medicare https://www.wisebread.com/taxonomy/term/4154/all en-US How One More Year of Work Can Transform Your Retirement https://www.wisebread.com/how-one-more-year-of-work-can-transform-your-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-one-more-year-of-work-can-transform-your-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/our_business_has_no_flaws.jpg" alt="Our business has no flaws" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As you glance into the future, do you see a life of endless work stretching out in front of you? If so, you're not alone. An increasing number of people are wondering how they'll ever be able to retire.</p> <p>But maybe things aren't as bad as they seem. In fact, a recent study found that delaying retirement by just <em>a few months</em> could have a major impact on your ability to retire and your standard of living in retirement.</p> <p>A National Bureau of Economic Research (NBER) study concluded that &quot;working three to six months longer boosts retirement income by as much as increasing retirement contributions by one percentage point over 30 years of employment.&quot;</p> <p>More specifically, the study found that instead of retiring at age 66, working until age 67 can boost retirement income by 7.75 percent. By contrast, increasing the amount of earnings saved in a retirement account by one percentage point starting at age 36 and keeping it at that level for the next 30 years would raise retirement income by just over 2 percent.</p> <p>The NBER findings held true for singles as well the primary earner of married couple households across a wide range of incomes.</p> <p>That isn't to say that increasing your savings rate is a bad idea. It's just that of the two main options available to workers who are behind on their retirement planning &mdash; saving more or working longer &mdash; working <em>even a little </em>longer will likely pay higher dividends than saving more.</p> <h2>The value of waiting</h2> <p>The researchers noted four benefits from delaying retirement. First, each additional month of work provides an opportunity to save more in a retirement account. Second, it gives that account balance more time to grow. Third, if you plan to buy an annuity, each month that you hold off will increase the benefit amount for the same cost or lower the cost of the same benefit amount.</p> <p>Fourth, and by far most importantly, each month you delay retirement will boost your Social Security benefits. The earliest you can claim benefits is age 62; the latest is age 70. Between those two points, each month that you wait will increase your monthly benefit.</p> <p>You can review your estimated Social Security benefits by creating an account on the <a href="https://secure.ssa.gov/RIL/SiView.do" target="_blank">SSA website</a>. You'll see how dramatically different your estimated monthly benefits will be at age 62, at your &quot;full retirement age&quot; (67 for those born in 1960 or later), and at age 70. For example, my benefit will increase more than 50 percent if I claim at age 67 instead of 62. And if I wait until age 70, my benefit will be nearly twice as high as my age 62 benefit.</p> <p>Once you know your full retirement age benefit, you can also estimate the month-by-month or year-by-year differences in your benefits by using the <a href="https://www.ssa.gov/oact/quickcalc/early_late.html" target="_blank">SSA's calculator</a>. For example, if I were to claim benefits beginning at age 67 instead of age 66, waiting that extra year would give me a 6.5 percent raise &mdash; $2,750 per month vs. $2,582, a difference of $168 per month or $2,016 per year.</p> <p>To understand how that compares to saving more, let's start with &quot;the 4 percent rule,&quot; a common recommendation to withdraw no more than 4 percent of your nest egg each year in order to make sure your retirement savings last throughout retirement. Following that guideline, it would take $50,400 of additional retirement savings in order to provide a $2,016 boost of yearly retirement &quot;income.&quot;</p> <p>To accumulate that much more money in her retirement account, a 56-year-old making $80,000 per year would have to contribute an additional 4.3 percent of salary each month ($289.50) to her workplace retirement plan, generate an average annual return of 7 percent, and do that for 10 years. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <p>There may be other benefits to delaying retirement as well.</p> <h2>Continued employer matches on retirement savings</h2> <p>If your employer matches a portion of the money you contribute to your workplace retirement plan, that's an incredible benefit. The longer you keep taking advantage of it, the larger your nest egg will grow. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h2>Extended group health insurance</h2> <p>Medicare eligibility begins at age 65, so if you retire before then, you'll need to find coverage elsewhere, which can be expensive. By the same token, if you continue to work past age 65, you may be able to hang onto your group health insurance, which may be more comprehensive than Medicare.</p> <p>If that's your situation, be sure to contact your benefits department to see how your current health insurance works with Medicare. It may be that you'll have to sign up for Medicare even if you keep your current insurance. The number of people employed at your company will dictate how payment of claims will be coordinated between the two insurance plans. (See also: <a href="http://www.wisebread.com/4-common-mistakes-to-avoid-when-you-enroll-in-medicare?ref=seealso" target="_blank">4 Common Mistakes to Avoid When You Enroll in Medicare</a>)</p> <h2>More employer-provided education opportunities</h2> <p>Employer-sponsored training is another valuable benefit, whether it comes in the form of tuition reimbursement for college classes or in-house workshops. If you're among the growing number of people who plan to do some type of work for pay after leaving the full-time workforce, new skills you pick up on your current employer's dime could be well worthwhile.</p> <p>If you're behind on your retirement planning, hopefully this has shown you that you probably won't have to work forever in order to cover your later life expenses. Even relatively small delays in your retirement can make a meaningful difference. And when you factor in the other benefits of working a bit longer, you may be in far better shape than you thought. (See also: <a href="http://www.wisebread.com/6-great-retirement-jobs?ref=seealso" target="_blank">6 Great Retirement Jobs</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=https%3A%2F%2Fwww.wisebread.com%2Fhow-one-more-year-of-work-can-transform-your-retirement&amp;media=https%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520One%2520More%2520Year%2520of%2520Work%2520Can%2520Transform%2520Your%2520Retirement.jpg&amp;description=How%20One%20More%20Year%20of%20Work%20Can%20Transform%20Your%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/How%20One%20More%20Year%20of%20Work%20Can%20Transform%20Your%20Retirement.jpg" alt="How One More Year of Work Can Transform Your Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="https://www.wisebread.com/how-one-more-year-of-work-can-transform-your-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/what-you-need-to-know-about-working-while-collecting-social-security">What You Need to Know About Working While Collecting Social Security</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age">3 Reasons to Claim Social Security Before Your Retirement Age</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-face-4-ugly-truths-about-retirement-planning">How to Face 4 Ugly Truths About Retirement Planning</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement employer match full retirement age income insurance medicare social security working Mon, 02 Jul 2018 08:30:17 +0000 Matt Bell 2153115 at https://www.wisebread.com 5 Ways to Embrace Having to Work in Retirement https://www.wisebread.com/5-ways-to-embrace-having-to-work-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-embrace-having-to-work-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/confident_mature_businesswoman_sitting_at_desk.jpg" alt="Confident mature businesswoman sitting at desk" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all know what retirement is supposed to look like: You get a nice farewell luncheon and a gold watch from your employer &mdash; and then you get busy golfing, traveling, spoiling the grandkids, and generally living it up in your golden years.