Blog Archives - PFwise.com

Why Every Retiree Needs To Have SPIA In Their Retirement Portfolio

11/30/2019

Q. Why every retiree should consider a Single Premium Immediate Annuity product in his or her retirement portfolio?

A. SPIA should be considered by every retiree for two reasons:

1. Eliminate Longevity Risk
A SPIA is an excellent way to reduce the fear of running out of money. It can allow an individual to spend the growth in their portfolio on travel, new cars, hobbies and other activities of daily living that occur in retirement. Retirement has become a new Life Stage and people want to enjoy retirement but it takes income to do so and a SPIA provides that income and they will receive it as long as they are alive.

2. Avoid Unnecessary Losses in a Down Market
By covering fixed and necessary living expenses with a SPIA, an individual has reduced the risk of loss in retirement portfolio. They no longer need to sell off assets in a downmarket in order to fund everyday living expenses. Their social security and Immediate annuity income cover all those necessary expenses.

4 Must Have Shopping Apps To Save You Money and Time

11/29/2019

JoinHoney.com
This browser extension automates your savings, it's best for online coupons and private alerts. When you check out at Amazon or any other 30,000 websites, you just click on Apply Coupons in a pop-up box, and HOney will input coupon codes for you. It can also alert you when a product's price drops and provide price histories on many items.

Fakespot.com
This browser extension is essential if you shop at amazon.com, walmart or any other e-retailers that offer products sold by third parties. It checks if a review is fake or real. It's best for you to decide what and where to buy!

PriceBlink.com
This browser extension checks prices at 11,000 stores. When you shop at Amazon.com and land at a product page, a yellow bar will pop up, click on Compare Prices and you will get a list of prices for that item at other stores.

Rakuten.com
Use this browser extension on your computer will earn you cash back when you making qualifying online purchases at more than 3,500 stores such as amazon.com. It sends out a check in the mail quarterly once you reach $5 in rewards.

2020 IRS Contribution Limits

11/28/2019

Federal tax law places limits on the dollar amount of contributions to retirement plans and the amount of benefits under a pension plan. IRC Section 415 requires the limits to be adjusted annually for cost-of-living increases.

Starting Jan. 1, 2020, you can invest more thanks to an increase in the dollar limitations for some retirement-related items for the 2020 tax year.

The contribution limit for employees who participate in 401(k), 403(b) and most 457 plans, will increase from $19,000 to $19,500. Other changes please see table below.

How to Turn RMDs Into an Income Advantage

11/27/2019

The Power Series of Index Annuities® with the Lifetime Income Plus FlexS guaranteed living benefit (GLB) rider provide with the flexibility to take Required Minimum Distributions (RMDs) without eliminating rollups or locking in withdrawal rate for life.

See a hypothetical example below - income is guaranteed to grow for the first 10 contract years, even after RMDs begin. Plus, you can wait until you’re in a higher withdrawal age band to activate your rider and lock in more income for life.

7 Myths About What May Impact Your Credit Scores

11/26/2019

Credit scores could have big impact on many things, from better terms on credit cards and lower mortgage rates, to lower premiums on auto and homeowners insurance, and sometimes even the ability to get approved to lease an apartment (or to waive the upfront deposits).

However, here are 7 myths regarding what may (but actually doesn’t) help or hurt the credit scores -

1. Checking credit scores can hurt the credit score (a “hard inquiry” where a financial firm is evaluating a potential loan to you can have an impact, but a “soft inquiry” like an employer conducting a background check does not, nor does a soft inquiry of checking your own credit score);

2. Paying bills on time is all you need to worry about (it’s not, as “credit utilization” also matters, because paying on time but always being maxed out is a negative compared to ‘just’ using 30% of your available credit each month, which can be remedied by spending less or simply asking for a credit limit increase);

3. Carrying a balance helps boost the credit score (it doesn’t, it just racks up interest charges!);

4. Closing an old card with a high interest rate will help (it doesn’t, and closing a long-standing card can actually reduce the score by reducing the average age of your credit accounts);

5. Opening a new retail card at a 0% rate is good for your score (it’s not, it’s a hard inquiry that’s more likely to reduce the score);

6. Shopping for a mortgage/auto/student loan hurts the credit score (hard inquiries matter, but if multiple hard inquiries come together, they’re bundled together as a single query, and recognized as a single transaction that reflects the borrower is likely just shopping around);

7. Assuming credit reports are accurate in the first place (the FTC found in 2012 that 21% of consumers had errors, with 5% of the cases so serious it impaired their credit… which means it really is important to monitor your credit score to ensure credit events are being reported properly!).

