• March 2019 Newsletter

    Early Retirement   According to a recent Gallop Pole, as individuals grow older, plans for an early retirement tend to diminish. As we put pencil to paper to determine if financial resources will support expenses, the cost of living realities are striking. The largest expense in the center of this analysis is health care costs. For those pursuing early retirement, it is critical to get a realistic health care cost estimate. Medicare enrollment prior to age 65 is only available to those with end stage renal disease, Lou Gehrig’s disease or those on Social Security disability. This means that in the absence of employer provided health care, normally we turn to the private insurance market. These policies are usually purchased on the Affordable Care Act health care exchanges (federal or state). You can also shop them directly with insurance carriers.…

  • Be a Hero

    Looking back at 2018, one of the most popular and widely utilized ideas I discussed involves helping clients reduce their Medicare Premiums when transitioning to retirement. While speaking to consumers at client symposiums, I introduce them to IRMAA (pronounced Ehrma). It is not a pleasant introduction, as IRMAA stands for Income Related Monthly Adjustment Amount and is basically a tax on Medicare Parts B and D premiums. Those with higher incomes pay higher premiums. The charts below provide the 2019 income levels and corresponding premiums. Since Medicare B and often Medicare D premiums are taken directly from one’s Social Security benefit, landing in a higher income bracket creates a tangible reduction in one of the primary sources of retirement…

  • Pay Raise

    It has been years since retirees have seen a meaningful cost of living adjustment (COLA) to their Social Security retirement benefit. The two-pronged impact of minimal COLAs coupled with substantial Medicare premium increases has flattened the amount of this important source of retirement income. 2019 will offer a small break to this pattern. Social Security announced a 2.8% increase to 2019 retirement benefits. Medicare B premiums will increase by 1.1%. Part D premiums will slightly decline.For example, a retiree with an annual 2018 retirement benefit of $20,000 will see an annual increase of $560. This assumes a national average for Part D costs. Keep in mind, retirees with higher incomes (MAGI exceeding $85,000 single or $170,000 joint) have…

  • Summer 2018 Newsletter

    Urgent Conversations Do your clients have a plan for custodial care? Do they recognize the urgency? One of the foundations of a comprehensive financial plan is having a well thought through strategy to handle custodial care, the help many of us will require with normal activities of daily living. In short, our clients need assistance thinking through who will provide this care, the resulting consequences in this person’s life, and the costs associated with this care. If properly handled, this conversation should lead to modifications in the financial plan to support the care provider and handle costs. Demographic trends and technological innovation are creating both disturbing and encouraging developments. We…

  • May 2018 Newsletter

    4 HSA Facts Every Planner Should Know In previous newsletters I have covered the basic financial planning concepts surrounding Health Savings Accounts (HSAs). Most notable is the strategy of not using the HSA for current health care expenses and instead, investing the HSA for retirement. Click the video link at the bottom of the page for a review of this strategy. Moving beyond “HSA 101” concepts, consider of few other useful planning strategies with HSAs: 1. The HSA owner has control over the money in their HSA account. This may seem somewhat basic but consider the implication. If you do not like the saving and investment options in the HSA…

  • March 2018 Newsletter

    The reason I named my book Top of the First is that we are early in the process of integrating retirement health care issues into our financial plans. This is particularly evident with the use of the Health Savings Account (HSA). In previous newsletters, I described the basics of HSAs and their potential to accumulate substantial retirement income. In short: Deposits into an HSA account are pre-tax. Earnings accumulate tax-free. Withdrawals for qualified medical expenses are tax-free. The decision to fully fund an HSA, abstain from making any withdrawals and therefore fully invest the HSA for retirement is taking hold with financial advisors. This is especially true with advisors’ personal…

  • Know Your Clients, Serve Your Clients. 4 Ideas

    February 2018 Newsletter Make 2018 the year you connect with clients on their largest concern: retirement health care. There are a number of basic building blocks that provide a comprehensive financial plan for clients. Preparing for retirement health care begins with building a health care cost estimate into one’s financial plan and preparing for the impact on retirement income. Going a bit deeper, take a look at your clientele and explore ways to implement creative and effective wealth accumulation ideas targeted to deal with retirement health care issues. Start with these four areas. 1. Who is utilizing a Health Savings Account (HSA)? Approximately 25% of U.S. households have a qualified high deductible health insurance plan with an HSA. Educate…

  • 2 Minus 0 = 0 ??

    November 2017 Newsletter The October announcement of a 2018 2% cost of living adjustment (COLA) was welcome news for Social Security recipients.  While 2% is not a large number, it comes on the heels of 2016 0% COLA and 2017 .3% COLA.  Medicare joined the good news by announcing there will be no increase to the base Part B premiums in 2018. Given that most individuals see the Part B premiums deducted from their Social Security Retirement Benefit, one would expect to see a simple 2% pay raise next year. The reality is: Most Social Security recipients will see close to no increase to their benefit. A very small group will see the 2% increase. Another small group…

  • Health Savings Accounts HSA and FSA ??

    October 2017 Newsletter I am looking forward to speaking at the upcoming 2017 Schwab IMPACT conference where I will be addressing the topic of Health Savings Accounts (HSAs).  Many financial planners are familiar with the concept of investing HSA assets in order to build a source of tax free retirement income in order to pay for retirement health care expenditures. This does take some planning and discipline as the idea is to pay for current health care costs with other disposable income in order to keep the HSA assets fully invested and growing for retirement. One employee benefit, a “Limited Purpose Flexible Spending Account (FSA)”, can be helpful with this endeavor.  Unlike a regular Flexible Spending Account, that…

  • Who’s on First, Whats on Second

    September 2017 Newsletter I recently had a conversation with a seasoned and successful financial advisor who expressed frustration regarding how unresponsive his clients are to repeated appeals to purchase long term care insurance solutions. The advisor’s clients were certainly the right demographic, modestly affluent and in their 50’s and 60’s. Some even had personal experience with family members or friends needing custodial care. The advisor stated that he consistently discusses the extraordinary cost of care, whether it is delivered at home or in a formal nursing home environment. He also fluently quotes the alarming statistics describing how likely it is that one will need custodial care. The basic flow, which is not uncommon, is to cite the…