Category: Retirement Planning

Will You Outlive Your Nest Egg in Retirement?

Will You Outlive Your Nest Egg in Retirement?

If this question is on the forefront of your mind as you approach retirement, you are not alone. According to recent studies, this is the primary concern of soon-to-be retirees just like you:

  • 43% of workers fifty or older say that outliving their money is their most significant retirement-related fear.
  • 57% of financial planners state that running out of money is their clients’ most pressing retirement concern.
  • 60% of older Americans fear outliving their savings more than death itself.

 

Truly, these figures speak to sleepless nights and anxiety of many older Americans, especially considering that many are less afraid of the grim reaper than an empty pocketbook.

 

But before you jump on the bandwagon of restless worry, I think it is important to step back and consider whether your fears are founded at all. Although there is definitely reason to believe that many Americans are financially unprepared for retirement, this doesn’t mean that you are. In fact, most of the clients I work with at my offices in Sidney and Troy have saved enough for a modest or beyond modest standard of living in retirement.

 

So, how do you find out? I have two words for you: income planning. In order to help ensure that you have enough money to last your entire life expectancy, you must analyze your situation and put an adaptable plan in place.

 

Although income planning is often a confusing and overwhelming process in all of the details, at its core, it is really only a few simple steps. Here is a rough sketch of what the income planning process looks like to get you thinking in the right direction:

 

  1. Check Your Income Sources

Almost everyone has steady sources of income that form the foundation of any good income plan. Start by figuring your Social Security benefit, and then add in your pension or income from rental properties (if you are lucky enough to have either of these). The key here is to add up any and all sources of reliable cash flow, perhaps even cash flow from part-time work in retirement (yes, I realize that seems crazy, but many retirees are choosing to work).

 

  1. Analyze Your Other Savings and Retirement Accounts

This includes investments and savings accounts as well as any qualified retirement account such as an IRA or 401(k). The idea is to calculate any lump sum amounts you will draw from to supplement your income sources. Once you’ve completed this step, you are ready to move on to the next (less enjoyable) step.

 

  1. Calculate Your Expenses

What I am talking about here is your basic expenses. This doesn’t include travel or big-ticket purchases such as boats or snowbird homes. This is about monthly necessities like food, water, shelter, car payments, mortgage payments, and the like. Start with what your bills are now, and then compare that to retirement. Will you have a car payment well into your retirement, or will you pay that off soon? What about your mortgage? How will your healthcare expenses change? For almost all retiring 65 and over, this means considering how much Medicare will cost them (read this blog to see) as opposed to their private insurance or employer plan.

 

  1. Run The Calculation

This step involves plugging all of those numbers into a system, either a homemade excel spreadsheet or an online program. This will help you figure out the chances of you making it your entire life expectancy without running out of money. With our clients, we use Money Guide Pro. This system runs a thousand different scenarios, calculating probabilities on various unknowns. It enables us to consider a wide variety of factors such as inflation, taxes, or potential dips or spikes in your investment portfolio that are difficult to calculate by hand.

 

  1. Add in Fun Extras

This is where it can get fun. If your chances of success are very high, you can add other “extra” expenses into your plan. Perhaps you want to go on a $5,000 trip every year to an exotic location. Perhaps you want to give back to your community so much every month. Whatever your dreams and goals are, you can add these in and rerun the calculation. You can continue to do this as long as your chances of success remain in a comfortable range!

 

Want Someone to Crunch The Numbers for You?

At Seniormark, we realize that income planning is easier said than done. But however difficult it may be, it simply must be done in order to answer the question weighing on so many minds: Will I outlive my nest egg in retirement?

 

Give Seniormark a Call for a free consultation at 937-492-8800 and put your fears to rest!

 

CONSUMER ALERT: Seniors Should Beware of DNA Testing Scam

COLUMBUS – Ahead of World Elder Abuse Awareness Day this Saturday, June 15, the Ohio Department of Insurance and the Ohio Department of Aging are warning Ohioans of a new scam targeting seniors. Ohio consumers should be cautious of genetic testing firms visiting senior communities or making unsolicited phone calls and mailings related to DNA screenings.