5 Steps To Create and Ensure a Diversified and Secure Retirement Income Plan

11/25/2019

Q. What are the steps I should take in order to create a diversified and secure retirement income plan?

A. Here are 5 steps to consider taking to help create a diversified income plan:

Identify your personal and financial goals.
Complete a retirement income plan to determine the probability that you will have enough money to last throughout retirement.
Determine when to take Social Security; how much of your investment portfolio you want to allocate to an emergency fund, income protection (via annuities), and growth potential; and who will manage your investment portfolio.
Implement your plan with the right mix of income-producing investments to balance your financial needs and investment priorities in retirement.
Regularly review your plan's progress to make sure your investment plan is on track to meet your lifestyle and income needs.

Costs and Savings When Downsize

11/24/2019

Q. What are the major costs and savings when downsizing?

A. The table below shows the major costs and savings in downsizing.

2 Potential IRA Pitfalls to Avoid

11/23/2019

1. Early withdrawal penalties
If you are age 55 or older with a 401(k) plan, you may leave your job and take money out of the 401(k) plan without the 10% penalty. You will still pay tax, but no 10% penalty. However, if you take a 401(k) plan and roll it over to an IRA, you will lose that age 55 exception; you’ll have to wait until age 59½ before you can avoid the 10% penalty unless you meet one of the other exceptions.

2. Taking your first RMD
If you have a traditional IRA, you have to remember that you will be subject to those required minimum distributions (RMDs). These begin during the calendar year in which you become 70½ years old. RMDs do not apply to Roth IRAs.

Which States Have the Highest Income Tax Rates in U.S.?

11/22/2019

Q. If I work in state A but live in state B, which state should I pay income tax?

A. States generally tax the income of nonresidents who generate income in that state. Income subject to tax can include:

Rental income
Gain on the sale of real estate
Employment income

The map below shows income tax rates by different states in U.S.

Long Term Care and Critical Illness Planning For Every Life Stage

11/21/2019

Every life stage brings different financial priorities and concerns — Securian Financial’s educational document below discusses priorities and solutions for consumers' Long Term Care and Critical Illness concerns at different life stages. Its target is for insurance professionals, but consumers will find it helpful too.

Top 12 Auto Insurers With Lowest Premiums

11/20/2019

The average annual cost of a full-coverage auto insurance policy in the United States is $2,390, according to financial data analytics firm ValuePenguin. Based on analysis of insurance rate data from Quadrant Information Services, ValuePenguin has published a list of the 12 cheapest car insurance companies across the country.

Erie has come out on top, with the lowest average annual rate of $1,521, which is approximately 46% cheaper than the national average across all 50 states and the District of Columbia. In the 12 states and Washington D.C. where Erie does business, the insurer is often the cheapest insurer for drivers. ValuePenguin found that drivers in Pennsylvania who choose
Erie could save up to 32% compared to the state average.

In second spot is State Farm, with an average annual rate of $1,737. State Farm is the largest auto insurance company in the country, offering rates that beat the average in 46 states and D.C. State Farm’s mean is just lower than the average annual rate of $1,781 provided by Farm Bureau Mutual (IA Group), a regional insurer that offers coverage in eight Midwestern and Western states.

ValuePenguin’s data is based on online insurance quotes obtained via Quadrant Information Services for a sample driver. For the purpose of the exercise, the driver was a single 30-year-old man, who drove a 2015 Honda Civic EX and had a clean driving record. The only variable that changed was the ZIP code where he lived in the US.
The coverage quoted included: bodily liability (limit of $50,000 per person/$100,000 per accident); property damage (limit of $25,000 per accident); uninsured/underinsured motorist bodily injury (limit of $50,000 per person/$100,000 per accident); comprehensive and collision ($500 deductible); and personal injury protection (the minimum amount when required by the state).

