Social Security Benefits Planning
The Social Security decision is one of the single most important financial decisions you will face in retirement. It is a decision that could potentially result in accumulating hundreds of thousands of dollars in additional retirement income. How to file can be complex and there are a variety of factors to consider before executing your decision that is almost always irrevocable.
Social Security planning is an opportunity to work with one of our Financial Advisors to lay a solid foundation for a comprehensive retirement income solution. Our Advisors can help you in making the transition from accumulating assets for retirement to withdrawing those assets during retirement. Our Advisor can also help you understand how to integrate Social Security decisions into a retirement income plan.
Key discussion factors in deciding on a strategy:
- What is your life expectancy?
- If you are married, what is your spouse’s life expectancy?
- Who has the larger estimated benefit?
- Do you qualify for spousal benefits?
- Are you divorced and/or widowed and were married for 10 or more years?
- How much income do you need to replace in retirement?
We will discuss Common Social Security Myths, such as:
-Income replacement ratio (higher for low to median wage earners, lower for high income earners)
-Social Security is not going to be there so I will just take it early at age 62
-When my spouse passes away, I continue to receive both benefit checks
So let’s Get Started
For some, choosing the right time to file for Social Security retirement benefits appears to be straightforward. For most, the decision is more complicated. Some choose to take benefits as soon as they become eligible at age 62 and others choose to take benefits at the same time they stop working or delay claiming benefits to get a higher payout.
Most people wonder:
- At what age should I file for benefits?
- At what age should my spouse file for benefits?
- When does it make sense to claim a spousal benefit?
- How do I ensure my spouse gets the largest survivor benefit?
- How do we know which of the common filing methods might be right for us?
- If one of us lives a long life, how does that affect our decision?
We can help. Click here to get started.
With tuition rates on the rise it is important to start saving for education early. Time is a powerful tool to have on your side and is extremely beneficial in helping reduce the impact of tuition inflation.
There is a saying, “If you want to make a lot of money, invest early, invest a lot, and let it be there for a long time.” With the power of compounding returns, the earlier you start the greater chance you give your assets to grow which allows you to have more options when it comes to educational institutions. There are a few options when saving for a child’s education which includes an educational IRA or a 529 plan depending on your situation.
We recognize setting you up for financial independence means planning for not only your future, but your children’s as well. Schedule an appointment with us to start turning your goals into an actionable plan for the financial confidence and understand of which educational savings option would be best suited for you.
Long Term Care Insurance
These are the facts as we understand them, regarding Long-Term Care needs in America:
27.3% of all Americans will reside at some point in their lives in a nursing home
70% of all Americans after age 65 will need some type of long-term care
10% of all Americans younger than 65 will require some care in a nursing home, in fact
40% of current patients receiving long-term care are under age 65 from accidents or debilitating illness
The median length of stay in a nursing home before death is 5 months
The average length of stay is longer at 14 months due to a small number of people with longer stays
53% die within 6 months of nursing home admission, 65% die within 1 year
The current cost for Nursing Home Care is $200/day in Arizona, or $6,000 a month
About 60% of nursing home residents rely on Medicaid to pay their long-term care costs.
Many people don’t get to Nursing Homes, but many still need Home Care, Assisted Living, Adult Day Care, Alzheimer’s facilities, Respite Care, or Hospice Care. Anyone is a candidate who loses one or more of the basic activities of daily living (ADLs) such as dressing, bathing, eating , toileting, continence, transferring (getting in and out of bed or chair), and walking. A recent study found:
People are receptive to their financial advisors initiating discussions about long-term care
People know that insurance is the best bay to address the long-term care issue
People are not comfortable addressing the financial risk of long-term care without the intervention of financial advisor, and their planning reveals this
The main reason people purchase long-term care insurance was the desire to avoid being a “burden” on their family
So based on our known facts, and the behavioral study of how people approach long-term care insurance, if we don’t initiate the conversation then who will?
The question of Long-Term Care Insurance is all about your risk tolerance, genes, life expectancy, and wealth.
Source: Health and Retirement Study (HRS), Crump Insurance, John Hancock Insurance
For educational and information purposes only. For use with non-registered products only. The insurance products described are issued by various companies and not available in all states. Policy terms, conditions and limitations will apply. Not all applicants will qualify for coverage.
