Category: Retirement Planning

10 Terms to Beef Up Your Medicare Literacy

10 Terms to Beef Up Your Medicare Literacy

In this day and age, you have a vast pool of knowledge available to you. But none of that matters if you can’t understand any of it. If you’ve done any researching on the Internet about Medicare, you know what I mean. To help you out, I compiled a list of important terms that often catch retirees unaware.

 

  1. Annual Enrollment Period (AEP)

The AEP is the busy time of year for Insurance companies such as ours. You can think of it as the black Friday of Medicare. It is the time of year (October 15—December 7) when Medicare beneficiaries can switch plans, drop plans, and join new ones. It is an open market, a bustling time for anyone involved with the Medicare industry.

 

  1. Open Enrollment Period

The day you turn 65 and are signed up for Medicare Part B is the first day of your open enrollment. This 6-month long time frame is the window in which you can get on ANY Medicare Supplement plan, regardless of health! You will want to take advantage of this…your options narrow significantly outside of open enrollment.

 

  1. Deductible

A deductible is the money you have to pay upfront before the benefits of a plan begin. For example, Part A of Medicare has a $1340 deductible. They will not cover anything until you reach it.

 

  1. Copayments

Copays are a set dollar amount you pay in addition to the payment made by the insurer (whether it be Medicare or a private insurance company). Think of the $10-50 fees when you visit the doctor’s office or buy a certain prescription drug.

 

  1. Coinsurance

This is very similar to copayments, but it is a set percentage instead of a dollar amount. For example, the Medicare Part B coinsurance is 20%. This means you pay 20% of the total bill, not a set dollar amount.

 

  1. Out-of-pocket Costs

All three of the previous terms (deductibles, copays, and coinsurance) are all a part of a much larger concept of out-of-pocket costs. In other words, your out-of-pocket costs are everything you pay for your healthcare beyond your premium. One warning you will receive a lot is this: With only traditional Medicare (parts A and B), there is no limit to your out-of-pocket spending. Yes, I am low-key warning you again, but hopefully you fully understand it now.

 

  1. Donut Hole

Speaking of out-of-pocket costs, for a Part D drug plan, they are highest in the donut hole, a gap in prescription drug coverage. You enter the donut hole when you reach $3750 in total costs and exit it once you reach $5000 in out-of-pocket costs.

 

  1. Drug Tiers

Drug plan companies often organize the medications they cover into levels. They call these levels—you guessed it—tiers. Drugs on a lower tier (often generic brands) have lower copays and coinsurance. Drug on a higher tier (such as brand name or specialty drugs) often have higher associated costs.

 

  1. PPO

PPO stands for Preferred Provider Organization. So a PPO is a health plan that has a network of “preferred” doctors and hospitals. If you use those doctors and hospitals, they reward you will lower out-of-pocket costs.

 

  1. HMO

HMOs (Health Maintenance Plans) are a little bit more intense than PPOs. It is the same idea, but HMO plans won’t cover you at all if you don’t use their network of hospitals and doctors.

 

That brings this list to close. If you are still confused about a term on this list, ask us for help in the comments section. Have you come across another difficult word on your Medicare planning journey that you think we should add? Let us know. We want to hear from you!

 

Annual Enrollment is the only time of year you can switch your Medicare Advantage Plan or Part D Drug Plan! Looking to review your plans with a Certified Senior Advisor this open enrollment season? Call Seniormark at 937-492-8800 or click here to set up a free consultation.

Think Poor Health Will Stop You From Getting Medicare Supplement Insurance? Think Again.

Think Poor Health Will Stop You From Getting Medicare Supplement Insurance? Think Again.

Insurance companies can’t refuse you coverage for having cancer or being on an expensive chemo-treatment. They can’t deny you a policy for having diabetes or (Burger King-induced) sky-scraping cholesterol or any other pre-existing condition for that matter. These companies are federally mandated to grant you coverage as long as you enroll within the Medicare Supplement Open Enrollment Period. This is good news for you!

 

The Open Enrollment Period

The Medicare Supplement Open Enrollment Period is a 6-month window beginning the day you both turn 65 and are enrolled in Part B of Medicare. During this time frame, you have all the privileges of someone who doesn’t have poor health, including:

  • Access to all 11 Supplement plans (A, B, C, D, F, HDF, G, K, L, M, and N)
  • No premium hikes due to health conditions
  • No medical underwriting

 

You’ve Got Another Shot.

And then there’s guaranteed issue. Although this is based on very specific circumstances (such as coming off of employer insurance or your current plan discontinuing service), it still offers many people with pre-existing conditions another shot at getting on a plan. It is important to note, though, that some plans may not be available under guaranteed issue. It isn’t an all-access pass like the Open Enrollment Period, but it does give you the assurance to know you will not be denied.

 

 

It’s Not the End of the World!

But don’t sweat if you are no longer within the Open Enrollment Period. This definitely does not mean you won’t be able to get Medicare Supplement Insurance. It just means you will have to answer questions about your health, where they might look at your whopper addiction with a more critical eye.  You may have to pay more, but (depending on your specific conditions) they won’t automatically deny you coverage.

