Author: Dan Hoelscher

Dan Hoelscher founded Seniormark in 2007 in an effort to help individuals make a successful transition into retirement. Dan is a Certified Financial Planner™ Practitioner and holds Certified Senior Advisor (CSA)© and Certified Kingdom Advisor™ certifications. Since founding Seniormark, Dan has helped thousands of retirees throughout Ohio.

6 Annual Enrollment Dates You (Quite Literally) Can’t Afford to Forget

6 Annual Enrollment Dates You (Quite Literally) Can’t Afford to Forget

I know you’ve got a lot of dates to juggle: birthdays, anniversaries, holiday get togethers, or departure dates for long awaited travel plans. But you have to leave some empty space—in your memory and on your calendar—to add these 6 dates.

 

Why?

 

Because the Medicare Annual Enrollment Period is upon us, a time when the Medicare marketplace is bustling with transactions. Beneficiaries such as yourself are switching Drug Plans, Advantage Plans, or transitioning from an Advantage Plan to a Medicare Supplement or vice versa. These are strategic moves you can only make during Annual Enrollment!

 

Now, if you are thinking, “I’m perfectly fine with my health insurance. I’ll just let it go this year,” I’d like to offer a word of warning: Not reviewing your Medicare health insurance plans this Annual Enrollment Period could cost you thousands. You see, Benefits and premiums change from year to year, so you have to review your plans with a professional to ensure you are still in the best-valued plan for your needs.

 

It doesn’t seem like letting it slide just one year could end up being so costly, but I’ve seen it happen again and again. In fact, I recently had a man come into my office in January, confused about why his approximately $190 per month prescription wasn’t covered anymore. As it turns out, he missed Annual Enrollment. The insurance company dropped his prescription from their formulary (list of covered drugs) for the new year. Unfortunately, I had to tell him, he was stuck in the ill-fitting Drug Plan for the whole year, the consequences of a mistake that would (by the end of the year) cost him $2,280. Ouch.

 

So, if you are a current Medicare beneficiary, get your pen ready and calendar ready. Annual Enrollment (October 15—December 7) is chock full of clear-cut deadlines. Don’t find yourself locked into a financially draining health insurance plan! You (quite literally) can’t afford to miss these 6 dates:

1. October 1st

This is the day we, as an insurance agency, receive all of the new information regarding plan changes.

  • Did your Drug Plan drop your most expensive prescription from its formulary?
  • Was there a premium hike?
  • If you have an Advantage Plan, is your doctor still considered “in-network?”

October 1st is the day we have all these answers and can speak to you about the possibility of switching to save you money and hassle.

 

Note: You can call about your options anytime during Annual Enrollment, but the earlier is truly the better. This time of year is quite busy!

2.October 15

The marketplace is open!  Annual enrollment has officially begun, and you can now enroll in a new plan.

3.December 7

I hope you have made all the necessary changes, because—at this date—you are locked into your plans for another year. Annual enrollment is closed.

4.January 1

It’s a new year, a new resolution, and—quite possibly—new insurance. This is the date any changes you made during the open enrollment period go into effect.

5.January 1

Nope, you didn’t just read the same line twice, and you are not seeing double! I know this is a repeat, but I want to clarify why this date is worth the extra mention: It is also the first day of the Advantage Plan disenrollment period. Just in case you’re second-guessing your decision, Medicare set up a disenrollment period where you can get out of your Advantage Plan with no penalties.

6.February 14

Finally, this is the last day of Medicare’s disenrollment period. If you are in an Advantage Plan and don’t like it, this is your last chance to drop it!

BONUS: February 14th is also Valentine’s Day. You’re welcome.

 

Looking to Review Your Plans With a Medicare Expert?

Even if you are not yet sure if you want to switch, I recommend giving Seniormark a call at 937-492-8800! Our friendly and caring staff is more than willing to be a resource during this bustling Annual Enrollment season. We will help ensure you meet all the deadlines and end up in a great plan for your needs and pocketbook as the New Year rolls around.

How Much Does Medicare Cost in 2017?

How Much Does Medicare Cost in 2017?

The cost of health care is a big question mark for soon-to-be retirees. Perhaps you’ve been on a trusty employer plan for the last few decades or have come to know and love a private insurance plan that fits your needs and budget.

But now you’ve got to switch to Medicare. And although you’ve always been able to pay your premiums, the cost of Medicare is an unknown number among a sea of unknowns associated with health care in retirement (or retirement in general, for that matter).

