• 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…

  • The More Things Change, the More They Stay The Same

    July 2017 Newsletter Do you have retired clients with $134,000 of income? Are they aware of the higher Medicare tax about to hit them? As the US Senate struggles to craft legislation to repeal and replace the Affordable Care Act, one piece of significant legislation remains unchanged. Higher income Medicare enrollees currently pay higher premiums for Medicare Parts B and D. These higher premiums are called Income Related Monthly Adjustment Amounts (IRMAA). The brackets determining the amount of these premiums will change in 2018. In 2015, when the Medicare Access and CHIP Reauthorization Act announced the new brackets, there was minimal press coverage or objection to this tax increase. After all, implementation was…

  • A Bit of Good News

    June 2017 Newsletter While speaking to consumers at client symposiums, at some point in the presentation I introduce them to the IRMAA (pronounced Ehrma). It’s not a pleasant introduction, as the 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 chart below provides the income levels and corresponding premiums. Medicare Part B Premiums Medicare Part D Premiums One important fact with the IRMAA is Social Security/Medicare use income from two years prior to determine current Medicare Premiums. For example, 2017 premiums are based on 2015 income. As individuals digest this information, recent retirees will realize that two years ago they were often in a…

  • Effective Conversations Lead To Effective Planning

    May 2017 Newsletter We know our clients are concerned about retirement health care costs. A couple of facts really stand out when you look at recent pre-retiree consumer polls: Retirement Health Care is now ranking as your clients’ top concern. This concern not only spans across income levels, but actually increases among the more affluent households. It is obvious that we need to connect with clients on this topic. How do we accomplish this in a way that will spur our clients to take action and as a result, alleviate some of the concern? Much of the popular press tells a 65-year-old retiree to plan on $130,000 for routine health care costs in retirement (this excludes any custodial care…