</p> <p>So if you find yourself with an underfunded nest egg and the realization that you have to continue working in retirement, you can be forgiven for wanting to throw an epic temper tantrum. Working in retirement is not what we were promised, and if that doesn&rsquo;t warrant some flailing and crying, I don&rsquo;t know what does.</p> <p>But not being able to fully retire doesn&rsquo;t have to put you in a permanent bad mood. Once you&rsquo;ve stopped shaking your fist at the heavens, consider these ways to not only accept, but also embrace the reality of working in retirement.</p> <h2>1. You may be happier than retirees</h2> <p>Though it might seem like retirement is the key to happiness, psychological researchers have found that working is actually better for your subjective well-being. According to a 2014 study by Dr. Elizabeth Mokyr Horner in the Journal of Happiness Studies, retirees do experience a rush of well-being and life satisfaction in the first few months after they retire &mdash; but they feel a sharp decline of their levels of contentment within the first few years of retirement.</p> <p>There are a couple of reasons for this decline in happiness. First, anything you spend years planning for is unlikely to live up to your expectations. It&rsquo;s only natural for retirees to feel let down when they realize their new chapter in life isn&rsquo;t exactly what they expected. In addition, when you end a career that has helped define who you are, it&rsquo;s common to feel adrift once that career has ended. Finally, retirement can often lead to a shrinking social circle, since you no longer see co-workers on a daily basis. Lack of social contact can increase feelings of loneliness and depression, which can be a major problem among retirees.</p> <p>Even if you are not happy about the fact that you have to work past retirement age, remember that working may actually be improving your happiness by helping to define you, giving you a broader social circle, and providing you with a reason to get up every morning. (See also: <a href="http://www.wisebread.com/how-to-find-your-new-identity-after-retirement?ref=seealso" target="_blank">How to Find Your New Identity After Retirement</a>)</p> <h2>2. You can make your workplace better</h2> <p>One of the benefits of working past traditional retirement age is the amount of knowledge and experience you bring to your job. Not only does that make you a valuable member of your workplace, but it provides you with an opportunity to help encourage and shape the culture there. By taking younger co-workers under your wing and making suggestions based on your depth of knowledge, you can potentially improve the company you work for. It&rsquo;s tough to do this without the kind of clout your experience lends you.</p> <h2>3. You can put off taking Social Security</h2> <p>According to the Center for Retirement Research at Boston College, approximately 42 percent of men and 48 percent of women begin taking their Social Security benefits at age 62, the earliest you are eligible to receive them. But Social Security benefits are permanently reduced by up to 30 percent by taking them so far in advance of full retirement age.</p> <p>If you are still working in retirement, you can put off taking your Social Security benefits, and thereby increase your monthly benefit by as much as 8 percent per year that you put off Social Security. In addition, you may also be increasing your Social Security monthly payment by continuing to work, since the Social Security Administration calculates your benefit based on your 35 highest earning years. If you are at the top of your lifetime salary while working past retirement age, these high earning years will replace lower earning years from your youth &mdash; and potentially increase your monthly payment. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>4. You are in a retirement investment sweet spot</h2> <p>Though working past retirement age may not be your idea of fun, it does give you an unparalleled opportunity to invest. First, since you are over the age of 50, you can take advantage of the catch-up provisions that allow you to contribute up to $24,500 to your 401(k) and up to $6,500 to your IRA, allowing you to reduce your tax burden while funding your retirement accounts.</p> <p>In addition, since you are working longer, that means you have a longer investment timeline to play with. This can allow you to invest for growth in ways that a typical retiree could not, since she would be trying to protect principal. Since you anticipate working for a few more years, you get a few more years of the magic of compound interest working to build your wealth. (See also: <a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50?ref=seealso" target="_blank">7 Reasons to Invest in Stocks Past Age 50</a>)</p> <h2>5. You can keep using your employer&rsquo;s health insurance</h2> <p>All Americans are eligible for Medicare as of age 65, but the program costs more than you might expect and covers less than you might think. Not only do you have to pay a premium of at least $134 per month for Medicare Part B, but you will be on the hook for 20 percent of the Medicare approved amount for health care after you have met the annual deductible of $183. In addition, Medicare does not cover prescription drugs, dental or vision care, foot care, hearing aids, or dentures.</p> <p>Being able to stay on your employer&rsquo;s health insurance could be a major benefit to working, since you are likely to have more comprehensive coverage under that insurance and it may be less expensive for you, as well. (See also: <a href="http://www.wisebread.com/4-common-mistakes-to-avoid-when-you-enroll-in-medicare?ref=seealso" target="_blank">4 Common Mistakes to Avoid When You Enroll in Medicare</a>)</p> <h2>No need to curse the heavens</h2> <p>Working in retirement may not be what you planned, but it doesn&rsquo;t have to feel like the end of the world. If you take the time to recognize how working in retirement can actually help your emotional, mental, financial, and physical well-being, you can embrace the reality of working when you&rsquo;d expected to be golfing.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=https%3A%2F%2Fwww.wisebread.com%2F5-ways-to-embrace-having-to-work-in-retirement&amp;media=https%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Ways%2520to%2520Embrace%2520Having%2520to%2520Work%2520in%2520Retirement.jpg&amp;description=5%20Ways%20to%20Embrace%20Having%20to%20Work%20in%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/5%20Ways%20to%20Embrace%20Having%20to%20Work%20in%20Retirement.jpg" alt="5 Ways to Embrace Having to Work in Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="https://www.wisebread.com/5-ways-to-embrace-having-to-work-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/8-ways-to-preserve-your-net-worth-in-retirement">8 Ways to Preserve Your Net Worth in Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-one-more-year-of-work-can-transform-your-retirement">How One More Year of Work Can Transform Your Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-signs-you-need-to-come-out-of-retirement">5 Signs You Need to Come Out of Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/tiny-nestegg-retire-abroad">Tiny Nestegg? Retire abroad!</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement back to work Health health insurance investing medicare quality of life retirees social life social security well-being Thu, 28 Jun 2018 08:00:15 +0000 Emily Guy Birken 2148704 at https://www.wisebread.com Why Health Care Should be Part of Your Retirement Savings Plan, Too https://www.wisebread.com/why-health-care-should-be-part-of-your-retirement-savings-plan-too <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-health-care-should-be-part-of-your-retirement-savings-plan-too" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/making_a_financial_plan_0.jpg" alt="Making a financial plan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You might think that retirement planning should be all about the fun and rewarding stuff you are saving up for: remodeling your home, traveling, spoiling your grandkids, and enjoying life. But only thinking about the good parts of your retirement leaves a major piece of your future unfunded: health care.