“Scam artists are always looking for new ways to steal money or personal information,” said Governor Mike DeWine. “We want people to be careful and to know the signs of a possible scam.”

 

In the scheme, which has been reported in Ohio and other states, firms reportedly collect consumers’ personal information under the pretense of DNA testing to screen them for cancer, Alzheimer’s, or other life-threatening diseases. Victims are told that Medicare will cover the cost of their testing. However, Medicare provides limited coverage for DNA testing (which is why consumers should consult their health care providers). As part of the scam, consumers often are asked for their Medicare card number and Social Security number.

 

“We want Ohioans to be aware and cautious as they consider DNA screening services,” said Ohio Department of Insurance Director Jillian Froment. “Consumers should never share their personal information, including Social Security number or Medicare card number, with anyone who reaches out unexpectedly. If you think you may be a victim of fraud or if you suspect potentially fraudulent activity, please contact us.”

 

“Scammers and shady businesses target older adults to steal money, get personal information, or in this case, improperly access individuals’ insurance benefits,” added Ohio Department of Aging Director Ursel McElroy. “As older adults get wiser to common scams, scammers are doing more to try to win their trust. Guard your Medicare or other insurance card like you would a credit card. To a scammer, it is just as valuable.”

 

To protect yourself, be alert if anyone conducting DNA cheek swabs requests that you agree to be billed for services in the event Medicare does not pay. These types of “testers” may be committing Medicare fraud because they are attempting to bill Medicare for a procedure that has not been ordered by a health care provider.

What Should Medicare Recipients Know About Genetic Testing?
  • In order for the testing to be covered by Medicare, it must be medically necessary.
  • Consumers should always confirm that their test has been ordered by their doctor, that it’s covered by their plan, and that it’s medically necessary.
  • If you are interested in DNA screening, talk to your doctor and determine if it is right for you.

How Can I Protect Myself from This Type of Scam?

  • If you or a loved one is approached by someone claiming to offer genetic testing, do not give your personal information (like your Medicare or Social Security information) to them.
  • Theft of Medicare card numbers may be used to commit identity theft or fraud.
  • Instead of receiving a DNA screening unsolicited from a firm not affiliated with your health care provider, talk to your doctor first and determine if the test is necessary.
  • Some consumers have reported receiving DNA testing kits in the mail without requesting them. Consumers should not use these kits but should instead talk to their doctor first.

If you suspect wrongdoing or if you believe you have been victimized, call the Ohio Department of Insurance’s Fraud and Enforcement Hotline at 800-686-1527 or the Ohio Senior Health Insurance Information Program at 800-686-1578.

Older Ohioans and their loved ones can learn more about scams and other forms of elder abuse and exploitation, along with ways to prevent and report them, on the Ohio Department of Aging’s website (www.aging.ohio.gov/elderabuse).

 

Source:  Ohio Department of Insurance

To Delay or Not to Delay? The Social Security Break-Even Point Explained

To Delay or Not to Delay? The Social Security Break-Even Point Explained

The question of when to take Social Security has been called “the single most important retirement money decision of your life.” So it makes sense that it would be weighing on the minds of many soon-to-be retirees. Should I take it early at 62?  How about my full retirement age of 66? Or maybe 70, when my benefits are maxed out?

 

And when that question is brought to the table, what inevitably follows is a discussion of the “break-even” point, a mystical age out there in the unknown future. The problem is, sometimes the explanation is just as elusive as the number itself.

 

Most people don’t even know what the break-even point is, let alone how it affects when they should start receiving benefits! This is why I am here to clarify.

 

The Big Trade-Off

But before I go into my explanation, you need to know that the decision of when to take Social Security is always a trade-off. This is probably why it’s so hard to make! For example, if you claim at 66 (rather than 70), you receive checks for those four extra years, but your benefit is smaller. If you delay claiming benefits to 70, you forfeit those 4 years of benefits, but your monthly Social Security Check is much larger.