Although I can’t grant you any magical, one-size-fits-all answer, I can give you some solid estimations based on my experience working as a local Medicare expert to help you compare what Medicare costs with your current plan.

I always like to start with some good news…

 

  • Medicare Part A (Inpatient Care) Is Free

Have you paid into Social Security for at least 10 years (40 quarters)? Then your premiums for Part A are paid for!

Unfortunately, though, it can’t all be free…

 

The Associated Part B (Outpatient Care) Monthly Premium Is $134.00

This figure is adjusted for high income, but that is not a concern for most people. $134.00 will be your monthly premium unless your income exceeds $85,000 per year or more as an individual or $170,000 filing jointly with your spouse.

This is where there is a fork in the road. From this point, the cost of Medicare is heavily affected by which path you take. You can boil down all the madness into two basic choices (“Swamped with mail? Here’s what it all means”): Medicare Advantage or Original (traditional) Medicare.

 

The Traditional Medicare Route

If you take this path, I always suggest picking up a Medicare Supplement Plan. It might seem unnecessary (“Do I Really Need a Medicare Supplement?”) to some, but without the extra coverage, there is no limit to your out-of-pocket spending.

A Supplement’s price range is anywhere from $50-150, but a standard, middle of the road Plan G usually costs about $110 per month. This is the typical plan I recommend to my clients.

Then, since a Supplement does not cover those sky-high prescription drug costs, the vast majority of retirees purchase a Part D Drug Plan. Although the prices span anywhere from $14.60 to $157.40 per month, the average cost for a drug plan is $35.63 as of 2017. The out-of-pocket costs associated with Part D vary greatly depending on your medications. Just keep in mind that there will likely be copays and coinsurance regardless of which plan you choose.

 

The Medicare Advantage Route

The other choice is the less beaten path. From my experience, most people feel very cozy in the stability of a Medicare Supplement. However, an Advantage Plan often appeals to the more cost-conscious, risk-taking retirees. Offered as an alternative to Traditional Medicare, Advantage plans range from $0-179 per month with most settling in around $70. To make them even more attractive, a Drug Plan is almost always included as a part of the package.

Caution: Check For Possible Out-of-pocket Costs
At first glance, it looks like choosing a Medicare Advantage is a no-brainer, but there is a reason it appeals to risk-takers. With a Medicare Supplement (only available with Original Medicare), the maximum out-of-pocket is only $183 annually for Plan G (not including prescription drug costs). However, in an Advantage Plan, the coverage is a bit spottier. You pay less in monthly premiums, but copays, coinsurance, and deductibles are much higher. The potential out-of-pocket for an advantage plan can be as a high as $3500-6000 per year or more! Some years you will save money because of the cheaper premium, but one year of bad health can turn that around really quickly.

The Costs At a Glance For a 65-Year-Old

Original Medicare
Free Part A
+
$134 per month Part B
+
$110 per month for Medicare Supplement Insurance
+
$35.63 for Part D Drug Plan
= $279.63 monthly
(with LOW out-of-pocket spending limit)

Medicare Advantage
Free Part A
+
$134 per month Part B
+
$70 per month for an Advantage Plan (Part D included)
= $204 monthly
(with HIGH out-of-pocket spending limit)

 

Interested In A More Personalized Analysis?

So there you have it! This should give you a good idea of what Medicare costs for the average 65-year old. But—as I said before—the cost of Medicare is different for every person. If you are interested in more personalized figures, call us at 937-492-8800 for a free consultation. We will assess your financial and health situation to find an overall plan that meets your needs, concerns, and pocketbook. Ensuring you a successful and secure transition into retirement is our number one priority.

There will always be some unknowns when it comes to health care costs in retirement, but sitting down with a professional in order to assess your situation can diminish even the biggest question marks and settle your deepest concerns.

Disclaimer: Numbers are based on Sidney, Ohio.

<a href=”https://seniormark.com/free-consult” onclick=”ga(‘send’, ‘event’, ‘Google Link’, ‘CTA Banner’, ‘Free Consult’);”><img src=”http://seniormark.com/wp-content/uploads/2017/06/senior-mark-free-consult.jpg” alt=”Free Consult” border=”0″ /></a>

Beat The Medicare Supplement Premium Creep by Shopping Around!

Beat The Medicare Supplement Premium Creep by Shopping Around!

If you’ve been in your Medicare Supplement Plan for 3-5 years or more without switching, it’s likely that you are overpaying big time.

