you where you want to be.  We hope you’ve enjoyed learning a bit more about how investing works.  We hope we’ve been able to answer some questions you may have pondered over the years.  Most of all, we hope you can use this information as a springboard to ask more questions down the road.  After all…

When it comes to investing, the only bad question is the one left unasked!

Medicare Changes Retirees Need to Know About

New laws are here!

If you have questions about Medicare or would like to learn about the new laws, click here to view the schedule for our upcoming medicare webinars.

The new Inflation Reduction Act is a big enchilada of green energy spending, corporate taxes, and some pretty major changes to Medicare.

Is this deal a big deal? Could be. We’ll wrap it up for you at the end.

First, here are some Medicare changes you might want to know about:1

Medicare will be able to negotiate drug prices (starting in 2026)
For the first time, the Medicare program will have the power to negotiate the cost of (some) drugs.
Before price negotiations kick off, new rules will also force manufacturers to pay “rebates” to the government if they increase covered drug prices higher than general inflation (starting in 2023) and limit Medicare Part D premium increases each year (starting in 2024).1

Why does this matter? Drug price inflation is crazy high, outpacing general inflation for thousands of medications.2

The power to negotiate drug prices with manufacturers could end up lowering costs. For example, a budget study found that Medicare was paying 32% more for the same drugs as Medicaid (which already has the power to negotiate prices).1

Lower prices could lead to overall program savings (and possibly lower Medicare premiums), plus save money for retirees who depend on those specific drugs.

Out-of-pocket drug costs on Part D will be capped at $2,000/year (starting in 2025)
Under current laws, there’s no cap on how much people have to spend out-of-pocket for their medications, which can really add up under cost-sharing requirements.

Starting in 2024, folks who spend enough out-of-pocket on medications to surpass the “catastrophic threshold” will no longer have to pay coinsurance for their expensive drugs.1

And, starting in 2025, the maximum out-of-pocket medicine cost for folks on Part D will be a flat $2,000.

Why does this matter? Many drugs (especially new ones) can be devastatingly expensive.
Capping annual drug costs will hopefully not only save folks money, but also lead to more predictability in their yearly health care costs.

Out-of-pocket insulin costs will be capped at $35/month for Medicare participants (starting in 2023)
Starting in 2023, enrollees won’t have to spend more than $35 per month on their insulin copays.1
Folks on private health insurance won’t see a change.


Why does this matter? As anyone who needs insulin will tell you, it can get pricey, costing over $500 per year on average.3 Much more if you need one of the more expensive versions.
Capping costs could help the millions who need this life-saving medication.

All vaccines will be free under Part D (starting in 2023)
While flu and COVID-19 shots might be covered for many, most vaccines are not.
Starting in 2023, cost-sharing under Part D will end, making ALL covered adult vaccines free.1

Why does this matter? Many adult vaccines can cost quite a few bucks. For example, the shingles vaccine can cost upwards of $150 a pop and other recommended jabs can also be very pricey.4
Making vaccines free could not only lower the financial impact of immunizations, but also increase their availability to lower-income folks.

Will these new laws help retirees?
This is where the future gets hazy. Legal challenges or post-election changes could end up altering much of what’s in the Inflation Reduction Act. And much depends on the actual execution of the new rules.

The new rules could also mean premium changes as insurance companies figure out their models.

Since health care is one of the biggest unknown costs in retirement, lowering drug costs and making spending more predictable for Medicare recipients could absolutely have a positive impact on millions of people.

Will the Inflation Reduction Act help the economy?

Whether the overall bill will live up to its name, lower inflation, and have a net positive impact on the economy also remains to be seen.

Some economists project that the bill will end up modestly reducing inflation and trimming the federal budget over the next decade.5

Others are concerned about the impact of the new corporate tax rules written into the legislation.
As is usually the case, time will tell.

Remember, our medicare webinar is a great opportunity to learn more.  Click here to register now for an upcoming webinar.

1- https://www.morningstar.com/articles/1109390/the-inflation-reduction-acts-impact-on-retirees

2- https://www.kff.org/medicare/issue-brief/prices-increased-faster-than-inflation-for-half-of-all-drugs-covered-by-medicare-in-2020/

3- https://www.kff.org/medicare/issue-brief/insulin-out-of-pocket-costs-in-medicare-part-d/

4- https://www.cdc.gov/vaccines/programs/vfc/awardees/vaccine-management/price-list/index.html

5- https://www.moodysanalytics.com/-/media/article/2022/assessing-the-macroeconomic-
consequences-of-the-inflation-reduction-act-of-2022.pdf

Chart source: https://www.kff.org/medicare/issue-brief/how-will-the-prescription-drug-provisions-in-the-inflation-reduction-act-affect-medicare-beneficiaries/

Friends in Retirement

We often think of retirement as the time to finally do the things we have been putting off. We tell ourselves “Work hard now so we can play later.” Or, perhaps, we get so caught up in the day-to-day chaos that finding time for leisure like hobbies, clubs, or social groups takes a back seat.