 

So what’s the break-even point? In short, it is the age (month and year) when delaying benefits starts to pay off. It is the point in your life when the larger checks begin to catch up (in dollar amount) with the head start you would’ve gotten had you begun at age 66.

 

But that’s a little too abstract. Let’s get concrete.

 

A Running Analogy

Imagine two track runners, all decked out in the short shorts and sports watches, hanging out at the starting line. Let’s call them Jack and Will.

 

Now Jack, he’s a really on-top-of-it type of guy, eager and prepared. He is poised at the start line, ready to go. When the gun goes off, he takes off, determined and well paced.

 

Will, on the other hand, is a little bit lazier. When the gun goes off, he waits. He takes time to stretch, yawn, maybe take a few more sips of his Gatorade. And after Jack completes 4 laps, he takes off. He’s way behind, but he’s going 32% faster than Jack.  Did I mention that Will is a world-class athlete?

 

At first, it looks like Jack is going to win hands down. But after each lap, Will gains on him.  Lap 5 and 6? Will’s chances still look bleak. 6 and 8? Still no chance. But by the time Will completes his 11th and 12th lap, victory is within his grasp. Will grits his teeth. Closer. Closer. He’s breathing down his neck!

 

And then, with a burst of adrenaline and determination, Will finally surpasses Jack in lap 13.

 

The break-even point. The brief moment Jack and Will were side by side is the break-even point.

 

Now let’s bring it back to Social Security.

 

Claiming earlier (let’s say at 66) is being like Jack. When the gun of full retirement age sounds, you take off. But your check is smaller. You’re making money at a slower pace.

 

Now claiming later, that is just like Will. You take off 4 laps too late, but your check is larger. You’re making money 32% faster (8% for every year past full retirement age).

 

Eventually the monetary benefits of claiming late will surpass the benefits of claiming early.

 

But that doesn’t mean that claiming later is always the better bet.

 

For instance, what if you pass away before you reach your break-even point? Or, keeping with the running metaphor, what if Jack and Will’s race was only 9-laps? In that case, Will wouldn’t have had enough time to catch up.

 

This is why Social Security advisors consider your life expectancy. If your life expectancy is beyond your break-even point, it may be a good idea to delay. But if not, it may not be.

 

However, the biggest point about the break-even point is this: It is not the sole determinant in the “to delay or not delay” question. Marital status, availability of resources and many other considerations greatly affect the decision. The truth is that a lot of factors come into play when running the race of Social Security planning. What you really need is a trusted advisor who can coach you through “the single most important retirement money decision of your life”.

 

Need a Certified Financial Planner to help you make the right decisions about Social Security? Call Seniormark at 937-492-8800 for a free consultation.

 

Do I Need to Sign Up For Medicare If I Have Insurance with My Employer?

Do I Need to Sign Up For Medicare If I Have Insurance with My Employer?

This is an important question. If you sign up for Medicare, and you didn’t need to, you end up forking over cash in premiums for insurance you don’t even need. However, if you don’t sign up for Medicare and you needed to, the results are equally frustrating: penalties or high out-of-pocket expenses that suck the life out of your nest egg.

 

Here is an easy-to-follow guide to help you make a decision that’s the best for you. I’ll address each part of Medicare individually to help you come to a decision for each.

 

For a more in-depth explanation of the parts of Medicare, click here.

 

Part A (A.K.A Hospital Insurance or “Inpatient Care”)

This is an easy one. You can go ahead and sign up for Part A, regardless of whether you have insurance with your employer.

 

Why?

 

Because Part A is absolutely free! If there’s no premium, why not just take the coverage? As long you or your spouse has paid into Social Security for ten years or more, there is no associated cost.

 

There is only one reason why you would want to delay Part A: Health Saving Account contributions. You can still withdraw from a health savings account, but you cannot continue making contributions if you are on Part A.

 

But other than that, this is a simple decision. More often than not, you can just go ahead and sign up.