 

Of course, this doesn’t mean that there aren’t still circumstances where you will be unable to receive coverage. But—because of open enrollment and guaranteed issue—this doesn’t happen nearly as much. The government is making strides to ensure that health coverage is available to those who need it most: those who are unhealthy.

 

Need help picking out one of the 11 Medicare Supplement Plans? Want somewhere to start? Call Seniormark at 937-492-8800 or click here to set up a free consultation.

4 People You Need to See Before Retiring

4 People You Need to See Before Retiring

Retirement is an exciting transition, of course, but it is also a nerve-racking one. Information is flooding your inbox and mail, and weighty decisions are heaping on your fatigued shoulders.

 

But think back to previous life transitions: from elementary to high school and from high school (or college) to the workplace. These transitions were stressful as well.  But what made them manageable were the people.

 

The transition to retirement is no different. You need people to assist and advise you throughout this complex process. The following people may not be as involved as a personal mentor or teacher, but they can and will serve as guideposts throughout your journey.

 

A Social Security Office Representative

So…not exactly your BFF. I realize that. But this person has one vital piece of information to give you: your social security statement. This document details how much monthly benefit you qualify for from the federal government. It contains information you need to consider when planning for retirement. If you already have this filed away, then great! You can move on to guidepost #2.

 

Employer and/or Human Resource Department Employee

Depending on the size of your employer, you may not be very chummy with these people either, but hear me out because some employers provide retiree benefits such as health care or a pension. You need to find out more about these benefits (if they exist) in order to effectively plan for retirement. One important question to ask is how the benefits will interact with Medicare. For example, in the case of health insurance, who pays first—the employer or Medicare?

 

Your Doctor

I hope we’re getting a little bit closer to the heart! No? Well here’s the value: you may already have an idea of your overall health and prescription drugs, but if you don’t, your doctor will explain it thoroughly. This information comes in handy throughout the Medicare planning process, especially when shopping for a Part D prescription drug plan.

 

A Retirement Advisor

If this guy or gal is not your friend beforehand, there is a good chance he will be after all of this is over. A retirement advisor is a person who puts all of the pieces together.  He takes the information you gathered from the other 3 people and uses it to develop a retirement plan tailored to your unique needs. This covers planning for expenses (medical and otherwise), social security benefits, and Medicare planning.

 

As a bonus, the last people I would tell you to visit are your friends and family. Although I wouldn’t necessarily trust them with shopping your drug plan or determining your social security benefits, they are wonderful moral support as you approach this overwhelming milestone. So visit your kids, your grandkids, your siblings, and your lifelong friends. Nothing relieves stress more than knowing you don’t have to handle it all alone.

 

Looking for a retirement advisor ready to help you transition from work to play? Call Seniormark at 937-492-8800 for personal help at no cost to you!

 

The Diversification Misconception: Why All Your Eggs May Still Be in One Basket

The Diversification Misconception: Why All Your Eggs May Still Be in One Basket

The adage is almost older than investing itself: Don’t put all your eggs in one basket. In other words, diversify your portfolio so that—if a particular investment tanks—you haven’t lost all your money.

 

So you set off to work, scattering your wealth in various locations over time. $10,000 in a Vangard mutual fund, $25,000 in U.S. Bank, 15,000 in randomly selected stocks. Here a little; there a little.

 

Sounds simple, right? The only problem is that this isn’t diversification. Sure, it is better than betting your entire life savings on a Kraft Mac and Cheese stock.  And it may protect you against any one company going under. But—in almost every other respect—this investment strategy doesn’t leave you any better off than a one-basketeer. Why?

 

Because asset classes are the ticket!

Diversification is not about the variety of companies, but rather the variety of asset classes you invest in. Maybe you’ve heard some of them thrown around at dinner parties as wealthy investors brag about their business ventures: fixed income, large cap growth, international, global, etc.

 

But what is an asset class? In short, it is just a categorization of investments, but this definition doesn’t tell the whole story. An asset class, rather, is a category of investments with comparable characteristics that tend to behave similarly in the marketplace. If one goes up in value, it is likely that the others have gone up as well (at least to some degree). And when one plummets, check the others; they probably aren’t doing so hot either.

 

This means that if you have all of your money invested in one asset class, your portfolio is not diversified. If that one asset class does poorly (since all investments within the category behave similarly), your entire portfolio will suffer.

 

But you can’t stop there!

Haphazardly choosing various asset classes will put you far above those who are randomly selecting investments, but you must go further to truly diversify your portfolio.

 

It’s not just about a variety of asset classes; it is about the right variety of asset classes. Some asset classes behave very similarly to other asset classes. These pairs are considered positively correlated. The general rule is this: you don’t want pairs of investments that are positively correlated. In fact, negatively correlated asset classes are the best. Following this rule puts you in a strong position as an investor. Your investments won’t all go up and down at the same time.

 

 

Allow me to give you an example to illustrate this concept.