</p> <p>The fact of the matter is that health care could be your largest retirement expense &mdash; by a lot. Each year, Fidelity calculates the average cost of medical expenses for a 65-year-old couple retiring during that calendar year. In 2018, Fidelity has calculated that the average couple will need $280,000 in today's dollars to cover medical expenses in retirement &mdash; and that figure does not include long-term care.</p> <p>As heartburn-inducing as that number is, it's not time to panic. Even people earning average incomes can prepare for health care costs in retirement without robbing a bank, moving in with their children, or learning to practice medicine on oneself. Here's what you need to know about medical care in retirement, and how to prepare yourself and your budget for it. (See also: <a href="http://www.wisebread.com/4-affordable-retirement-spots-with-world-class-health-care?ref=seealso" target="_blank">4 Affordable Retirement Spots With World-Class Health Care</a>)</p> <h2>Your health in retirement</h2> <p>Let's start with the bad news: It's likely that your health will deteriorate in retirement.</p> <p>In some ways, it's harder to think about declining health than it is to think about mortality, since we know the latter is inevitable. The statistics on preparing for death vs. preparing for poor health in retirement bear this out, since 42 percent of Americans have a will or estate plan in place, according to a Care.com survey, while the Economic Policy Institute found that only 30 percent of Americans have more than $1,000 saved for retirement.</p> <p>But declining health as you age is a fact of life. According to the CDC, three out of every four Americans over the age of 65 have multiple chronic conditions. These are defined as illnesses or medical conditions that last a year or longer and require ongoing medical attention or limit daily activities.</p> <p>In addition, the Alzheimer's Association reports that one out of every three seniors dies with Alzheimer's or another form of dementia. What is so pernicious about these medical issues is the fact that dealing with chronic health conditions or dementia can be devastating to a retirement budget. (See also: <a href="http://www.wisebread.com/dont-let-poor-health-kill-your-retirement-fund?ref=seealso" target="_blank">Don't Let Poor Health Kill Your Retirement Fund</a>)</p> <h2>What about Medicare?</h2> <p>What is most concerning about the Fidelity calculation of $280,000 for medical care costs in retirement is the fact that the numbers are based on a 65-year-old retiring couple, which means they are eligible for Medicare. In fact, Medicare premiums make up 35 percent of Fidelity's calculation, or $98,000. (The remaining breakdown is 45 percent to co-payments, coinsurance, and deductibles, and 20 percent to prescription drugs.)</p> <p>Medicare costs more than you realize, and covers less than you'd expect. It's important to understand what Medicare does and does not cover. (See also: <a href="http://www.wisebread.com/5-common-medicare-myths-debunked?ref=seealso" target="_blank">5 Common Medicare Myths, Debunked</a>)</p> <h3>Medicare Part A</h3> <p>Medicare Part A, which is also known as hospital insurance, charges no monthly premium for the majority of enrollees. However, Part A coverage is quite sparse. It is called hospital insurance for a reason &mdash; because it only (partially) covers inpatient hospital care, inpatient care in a skilled nursing facility, home health care, and hospice care. In short, Medicare Part A will only pay for a serious medical problem that either lands you in the hospital or is expected to be fatal. It does not cover doctor's visits or prescriptions.</p> <p>In addition, Part A only partially covers this care. You will still have to meet a deductible of $1,340 (for 2018) for each benefit period, and you will be responsible for a coinsurance amount of $335 per day if you stay more than 60 days in a hospital and $167.50 per day if you stay more than 20 days in a skilled nursing facility. (See also: <a href="http://www.wisebread.com/4-common-mistakes-to-avoid-when-you-enroll-in-medicare?ref=seealso" target="_blank">4 Common Mistakes to Avoid When You Enroll in Medicare</a>)</p> <h3>Medicare Part B</h3> <p>This is the part of Medicare that works like regular health insurance. The majority of beneficiaries will pay a monthly premium (which can be deducted from their monthly Social Security check) for this program. As of 2018, the monthly premium for most Medicare Part B beneficiaries is $134, although higher income beneficiaries may have to pay more.</p> <p>On Part B, you will pay all costs for covered services up to the yearly $183 deductible. Once that has been met, you will generally pay 20 percent of the Medicare-approved amount for most doctor services, outpatient therapy, and durable medical equipment. However, Medicare Part B does not cover long-term care (nonmedical help that the elderly may need for daily living), prescription drugs, routine dental or eye care, dentures, hearing aids or exams for fitting them, or routine foot care.</p> <p>These coverage gaps can help explain the astronomical amount of money Fidelity calculates for health care needs in retirement. (See also: <a href="http://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare?ref=seealso" target="_blank">How to Make Sense of the Different Parts of Medicare</a>)</p> <h2>Why you shouldn't panic</h2> <p>While none of this is good news, it's still no reason to go on a bank-robbing spree or start playing the lottery. There are a number of savvy strategies you can adopt right now to help make sure health care does not overwhelm your retirement budget.</p> <h3>1. Take care of your health</h3> <p>Adequate sleep, exercise, and healthy eating may not seem like part of your financial plan, but they can potentially have a greater return than any traditional investment. Taking better care of yourself can help to improve your health and potentially reduce the need for medical care as you age.</p> <p>However, it's important to remember that even the most fit ultramarathoner who consumes only kale smoothies is not immune to the vagaries of poor health. But you will never regret taking care of yourself, because at the very least, it helps you to feel better in the present. (See also: <a href="http://www.wisebread.com/7-smart-ways-to-invest-in-your-health?ref=seealso" target="_blank">7 Smart Ways to Invest in Your Health</a>)</p> <h3>2. Investigate long-term care insurance</h3> <p>One of the biggest coverage gaps in Medicare is long-term care, which is help that a senior might need with daily living activities such as bathing, dressing, eating, and mobility. Private health insurance also does not cover this kind of care, which means any retiree who needs it will be on the hook to pay for it herself. And according to the Department of Health and Human Services, the average 65-year-old today has a 70 percent chance of needing long-term care at some point in the future.</p> <p>Long-term care insurance can potentially fill the coverage gap. This kind of insurance will help pay for your nonmedical long-term care after you have reached the end of the &quot;elimination period,&quot; which can last anywhere from 20 days to 120 days. Until that point, you will pay for your care out of pocket.</p> <p>Long-term care insurance isn't cheap, though. Prices vary, but a 60-year-old couple could expect to pay between $2,700 and $5,600 per year for a policy that pays for $150 per day in care, for a benefit period of three years. (See also: <a href="http://www.wisebread.com/the-best-age-to-buy-long-term-care-insurance?ref=seealso" target="_blank">The Best Age to Buy Long-Term Care Insurance</a>)</p> <p>This kind of insurance is the best option for about 20 to 30 percent of retirees, according to the Center for Retirement Research at Boston College &mdash; those who have a moderate nest egg. For many others, it will make more sense to exhaust their assets to become eligible for Medicaid, which will cover long-term care. (See also: <a href="http://www.wisebread.com/5-ways-to-make-long-term-care-more-affordable?ref=seealso" target="_blank">5 Ways to Make Long-Term Care More Affordable</a>)</p> <h3>3. Consider a health savings account</h3> <p>If you are in good health as you approach retirement, you may want to sign up for a health savings account (HSA). This account, which works a little like an IRA, allows families to contribute up to $6,900 (as of 2018) and individuals to contribute up to $3,450 in pretax income. If you are over the age of 55, you can contribute an additional $1,000 above these limits. The money grows tax-deferred, and as long as you use any withdrawals for qualified medical expenses, they are also untaxed.