 

Part B (A.K.A Medicare Insurance or “Outpatient Care”)

Part B, on the other hand, is much more complicated. But in the end, your decision will boil down to your answers to three questions:

 

  1. Is my coverage through active, current employment?

The keywords there are “active” and “current.” In order to delay Part B without penalty, you or your spouse must have insurance coverage through active employment. You have to be on the floor or in the office (or at home in your PJs if you are lucky enough to have one of those jobs)! This means retiree benefits or COBRA or any other insurance that begins after you are done working do not count.

 

  1. Is your employer the primary payer (as opposed to Medicare)?

You can delay Part B without penalty as long as you can answer “yes” to question #1, but unless you can answer yes to this one, you may be stuck with some hefty bills on outpatient services. If Medicare is the primary payer and you don’t have Medicare, you will have to pay 80% of your outpatient healthcare expenses.

The way to find out if your employer is the primary payer is pretty simple. If your employer’s health insurance plan covers 20 or more people, the employer pays first. If it insures less than 20 people, then Medicare pays first. Ask your employer or human resource representative for the exact number to make sure!

 

  1. Is your employer plan less expensive?

None of these questions really matter if Medicare is the better value. Perhaps you can delay Part B without penalty (question 1) and without paying extra on outpatient services (question 2), but if Part B is the better value, why would you want to? That is why you must perform a cost to benefits analysis. If Medicare is the better value, then you should sign up for Part B. If it is not and you answered “yes” to the other two questions, it may be a good idea to delay.

 

Part D (Prescription Drug Coverage)

All that matters when it comes to deciding if you need to sign up for part D is whether or not your current drug coverage is “creditable.” In order for your drug coverage to be considered “creditable,” it must be at least as good as part D. In other words, it is expected to pay (on average) at least as much as a Medicare part D plan. To find out, ask your human resources department. When you turn 65 your employer will send you a letter telling you whether or not your coverage is creditable, but it is a good idea to find out beforehand for planning purposes.

 

So Let’s Recap!

  • Sign up for Part A unless you want to continue HSA contributions.
  • It might be a good idea to delay Part B if have insurance through current employment, your employer pays first, and your employer plan is a better value than Medicare.
  • As long as your current drug plan is considered “creditable,” you can delay Medicare Part D.

 

Are You Still Unsure About Your Decision?

If you still have questions about how your employer plan coordinates with Medicare (or about Medicare in general), you are not alone. Many people approaching 65 find themselves overwhelmed with all of the options and information. The good news is that Seniormark is here to help, and we offer our services at no cost to you. We will guide you through the entire process, ensuring that you avoid all the costly mistakes and pitfalls. Call Seniormark at (937) 492-8800 for a free consultation.

 

“Fear Not!” Is Still the Best Investment Advice

“Fear Not!” Is Still the Best Investment Advice

Here’s a crude snapshot of a conversation I had with my client a few months ago. I think you’ll find it heartbreaking:

“I see you have all your investments in a money market account.” (Note: this is an extremely low-risk investment option)

 

“Yeah…I did that when the market crashed in 2001. I started losing lots of money, and my portfolio dropped from $120,000 to $80,000. I got scared, so I pulled out and switched to a lower risk investment.” He paused. “I think I made a mistake.” Then he grew curious. “I have $100,000 now. How much would I have if I would’ve stayed put?”

 

I cringed a little bit. The question is a recipe for regret. “Are you sure you want to know that number?” He nodded. So I did a little number crunching. Here’s the grand reveal: “You would have $200,000 right now,” I told him.

 

The man was mild mannered. He didn’t overreact. “Ohhhhh…..that’s a lot of money,” he said. But even if he couldn’t sense the full effect of that sting, I felt it for him.

 

What kills me is that it was just one, fear-based decision. A natural, understandable fear, of course, but that doesn’t change the fact that it led to a poor investment decision, one that cost him $100,000.