Based on ValuePenguin’s analysis, the 12 major US auto insurance companies with the cheapest average annual rates are:

1. Erie
Average Annual Rate: $1,521
2. State Farm
Average Annual Rate: $1,737
3. Farm Bureau Mutual (IA Group)
Average Annual Rate: $1,781
4. American Family
Average Annual Rate: $2,041
5. Auto-Owners Insurance
Average Annual Rate: $2,112
6. GEICO
Average Annual Rate: $2,158
7. Nationwide
Average Annual Rate: $2,293
8. Progressive
Average Annual Rate: $2,393
9. Metropolitan
Average Annual Rate: $2,447
10. Travelers
Average Annual Rate: $3,017
11. Allstate
Average Annual Rate: $3,545
12. Farmers
Average Annual Rate: $4,280

NA. USAA *only provides insurance coverage to current and former military members and their families.
Average Annual Rate: $1,307

While price comparison can be a useful benchmark in personal auto insurance, it’s not the be-all and end-all. The depth and breadth of coverages alongside claims resolution and other value-added services are equally, if not more important than price. This is where the advocacy of the insurance agent really comes into play.

In addition to that, insurance companies are facing many challenges in auto lines right now. Issues like distracted driving, which is at an all-time high, and inflated vehicle repair costs due to increased in-vehicle technology are driving loss costs up, meaning insurers are having to pursue rate in order to break even on their auto insurance books. As a result, many drivers are seeing increases to their annual rate, and even the ‘cheapest’ options above seem expensive to many households.

How Grandparents Can Use Annuities To Create Multi-Generation Income

11/19/2019

Grandparents can pass retirement income to grandkids. The document below shows how to make it happen.

5 Questions to Ask Yourself 5 Years Before Your Retirement - Part V

11/18/2019

We discussed the fourth question here, now the last question to answer.

5. How does your home factor into your retirement?

Your home is likely one of your most valuables assets. If either downsizing or relocating is in your plans, you may want to start plotting the move now. If moving isn't in the cards, you may still want to think through whether it makes sense to pay down your mortgage faster—thereby saving on interest payments and improving cash flow in retirement.

Alternatively, consider how to use some of your home equity to help finance your retirement. If tapping home equity is only a temporary solution to bridge the gap until you start to draw down your retirement assets or start receiving guaranteed income payments, consider applying for a home equity line of credit while you're still employed and more likely to qualify for the best rates. If home equity factors into your long-term planning, you could also consider a reverse mortgage. But proceed with care and be sure you understand all the associated costs and requirements. Before considering any of these ideas, make sure you consult a tax professional or attorney.

5 Questions to Ask Yourself 5 Years Before Your Retirement - Part IV

11/17/2019

We discussed the third question here, now the fourth question.

4. Where will your retirement income come from?

At the same time you think about shoring up your retirement nest egg, you need to begin thinking about how you'll convert some of these savings into retirement income. For many people, it's helpful to start by grouping potential sources of income into 2 basic buckets: guaranteed income from sources such as Social Security, pensions, and annuities, and variable income from a job, retirement savings, and other sources such as rental real estate.

Next, estimate your retirement expenses and then map out ways to meet essential expenses with guaranteed income sources, and discretionary expenses with nonguaranteed income. If you plan to work a bit during retirement, that may provide a conservative boost to your retirement income. But be cautious here. Survey data shows that many people are not able to work as long as they wanted. Finally, before you rush out to file for your Social Security benefits at age 62, consider the big picture: Generally, the longer you wait, the higher the potential lifetime benefits.

After your review your current investment mix, you may also want to consider shifting a portion of your investment portfolio into income-producing assets, such as bonds or dividend-paying stocks. A guaranteed income annuity is another option to consider if you're interested in converting your assets to income. Generally, the older you are when you buy an annuity, the higher the monthly payout, but there may be advantages to purchasing an annuity before you reach retirement age. But these potential moves should still be done within the context of maintaining an appropriate overall asset mix across stocks, bonds, and cash. Remember, your retirement income will likely need to last for 30 years or more, which typically requires some exposure to stocks.

Read the last question here.

5 Questions to Ask Yourself 5 Years Before Your Retirement - Part III

11/16/2019

You can read the second question here, now the third question to answer.