</p> <p>The downside of HSAs is that you must have a high-deductible health insurance policy to qualify for one. To be considered a high-deductible policy, your insurance must have a deductible of least $1,350 per individual or $2,700 for a family, and an out-of-pocket maximum that is at most $6,650 per individual plan or $13,300 per family plan.</p> <p>This makes HSA plans a bit of a difficult choice. If you enjoy good health as you approach retirement, they can be an excellent option, since you can also make penalty-free nonmedical withdrawals after age 65 (although you will pay taxes). That means your HSA can be one part of your retirement nest egg that can be used for something other than medical care if you continue to have good health.</p> <p>But the high-deductible health plan puts you in a bad position if you get sick before reaching Medicare eligibility. You might end up having to raid your HSA before your official retirement. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <h3>4. Open a Roth IRA for health care savings</h3> <p>Roth IRAs are tax-advantaged investment vehicles that allow you to put aside already taxed money into the account, where it grows tax-deferred. As long as you keep the Roth IRA for at least five years and are over age 59&frac12;, you can withdraw funds from the account tax-free. As of 2018, you can set aside $5,500 per year, and savers over the age of 50 can contribute an additional $1,000.</p> <p>This makes the Roth IRA a good place to earmark funds for health care in retirement. Since there is no penalty or tax on withdrawn funds, you do not have to worry about how a big withdrawal for medical care could affect your taxes in retirement.</p> <p>You can determine the asset allocation of your Roth IRA based on your health expectations. If you are in good health as you approach retirement, plan on investing mostly in growth-oriented stocks, since you don't anticipate needing expensive health care until 10 or 20 years after retirement. If you already have a chronic health issue or know that certain medical problems run in your family, you may want to put most of your money in more stable investments, and only allocate a portion for growth. (See also: <a href="http://www.wisebread.com/the-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement?ref=seealso" target="_blank">The Right Way to Withdraw Money From Your Retirement Accounts During Retirement</a>)</p> <h2>The good, the bad, and the healthy</h2> <p>Health care in retirement does not need to overwhelm your budget. If you make sure you recognize the potential costs and understand Medicare's coverage gaps, you can prepare for your medical needs as you age. (See also: <a href="http://www.wisebread.com/follow-these-5-steps-to-full-health-care-coverage-in-retirement?ref=seealso" target="_blank">Follow These 5 Steps to Full Health Care Coverage in Retirement</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=https%3A%2F%2Fwww.wisebread.com%2Fwhy-health-care-should-be-part-of-your-retirement-savings-plan-too&amp;media=https%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Health%2520Care%2520Should%2520be%2520Part%2520of%2520Your%2520Retirement%2520Savings%2520Plan%252C%2520Too.jpg&amp;description=Why%20Health%20Care%20Should%20be%20Part%20of%20Your%20Retirement%20Savings%20Plan%2C%20Too"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/Why%20Health%20Care%20Should%20be%20Part%20of%20Your%20Retirement%20Savings%20Plan%2C%20Too.jpg" alt="Why Health Care Should be Part of Your Retirement Savings Plan, Too" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="https://www.wisebread.com/why-health-care-should-be-part-of-your-retirement-savings-plan-too">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-ways-to-build-retirement-stability-in-your-50s">5 Ways to Build Retirement Stability in Your 50s</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-the-self-employed-can-cut-health-care-costs">How the Self Employed Can Cut Health Care Costs</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings">4 Ways Couples Are Shortchanging Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-one-more-year-of-work-can-transform-your-retirement">How One More Year of Work Can Transform Your Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-revamp-your-budget-for-retirement">How to Revamp Your Budget for Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Health and Beauty Retirement health care health savings accounts HSA insurance long-term care medicare Roth IRA staying healthy Wed, 27 Jun 2018 08:30:15 +0000 Emily Guy Birken 2152287 at https://www.wisebread.com How to Revamp Your Budget for Retirement https://www.wisebread.com/how-to-revamp-your-budget-for-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-revamp-your-budget-for-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/they_have_got_budgeting_down_to_an_art.jpg" alt="They have got budgeting down to an art" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Retirement is a major life adjustment for most people. From figuring out how to spend your days, to determining the best way to manage your personal finances, there are many choices to make.</p> <p>Once you leave the world of paychecks and the daily 9-to-5 behind you, you may also think you're done with budgeting. At this point in your life, you may believe you've got a good handle on your spending and saving habits, and there's no point to budgeting anymore. But that couldn't be further from the truth. Here's a primer on all the ways your post-work budget needs to change.</p> <h2>Pay yourself and the IRS</h2> <p>The first step of building any household budget is figuring out total income. You now have the task of recreating a paycheck for yourself based on your available income sources. In retirement, that may mean a combination of Social Security benefits, a pension, distributions from IRAs and 401(k)s, and personal savings. You'll simultaneously need to cover your monthly living expenses and continually monitor the total balance of your portfolio.</p> <p>Your Social Security check will be a set amount each month, and any pensions or annuities you have may also be. Once you've established how much money you'll need on top of those benefits, you can determine how much to take out of your tax-advantaged retirement accounts.</p> <p>Then there are taxes to consider. You may have the option to have federal income taxes withheld from these payments, and while it's not required that you do so, it will save you the hassle of having to file quarterly estimated taxes. In any case, you'll need to factor taxes into your ongoing budget. (See also: <a href="http://www.wisebread.com/heres-how-you-should-budget-your-social-security-checks?ref=seealso" target="_blank">Here's How You Should Budget Your Social Security Checks</a>)</p> <h2>Stop saving for retirement</h2> <p>You've spent your entire pre-retirement life saving and accumulating assets so that one day you'd be able to live comfortably without having to work. Now that you're finally in the decumulation phase, you no longer have to save a portion of your monthly income for long-term goals. Monthly retirement contributions are one line item you can remove from your budget.</p> <h2>Increase your emergency fund</h2> <p>During your working and saving years, it's important that you have enough cash saved to cover a large unexpected bill or a job loss in order to prevent having to take early withdrawals from retirement accounts or take on debt.</p> <p>In retirement, your need for cash savings may be even greater, but for different reasons. You may not have to worry about something like a job loss, but emergencies can still happen. As your home and vehicle age, you may find yourself needing to make major repairs or replacements. A health care crisis could devastate your finances. If you aren't prepared for major unexpected expenses, you risk wiping out a portion of the nest egg you're meant to be living on for the next few decades.</p> <p>Remember, unlike your pre-retirement years, the majority of your savings may now be in tax-deferred retirement accounts. As you build your yearly income stream, you'll also be considering your income tax liability, taking into account your portfolio balance and your expected withdrawal rate. What happens to those numbers if you have a large emergency expense one year? Having to take distributions from your retirement accounts during those times may permanently affect the long-term viability of your nest egg, which is why a cash reserve can help support your overall retirement plan.