Imagine a friend of yours just caught a big break at work. His salary just doubled. Since he doesn’t know what to do with this expendable income, he decides to invest. The first thing he purchases is 100 shares of umbrella stock (the umbrella industry is rockin’). Then—to diversify his portfolio—he also buys 75 shares of stock in a poncho company. He’s in the clear, he thinks, but just to be sure, he goes online and buys 90 shares of stock in a company that sells rain boots.

 

How do you think he’s doing?

Yeah. It’s a disaster. In fact, his miniature portfolio is so imbalanced and hopelessly one-basket-ed that you internally cringe by his second purchase. You don’t need to know much about investing to know that his stocks are positively correlated. They will behave the same way! When it’s dry weather, they will all crash and burn. When it’s wet, they will likely do well.

 

What your friend should have done is invest in a sunscreen company to offset his investments in the umbrella company. In a basic sense, this is diversification.

 

Now, this is definitely an oversimplified example. Anyone can see it from a mile away. But people are doing this in the real world, with real money. Not because they are dumb, but because—in reality—correlations aren’t nearly as obvious.

 

In my practice, I’ve seen it all too many times. People come in for a financial consultation, thinking they have a diversified portfolio, and I find that 70% of their investments are in a single asset class. And this isn’t even taking into account the correlations!

 

Needless to say, it’s a scary situation. No one knows how well a particular investment is going to do from year to year. And no one knows how a particular asset class will do either. The only thing we can do is develop a well-balanced, well-rounded, well-diversified portfolio to smooth out the ups and downs, and then watch the money grow over time. It’s the time-tested, statistically- verified choice.

 

But as long as investors believe the misconceptions, thinking that their portfolio is diversified, they will never change the reality that their eggs are still—in fact—all in one basket.

 

Concerned that your portfolio isn’t diversified? Call Seniormark at 937-492-8800 for a free consultation with a Certified Financial Planner!

 

2018 Medicare Parts A & B Premiums and Deductibles Announced

2018 Medicare Parts A & B Premiums and Deductibles Announced

 

Yesterday, the Centers for Medicare and Medicaid Services (CMS) released the 2018 premiums for the Medicare inpatient hospital (Part A) and physician and outpatient hospital services (Part B) programs.

For 2018, the Part B premium will be $134 for those new to Medicare.  For those already on Medicare, their premium will be between $108-$134, depending on the amount of their social security cost of living increase.  The Part B deductible will remain the same ($183). There are some changes to the numbers which are listed below, but if you have a Medicare supplement policy, it will take care of some, if not all, of these expenses.
2017                     2018
Part B Premium                                              $109.00                $134.00
Part B Deductible                                           $183                     $183
Part A Hospital Deductible                             $1316                   $1340
Part A Hospital Coinsurance Days 61-90        $329/day          $335/day
Part A Hospital Coinsurance Lifetime Reserve Days
$658/day          $670/day
Skilled Nursing Coinsurance Days 21-100
$164.50/day      $167.50/day

For more information on the 2018 Medicare Parts A and B premiums and deductibles, please contact our office at 937-492-8800.

Aren’t All Medicare Supplements the Same?

Aren’t All Medicare Supplements the Same?

Yes.

Well…no.

Well— it’s at this point that I realize cut and dry answers don’t get along very well with Medicare. Or the federal government. Or really anything related to government for that matter.  And I am forced to give you the incredibly vague answer that sometimes isn’t an answer at all: yes and no. Allow me to expound.

 

Yes, they are all the same because…

 

Medicare Supplements Are Now Standardized.

Starting in 1992, the federal government came out with 11 plans labeled A through L, each with their own distinct coverage level and associated benefits. These 11 plans are identical no matter where you purchase them, which means that Plan F is still Plan F (offering the same coverage) whether you buy from AARP or Aetna or any other company.

 

However, just because the plans are standardized, that does NOT mean the prices are!

 

Which brings me to the inevitable…

No, they aren’t all the same because…

 

Prices Can Vary Dramatically—

As much as $100 a month.

And for the exact same benefits! Here’s an example. Let’s say you are a 65-year-old male from Sidney, Ohio who doesn’t use tobacco. If you purchased Plan F Supplement insurance from Banker’s Fidelity Life, it would cost $152.06 a month. However, if you purchased Plan F from Physicians Mutual Insurance, you would pay $294.33 a month. This is like having the option of identical minivans. Same make and model. Same gas mileage. Same features. Except one is almost twice as much. The choice is a no-brainer, right?  (Prices are current as of November, 2017).

 

 Now it’s time for something definite:

 

You should ALWAYS go to a trusted Independent Advisor (see my blog for reasons why here) for help.

 

They will get you into a plan that is right for you. Since they are independent, they are free to shop with a lot of companies to find the plan with the best benefits for the lowest cost.

 

Ahhh…the best value.

Now that is cut and dry.

 

Still have questions?  Sign up for our next workshop here:  workshop signup.

 

If you need help shopping for a Medicare Supplement plan, call us at 937-492-8800  for a free consultation!

 

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.

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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.