 

You see, Medicare Supplement rates change from year to year. The one that was the best value last year may not be the best value now. In fact, they tend to creep—up and up and up.  And here’s why:

 

What Goes Up, Won’t Come Down

Medicare Supplement rates depend on total claim dollars the company pays out. Makes sense, right? The more money a company spends in claims, the more it needs to make, and the more it has to charge.

 

So as health care costs rise and policyholders make more expensive claims, premiums will slowly increase. And it doesn’t just stop. It continues to click upward, slow and steady, like a roller coaster.  Until—after a while—people unhitch their harnesses and exit in search of a more affordable plan.

 

But here’s the problem: the policyholders who leave aren’t the sick ones. Most of them wouldn’t be able to qualify for other insurance based on their health. No. The policyholders who leave are the healthy ones. The ones who balance out the budget, make fewer claims, and (ultimately) keep insurance companies in the black. This leaves an unhealthy pool of beneficiaries behind, the ones who need insurance the most and make the most (and the most expensive) claims.

 

So how does an insurance company cope? They let their premiums creep up even more, even faster. Click. Click. Click. But unlike a rollercoaster, the premium will never peak. It will never come back down.

 

Beat the Creep by Shopping Around!

But fortunately, most people don’t have to be stuck on that ever-climbing rollercoaster. Even if you have less-than-perfect health, you can shop around. As I said before—if you haven’t switched your Medicare Supplement Plan for 3-5 years or more, you’re probably paying too much! It’s time to switch.

 

Some More Good News

And this doesn’t mean you have to reduce your coverage either. You can get the exact same benefits for much less. Because of standardization, a plan F at one company is identical to a plan F at any other company. The same goes for all 11 Medicare Supplement Plans. So as long as the provider is decently rated (we usually recommend a B+ or above), you can go with the least expensive plan without sacrificing anything!

 

The bottom line is this: there’s really no reason to not take a look. We’ve had clients save hundreds a year by switching. So check the competition. Bargain hunt. Shop. You have nothing to lose, and a much lower premium to gain.

 

Need a quick way to compare Supplement prices? Use our Supplement Quoting tool to get you started. If you have any questions about what you find, call Seniormark at 937-492-8800. We’re here to help.

 

Resources

7 Reasons Why You Should Choose a Retirement Advisor (Instead of a Salesperson)

7 Reasons Why You Should Choose a Retirement Advisor (Instead of a Salesperson)

Are you turning 65 soon and thinking about retirement? Then buckle up. An onslaught of sales mail is coming your way. You might even get a few sales calls and knocks on your door as well. Salespeople are definitely assertive. And once you are between 3-6 months of your 65th birthday, hundreds of them will be vying for your attention, Medicare Advantage Plans and Supplement insurance extended in hand.

 

But I don’t think you should buy from them.

 

It’s not that I have a special vendetta against salespeople. You just have a better choice available: the reserved, resourceful guys on the fringes of the chaos, just waiting for you to come to them. That’s right, I recommend seeing a retirement advisor, and here’s why:

 

Advisors Have More Certification

I’m not saying there aren’t well-studied salespeople, but it isn’t the norm. An advisor, on the other hand, will almost always have some form of certification. They have to. Because they aren’t just sweet talking you into a healthcare plan, they are working with you to develop a comprehensive retirement strategy based on your unique situation. You need skill to do this. You need to know your industry backwards and forwards. This takes reading the right books and completing the right classes. It takes a certain level of certified expertise.

But be careful: Not all certifications are equal.  Here is a link to some of the most significant certifications.

 

They Specialize

Be leery of those who “specialize” in Medicare Supplements, Long-term care insurance, home and auto, life insurance, annuities, rollovers, and pet insurance. If their list is long and their Santa bag of products is larger, there is a good chance they’re the proverbial Jack-of-all trades who is—unfortunately—a master at none. Typically, an advisor isn’t like this. They will pick a few areas of finance or insurance and specialize. Their specialization leads to mastery. And their mastery leads to good advice and service.

 

They Are Accessible

They have an office space, so you know where to find them. They have office hours, so you know when they are available. When you call, they pick up. When you email, they respond. Predictability is the key. This is because their job isn’t just to sell (although they do this as well); it is to service their products afterwards. Claim issues? Questions? Concerns? An advisor sticks around long enough to tackle them.

 

They Educate You

The goal of an advisor is not to decide for you. It is to educate you, so you can make a decision for yourself. They will give you recommendations, of course. They aren’t just going to slap down 11 supplements, 24 drug plans, and several dozen Advantage Plans and say, “Choose!” But the point is, you make the choice to buy. You know the advantages and disadvantages of different options (because they taught you).  And you become the driving force of your own fate. So when plans go well, you don’t just have an advisor to thank; you can also thank yourself.

