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Retirement Investing

Medicare Fall Open Enrollment Ends Soon

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Time is almost up for this years Medicare Open Enrollment period.  You have until the 7th of December to modify your existing Medicare plans. In this period you can enroll in a Medicare Advantage Plan or a Part D drug plan.

Any modification made during this period is effective from January 1st of the following year. Generally, this is the only time of the year when one can opt for a new plan or switch from Advantage plans to Original Medicare plans. A tweak not known to many is to purchase a Medigap policy which compensates for Medicare costs to some extent. The availability of a Medigap Policy completely depends on the place of residence.

Medicare coverage and costs are revised every year. It is recommended to compare the existing package with the new ones for better understanding before making any possible modifications. The members of Medicare Advantage Plans of Part D receive notice of changes and the current evidence of coverage which are to be compared to see if any modification will result in cost and coverage benefits.

Medicare has rolled out a Plan Finder tool for locating the best plans in Part D drug coverage policies. The tool is designed to understand the requirement of drugs, cost of those drugs and the availability in pharmacies often visited based on which it runs extensive comparisons with other plans and end up displaying the best plan to opt for if there is any.

Joining an Advantage Plan is a very simple process. Calling their national toll free number may be the quickest way to know about the plans in that area following which one can choose to opt for a particular package best suited for the requirements. Calling the State Health Insurance Assistance Program can help you understand the available options and is recommended for changes if necessary. After shortlisting a plan, it is a must to check that the doctors and hospitals are included in the network. Speaking to the representative should be followed by noting down the date, the conversation and a cross-check with the current plans for transparency.

Though there are different ways to enroll during the fall open enrollment period, the most hassle-free way of enrolling and protecting yourself is to directly call their toll free number which is 1-800-MEDICARE. One last check to confirm all the details before making payment is suggested.

In case that you are not satisfied with any Advantage Plan opted for during the Fall Open Enrollment period, you can modify the plan in the next window which is called the Medicare Advantage Open Enrollment Period abbreviated as MA OEP. This period starts from 1st January and ends on 31st March of every year. This is the final window for making any sort of changes wished for in the Medicare Advantage Plans and the Part D drug coverage plans.

There lies a distinct difference between Open Enrollment for Federal Marketplaces and the Fall Open Enrollment period. The federal marketplaces are meant to annually offer enrollment periods for American citizens who are not insured or underinsured according to the standards set by the law. Though the duration of both the windows may coincide, the federal marketplaces or exchanges is not recommended citizens with existing membership with Medicare or are eligible for Medicare. For people who can afford and are eligible for Medicare and are looking to modify their current plans or opt for the new membership with the organization, the Fall Open Enrollment Period starting from October and ending on December is the correct time of the year.

Your Social Security Benefits Get A Boost

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Some seniors are dependent on their Social Security benefits, but the majority of your retirement income may be derived from other sources. While your Social Security income may not be your primary source of income in retirement, you nonetheless may be counting on that income to provide financial support for your quality of life in a modest capacity. Social Security benefits increases have been minimal most years since 2000. The exception was in 2012 when benefits increased by 3.6 percent. However, in 2010, 2011 and 2016, there was no cost-of-living adjustment. The announced cost-of-living increase for the 2019 calendar year is 2.8 percent.

More than 67 million Americans are Social Security beneficiaries, so this has a major impact on the lives of many people. The modest increase in income is not the only change made by the Social Security Administration for 2019. The amount of income that can be taxed for Social Security has increased, and the earnings limit for some individuals has also been adjusted.

While this year’s increase is substantially higher than the increase in most years in recent history, it is not enough to compensate recipients for the diminished buying power of their Social Security income. The Senior Citizens League has estimated that the buying power of Social Security benefits has decreased by 34 percent since 2000. This estimate takes into account the planned increase in benefits for 2019. Over this same period of time, this organization estimates that expenses for seniors have increased by as much as 96 percent. For example, homeowners insurance premiums for seniors have increased by 164 percent and property taxes have increased by 129 percent in this time period. Prescription drug costs have increased by 188 percent, and home heating oil costs have increased by 181 percent.

In recent years, cost-of-living adjustments to Social Security benefits has also resulted in an increased premium for Medicare premiums. In fact, the net benefit for many retirees has been minimal when both factors are taken into account. Updates to Medicare premiums for 2019 have not yet been released. However, because the cost-of-living adjustment for this year is substantial, any premium increases are not expected to make a huge impact on the raise that many beneficiaries are receiving for 2019. Keep in mind that Medicare premiums have increased by 195 percent between 2000 and today, and Medigap costs have increased by 158 percent.

While the impact of the Social Security benefits increase this year and in the next few years may have a modest impact on your financial situation at the moment, you can see that continued increases to senior living expenses could make you more reliant on Social Security benefits in the years ahead. It is important that you pay attention to benefits adjustments, Medicare costs and cost-of-living increases in the years ahead as their effects can become increasingly significant as you get older. In addition, now that you know more about the increase to Social Security benefits in 2019, you can update your financial plan and budget going forward.