In fact, we are willing to bet that if you really think about it, your social circle can be traced back to two main groups:

work (obviously, we spend most of our time there)

and if you have kids, their direct network, whether that is school, sports, or extracurricular activities.

And those bonds are the ones that resonate most with you. They are the core aspects of your life: work, values, and children.

But what happens when you leave that job, and your kids get older? What happens when you suddenly have free time?

What are you left with?

A decades old list of potential hobbies?

What do you do with that?

Well, it’s a great place to start.

At the risk of getting too psychological, it’s easy to put the needs of a job or children before your own, and soon that becomes our identities.

But there is something really fun and exciting in getting to rediscover yourself! It’s like a clean slate.

So, pull out that list. Test the waters. See what piques your interest.

Don’t have a list?

Here are some ideas to get you started, as well as some ways to meet others who share that common interest.

Financially Savvy Investor

These days, most people can’t afford to reach their financial goals – like retirement – on their employment income alone.  The cost of living is simply too high.  That’s why investing is so important: Because it allows you the opportunity to put your money to work for you.  Through investing, you can potentially grow your money and seize opportunities for additional income. 

But it’s not enough to simply throw your money at the stock market.  You must invest wisely if you’re to reach your financial goals.  You must be a financially savvy investor. 

To help, we’ve created a special infographic called Four Steps to Becoming a Savvy Investor.  Please take a minute to look it over.  These steps are all very simple to understand, but they’re critically important.  If you have any questions about them, or if you need any help applying them, please contact us for further information. 

We hope you find this infographic helpful.  Again, please contact us if there is anything we can do to help you invest for your future. 

Medicare – Insurance for Retirement #3

We have come to the final lap with Medicare.  The three articles that have made up this series are in no way a complete analysis on Medicare, but hopefully this information will provide you with a good understanding of the basics of Medicare planning.

Medigap Plans (also known as Medicare Supplement)

Medigap is extra health insurance that is purchased from an insurance company to help control the costs of healthcare expenses. For a monthly premium, a Medigap policy can help pay for things such as deductibles, co-pays, and/or co-insurance of your Basic Medicare (Part A and B).  Medigap can also be used for health care expenses if you travel outside the U.S.  Medigap policies will not cover things like long term care, dental care, vision care, eye glasses, hearing aids, and private nursing.  Medigap can be used to put a maximum cap on your annual medical expenses. This is very useful because Medicare Part A and B do not have a maximum out-of-pocket expense limit. It should be noted, that many Part C plans include some maximum out-of-pocket limit.

Medigap comes in many distinct “Parts” (Medigap Part A through N) and they are standardized. This means that the benefits of each Medigap Plan are the same regardless of the insurance provider.   It is important to note that Minnesota, Wisconsin and Massachusetts have different Medigap policies. 

Medigap can deny you for a pre-existing condition if you apply for a Medigap policy more than 6 months after you apply for Part B – no matter if you are still working or not. For example, you turn 65 and apply for Part B, but because you are still working you decide to not apply for Part C or Medigap. At age 68, you incur a preexisting condition and so you retire. At that point, you try to sign up for Medigap, but because of your pre-existing condition, the insurance company may deny you. Furthermore, a preexisting condition may not be covered within the first 6 months of signing up for Medigap. Note, that Part C cannot exclude you from coverage because of a preexisting condition, so it ends up being the back-up plan for many savvy people in this position.

Depending on the amount of insurance coverage you are looking to obtain, most iterations of how people get Medicare coverage is as follows:

  • Medicare Part A, B, and Part D (least amount of coverage)
  • Medicare Part A, B, and Part C (average amount of coverage)
  • Medicare Part A, B, D, and Medigap (most amount of coverage)

In the above, Option 2 or 3 are usually the most recommended strategies because of how inexpensive a Part C (Medicare Advantage Plan) can be in comparison to a standalone Part D. To go from Option 2 to Option 3, expect much higher monthly premiums. Those who expect to need that much insurance may benefit from Medigap policy, but because of the higher premiums ($51/month to $568/month, depending on the Plan) it is not for everyone.

Now that we have gone over the basics of Medicare, what are the next steps? If you are looking to get advice or find the strategies that are specific to you, please call our office to schedule an appointment.  We have been able to assist a good number of people in making well informed decisions when it comes to Medicare and their individual needs. 

It is also important to note that many states offer health insurance advisors and Medicare consultants whose sole objective is helping people evaluate health plans.  If you would like to discuss specific Medicare health care plans with your local Medicare office, visit www.shiptacenter.org to find a counselor in your area.