 

They Challenge You

Advisors aren’t just “yes men”. They are straight up with you. When you wander onto a questionable path, they care enough to stop you. I remember when a client of ours stormed in, fighting mad about the weak points of his employer plan. He wanted to get off it immediately and onto Medicare. But I knew this was an emotionally charged decision. Sometimes employer plans can be frustrating, but it was going to be way more expensive for him to get on Medicare. It took quite a bit of convincing, but I challenged him. It’s what an advisor does. Your first instincts are not always the best ones.

 

They Give You Time to Process

A lot of salespeople try to communicate something called “urgency”. This isn’t always a bad thing. Some situations are just urgent! For instance, I almost always recommend getting on Medicare when you are first eligible because not doing so can result in life long penalties. But a lot of this communicated “urgency” is just to rush you into buying a product. But advisors give you time to think things over. They realize that you want a methodical approach, a framework for weighing all your options.

 

They Are Client-Centered

 An advisor focuses on you, not the product. The whole process starts with an analysis of your situation and ends with your decision. Advisors advise people that buy products. Salesmen sell products that people buy.  This seems like splitting hairs, but listen to the people around you. Have you ever heard someone say, “Yeah, this guy came by my house and sold me this?” Notice the lack of agency. They didn’t buy it. Someone sold it to them. That is a sure sign of a product-centered approach: a sense of buyer’s guilt and a subtle, underlying regret.

 

Before I end this post, I want to make something very clear. I am not saying that salesmen are bad people. And I am not saying that all advisors are these haloed angels in disguise. But I know what it is like to be on both sides. I’ve worked for a large brokerage firm, a large insurance company, and a large bank. And in all 3, I had the same problem: I felt bound by the ever-present pressure of sales quotas. I tried to advise and do what was best for the client, but—for all intents and purposes—I was a salesperson. My job was to sell products that people buy.

 

Now that I’ve switched sides, I will never go back. The advising side is just better. It is better for clients. And it’s better for everyone, really.

 

But enough about me. Now back to you. You are approaching retirement, readying yourself to leave that stressful job behind and explore new hobbies, new places, and new experiences. Or maybe you just want to stay local and spend more time with family.

But whatever your situation, I want to make a suggestion. As an advisor, I want to advise. Whoever you choose to help you with retirement, makes sure it is someone you can absolutely trust. Makes sure it is a person who is knowledgeable in the area you need the most help. And make sure they aren’t just there to sell products to people, but rather to invest in people who buy products.

 

Your retirement decisions are just that important.

 

If you are confused and interested in some Medicare planning help, click here to sign up for our free workshop! No high-pressure sales pitches here, just in-depth discussion and Q and A about Medicare.

 

Do You Know How Much Money Your 401(k) Could Lose This Year?

Do You Know How Much Money Your 401(k) Could Lose This Year?

In other words, I’m asking, “Do you know your risk?”

 

But I didn’t ask it that way because I know that, for a lot of people, risk is this abstract, distant, otherworldly life force. They know it has an effect on their portfolio, but not to what extent or—in all reality—how.

 

Tell me if this scenario resonates with you.

You are stuffed in a room with 100 or so of your coworkers of all ages. A well-dressed financial rep enters the room. He’s here to talk about your 401(k).

 

Speaking in generalities, he outlines 5 different portfolios from conservative to aggressive: “If you’re a riskier person, you might want to go with the more aggressive portfolio. If you’re more careful or getting ready to retire, you might want to go with one of these more conservative ones.”

 

After a good amount of explanation, he asks you to choose. So you do…kind of haphazardly. You pick one that you think matches your risk tolerance, or maybe you pick one considered to be “middle of the road”. You’re not sure what you got yourself into, but…hey…how bad can it possibly be?

 

Of course, this scenario plays out in a lot of different ways. But, from my 19 years of experience, it’s typical. The only problem is, it doesn’t reveal what’s really important to you: how much money you could lose or gain. You don’t really understand. You just choose, and risk remains some abstract, otherworldly concept.

 

So let’s get it back into orbit. In fact, let’s land it right in your neighborhood with some meat and bones substance. Do you remember which of those 5 portfolios you chose?

Well…here they are, demystified, showing you in-the-ballpark figures for how much you could stand to lose and gain in a given year:

  • Conservative (33 risk score): -10% or +20%
  • Moderately Conservative (47 risk score): -18% or +32%
  • Moderate (59 risk score): -24% or +40%
  • Moderately Aggressive (68 risk score): -28% or +46%
  • Aggressive (72 risk score): -32% or + 48%

Note: Risk Scores are based on a scale of 1-100 with 100 being the most aggressive.