 

In fact, fear almost always leads to poor investment decisions. It consistently causes investors to sell when the market hits rock bottom and buy back in when it is already well on its way to recovery.  In other words, fear causes investors to disobey the most fundamental rule of investing: buy low and sell high. It subdues logic in its cage and releases an irrational beast, bent on destroying your portfolio.

 

Case Study: The “Great Recession” of 2008

2001 isn’t the only time this happened, and my client certainly isn’t the only case. The “Great Recession” also caused a great deal of panic and poor decisions. If you check out this graph created by BlackRock Mutual Funds, you’ll see what I mean.

Allow me to help a bit with the interpretation. The blue line represents the stock market performance. The light blue bars represent money invested in mutual funds, or…in finance jargon… the “Net Equity Mutual Fund Flow”.

 

You’ll notice something quite peculiar if you attend to the circled section of December ’08, the stock market crash. During the fright and terror of that lowest dip, a lot of people sold their mutual funds. The blue bars at their lowest point (far below the axis) evidence this.

 

And when did investors buy back in? Note that the blue bars follow the stock market line very closely. By the time most people bought back in, the market was already near its next peak. People were selling low and buying high! This is not a good investment strategy.

 

A Little Advice For a Big Problem

No one knows what the market will do tomorrow. It might go up. It might go down. It might fluctuate a little. It might fall or rise dramatically. There are a lot of uncertainties in investing.

 

But one thing is for sure: the stock market consistently grows over the long haul. According to distinguished finance professor at Wharton, Jeremy Siegel, it has grown an average of 6.5-7% per year over the last 200 years. But one of the major problems is that fear zaps long-term vision, blinding investors to the future possibility of growth as they watch their hard-earned money plummet in the present.

 

So here is the little piece of advice: Like an angel who appears in the dead of night, “Fear not!” The sensationalist media of apocalyptic proportions is lying to you.

 

As long as your portfolio is truly diversified and matched to your risk tolerance, as long as you regularly review your investment strategy with a professional, don’t lose your head!

 

You’ve got nothing to fear but fear itself.

 

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

 

 

Read This Before You Take Social Security Early

Read This Before You Take Social Security Early

Social Security is a bit like the Stanford Marshmallow Experiment, the one where they place elementary-aged kids in solitude with a tantalizing marshmallow on a plate in front of them. “If you wait until I come back, I will give you another marshmallow,” the researcher tells them, “but if you eat any before I come back, even just a nibble, you will just have the one.” As you can imagine, the kids fidget in their chair after the researcher exits the room, their short legs dangling and their eyes flitting to the door to the marshmallow, to the door and back to the marshmallow.

 

Not surprisingly, many of these kids, despite the promise of a bonus pillow of sugar, decide to eat their marshmallow early. After the researcher comes back into the room to see an empty plate, they end up kicking themselves.

 

Psychological implications aside, the moral of the story is clear: it pays to wait, even though many don’t!

 

This is why it is not surprising that a similar (although admittedly much more convoluted and less adorable) thing is happening with what has been called “the single most important retirement money of your life”: when to start taking your Social Security benefit.

 

You see, although it pays to wait until full retirement age (66 in2019) or beyond to start taking Social Security, many retirees are still claiming early (at 62).

 

Let’s take a closer look.

 

It Pays To Wait!

How much exactly?

 

Well, that depends on which year you were born. For those born between 1943-1954, the difference between taking Social Security at 62 and waiting until your full retirement age at 66 is a 25% reduction.

 

If you take your check at 62, you only get 75% of your full check. But if you wait until 63, you gain an extra 5%. Then, during the next three years, you gain an extra 6 and two-thirds percent each year, getting you to 100% of your benefit by the current full retirement age of 66.

 

After that, things really start to ramp up.  If you possess the will power and resources to delay beyond the full retirement page, you tack an extra 8% on to your check each year until age 70!

 

Now, I’m going to put that into perspective.  Let’s say you have a full retirement benefit of $2000 per month. Taking it at 62 will reduce your benefit to $1500. Waiting until 70 will amp up your benefit to $2,640. If you do the math, that means that it pays an extra $1,140 per month just to wait and max out. And the best part is that this is a guaranteed income for the rest of your life!