Medicare – Insurance for Retirement #1

Introduction – The Complexities of Medicare

Medicare is the health insurance that people dread to think about because of the complexities and lack of information available. Many, even those already on Medicare, do not know the rules or how it works. Once they sign up for Medicare, most think it’s a set-it-and-forget-it health insurance. But, premiums can increase, benefits can change, and medical needs can increase. It is for these reasons that it is important to understand Medicare before and after you sign up for it.

This is article number one of a three-part series on Medicare. Open enrollment for certain parts of Medicare started on October 15th and now is as good a time as any to better understand Medicare. This article will address Basic Medicare (Part A and B). Our next article will go over Medicare Advantage Plans (also known as Part C) and Part D. The third and final article in this series will focus on the Medicare Supplement Plan (also known as Medigap).

Medicare Part A

Medicare Part A is known as hospital insurance. It covers hospitalization, skilled nursing facility care, inpatient care in a skilled nursing facility, hospice care and home health care.

Generally, it is available to people that are 65 years or older (as well as younger people with disabilities or end stage renal failure). Part A is premium free if you are 65 or older and you or your spouse have worked and paid Medicare taxes for a minimum of 10 years.

Although Part A is premium free, that does not mean there’s no out-of-pocket expense. In 2018, there is a $1,340 deductible per “spell of illness”. A single “spell of illness” begins when the patient is admitted to a hospital or other covered facility, and ends when the patient has gone 60 days without being readmitted to a hospital or other facility. That means that if you need to be hospitalized, you must pay $1,340 out-of-pocket as a deductible and then Part A kicks in. If you pay $1,340 as a deductible, leave the hospital and come back in 3 months for a different reason, you would have to pay the deductible again. This surprises many people because they are used to the annual deductible reset, not the 60-day deductible reset.

Another aspect of Part A that people find surprising is there is no maximum out-of-pocket expense. If you need skilled nursing care for home health care, you must pay the $1,340 deductible and then Medicare Part A will help pay for SOME of the costs, not all. Therefore, if you need Part A coverage for more than 100-150 days for hospitalization or skilled nursing care, you may have to pay the entire bill thereafter. This, of course, can lead to catastrophic healthcare expenses. We will discuss a potential solution in our upcoming articles.

Medicare Part A is the first part of Basic Medicare. Because there is no premium, there is no reason why most people should not sign up for Medicare Part A three months prior to their 65th birthday. There is one specific exception…if you are working, covered by your employer’s high deductible healthcare plan AND contributing to your Health Savings Account. If this is the case then you should visit our office to speak with us to determine if it makes sense for you to sign up for Part A.

Medicare Part B

Medicare Part B is known as medical insurance. It helps covers services and supplies that are medically necessary for the diagnosis or treatment of a health condition. This includes outpatient services, at a hospital, doctor’s office, clinic, or other health facility. Medicare Part B also helps cover many preventive services to prevent illness or detect them at an early stage. Together, Medicare Part A and Part B are known as Original Medicare.

Part B has the same eligibility as Part A – 65 years of age or older and you or your spouse have worked and paid Medicare taxes for a minimum of 10 years.

Unlike Part A, Part B has a monthly premium and a yearly deductible. The monthly premium for 2018 starts at $134 amount and can increase if your gross income (which is your adjusted gross income plus tax-exempt interest) is above a certain amount. Higher premiums may also apply if you do not enroll in Medicare Part B when you were first eligible.

The deductible for Part B is relatively low ($183 per year in 2018). Furthermore, Part B has a coinsurance of 80%.

After the initial yearly deductible, Part B will pay for 80% of the “Medicare-approved amount”. This basically means Medicare says what something should cost. If a medical provider charges 120% of what Medicare says it should cost, you will have to pay for that extra 20% premium. In truth, Medicare Part B, on average, will only pay about 60% of these medical costs! Lastly, just like Part A, there is no limit on out-of-pocket expenses.

For a variety of reasons, it does not always make sense for someone to sign up for Part B at age 65. If you are still employed with a company that has a minimum of 20 employees, or if your spouse is, you do not have to sign up for Medicare Part B. Instead, you can stay on the medical plan offered by your or your spouse’s employer. If you plan to do this, you should check with the benefits administrator to see how the plan works with Medicare. A good rule of thumb is when you hear that your work insurance is secondary to Medicare, it would be a good idea to apply for Part A and B at the very least.

Enrollment for Medicare Part A and B is easy. Call Social Security at 800-772-1213 or go to the nearest Social Security office. Bring your photo identification (state issued ID or passport) and proof of your birth (birth certificate). You will also need proof of your marriage (marriage certificate) if you are applying for Medicare through your spouse’s work record. You can sign up for Medicare three months before your 65th birth month. For example, if you were born in July, you can apply for Medicare on April 1st for the benefits to start July 1st.

We will cover Medicare Part C, D and Supplemental in our upcoming articles.