 

They might have slight variance in risk scores, percentages, and names from company to company. Your particular portfolio may be a bit different, but this is the typical landscape of the 401(k) options offered to you.

 

This means that—with a $100,000 401(k)—you could stand to lose $32,000 with the aggressive option, $24,000 with the moderate option, and $10,000 with the conservative. All in one year.

 

In light of what you chose, how does that make you feel?

If you are comfortable with the loss and gain, you made a good choice. If you’re scared, you didn’t, and you need someone to make adjustments so your portfolio matches your risk tolerance. Simple, right?

 

You have just experienced a wonderful taste of a personalized risk analysis.

This is what I do with my clients. I sit them down. I analyze their portfolio. I tell them what percentage they could lose or gain in a year.  And then I ask a very important, very telling question: “If you were to lose (insert dollar amount of potential loss here), would you be comfortable with that?”

 

They have one of three reactions:

  1. “Oh no, that’s way too much.”
  2. “Yes, I’m comfortable with that.”
  3. “Yes, and I would be comfortable with more loss if it means more gain.”

 

In my practice, working mostly with soon-to-be retirees, I usually get the first reaction the most. And for good reason too! People who will be retiring soon should have a conservative portfolio. They shouldn’t invest aggressively like a 25 year-old because they just don’t have the time to make up for losses.

 

But if they never check the risk of their portfolio, they will never make those necessary adjustments.  And when the economy takes a turn for the worse (eventually it will), they could lose one-third of their money when they need it most. They might even make a fear-based decision to pull their money out, locking them into those losses for good.

 

I don’t usually show so much urgency, but I know how important it is. I’m not going to knock down your door, but I will implore you now.

 

Don’t let this be you.

 

Need a personalized risk analysis at no cost to you? Call Seniormark at 937-492-8800 for a free consultation.

 

Wondering what to do with your 401(k) after you retire?  Consider attending our 401(k) workshop offering, designed to help you answer your most pressing questions. There are no high-pressure sales attempts here, just an in-depth and informative discussion about your options. Click here to discover more. 

 

5 Strategies to Get the Most Benefits Out of Your Social Security

5 Strategies to Get the Most Benefits Out of Your Social Security

It’s human nature to want to get the most out of everything. That’s why “stretching your dollar” appeals work so well.  It’s also why people spend 15 minutes scrounging that last bit of toothpaste from the tube (you know you’ve done it).

 

As you are approaching retirement, you’ll want to do the same thing with your Social Security.

 

Of course, there are a lot of strategies to consider, and this list definitely won’t be exhaustive (unless you want a Encyclopedia Britannica-length blog post). But if you have just started thinking about Social Security and how you’re going to squeeze those last few dollar signs out of the tube…this is a good place start.

 

Boost Benefits While Your Income Has Peaked

Social Security bases your benefits on your income over 35 years. They pick your highest income years and do some mind-bending, brain-busting, soul-sucking math equations and bam! Out pops your PIA, which is your monthly Social Security Check. Here’s the moral of the story: higher average earnings over 35 years= higher PIA= more money in your Social Security check every month.

 

I take it you are earning more now than you did when you were 30? So what would happen if you would work a few extra years, making your peak income? Those lower income years (when you were just scraping by) could drop out of the equation, leading to a better Social Security check. According to Elaine Floyd, a Certified Financial Planner from Savvy Social Security Planning, waiting to retire until 70 as opposed to 62 will you earn you an extra $31,000 in increased Social Security benefits. It’s not a lot, but taken along with an extra eight years of fat income, it might very well be worth the extra work. Or—as Floyd put it—the extra $31,000 is like “icing on the cake.”

 

Maximize Your Money By Delaying Benefits

Good things come to those who wait. Delaying benefits until 70, 67, or even 65 can be difficult. It will take a strong financial situation, strong health, and a strong will. But your patience will be worth it in the end.

 

In fact, your benefit payment goes up by 8% for every year after full retirement age that you delay. That’s a lot of cash. So unless you can’t afford to wait or you have a low life expectancy, I recommend waiting.