3. Are you invested properly?

As you round the bend toward retirement, it’s not a good idea to take on any more investment risk than necessary for your time frame, financial circumstances, and risk tolerance. But remember that this does not mean the answer is always to become more conservative. The consequences of being too conservative can be just as worrisome when you account for inflation and the possibility that you could outlive your savings. That is why it is important to think about an appropriate asset allocation.

Although you can't control market behavior, you can help manage its long-term effect on your portfolio through investment choices and by modifying portfolios so they have an age-appropriate mix.

An ideal investment mix will depend on a number of factors, including your age, time horizon, financial situation, and risk tolerance. Retirement is often the time to take some risks off the table, but some people are tempted to become too conservative. Don't forget that your goal is for your retirement savings to last for a 30-plus-year retirement time horizon. This usually means some longer-term growth potential is needed in the portfolio.

Keep reading the fourth question here.

5 Questions to Ask Yourself 5 Years Before Your Retirement - Part II

11/15/2019

First question - what are your expectations here. Now the second question.

2. Will you have enough?

This is the most important question that many preretirees need to answer.

With 5 years to go, you'll want to run some real numbers. If the numbers aren't encouraging, you may need to rethink your plans, step up your savings, or both. The good news: If you're age 50 or older, you may be able to make up for a savings shortfall with additional catch-up contributions to your 401(k) or IRA. If you are age 55 or older, you can also make an additional $1,000 catch-up contribution annually to your health savings account
.
For baby boomers who are nearing retirement, saving more and adjusting their asset mix has less impact for the simple reason that they have less time for those changes to impact accumulated wealth—though it may still help. For them, postponing retirement is generally the most effective step. Delaying retirement from 65 to full Social Security retirement age (between 66 and 67, depending on birth year) may be the best way for most preretirees to boost their retirement savings and increase their retirement income levels. If you delay claiming, you’ll have more time to build your retirement nest egg and a shorter retirement to fund.

Check out the third question here.

5 Questions to Ask Yourself 5 Years Before Your Retirement - Part I

11/14/2019

1. What are your expectations?

It seems like a simple question, but many people have no idea how much they expect to receive in monthly retirement income, and most either don't know or are unsure of what their Social Security payments may be in retirement.

This lack of planning and understanding may affect more than just your happiness in retirement; it could also affect when and how you'll be able to retire. Five years before you plan to retire may be a good time to refine your retirement planning estimates and reprioritize your goals.

Where do you plan to live?
If you plan to move, make sure you also consider how that will impact your cost of living, including the cost of health care and your access to it. If you have your eyes on moving to another state, be sure you understand any differences in taxes (e.g., state, income, estate, local, sales, and property taxes) as well as differences in the cost of living. If you plan to stay put, you'll want to consider how your home equity factors into your plans.

What do you want to do?
The early stages of retirement can be an expensive time. Many people overestimate how much they'll be able to work in retirement, and underestimate how much they'll spend. Take a hard, realistic look at both fronts.

How will you pay for health care?
After food, health care is likely to be your second largest expense in retirement. According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2019 may need approximately $285,000 saved (after tax) to cover health care expenses in retirement.

While many preretirees are thinking ahead and factoring health care costs into their retirement savings plan, almost 4 in 10 are not.2 In fact, 48% of preretirees estimated that their individual health care costs in retirement would be less than $100,000—far lower than Fidelity's current estimates.

If you've relied on your employer to pick up most of your health care tab, retirement could be a rude awakening: Only 18% of large companies offer health care benefits to retirees, according to a 2018 employer survey by the Kaiser Family Foundation. Although Medicare kicks in at age 65, you may need to buy supplemental insurance or, at the very least, budget for higher out-of-pocket health care expenses than you had while you were working.

Continue for next question here.

Basic Questions About Medicare Part D

11/13/2019

While Medicare Part A and Part B provide coverage for hospital and routine health care services for those 65 and older and those with certain medical conditions or disabilities, Medicare Part D covers the high costs associated with prescriptions..

3 key things to know about Medicare Part D

Part D helps you pay for self-administered prescription drugs. You can sign up for Part D when you enroll in Medicare Part A and/or Part B. Alternatively, you can skip Part D and go with a Medicare Advantage plan with drug coverage included.
Part D is optional. While prescription drug coverage through Part D (or Medicare Advantage with drug coverage) isn't mandatory, there are no other options with traditional Medicare for help with prescription drugs after age 65.
If you don't sign up for a prescription drug plan (PDP) on time, it can cost you. Sign up after your initial enrollment period or after a special enrollment period ends, and you can face a permanent late penalty.