</p> <p>Standard financial advice recommends that working people build an emergency fund that can cover at least six months' worth of essential living expenses. In retirement, you should strive to save between 12 and 18 months' worth of those living expenses, including annual insurance premiums. (See also: <a href="http://www.wisebread.com/yes-you-still-need-an-emergency-fund-in-retirement?ref=seealso" target="_blank">Yes, You Still Need an Emergency Fund in Retirement</a>)</p> <h2>Assess your changing housing costs</h2> <p>Housing is usually the largest household expense in everyone's budget, regardless of whether you rent or own. But after raising families and possibly paying a mortgage for 30 or more years, you may be in a position to either downsize, eliminate your mortgage payment, move to a new location, or a combination of all of these options &mdash; which can all meaningfully affect your budget.</p> <p>As you prepare for retirement and rethink your income and budget needs, carefully calculate what your new housing and associated costs will be. For example, you may think about moving into a smaller apartment or condo in a trendy part of town, but a more expensive location can unexpectedly increase your other everyday living expenses.</p> <h2>Prepare for a possible increase in medical expenses</h2> <p>If you're used to having employer-sponsored health insurance, be prepared to do your homework on Medicare <em>before</em> you retire. Many people are surprised to learn that Medicare does not cover all health care expenses, such as routine vision or dental care. Nor does it cover some assisted living expenses, which may create a huge financial strain if you didn't purchase a long-term care policy when you were younger. And if you're traveling outside of the United States, Medicare typically won't cover any health care related costs you may incur.</p> <p>Between purchasing various Medicare coverages, like Part D for prescriptions, and perhaps obtaining a supplemental plan to close the Medicare coverage gaps, you may wind up spending significantly more on making sure all of your health needs are properly insured. Crunch the numbers and make sure your new budget takes all of this into account. (See also: <a href="http://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare?ref=seealso" target="_blank">How to Make Sense of the Different Parts of Medicare</a>)</p> <h2>Eliminate work-related expenses</h2> <p>Throughout your entire working career, you've probably spent lots of money on various professional and daily work-related expenses. When you exit the workforce, much of that will change as your lifestyle will be different. Things like business attire and dry cleaning, daily transportation and parking costs, or business certifications and professional dues can all be crossed off your budget.</p> <h2>Adjust for an increase in leisure expenditures</h2> <p>When your schedule is completely free and you no longer have a daily commitment to be at work, every day feels like a Saturday. You may find yourself spending money on things you used to do only on the weekends or when you had some time off. Whether it's spending more time eating out, traveling, or participating in hobbies, you may need to adjust your budget for your increased free time.</p> <h2>Consider your gifting choices</h2> <p>If you have children and grandchildren, you may have started thinking about including financial support for them in your retirement budget. In addition to more substantial gifting opportunities that involve legal documents (like a trust), there are other ways to support your family members. Each year, you are able to gift anyone up to the annual gift exclusion, which is $15,000 for 2018, without having to file a gift tax return. A married couple can gift a total of $30,000 to one individual in one year.</p> <p>And if you are interested in helping to save for a family member's education, you can open and fund a 529 account, which is a tax-favored education savings plan. The same yearly gifting rules apply, but with a 529 account, you are allowed to front-load five years' worth of the 2018 $15,000 yearly amount for a total of $75,000 in one year. Once again, that is doubled for a married couple. (See also: <a href="http://www.wisebread.com/4-things-you-need-to-know-about-gift-tax?ref=seealso" target="_blank">4 Things You Need to Know About Gift Tax</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-revamp-your-budget-for-retirement&amp;media=https%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Revamp%2520Your%2520Budget%2520for%2520Retirement.jpg&amp;description=How%20to%20Revamp%20Your%20Budget%20for%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/How%20to%20Revamp%20Your%20Budget%20for%20Retirement.jpg" alt="How to Revamp Your Budget for Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/alicia-rose-hudnett">Alicia Rose Hudnett</a> of <a href="https://www.wisebread.com/how-to-revamp-your-budget-for-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-myths-about-money-in-retirement">5 Myths About Money in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/heres-how-far-1-million-will-actually-go-in-retirement">Here&#039;s How Far $1 Million Will Actually Go in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Retirement emergency fund entertainment expenses gifts grandchildren health care housing income long term care medicare taxes Mon, 25 Jun 2018 08:00:29 +0000 Alicia Rose Hudnett 2150387 at https://www.wisebread.com Best Money Tips: Things That Medicare Doesn't Cover https://www.wisebread.com/best-money-tips-things-that-medicare-doesnt-cover <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-things-that-medicare-doesnt-cover" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/healthcare_money_doctor_859186988.jpg" alt="Learning what Medicare doesn&#039;t cover" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found articles things that Medicare doesn&rsquo;t cover, how to make a perfect roasted chicken, and simple ways to cut moving costs.</p> <h2>Top 5 Articles</h2> <p><a href="https://www.kiplinger.com/slideshow/retirement/T039-S001-7-things-medicare-doesn-t-cover/index.html">7 Things Medicare Doesn't Cover</a> &mdash; Medicare Part A and Part B cover a large portion of your medical expenses after you turn 65, but they still leave some pretty significant gaps in your health care coverage. [Kiplinger]</p> <p><a href="https://www.sustainablecooks.com/the-perfect-roasted-chicken/">How to Make a Perfect Roasted Chicken Every Time</a> &mdash; Here's the secret to making a perfectly juicy, fantastically flavorful roasted chicken every time! [Sustainable Cooks]</p> <p><a href="https://www.frugalwiz.com/7-simple-ways-cut-cost-moving/">7 Simple Ways To Cut The Cost Of Moving</a> &mdash; If you're moving a long distance, consider using FedEx or UPS to ship some of your nonessentials. [Frugal Wiz]</p> <p><a href="https://www.getrichslowly.org/home-improvement/">The proactive homeowner: How to stay on top of home improvement</a> &mdash; Don't let your house fall into disrepair. Develop a maintenance schedule to take care of routine chores like cleaning the gutter, washing windows, and trimming greenery. [Get Rich Slowly]</p> <p><a href="http://www.thefrugalcottage.com/7-low-cost-ways-to-make-your-home-a-nicer-place/">7 Low Cost Ways To Make Your Home A Nicer Place</a> &mdash; An inexpensive bunch of grocery store flowers will brighten your home just like that! [The Frugal Cottage]</p> <h2>Other Essential Reading</h2> <p><a href="https://www.popsugar.com/smart-living/Marie-Kondo-Packing-Tips-43791709">Packing Can Spark Joy With These 9 Tips From Organizing Expert Marie Kondo</a> &mdash; Use cloth shoe bags with fun designs that you love. Your shoes will be protected and you'll feel a bit of joy every time you see the bags. [PopSugar Smart Living]</p> <p><a href="https://www.becomingminimalist.com/inheritance/">Inheritance: It&rsquo;s More than You Think</a> &mdash; Inheritance isn't just the material goods you leave your kids. [becoming minimalist]</p> <p><a href="https://www.livingwellspendingless.com/2018/05/24/the-one-thing-that-holds-us-back/">The One Thing That Holds Us Back</a> &mdash; Limiting beliefs can come in all shapes and sizes, and can show up in different areas of our lives to keep us from reaching our full potential. [Living Well Spending Less]</p> <p><a href="https://adventuresfrugalmom.com/how-to-maintain-cleanliness-and-orderliness-at-home/">How to Maintain Cleanliness and