 

Take Advantage of Spousal Benefits

Spousal benefits are 50% of the other spouse’s PIA (monthly Social Security check). For couples where one spouse is obviously the “breadwinner” of the two, this is especially beneficial to know. Because—a lot of times—half of the higher income earner’s Social Security check is way more than the full amount of the lower income earning spouse. And you can’t take both. But keep in mind, in order to claim spousal benefits, you have to have been legally married for at least one year and be at least 62. It’s also important to note that both the husband and wife cannot claim spousal benefits at the same time, and—it almost goes without saying—they stop when you are no longer married.

 

Collect Benefits From a Divorced Spouse

You may never want to see them again, but you may want to see their money. Don’t worry…this isn’t stealing! It won’t affect their benefits at all. It works exactly like spousal benefits. You get 50% of what your ex-wife or husband gets in their Social Security check. The only key here is that you have to have been married for 10 years and not be remarried.

 

Collect Survivor Benefits

If your spouse has passed on, you can collect his or her benefits on their behalf. You will have to forfeit your own check, but a lot of times your husband or wife’s check is better anyways.

So there you have it—5 ways to maximize your social security. But it is important to realize: Social Security (like all things involved with the government) is very complicated. It takes a person with a lot of expertise to help you get the most out of your social security, just like it takes a person with a lot of muscle to work out that last bit of toothpaste.

Wondering when you should start Social Security benefits? Have Social Security questions that need answered? Discover more about our free Social Security workshop designed to help you answer your most pressing questions.

The #1 Reason Why You Should Enroll in Medicare Part A

The #1 Reason Why You Should Enroll in Medicare Part A

(Even If You’re Still Working)

Whether or not you should sign up for Part B while still actively employed is a little more questionable. I mean, why pay that $134 a month premium if you’re employer plan is doing a fine job at a cheaper price. But Part A is not like that. There are basically no downsides to enrolling once you’ve turned 65. Why, you ask?

Because It’s Free!

Of course, that is neglecting the fact that you’ve paid into social security for about 40 years and—therefore—have earned it. But—wherever you stand on the proverbial “free lunch” debate— this does not change the fact that Medicare Part A has no associated premium. If you are approaching 65 and have paid into Social Security for at least 10 years, there is no reason to delay.

There is only one reason why you would want to opt out of Part A…

Health Savings Accounts

If your have an HSA and wish to continue contributing to it, you may want to delay Part A. Of course, you can still have an HSA. And you can still use it to pay medical expenses. But you cannot put any money into it after you enroll in Medicare. There are some people who do, of course—whether unknowingly or purposefully—but this is not a wise choice. If the IRS audits you, you will be subject to a stiff penalty. According to IRS publication 969, the penalty is 6% of your contribution and its interest until you remove the funds from your HSA.

But other than that, you should definitely enroll in Part A if you are approaching 65. All those years of the government dipping into your earnings have paid off—if only in a small way. There may not be such a thing as a “free lunch”, but there is such a thing as taking advantage of what you’ve so rightfully earned.

We know. Medicare is confusing. Still have questions?  Just contact Seniormark at 937-492-8800 for a free consultation, or sign up for our next workshop!

 

 

3 Reasons Why Most Retirees Should Rollover Their 401(k)

3 Reasons Why Most Retirees Should Rollover Their 401(k)

I’m not saying there aren’t legitimate reasons to keep your 401(k) at your employer, but those reasons are typically unimpressive or only apply to a small percentage of people.

 

For instance, a 401(k) plan will allow you to make penalty-free withdrawals after you turn 55. An IRA will make you wait until 59 ½ to make penalty-free withdrawals. This might be something to consider, but only if you plan on cashing out that early. If you aren’t retiring within that time frame, you probably aren’t.

 

In my experience, I’ve found that rolling over your 401(k) to an Individual Retirement Account (IRA) is still the best option, and here’s why.

 

1. You Are in Control

When you leave your 401(k) with your employer, it is tied to that employer. Although this doesn’t mean you will lose your money if your employer goes under (that would be rare and virtually unheard of), but it could very well limit your access to your funds.

 

I used to believe this was a nearly impossible rarity as well, but I’ve changed my mind. Within just a 6 month period, I had two clients call in, wanting to roll over their 401(k). They heard that their previous employer was going under, and they wanted to cut ties as soon as possible. We set to work right away, but by the time the paperwork was filed, it was too late. Their 401(k) was frozen. They couldn’t move it. They couldn’t withdraw from it. They couldn’t touch it. And this didn’t just last for a couple weeks, it lasted a year or more for both of them.

 

Not only was this inconvenient and frustrating (it was their money, after all), but it can also be detrimental. What if it was an emergency, and they really needed that money to make ends meet? You save money in a 401(k) so that income will be there for you when you need it in retirement. When it is deemed unavailable by no fault of your own, it can be quite irritating.