The A, B, C & D of Medicare
Whether your 65th birthday is on the horizon or decades away, you should understand the parts of Medicare – what they cover, and where they come from.
Parts A & B: Original Medicare. America’s national health insurance program for seniors has two components. Part A is hospital insurance. It provides coverage for inpatient stays at medical facilities. It can also help cover the costs of hospice care, home health care, and nursing home care – but not for long and only under certain parameters.1
Seniors are frequently warned that Medicare will only pay for a maximum of 100 days of nursing home care (provided certain conditions are met). Part A is the part that does so. Under current rules, you pay $0 for days 1-20 of skilled nursing facility (SNF) care under Part A. During days 21-100, a $164.50 daily coinsurance payment may be required of you.2
If you stop receiving SNF care for 30 days, you need a new 3-day hospital stay to qualify for further nursing home care under Part A. If you can go 60 days in a row without SNF care, the clock resets: you are once again eligible for up to 100 days of SNF benefits via Part A.2
Part B is medical insurance and can help pick up some of the tab for physical therapy, physician services, expenses for durable medical equipment (scooters, wheelchairs), and other medical services such as lab tests and varieties of health screenings.1
Part B isn’t free. You pay monthly premiums to get it and a yearly deductible (plus 20% of costs). The premiums vary according to the Medicare recipient’s income level. The standard monthly premium amount is $134 this year, but your Part B premiums will average $109 if you pay them out of monthly Social Security benefits. The current yearly deductible is $183. (Some people automatically receive Part B coverage, but others have to sign up for it.)3
Part C: Medicare Advantage plans. Insurance companies offer these Medicare-approved plans. Part C plans offer seniors all the benefits of Part A and Part B and more. To enroll in a Part C plan, you need have Part A and Part B coverage in place. To keep up your Part C coverage, you must keep up your payment of Part B premiums as well as your Part C premiums.4
To say that not all Part C plans are alike is an understatement. Provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits can all vary widely, so shopping around is wise. During Medicare’s annual Open Enrollment Period (Oct. 15 – Dec. 7), seniors can choose to switch out of Original Medicare to a Part C plan or vice versa; although, any such move is much wiser with a Medigap policy already in place.5
How does a Medigap plan differ from a Part C plan? Medigap plans (also called Medicare Supplement plans) emerged to address the gaps in Part A and Part B coverage. If you have Part A and Part B already in place, a Medigap policy can pick up some copayments, coinsurance, and deductibles for you. Some Medigap policies can even help you pay for medical care outside the United States. You have to pay Part B premiums in addition to Medigap plan premiums to keep a Medigap policy in effect. These plans no longer offer prescription drug coverage; in fact, they have been sold without drug coverage since 2006.6
Part D: prescription drug plans. While Part C plans commonly offer prescription drug coverage, insurers also sell Part D plans as a standalone product to those with Original Medicare. As per Medigap and Part C coverage, you need to keep paying Part B premiums in addition to premiums for the drug plan to keep Part D coverage going.7
Every Part D plan has a formulary, a list of medications covered under the plan. Most Part D plans rank approved drugs into tiers by cost. The good news is that Medicare’s website will determine the best Part D plan for you. Go to medicare.gov/find-a-plan to start your search; enter your medications, and the website will do the legwork for you.8
Part C & Part D plans are assigned ratings. Medicare annually rates these plans (one star being worst; five stars being best) according to member satisfaction, provider network(s), and quality of coverage. As you search for a plan at medicare.gov, you also have a chance to check out the rankings.9
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Southwest Investment Advisors, a registered investment advisor and separate entity from LPL Financial.
1 – mymedicarematters.org/coverage/parts-a-b/whats-covered/ [2/14/17]
2 – medicare.gov/coverage/skilled-nursing-facility-care.html [2/14/17]
3 – medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html [2/14/17]
4 – tinyurl.com/hbll34m [2/14/17]
5 – medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/when-can-i-join-a-health-or-drug-plan.html [2/14/17]
6 – medicare.gov/supplement-other-insurance/medigap/whats-medigap.html [2/14/17]
7 – ehealthinsurance.com/medicare/part-d-cost [11/5/16]
8 – medicare.gov/part-d/coverage/part-d-coverage.html [2/14/17]
9 – medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/five-star-enrollment/5-star-enrollment-period.html [2/14/17]