Orderliness At Home</a> &mdash; A clean and orderly home means a healthier, more productive household. [Adventures of Frugal Mom]</p> <p><a href="https://www.leahingram.com/best-wedding-bridal-registry-save-money/?utm_source=rss&amp;utm_medium=rss&amp;utm_campaign=best-wedding-bridal-registry-save-money">7 Best Bridal Registry Programs That Save You Money</a> &mdash; These wedding registry programs offer freebies, bonus gifts, and other incentives that help you save money. [Leah Ingram]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="https://www.wisebread.com/best-money-tips-things-that-medicare-doesnt-cover">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/why-health-care-should-be-part-of-your-retirement-savings-plan-too">Why Health Care Should be Part of Your Retirement Savings Plan, Too</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare">How to Make Sense of the Different Parts of Medicare</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-common-medicare-myths-debunked">5 Common Medicare Myths, Debunked</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/8-tips-for-getting-the-most-out-of-your-medicare-plan">8 Tips for Getting the Most Out of Your Medicare Plan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-compare-medicare-part-d-plans-a-beginner-s-guide">How to Compare Medicare Part D Plans: A Beginner’s Guide</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Health and Beauty best money tips medicare Fri, 25 May 2018 08:30:24 +0000 Amy Lu 2143837 at https://www.wisebread.com 3 Unexpected Hurdles You Might Encounter When Applying for Social Security Benefits https://www.wisebread.com/3-unexpected-hurdles-you-might-encounter-when-applying-for-social-security-benefits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-unexpected-hurdles-you-might-encounter-when-applying-for-social-security-benefits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/making_a_financial_plan.jpg" alt="Making a financial plan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Every month, 61 million Americans collect some sort of Social Security benefit. So the process to file for and receive benefits must run like a well-oiled machine, right?</p> <p>Not necessarily. While the majority of Social Security beneficiaries enjoy a relatively simple and painless process when they apply for benefits, not everyone is quite so lucky. For some beneficiaries, the path to receiving monthly benefits may be littered with unexpected hurdles, pitfalls, and snags.</p> <p>Here's what you need to know about the potential hiccups you might encounter when applying for your Social Security benefits, and how you can avoid them.</p> <h2>The hurdle: You don't have all of your vital paperwork</h2> <p>As a government benefit, Social Security does require a relatively long list of vital paperwork for signing up. Specifically, you will need the following documentation to apply for benefits:</p> <ul> <li> <p>Your Social Security number.</p> </li> <li> <p>Your original birth certificate or other proof of birth.</p> </li> <li> <p>Proof of U.S. citizenship or lawful alien status if you were not born in the United States.</p> </li> <li> <p>Your military discharge papers, if you served.</p> </li> <li> <p>A copy of either your W-2 forms or your self-employment tax return for the previous year.</p> </li> </ul> <p>For most beneficiaries, gathering these documents is simply a matter of gathering papers from a file cabinet or safe.</p> <p>However, some beneficiaries may either have no copy of their vital paperwork, or they may have some sort of problem with a piece of paperwork. For instance, my stepfather discovered as an adult that his original birth certificate had spelled his name differently than he had spelled it his entire life, which meant that he had to get a new birth certificate issued in order to make sure his legal name matched his birth name. Otherwise, he may have been considered ineligible for Social Security benefits when he was ready to retire. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits?ref=seealso" target="_blank">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a>)</p> <h2>The fix: Ask staffers to help you get started</h2> <p>Not having all the necessary paperwork is a relatively common problem facing beneficiaries, and it is something that the staffers at your local Social Security office are used to dealing with. If you are simply missing the necessary paperwork, Social Security can help you to obtain any information you might be having trouble finding.</p> <p>If you have a more complex problem like my stepfather's, Social Security may also be able to let you know what legal steps you must take &mdash; although it's always wise to get a second opinion on such matters.</p> <p>In either case, it is ultimately better to get the ball rolling on time for your Social Security benefits application and enlist the help of the Social Security Administration in getting your paperwork in order.</p> <h2>The hurdle: Your claiming situation is unusual</h2> <p>Most of the millions of beneficiaries who are processed through the Social Security Administration fit into one of several standard claiming situations. For these beneficiaries, the basic information available through both the SSA website and via staffers at the local office will provide the road map necessary to get signed up for benefits.</p> <p>However, there are any number of less-than-standard situations that a beneficiary may find herself in, and that's when things can get tricky.</p> <p>For instance, something as simple as applying for Medicare benefits after age 65 could stymie your local Social Security office. Beneficiaries who have health care benefits through another source are not required to sign up for Medicare upon reaching age 65. However, the majority of beneficiaries must sign up for Medicare at age 65 or face a fine, and since the rule covering this so-called special enrollment period is not necessarily well-known by the staffers whose job it is to get you enrolled, a beneficiary in this situation may find herself arguing again and again that she is not subject to the fine.</p> <p>Any claiming situation that is not standard can become bogged down with this kind of miscommunication and misunderstanding. The rules governing Social Security are complex and not even lifelong staffers know all of the specific situations that could affect benefits, which can cause confusion and frustration for any beneficiary who does not fit into a neat claiming box. (See also: <a href="http://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare?ref=seealso" target="_blank">How to Make Sense of the Different Parts of Medicare</a>)</p> <h2>The fix: Research and persistence</h2> <p>The hardworking folks at your local Social Security office want to help and they have a great deal of expertise &mdash; but it is not their primary responsibility to make sure you understand your options. Ultimately, it is up to the beneficiaries themselves to understand the specific rules governing their claiming situations.</p> <p>That's not to say that you are entirely on your own. Start by asking questions at your local office, and use that as the jumping off point to research the particular rules for your situation. Remember that the staffers at the local office will be experts on Social Security as a whole, while you may need to become an expert on your specific claiming strategy.</p> <p>Once you have determined what rules govern your situation, be persistent in asking that those rules are followed. Bring a copy of the rule with you when you meet with a Social Security staffer, and be prepared to keep presenting it as you go up the chain of command if you're not satisfied.</p> <h2>The hurdle: You receive conflicting information</h2> <p>Since you know that you'll have some sort of unusual claiming situation, you take the bull by the horns and research your options. You do some preliminary digging on SSA.gov and call your local office to double check what you've found. Based on the information you were able to read online and the assurance of the staffer at the office, you feel confident that everything is copacetic.