LBA provides valuable information in the following articles to assist in your decisions.
“I’m considering retiring, but I don’t know what to do, and as I think about it, I’m not even sure what retirement is?”
If this is the way you feel, you’re not alone. For many who have been working for 30, 40, or even 50 years, in a significant and demanding position, you probably feel that you are defined by your work. So, what happens when you stop? Everyone needs a reason to get out of bed in the morning, what will your reason be?
The dictionary defines “retirement” as:
None of the definitions say the “golden years”.
A recent TV commercial depicted retirement as someone going into the office, flipping over their desk, and yelling “I’m otta here”, then what?
Doing a bit of research, an article discussed the phases of retirement which was interesting and real:
So why is it that some people retire and they are happy, and others are miserable? It must be the money, right? People who retire with more money are happier than those who retire with less money, right?
Many people feel that if you have the financial resources, and you’ve figured out the complexities of Medicare, then you’re ready to step into retirement. Maybe it’s even more complicated than that. Maybe it’s not just about the money and your physical health; maybe there is a psychological component to also consider. Maybe you have some questions to work through:
It’s interesting, the Department of Labor has on their website “The Top 10 Ways to Prepare for Retirement”. Surely one of the top 10 ways must address the psychological aspects of retirement ……. no, they only discuss the money!
After some searching on the internet, if you type “am I psychologically ready to retire?”, you’ll find some interesting information worthy of your time.
Maybe the answer is simple; maybe you just need a plan!
The advisors at LBA meet lots of people who are either planning to retire, in the process of retiring, or are actually retired. Those with a plan are happier!! Be like “those people”. Remember, a goal without a plan is just a wish.
Submitted by Robert Dumais, Principal at Legacy Benefit Advisors (LBA).
LBA is collaborating with Robert Delaney, Executive Director at the RI Institute for Labor Studies and Research on a “Pre-Retirement” program for the members of the RI Labor Community. More to follow.
This is a heavily debated topic. Some experts in the field feel that it is best to start as early a possible, while others suggest starting as late as possible. We suggest that the answer is difficult because we don’t know when we will pass on. If we knew that, the answer would be something we could easily calculate.
Our second-best answer is to suggest that you wait as long as possible, and start when you really need the income. This is a simple and straightforward answer that will serve most people well.
A little background information might be helpful. Depending on your year of birth, the government sets what they call your “Full Retirement Age” (FRA). This age is significant for several reasons. If you start your SS benefit before your FRA, your benefit will be reduced by approximately 6% for each year you start early (with some exceptions the earliest start age is 62). For example, if your FRA is 67 and you start taking SS at age 62, you will collect approximately 30% less (6% x 5 yrs) each month forever, than if you waited until age 67, your FRA. Alternately, if your FRA is 67 and you wait until age 70 to start, you will collect approximately 8% more for each year you waited, but not beyond age 70. So, in this example waiting until age 70 to collect would increase your payment by 24% (8% x 3 yrs) each month forever.
The age when you would break even, comparing an early start date with lower payments versus a late start with larger payments, differs a bit from one individual to another but it is typically around age 80.
If you live past your break-even age, the best decision would have been to wait as late as possible, if you pass before your break-even age, the best decision would have been to start as early as possible. The expression “hindsight is 20/20”, applies.
Another factor to consider is that on average, life expectancies are getting longer, and living to 100 and beyond is actually becoming fairly common. With that in mind, the larger payment associated with waiting as late as possible would certainly be beneficial if you live well beyond your break-even age.
Another factor to consider when choosing a start date is whether or not you plan to work after you retire, and how much would you expect to earn if you continue to work. If you thought the definition of retirement was that you would no longer work, for many the word “retirement” is the age when you no longer “need” to work, but you might still “choose” to work. The concern here is that if you start collecting SS before your FRA, your working earnings will be monitored. If you exceed the government’s predetermined cap, your SS payments will be reduced, and some or all of your SS benefit will be deferred. So, if you thought you would start your SS at 62 and continue to work full time, significantly increasing your income, you might be disappointed.
Another point to consider is the fact that if both spouses are collecting SS, and one spouse passes, the surviving spouse will not collect both SS payments, the surviving spouse will collect the larger of the two and the other will stop. This rule might be justification to have the spouse with the higher SS payment wait as late as possible even if the spouse with the lower payment starts early.
In a nutshell, SS is complicated with literally thousands of guidelines. We strongly recommend that you seek assistance from a professional.
“Being retired” is easy, but the “process of retiring” involves some key decisions which should not be taken lightly. Most people retire once, at LBA we help hundreds of people retire.
Submitted by Robert Dumais, Principal at Legacy Benefit Advisors, 401 868 1400. “www.LBAri.com”
If you are on Medicare, the dates October 15 through December 7 are extremely important because they mark Medicare Open Enrollment Season. It is the time of year when you can reevaluate your Medicare elections and make changes if you choose that would be effective January 1.
When you first made your Medicare elections, ideally you met with an independent expert who asked lots of questions. Some of those questions may have included the following:
Health questions:
Lifestyle questions:
Budget questions:
Assuming your answers to any of the questions have changed over the years, its time for you to sit with an independent expert again. The elections you made in the past might not be the best choices moving forward, and might be costing you thousands of dollars, and might even limit your access to care in the future.
Even if your status has not changed, you should still talk with an expert because the Medicare marketplace is always changing and it is your responsibility to keep pace. The best example here is prescription drugs, where the average savings from taking a second look is more than $500 per year.
Most people don’t realize that Medicare guidelines can also differ by State. The best advice is to “get free help” from an independent expert, and if they are not asking the types of questions outlined above, it might be time to go elsewhere!!