What Part D does not cover?

Drugs used for weight loss/gain, fertility, erectile dysfunction, and cosmetic effects
Non-prescription drugs (over the counter medications)
Vitamins
Insulin (when used with an insulin pump)
Inpatient drugs (these may be covered by Part A)
Drugs not listed on a PDP's formulary (list of covered drugs)

How and when do I sign up for Medicare Part D?
You can sign up for a prescription drug plan with a private health insurance company that offers them through their website, over the phone, or with a licensed agent. When you can sign up is a little more complicated.

Just like Medicare Part A and Part B, you can enroll in Part D during your Initial Enrollment Period (IEP). That's up to 3 months before and up to 3 months after your 65th birthday. You can also enroll during a qualifying Special Enrollment Period (SEP), such as when you or your spouse’s employer-based health coverage ends.

How to avoid Part D penalties?
If you sign up for a Part D plan after your IEP or SEP, a permanent penalty—potentially adding up to thousands of dollars over your lifetime— gets tacked on to your monthly premium. The penalty amount can change each year as well.

You can avoid the penalty if you show proof of creditable drug coverage during the time you were supposed to sign up. If you had acceptable coverage includes a prescription drug plan through an employer (yours or your spouse's).

If you don't sign up for a prescription drug plan on time, and you don't have proof of creditable drug coverage, you also have to wait until the next open enrollment period (October 15–December 7 each year) to sign up. Your coverage starts shortly after you enroll (on January 1) and will include the premium penalty.

How Part D penalties are calculated?
Medicare doesn't charge a flat rate penalty for enrolling late. Instead, the amount is determined by multiplying the number of months an individual went without a Medicare drug plan (or creditable drug coverage) by 1% of the national base premium, the premium rate Medicare establishes for Part D each year.

For example, if you delayed signing up for Part D for 5 years, you would face a 60% penalty (60 months × 1%). The penalty amount is rounded to the nearest $0.10 and added to your monthly Part D premium. There is no cap on the Part D penalty.

Since the national base premium changes every year, so does the Part D penalty. For more about Part D penalties, visit Medicare.gov.

Yield Curve 101

11/12/2019

A yield curve is a graphical representation of yields on bonds with different maturities. The most common example is the government bond yield curve, but it is very well possible to render a yield curve for other types of bonds, such as corporate bonds, high yield bonds, etc.

The government bond yield curve is often referred to as the benchmark yield curve; the image above shows this curve for US government bonds on 1 November 2019. Data to draw a yield curve (for US gov bonds) are readily available from various sources. A good source to check yields for various maturities of government bonds is the website of the US Department of the treasury (www.treasury.gov). The image above is rendered using data from that source.

On the horizontal axis the maturity of the bonds is translated to no of months in order to get a proper scaling on the chart. On the vertical axis the yield is shown.

In a normal situation, one would expect to receive a higher compensation (yield) for longer maturities. When you lend money to the government for 20 or 30 years, it intuitively makes sense to receive a higher compensation than when you lend it only for a year or a few months.

As these yields change every day, the shape of the curve will change accordingly. Because financial markets have a tendency of throwing curve balls from time to time, unusual/unintuitive situations can and will happen.

In general, the yield curve reflects the way investors think about risk. In a normal yield curve situation, the thinking is that the shorter the maturity, the less risk for the investor and, therefore, a lower yield (compensation) than for longer-dated bonds.

A normal-shaped yield curve is usually seen in an economic environment that shows normal growth and little-to-no changes in inflation or available credit.

An inverted curve is usually seen as a signal that economic growth will soon stabilize or reverse, maybe even signaling the start of a recession. This is caused by investors thinking that the period of economic growth is or will soon be over, making them more likely to accept lower rates before they fall even further. This process can cause (partial) yield curve inversions.

An inverted yield curve does not have to be "completely" inverted as in the image. Sometimes only part(s) of the curve are inverted; this can cause humps or dents in the curve as we would expect it to be shaped.

It is not so much the current shape of the curve that can help us to solve the financial puzzle, but more the transition and the changing of the shape of the curve that will provide us with clues for the potential future direction of the economy.