Retirement Should Not Scare Women

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Halloween may be an appropriate time for a good scare, we should limit unwanted surprises in retirement!  Generalizations may not necessarily reflect your individual circumstance although there are fact-based reasons why the average woman faces greater hurdles than the average man does in securing her retirement. However, an awareness of the negatives and a proactive plan to take full advantage of some positives should demonstrate that retirement should not scare women.

More years of retirement and with fewer assets

The deck is stacked against some women before they even think about enjoying their first day of retirement. Some of the factors include:

• Longer life expectancy
• Greater likelihood of being the surviving spouse
• Wage gap as compared to male counterparts
• Less working years due to child rearing and caring for aging parents

One factor that may be interpreted as either a positive or negative is risk tolerance. Women tend to invest more conservatively than men, which can lead to lower potential returns. Conversely, conservative investors tend to move money around less often and continuity can lead to more consistent growth in the long term.

Take control

Where one starts is seldom as important as where one ends up. Consider these strategic goals to level the retirement playing field:

Save – Start early, continue to save and save as much as possible. 20 percent of income is a nice goal but maximizing what is practical is the ultimate goal.

Know what is needed – In our sunset years, we tend to fear dying less than outliving our retirement money. One way to prevent that is to begin with knowledge of what it costs to live. Be realistic about expenses that are fixed and what will no longer be needed once work is no longer in the picture. Ideally, the fixed expenses of one year of retirement living is generated annually by retirement income.

Invest the savings – This comes with one caveat – invest savings once an emergency fund for unexpected expenses is established. Most experts recommend six months of living expenses in cash assets as a minimum. Once that is accomplished, an asset allocation plan should be devised based primarily on age and ultimate financial goals.

Keep working – Other than the satisfaction work can provide as wells as a longer timeline to save, extending work past age 65 pays dividends in social security benefits. Although many women are concerned social security may one day fail, experts predict its pending demise is over exaggerated. One thing that is certain is that the longer a worker waits before taking benefits, the better. Consider that at age 62 a worker receives 70 percent her full retirement benefits, but that number rises to 132 percent at age 70.

Include an estate plan

Careful planning includes what-if scenarios. Take the time to set up a will and more preferably a trust, as well as a financial power of attorney and durable power of attorney for healthcare.

There’s no reason any woman should fear retirement. A realistic analysis, a well-crafted plan and disciplined execution will go a long way towards a secure and serene future.  We are here to help, give us a call, today.

How successful retirees invest in the stock market: 3 easy steps

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Investing in the stock market is an important part of any long-term investment strategy, but during retirement, the roller coaster ride that is today’s market can be a little difficult to stomach. While risk tolerance is a personal thing, everyone needs to recognize the two important changes during retirement that affect your ability to earn returns.

One: You stop adding money to your retirement accounts.

Two: You begin taking money out of your retirement accounts.

These two things matter regardless of your risk appetite, because they are connected to the one thing every investor must have in order to invest successfully in the stock market: TIME.

The average retiree has less time than the average investor who is in their 30s or 40s. Having less time means you aren’t able to capitalize on the best that the market has to offer – long-term strategies such as dollar cost averaging – without making a few adjustments first.

BUT – that doesn’t mean you don’t have any time. Today’s retirees are living longer than any generation before them, which means having a long-term investing strategy is a necessary part of any retirement plan. Here are three steps you can take today to ensure your market investments don’t send you screaming to the poor house.

STEP ONE: CHANGE YOUR STRATEGY

Dollar cost averaging is an effective investment strategy whereby you invest the same number of dollars regardless if the market is high or low. If you buy when stock prices are low, you continue to invest so that when stock prices go high, you effectively make a profit.

When the market falls during retirement, however, you are no longer buying those stocks when they are cheap, because you are no longer adding money to your portfolio. Furthermore, you’re also taking money out of your investments.  This means when the market takes a loss, you also take a loss – twice.

One way to avoid taking this double-hit is to change your investment strategy from one of accumulation to preservation. Instead of keeping all your money in the market in growth-mode, move a portion of your funds to a safer place where the principal is protected.

STEP TWO: SECURE YOUR INCOME

You can work with a financial professional to devise an income plan if you are unsure about how much money you need to maintain your lifestyle during retirement. Generally speaking, most retirees find they require 70 to 80 percent of their current income in order to maintain their lifestyle during retirement.

Many investors rely on annuities to structure their retirement income because they offer the kind of principal guarantees that market investments do not. For example, during the market downturn of 2008, many retirees lost as much as 40 percent of their portfolios and, that affected how they spent their money. Investors who had the money they needed for income secured inside an annuity, however, still received their income and were able to maintain their lifestyle.

STEP THREE: ESTABLISH AN EMERGENCY FUND

Everyone needs to have some sort of emergency saving fund, but retirees especially need to have access to cash. Your reasons for needing the cash could be happy or sad, but regardless of why, you don’t want to have bad timing.

If all your money is sitting in market investments and your daughter is getting married, imagine what would happen if the market took a hit and you had to sell at a loss just to take out your money.

Our stock markets are currently in a global economy where news from overseas can send the market plunging inside a single day. You don’t have to leave yourself vulnerable during retirement. Take these three steps to ensure your ride through retirement is a smooth one.

Have questions about the allocation of your retirement portfolio? We’re here to help. Call SF Financial in Colorado Springs at (719) 597-2179.