 

With an IRA, instances like this won’t happen. Rolling over your 401(k) gives you the control. The money is in your hands, secure and swaddled in your arms.

 

2. You are Free

Keeping money with an employer narrows your investment options. You can only pick from the investments your company has deemed “good” for most employees.

 

Of course, this is not always a bad thing. It is kind of nice that someone is taking the time to explore the breadth of investment options to choose the ones that are in the best interest of the majority. And if you are happy with your portfolio, you may not feel inclined to roll it over—that’s completely fine.

 

But here’s the thing: what is in the best interest of the majority is not always the best interest of the individual. It is always a compromise.

 

An IRA, on the other hand, offers you any and all investments opportunities available—stocks, bonds, mutual funds, real estate. If you can name it, you have access to it. This gives you the freedom you need to develop a killer portfolio.

 

3. You Have Someone to Help You

This is not to say that you don’t have anyone to help you with a 401(k) plan, but the help usually isn’t as individualized.

 

If you worked at a larger company or corporation, you know what this kind of help looks like. Once a year, everyone gathers in the break room or a conference room, and a financial representative comes in to talk about 401(k) plans. No one talks to you about your specific situation. They speak mostly in generalities: “if you’re older you might want to do this. If you’re younger, you might want to do this.” Everyone in the room—whether they are 20 or 60—is getting the same spiel.  They don’t sit down with you one-on-one, and they probably aren’t qualified to do so.

 

But with an IRA, you can hire a financial advisor to manage your portfolio. They take an individualized approach and ensure that your investments are set to meet your goals and match your specific risk tolerance.

There are some management fees associated with doing this, so I guess that is one weakness in choosing to rollover your 401(k). But I have discovered over and over again that you get what you pay for. Your retirement income is precious; you should put it in good hands.

 

Looking for a Certified Financial Planner who can help you roll over your 401(k)? Call Seniormark at 937-492-8800 for a free consultation! We specialize in the transition to retirement.

 

Contact Us Today

A Side-by-Side Comparison of Medicare Advantage and Medicare Supplements

A Side-by-Side Comparison of Medicare Advantage and Medicare Supplements

When it comes to Medicare, you only have two big options. That’s it.

The piles of mail you’ve been receiving from various agents as you approach 65 do not represent hundreds of choices. There are only 2 ways to get your Medicare coverage.

First, I hope you have already signed up for Medicare (If not, hop on over to our blog titled “What Is the Fastest Way to Sign Up For Medicare? to take care of that, then come back and read the rest of this!).

The first way is just to stick with original Medicare—Parts A and B. Then you need what is known as Medicare Supplement Insurance, named as such because it “supplements” Medicare, filling in the gaps of what Medicare doesn’t cover.

The other option, however, is to get a Medicare Advantage Plan. This is an alternative to Original Medicare provided through private insurance companies that have contracted with Medicare. Although you still have to sign up for Parts A and B to be eligible, this replaces Medicare as the primary payer of your claims.

Choosing one or the other comes down to what’s most important to you. You can’t have both! What I am going to do is hold both of these options up to the light, side-by-side, so you can see clearly the strengths and weaknesses of each.

Check it out:

Medicare Supplement

 

PROS  

  1. Minimal Out-of-Pocket Spending

You won’t have much coinsurance or copays with a Supplement. Most of it is covered.

 

  1. Predictability

They are also fairly consistent from year to year. They do creep up in premium (see our blog “Beat the Medicare Supplement Creep”, but they rarely leap! The benefits are guaranteed to stay the same.

 

  1. Out-of-State Coverage

Supplements cover you the same whether you are in your home state or out. Vacation homes? Extensive trips? No big deal. You’re covered.

 

  1. No Networks

You are free to use any doctor or hospital that accepts Medicare without sacrificing your coverage.

 

 

CONS

  1. Higher Premium

An in-the-ballpark average Supplement price is about $110 per month premium. This is higher than most Advantage Plans.

 

  1. No Drug Plan

Drug plans are not built in. You have to get a stand-alone drug plan, which cost an average of $34.10 per month in 2016.

 

Medicare Advantage

 

CONS

  1. High Out-of-Pocket Spending

Advantage plans have more of a pay-as-you-go approach. Higher copays, coinsurance, and unexpected costs are common.

 

  1. Unpredictability

Since Advantage plans are funded by government subsidy, benefits and premium costs tend to vary from year to year as a result.