LBA’s Labor friendly team is second to none with regard to their knowledge and integrity, and you will never pay a fee for their time.
LBA is frequent contributor to the Common Ground newspaper, and they provide frequent guests on the Common Ground radio show.
“Inertia” is a word of many meanings. One definition defines it as “the force that holds the universe together." Another more relatable definition for many folks is a “resistance to change." If we target the second definition in this particular case, we can see how this "force" can directly apply to our everyday lives. Inertia is what keeps us making the same decisions over and over again, whether they are good or bad.
Take for instance, those individuals who include exercise in their daily routine; the inertia that keeps us heading to the gym is great, and it helps ensure that we maintain a healthy habit. For those who don’t enjoy exercise, however, inertia can also be what prevents them from starting. Interestingly, just like in our universe, overcoming inertia usually requires some strong outside force. For example, a doctor telling you that your lack of exercise puts you at an increased risk of a heart attack or stroke, is a strong motivating force to buy that treadmill, and may be just the push needed to make you change your habits.
If we apply inertia to financial aspects of our lives, we sometimes resist making changes that would greatly benefit us, just because it’s easier to stay on the current, albeit sometimes less beneficial course. And as life goes, months on the wrong course can turn into years, until we might think that it is too late for any course change to make an appreciable difference... so we do nothing.
The question is, how do we change course? How do we know if we are even on the right or wrong course now? Do we know for sure that what may have been the right course ten or twenty years ago, is still the right one today? Or if we set a new course now, we’ll be all set forever... right? With so many questions, it’s easy to understand why we just stay in the “groove” or “rut” as the case may be, and often do nothing. Ben Stein summarized it best when he said, “so many fail because they don’t get started… they don’t overcome inertia."
Many experts say that overcoming inertia is easier if you can secure some “short-term wins." If you wanted motivation to keep using your new treadmill, a 5lb weight loss is a great start. Continuing to use it longer may spark dreams of someday running a marathon, but nailing your first goal of running a 5K is a force in the right direction. Amazingly, as your endurance improves, so does your confidence.
The outside force required to wake us up financially may be a simple reality check... if my target retirement age is getting closer, are my assets close to where they need to be? Do I even know where they need to be? Getting started may take “a rude awakening,” as some might say. Actually sitting down and facing the fact that your dreams might be just dreams without a change, could be enough of a motivator to pursue a better track. Different things motivate different people... for some it’s the carrot, for others it's the stick.
Just like consulting a doctor is a first step to combat the inertia of a less-than-perfect fitness regiment, perhaps your first goal towards ensuring your financial freedom is simply the decision to call a professional. From there, you can discuss together whether you're on the right track, or how to change course if not. After all, life's not a sprint... it's a marathon. Don't get stuck watching from the sidelines!
Submitted by Legacy Benefit Advisors
A frequent contributor to "Common Ground"
Medicare celebrates a big anniversary this summer. It’s been 50 years since it was signed into law by President Lyndon Johnson on July 30, 1966. The biggest addition to Medicare since then has been Medicare Part D prescription drug coverage being introduced in 2003.
Many Americans have paid Medicare taxes during their working years which qualifies them for Medicare Part A coverage for free. Most people will pay between $104 and $121 per month for Part B coverage. Medicare has remained a symbol of health care access for millions of American seniors, covering people 65 and over as well as certain disabled individuals. In 2012 alone there were nearly 50 million Medicare beneficiaries.
"Original" or “Traditional” Medicare refers to the government program covering hospitalization (Part A), plus doctor visits, surgeries, lab work and other services (Part B), but it does not cover all health care expenses. Prescription Drugs are generally covered by purchasing a Medicare Prescription Drug Plan (Part D). Deductibles and copays on hospital, doctor, and other services create a gap in coverage that can prove very costly if not covered with some type of supplemental plan.
Government action has prevented major Medicare Part B premium increases for many beneficiaries in 2016. The Centers for Medicare and Medicaid Services announced that the Part B premium for most people will stay at $104.90 per month. For some beneficiaries it will be $121.80 monthly. The annual Part B deductible has increased from $147 to $166 for all beneficiaries and the Part A deductible has gone from $1260 per benefit period to $1288.
In general, Part A covers:
Part B covers things like:
Medicare recipients may secure extra coverage to fill the gaps in Original Medicare in one of two ways. One option is to purchase a Medicare supplement plan, also known as medigap coverage, which covers some or all of the benefit gaps in original Medicare. This form of coverage would require a separate prescription drug plan (Part D) if you need to cover prescription costs.
The second coverage option is to elect a Medicare Advantage plan offered through a private insurance company. If you have a Medicare Advantage Plan, your plan must give you at least the same coverage as Original Medicare. These plans will have network restrictions and often have copays associated with them but will usually have a lower monthly premium than a Medicare supplement. They will often include prescription drug coverage and can provide additional benefits that are not normally covered by Medicare such as dental and vision coverage.
Choosing the right coverage at any point in life can be confusing and making the wrong decision can be both costly and medically devastating. In general, whenever choosing medical coverage, factors you should consider include:
Since changes in Medicare options happen each year, it is important to compare plans every year to secure the coverage that best fits your individual healthcare and financial needs for the upcoming coverage period.
In order to select the best possible coverage, you will want to consult with an advisor who specializes in helping people understand their local options as well as which plans might fit their unique situation. This service will usually be provided free of charge as these advisors will be compensated directly from the companies that they represent. The best option is to meet with a broker who represents multiple carriers and can help you compare many different plans. This will ensure that you get an objective opinion about which plan may best suit your needs.
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