</p> <p>The next time you call, however, you receive a different answer from a different staffer when you ask the exact same question. And the discrepancy is not a minor one &mdash; it's going to cost you big money. There is no way to prove that the first staffer told you something different, and you are going to have to pay for someone's mistake. (See also: <a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know?ref=seealso" target="_blank">13 Crucial Social Security Terms Everyone Needs to Know</a>)</p> <h2>The fix: Record your conversations with Social Security</h2> <p>Social Security expert Larry Kotlikoff is no stranger to some truly terrifying Social Security mistakes, and after years of helping beneficiaries navigate the program, he advises everyone to record their conversations with Social Security. While actually recording your conversations may or may not be feasible, it is paramount that you take notes of your conversations so that you have a record of the information you receive.</p> <p>In particular, you will want to note the date and time of the conversation, the name of the staffer you speak to, the specific aspect of Social Security law that governs your situation, the next steps advised by the staffer, and what potential fines, fees, or problems may arise from either taking or not taking those steps.</p> <p>Keeping this kind of record will not only help you better understand your situation, but also provide you with proof that you were advised a specific course of action if another staffer gives you conflicting advice later on.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F3-unexpected-hurdles-you-might-encounter-when-applying-for-social-security-benefits&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F3%2520Unexpected%2520Hurdles%2520You%2520Might%2520Encounter%2520When%2520Applying%2520for%2520Social%2520Security%2520Benefits.jpg&amp;description=3%20Unexpected%20Hurdles%20You%20Might%20Encounter%20When%20Applying%20for%20Social%20Security%20Benefits"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/3%20Unexpected%20Hurdles%20You%20Might%20Encounter%20When%20Applying%20for%20Social%20Security%20Benefits.jpg" alt="3 Unexpected Hurdles You Might Encounter When Applying for Social Security Benefits" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="https://www.wisebread.com/3-unexpected-hurdles-you-might-encounter-when-applying-for-social-security-benefits">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/3-financial-penalties-every-retiree-should-avoid">3 Financial Penalties Every Retiree Should Avoid</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-one-more-year-of-work-can-transform-your-retirement">How One More Year of Work Can Transform Your Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-ways-to-embrace-having-to-work-in-retirement">5 Ways to Embrace Having to Work in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement application benefits hurdles medicare paperwork preparedness problems social security social security administration Fri, 18 May 2018 08:30:31 +0000 Emily Guy Birken 2138249 at https://www.wisebread.com 5 Myths About Money in Retirement https://www.wisebread.com/5-myths-about-money-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-myths-about-money-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/retirement_plan_concept_0.jpg" alt="Retirement plan concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Retiring is an amorphous and complicated goal &mdash; which means retirement planning attracts more than its fair share of plausible-sounding myths. Unfortunately, these myths, misconceptions, mistakes, and misbegotten rules of thumb can seriously lead you astray on your path to a well-funded and fulfilling retirement.</p> <p>Don't fall for any of the following common myths about money in retirement.</p> <h2>1. You need $1 million to retire comfortably</h2> <p>This particular myth holds a unique distinction in that it is wrong in both directions: $1 million is both not nearly enough money for the retirement you're dreaming of, and way too high a number for most people to achieve.</p> <p>How is that possible?</p> <p>On one hand, $1 million doesn't go nearly as far as it once did. If you plan for a grand retirement that involves traveling, fine dining, entertainment, and general living-it-up, you will probably find that a $1 million nest egg will not cover all you want to do. In fact, depending on your cost of living and other circumstances, it's entirely possible you could exhaust $1 million with relatively modest retirement spending.</p> <p>On the other hand, $1 million is a number that is out of reach for the majority of workers. According to a 2016 GoBankingRates survey, 33 percent of Americans have <em>nothing</em> saved for retirement at all. For most Americans, the idea of saving $1 million for retirement may sound too overwhelming to even think about, and they may give up on the idea of saving altogether.</p> <p>The problem with this myth is that it is slapping a blanket generalization over a very idiosyncratic process &mdash; preparing for retirement. Instead of focusing on a nice, round number, calculate your best estimate of how much your own dream retirement will cost. Make adjustments to your dream or the number as necessary. (See also: <a href="http://www.wisebread.com/how-to-retire-with-less-than-1-million-in-savings?ref=seealso" target="_blank">How to Retire With Less Than $1 Million in Savings</a>)</p> <h2>2. The 4 percent rule</h2> <p>This myth actually has a specific start date. Financial adviser William Bengen proposed this rule in 1994 as a potentially safe withdrawal rate for retirees to make sure their money would comfortably last for the rest of their lives. He based his proposal on historical market data and predictions over where the markets would go in the next 20 years.</p> <p>Here's how the rule works: Historically, the rate of return on stocks generally hovers around 10 percent. That means a retiree can take 4 percent of their assets each year to live on, without ever touching the principal and still seeing growth each year. For a retiree with a $1 million nest egg, that means $40,000 would be available each year for living expenses, without ever dipping into the $1 million itself.</p> <p>There is no problem with the 4 percent rule when the market is doing well. The problem with this rule is that it doesn't work during market downturns. In 2008, the market saw a 30 percent decrease overall. Any withdrawals a retiree made during that time took a permanent bite out of their nest egg. Such a retiree either had to accept that permanent bite, or learn to live on less (or nothing) until the market bounced back.</p> <p>This is why it's a good idea to diversify so that you have some more stable and liquid investments you can count on in bad years, as well as long-term investments that can continue to grow (and recover) over time.</p> <h2>3. Social Security will cover your basic expenses</h2> <p>After paying into Social Security all your life, it's natural to expect the benefits to take care of you in retirement. But Social Security benefits are not now and were never meant to be a primary source of income in retirement. The program was begun in order to provide a safety net to keep seniors from abject poverty.</p> <p>The average monthly Social Security benefit in 2018 is $1,404 &mdash; which is barely enough to cover basic expenses in most areas of the country. It is far better to consider Social Security a supplement to your retirement income than count on it for living expenses. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>4. Medicare will take care of your health needs</h2> <p>Something that comes as a nasty surprise to retirees is the fact that Medicare covers less than you might think &mdash; and health care in retirement costs more than you might realize.</p> <p>Specifically, Medicare does not cover the following needs:</p> <ul> <li> <p>Long-term care (the nonmedical help that an otherwise healthy senior might need for daily living).</p> </li> <li> <p>Self-administered prescription drugs.</p> </li> <li> <p>Routine dental or eye care.</p> </li> <li> <p>Dentures.</p> </li> <li> <p>Hearing aids and exams for fitting them.</p> </li> <li> <p>Routine foot care.</p> </li> </ul> <p>Of these coverage gaps, long-term care can be the most devastating because the costs for such care can add up so quickly. It is in part because of the cost of long-term care that Fidelity calculated the average cost of lifetime medical expenses for a 65-year-old couple retiring in 2017 to be $275,000. (See also: <a href="http://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare?ref=seealso" target="_blank">How to Make Sense of the Different Parts of Medicare</a>)</p> <h2>5. Your taxes will be lower in retirement</h2> <p>One of the few benefits of no longer drawing a paycheck is the fact that you don't have to see Uncle Sam take a cut from it. You may think that once you're retired, all your money is yours free and clear, and the taxman will finally leave you alone.