 

 

 

 

  1. Out-of-State Coverage…Sometimes

Only in the case of emergency will you receive coverage out of your home state. Other than that, you’re on your own.

 

  1. Networks

They have them…networks of preferred hospitals and doctors. If you don’t use those preferred providers, you might have less coverage or—depending on the plan—no coverage at all.

 

PROS

  1. Low to No Premium

The average premium is somewhere around 60 dollars a month. Some are even free!

 

  1. Built-in Drug Plan

The vast majority of Advantage plans include a drug plan. No hassle or extra premium for you!

As you can see, the Medicare Supplement route is more costly, but there are a lot of benefits that give you more peace of mind and—all in all—less hassle.

On the other hand, the Medicare Advantage route is more economic, but it has fewer benefits, leading to unexpected costs and stress.

But both do their jobs. They both limit the potentially high out-of-pocket spending that is left by Medicare alone. Whatever you choose, don’t leave yourself vulnerable. Medicare alone is never a good idea!

Turning 65 soon and not sure what to do? Click here to sign up for our free Medicare workshop. No high-pressure sales pitches here, just in-depth discussion about the ins and outs of Medicare!

Workshops

10 Medicare Terms To Get You Started

10 Medicare Terms To Get You Started

If you’ve ever done research in your life, you know that knowledgeable people sometimes overdo it. They use words that only other life-long Medicare experts would know.

 

And when you ask them to explain, what do they do? Use even bigger and scarier words to describe the ones you didn’t understand in the first place. Our philosophy: Never use a big word, when a singularly un-loquacious and diminutive linguistic expression will do the trick.

 

Over our 19 years of helping retirees, it has served us well. Now we are here to pass our knowledge onto you in words you understand. To get started, here are 10 commonly used terms:

1. Medicare

At the top of the list, I like to kick-it-off with the basics. Medicare is a government-run health care program for those over 65. It is also for younger people with disabilities or kidney failure, but its primary concern is to serve the older generation.

2. Medicaid

This is often confused with Medicare, but they are completely different programs. Although they both serve the same purpose (to provide health insurance), Medicaid is for people with low income. There is a chance that you might be eligible for both programs at the same time.

3. Medicare Beneficiary

This is you. Or if you haven’t signed up yet, it will be you very soon. A Medicare beneficiary is a person enrolled in Medicare, receiving Medicare benefits.

4. Initial Enrollment Period (IEP)

The IEP is made up of 3 parts: the 3 months before you turn 65, your 65th birthday month, and the 3 months after. This 7-month window is the time that most people should sign up for Medicare. If you miss your IEP, it could lead to costly penalties. So pay attention. Like all time, those 7 months will fly by!

5. Part A

Medicare is divided up into 4 parts (A, B, C, and D). And Part A is your inpatient care. It includes nursing care, hospice, and some home health services. But—for the most part—it is coverage for when you are officially checked-in at a hospital.

6. Part B

Part B is exactly the opposite of Part A. It is your outpatient care, including lab tests, medically necessary supplies, and various screenings. To keep simple, Part B is care received while checked-out of the hospital.

7. Original (Traditional) Medicare

This one is simple. Whenever someone refers to original (or traditional) Medicare, they are referring to Parts A and B together.

8. Part C (Medicare Advantage)

Medicare Advantage is an alternative to original Medicare offered through private insurance companies that have contracted with Medicare. In other words, they replace Medicare as your health insurance provider. About 1 in 4 people choose Medicare Advantage, according to the Reader’s Digest. To find out the advantages and disadvantages of Part C, click here.

NOTE: You still have to sign up for Parts A and B to be eligible for Part C.

9. Part D

Part D is your drug plan. It covers your prescription medications. Also offered through private insurance companies, almost everyone signs up for Part D in addition to original Medicare (Parts A and B).

10. Medicare Supplement Insurance

A supplement is fondly nicknamed a “Medigap plan.” It is referred to this way because it “fills in the gaps” of what Medicare Parts A and B doesn’t cover on its own. Without it, you leave yourself quite vulnerable. There is no limit to what you could spend in uncovered health care costs!

That should be enough to get you started on this often-overwhelming journey of Medicare planning. As you continue to learn more and plan your retirement, we are committed to keeping you up-to date and informed…in words you can understand. How did we do? Leave us a comment below to pose any questions or concerns!

 

Turning 65 soon and confused about Medicare? Click here to sign up for our free Medicare workshop. No high-pressure sales pitches here, just in-depth discussion about the ins and outs of Medicare! We put it into words you can understand.

 

Workshops