 

To check the percentages for other birth years, check out this chart from ssa.gov:

 

But despite the favorable math associated with gritting one’s teeth to wait it out…

 

Many Retirees Choose to Take It Early!

In fact, according to Boston College’s Center for Retirement Research a whopping 48% of women and 42% of men choose to take it as soon as possible at 62!

 

And how many max out their benefits at 70? Less than 1 in 20 for both men and women.

 

The reasons for this are as individual as you or I.  Part of it may be that retirees simply do not have the funds to make ends meet while they defer their Social Security benefits, although this is less likely than originally thought. Yet others may have a bleak life expectancy in which the larger checks will not have much effect. These are usually valid reasons to wait.

 

However, going back to those kids with the marshmallows, perhaps people find that it is just easier and more satisfying to take it now rather than later. After all, it is not only kids who have trouble delaying gratification.

 

And the last I’ve checked, even 75% of your monthly benefit can buy a quite a few bags of marshmallows.

 

Do You Need Help Deciding When to Take Social Security?

Well, you are in luck.  We happen to know a thing or two about this subject.  Give our office a call and we can sit down with you and help you make some decisions about your social security timing.  Our office number is 937-492-8800.

 

How to avoid the #1 Mistake on Medicare’s Request for Employment Verification Form

How to avoid the #1 Mistake on

Medicare’s Request for Employment Verification Form

How many of you dread filling out Medicare forms?  Please raise your hand if you’ve ever had to correct the Medicare “Request for Employment Information” form (CMS-L564) for your employee.  When you complete the form, you’re hit with a fear that you might not remember how to properly complete this form.  Sure, you might fill them out from time to time, but this form never seems clear.  It’s daunting enough to prepare your employees for retirement – never mind assisting them with the Medicare process which seems like a full-time job itself.

 

Well, there is good news!  There is really only 1 question on this form that seems to trip people up.  AND we’re here to help you understand what Medicare is asking on this question and hopefully help you and your employees avoid any future issues.

 

Take a look at Section B of the “Request for Employment Information” form below.  Section B is the employer’s (aka HR Department’s) section.  And Question #2 is normally the main problem.  Are you ready to conquer this question?  Let’s dive in.

 

 

 

 

 

 

 

As most of you know, this “Request for Employment Information” form is required if your employee is over the age of 65 and outside of their initial enrollment period for Medicare.  They must submit this form with their Medicare Part B enrollment form to qualify for a Special Enrollment Period to sign up for their Medicare upon retirement.

 

For your employee to qualify for a SEP, they must meet 2 criteria:

  1. They must have group health insurance from ACTIVE employment (from their job or their spouse’s job) or have had such insurance within the past 8 months. AND
  2. They must have been CONTINUOUSLY covered by a job-based insurance since becoming eligible for Medicare (including the month they turned 65.)

 

For the most part, this form is filled out properly with no concerns.  But question #2 is typically the exception.  AND if question #2 is incorrect, it could mean big headaches for your employee.

 

So, why is Question #2 such an issue?  Well, if question #2 doesn’t reflect that the employee had insurance back to the month they turned 65 they WILL NOT qualify for a Special Enrollment Period.  No SEP could = BIG PROBLEMS for your employee.  It could delay their Part B start date and your employee could be assessed a Part B late enrollment penalty that will follow them for the rest of their life.

 

Question #2 states “If yes (the applicant was covered under employer group health plan), give the date the applicant’s coverage began. (mm/yyyy)

 

It seems simple enough.  You might wonder why that is so hard to answer?  Well, time and again we see that this date doesn’t reflect how long the employee had coverage but when the last “new” insurance company started.  For example, John Doe is 70 and has worked for your company for the last 20 years.  He has had group health coverage since February 1999.  BUT your company switched to a new insurance company on January 1, 2018.  Many times, we see the January 1, 2018 date on this form.