As with many graphs/tools/relationships/etc. that we use in our analysis, the yield curve will not provide us with the definitive answer. Like all other tools that we have at our disposal, it is just a piece of the puzzle that we are trying to solve every day.

Top 20 China Region Funds With Best 5-year Returns

11/11/2019

If you are optimistic about China's stock market futures, you may want to consider invest in some of these top 20 China region funds with the best 5-year returns ...

Long Term Care and U.S. Government: What You Need to Know

11/10/2019

Americans are living longer, and that raises the question of how to pay for long term care. Can you count U.S. government for help? What are the government benefits program? How about the eligibility requirements?

This Securian Financial article explains this topic very well, it's a good educational read!

5 Questions to Ask About Long Term Care Insurance

11/9/2019

Start thinking about long-term care insurance options while you’re healthy
It’s important to begin the process and make some crucial decisions now — before an unexpected health change could suddenly change your needs.2 And the chances of needing health care down the road are likely.

Americans turning 65 have almost a 70 percent chance of needing some form of long-term care in their lives. And about 8 percent of those between ages 40 and 50 have a disability that could require long-term care services.

Plus long-term health care can be expensive. The annual cost for a private, one-bedroom in an assisted-living facility is $43,536. The hourly rate for a home health aide is $20.50.

Questions to ask your financial professional
It’s always a good idea to consult a financial professional as you plan for the future. But whether or not you speak to a financial professional, here are five questions to consider as you think about your long-term care insurance options:

1. What are my insurance options for covering long-term care?
There are several kinds of long-term care (LTC) insurance policies, including traditional and hybrid options. And because Medicare doesn’t pay for LTC, it’s important to understand the pros and cons of each type so you can choose the policy that’s best for you.

Traditional LTC
This insurance can help pay for your future care — and in the event you go on claim, depending on the policy structure and benefits, may provide some of the most robust benefits to cover the costs for LTC. These policies stay in force as long as you keep paying the premiums, and although they may be affordable and less expensive than a hybrid policy initially, over time, the cumulative out-of-pocket costs can add up. Also, if you don’t need LTC, you generally won’t receive any benefits from your policy. Traditional LTC policies sold today do not offer guaranteed premiums or benefits so premiums may increase over time.

Hybrid LTC
Hybrid policies (typically a combination of life insurance or an annuity with long-term care insurance) guarantee premiums will never increase and benefits will never decrease. They also may offer a return of premium option so you can get your money back if you decide to give up your policy. They offer an income tax free death benefit and inflation protection options to help your LTC benefit keep up with rising health care costs.

Some hybrid policies are available with a single-pay (up front) or multi-pay (various payment periods may be available). Due to the shorter premium durations, Hybrids may be more expensive in the short-term compared to traditional policies.
Hybrid LTC policies are becoming increasingly popular — some 404,000 policies were sold in the United States in 2018.

2. What does LTC insurance generally cover?
Long-term care insurance may cover expenses related to assisting chronically ill people with their personal care needs, such as bathing, dressing, and moving between a bed or chair. It can also involve helping them accomplish everyday tasks, such as housework, managing money, preparing meals, shopping, and caring for pets.

Policies may also help pay for home- and community-based services, such as adult day care, caregiver training, home health care options, and respite care. They generally cover facility-based services, like assisted living, hospice, and nursing home care.

3. How will I receive benefits?
Your benefits will typically begin when you8 are certified as being chronically ill by a licensed health care practitioner and have satisfied your elimination period. This means you can’t perform at least two daily living activities due to a loss of function, or you need supervised protection due to severe cognitive impairment.

You can receive your benefits in one of two ways, either as a reimbursement for expenses incurred, or through a set monthly benefit amount often referred to as cash indemnity. With a reimbursement policy, you must first pay for qualifying medical expenses out-of-pocket, and then submit a receipt to the carrier to be reimbursed. On the other hand, a cash indemnity policy automatically sends you a monthly cash benefit that you can use to cover any of your care expenses, such as informal care, medical equipment, prescriptions, and even housekeeping and home maintenance needs.

4. What happens if I buy a policy but don’t need long-term care?
Traditional LTC insurance is generally “use it or lose it”, which means you typically won’t get any benefits from your policy if you don’t need LTC. Some traditional LTC insurance may allow you to get your money back if you decide you no longer want the policy, but this feature tends to be very expensive.

Hybrid LTC insurance will typically pay a death benefit if the policy is not used for long-term care costs. Also, many hybrid LTC policies offer a “return of premium” feature, which means if you give up your policy you can get back some or all of the money you have paid in.

5. Are there tax benefits to long-term care insurance?
For traditional LTC insurance, all or a portion of the premium may be tax-deductible based on some IRS limitations and qualifications. However, other than a handful of hybrid policies, the premiums associated with these plans are generally not tax deductible.

When it comes to how your LTC benefit may be taxed, LTC benefit payments are not taxable so long as:

Your benefit is equal to the actual expenses incurred, or
Your benefit is less than the IRS per diem ($370 in 2019)9

A rewarding life is really about being present in the here and now. Planning for your future health care can help you and your family do that. So you can enjoy the everyday moments — and confidently look forward to the major milestones, like retirement.

How to Include Medicare In Your Retirement Planning

11/8/2019

First off, know what Medicare’s different letters mean:

Medicare Part A covers hospital visits
Medicare Part B entails doctor visits
Medicare Part D is for prescriptions

What about Part C?
Medicare Part C (also known as Medicare Advantage plans) is all-in-one coverage (hospital, doctor, and prescription coverage) that is sold through private insurers that contract with Medicare. It may also include dental and vision coverage.

When does Medicare become available to me?
You’re automatically enrolled in Medicare Parts A and B at the age of 65, if you’re already earning Social Security, Or you’ll have the option to receive it when you get disability benefits from the Social Security Administration or Railroad Retirement Board.

Perhaps you’re eligible for Medicare Parts A and B, but need supplemental insurance for costs not covered by “original Medicare” (i.e., dental, vision, hearing aids, eye glasses, long-term care, and private-duty nursing)
.
There is a six month initial open enrollment period for Medigap coverage that starts the month you turn 65.5

How are Medicare premiums paid?
For Part A, no additional premium is paid. For Part B, the premium is paid through a reduction in Social Security benefits. And for Parts C and D, it all depends on the kind of private insurance you have.

How much will Medicare cost me?
It all depends. Just know that health care costs could be your biggest expense post-retirement. For a preview of what your costs could be, go to Medicare.com, enter your zip code and select a plan. Then, consider your health history (and your family’s), what your future finances will be, and other factors that could affect your money in retirement.

And remember that Medicare doesn’t cover dental, vision, hearing conditions or long-term care. You’ll need a separate insurance plan if you don’t want to pay for these medical expenses out-of-pocket. And, oftentimes, you might still need to pay deductibles and copayments on services covered by Medicare.

Do I need to save for Medicare when planning for retirement?
Yes, you should do what you can now to help plan for your costs due to Medicare.

According to a recent report, health care expenses are expected to increase by 5.5 percent every year, which is triple the inflation rate from 2012 to 2016. In 10 years, a retired couple will need up to 92 percent of their Social Security benefits to help cover health care costs.

Consider contributing to a health savings account (HSA), which has a triple tax advantage — meaning that contributions are pretax or tax-deductible, grow tax-free, and can be withdrawn without being taxed when used on qualified medical expenses and premiums. And any unspent funds roll over to the next year.

Long-term care insurance provides services (such as nursing home care) that Medicare doesn’t cover. To qualify, you likely will need to purchase while in good health. So make it something you consider when planning for your retirement.

Can I do anything now to make paying for Medicare later any easier?
You can also make healthy choices now to increase your chances of aging well and helping to mitigate extra health expenses down the road.8 It will help you feel better now – especially with all this talk about Medicare costs – and potentially in the long run.

Are there any unexpected taxes related to paying for Medicare?
Your modified adjusted gross income (which includes capital gains, Social Security, required minimum distributions from IRAs and 401(k)s, and more) determines the amount you pay for Medicare Part B premiums.

The 10-10-10 Product From AIG Will Knock Out 3 Birds With 1 Stone

11/7/2019

The document below shows annual premiums if you apply for this product at different ages ...

How to Grow Protected Lifetime Income While You Defer RMDs?

11/6/2019

The document below is a good description of QLAC and how to grow protected lifetime income while you defer RMDs.