 

If the January 1, 2018 date is used, John Doe doesn’t qualify for a SEP because it doesn’t show that he’s had group health insurance from age 65 on.  John Doe will have to wait to sign up for Medicare Part B during the general election period (Jan 1 through March 31 each year).  His Part B coverage wouldn’t start until July 1.  John Doe would also have to pay a Part B late enrollment penalty for the months that he didn’t have coverage since turning 65.  This late enrollment penalty would last for the rest of his life. 

 

But, if the correct date is used in Question #2: February 1, 1999, he should qualify for a Special Enrollment Period.  He could elect the Part B start date (1st of the month).  He should not be assessed a Part B late enrollment penalty.  All is good (at least with the Medicare insurance.)

 

Now that you know how to tackle the Medicare “Request for Employment Information” form, you’re ready to focus on the many other aspects of your employee’s retirement process.  Do you have more Medicare questions?  Give Seniormark LLC a call at 937-492-8800.  We’re here to help!

 

Investing Fact Check: No One Can Predict the Future

Investing Fact Check: No One Can Predict the Future

Not the common investor. Not your financial planner. Not even the “big wig” finance-savvy gurus.

 

I get it. It’s alluring to think you might have a competitive edge. The seductive power of huge yields in a short amount of time is almost magnetic. And it’s definitely a good marketing point for investment advisors who claim they can “beat the market”. But the truth is, market timing and stock picking just don’t work.

 

Of course, people score big sometimes. They might even get lucky a few years in a row. But, in a way, this is just dangerous. Like a gambler with a string of good hands, these people may begin to think they’re invincible, play hard for another year, and—eventually—return home with empty hands in their pockets and a droopy tail between their legs.

 

The results are in.

In fact, they’ve been in for a long time: When it comes to investing, you are your own worst enemy. Investor behavior consistently causes people to under perform over the long haul.

 

In Dalbar’s 22nd Annual Analysis of Investor Behavior, they discovered that the average investor under performed the S&P 500 by 3.66% in 2015. According to Dalbar, “while the broader market made incremental gains of 1.38%, the average equity investor suffered a more-than-incremental loss of -2.28%”. This type of data is consistent over the last 20 to 30 years. Over the last 20 years, the S&P 500 has outperformed the investor by 3.52%.

 

And with the “expert” investment managers, the results still aren’t that hot. In 2014, 86% of them failed to beat the market.

 

So why is this happening?

Maybe it has something to do with the fact that the average equity fund retention rate of 2015 was 4.10 years. This means that every 4.10 years the average investor changed his mutual fund to chase the hot returns of another investment option, ultimately trying to beat the market, ultimately believing they (or a financial guru) could predict the future.  If you just jumped down to this point, see the above statistics. It didn’t work.

 

So why do investors still believe it?

If it doesn’t work, then why do people still do it? There are many reasons why. Perhaps it is just lack of research and reflection. Or perhaps it is because people are looking at their stocks in a vacuum, thinking that their 6% return isn’t bad even though the S&P performed at 8%.

 

But I think the biggest reason is that they don’t look at the big picture. They see the ads that say “if you would’ve picked this stock last month, you would be up 40%” or “Here at (insert investing company name here), we’ve beat the market 3 years in a row”. They see the Warren Buffets of the world and forget that these are just isolated cases. When you zoom out and see the million other people who tried to beat the markets and failed, the truth comes into focus.

 

So—in the end—you can choose to do what many investors are doing.

 

Or you can choose the time-tested, statistically verified way: diversify your portfolio and wait…without touching it. If you’re retiring soon, I recommend this strategy. You don’t have time for risky moves. You don’t have time to make up for heavy losses.

 

Instead, you need an investment strategy that safeguards your portfolio from crippling losses, while allowing it to grow—slowly but surely—well into your retirement. It’s not flashy. It won’t get you on the cover of Money Magazine. But unlike trying to predict the future—

 

It works.

 

Want a Certified Financial Planner to analyze your portfolio at no cost to you? Call Seniormark at 937-492-8800 for a free consultation.

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.