</p> <p>It doesn't quite work that way.</p> <p>First, you are going to owe taxes on any money you take out from tax-deferred retirement accounts. Since retirees often have fewer federal deductions and dependents to claim, that means you could be paying a greater percentage of your income to taxes. And don't forget that once you reach age 70&frac12;, you will have to take <a href="http://www.wisebread.com/what-every-retirement-saver-should-know-about-required-minimum-distributions?ref=internal" target="_blank">required minimum distributions</a>, which means the size of your distribution (and therefore the size of the tax bite) isn't entirely up to you.</p> <p>In addition, depending on your retirement income, you may also owe taxes on your Social Security benefits. Altogether, it's good to remember that the taxman always cometh for you.</p> <h2>The truth will set you free</h2> <p>The myths about money in retirement are generally more pleasant than the reality. But as tough as it may be to swallow the truth about how much you need, how much you can withdraw, and how much the government plans to giveth and taketh away, it is far better to be clear-eyed and prepared.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-myths-about-money-in-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Myths%2520About%2520Money%2520in%2520Retirement.jpg&amp;description=5%20Myths%20About%20Money%20in%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/5%20Myths%20About%20Money%20in%20Retirement.jpg" alt="5 Myths About Money in Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="https://www.wisebread.com/5-myths-about-money-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-revamp-your-budget-for-retirement">How to Revamp Your Budget for Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-common-medicare-myths-debunked">5 Common Medicare Myths, Debunked</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 4 percent rule expenses health care medicare myths social security taxes withdrawal rate Fri, 11 May 2018 08:00:21 +0000 Emily Guy Birken 2133918 at https://www.wisebread.com 4 Common Mistakes to Avoid When You Enroll in Medicare https://www.wisebread.com/4-common-mistakes-to-avoid-when-you-enroll-in-medicare <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-common-mistakes-to-avoid-when-you-enroll-in-medicare" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/old_man_looking_at_his_laptop.jpg" alt="Old man looking at his laptop" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're close to retirement age, you might soon be eligible for Medicare. The federal health insurance program is an important resource, helping you cover the costs of hospital stays, doctor's visits, and prescription medication. The challenge? Signing up for Medicare can be complicated. It's not unusual for new enrollees to make mistakes, and these mistakes can prove costly.</p> <p>Your goal is to sign up for Medicare services on time and correctly to avoid financial hits. Here are some common mistakes to watch out for when enrolling in Medicare coverage.</p> <h2>Thinking you haven't worked enough to qualify</h2> <p>You might think that just because you haven't worked much, or at all, that you can't sign up for Medicare. That isn't true.</p> <p>To be enrolled in Medicare Part A, you might hear that you need to rack up 40 eligibility credits by paying Social Security and Medicare payroll taxes. That comes out to about 10 years of work for most people. But this only means that you won't have to pay for Medicare Part A coverage, which covers medical services provided by hospitals. You can still sign up for Medicare Part A if you haven't worked long enough to earn those 40 credits. You'll just have to pay a premium.</p> <p>Some people are automatically enrolled in Medicare Part B &mdash; the insurance that helps cover doctor visits, trips to the outpatient clinic, and any expenses for medical equipment &mdash; when they sign up for Part A (together, the two comprise Original Medicare), while others enroll separately. You don't need any work credits to sign up for Medicare Part B. You can qualify for this part of Medicare even if you've worked fewer than 10 years. You just need to be 65 or older and a U.S. citizen or legal resident who's lived in the country for at least five years. The same holds true for Medicare Part D, which covers prescription medications. As long as you already have Parts A and/or B, you can enroll in Part D. (See also: <a href="http://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare?ref=seealso" target="_blank">How to Make Sense of the Different Parts of Medicare</a>)</p> <h2>Signing up too late</h2> <p>Medicare.gov is clear about the risks of signing up too late for Medicare. In many cases, you'll need to sign up for Medicare coverage during your seven-month initial enrollment period. That period includes the three months before you turn 65, the month you turn 65, and the three months after.</p> <p>There is an exception: You can delay signing up for Medicare coverage if you have health insurance coverage past the age of 65 from an employer for which either you or your spouse still actively work. If this employer has 20 or more employees, you can delay Medicare enrollment until the job ends and not face a penalty. If your employer has fewer than 20 employees, you should sign up for Medicare when you are first eligible.</p> <p>If you do sign up late &mdash; especially for Part B coverage &mdash; you will face a stiff penalty. According to Medicare.gov, your monthly premium for Medicare Part B will be 10 percent higher for each full 12-month period that you could have had this coverage but didn't sign up for it. And that penalty will last as long as you are enrolled in Part B coverage.</p> <p>Here's an example from Medicare.gov: Say your initial enrollment period ended Sept. 30 of 2009. You didn't sign up for Part B coverage until the general enrollment period in March of 2012. Your Part B penalty will be 20 percent. That's because you waited two full 12-month periods before signing up.</p> <p>There is a penalty for signing up late for Medicare Part A, too, if you don't qualify for premium-free coverage and instead have to pay. Again, your monthly premium might increase by 10 percent. You'll have to pay this penalty for two times the number of years you could have had Part A coverage but didn't sign up for it.</p> <p>Again, here's an example from Medicare.gov: Say you were eligible for Part A coverage for two years before finally signing up. You will have to pay the higher premium for four years &mdash; twice the number of years in which you waited to enroll. (See also: <a href="http://www.wisebread.com/5-common-medicare-myths-debunked?ref=seealso" target="_blank">5 Common Medicare Myths, Debunked</a>)</p> <h2>Skipping Medicare Part D</h2> <p>Medicare Part D helps cover the costs of prescription medicine. It's not free &mdash; you'll have to pay a monthly premium. Because of this, you might be tempted to skip this coverage, especially if you're healthy today and you don't take any medications.</p> <p>Don't. You can't predict how healthy you'll be in the future. You can't predict whether one day you will need costly prescription medications.</p> <p>Sign up for Part D coverage as soon as you are eligible. Like with Medicare Part A or B, if you wait too long &mdash; any continuous period of 63 days or more after your initial enrollment period ends, unless you have approved medication coverage from a different source &mdash; you will face a penalty added to your monthly fee.</p> <h2>Not understanding what open enrollment means</h2> <p>Medicare does offer its own open enrollment period, which runs every year from Oct. 15 to Dec. 7. If you are new to Medicare, though, this isn't when you must sign up. New enrollees get their own enrollment periods.</p> <p>The open enrollment period starting Oct. 15 is reserved for those already receiving Medicare and who want to change their coverage choices for the next year.</p> <p>If you are enrolling for the first time, you still need to sign up for Medicare sometime during your seventh-month initial enrollment period.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-common-mistakes-to-avoid-when-you-enroll-in-medicare&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Common%2520Mistakes%2520to%2520Avoid%2520When%2520You%2520Enroll%2520in%2520Medicare.jpg&amp;description=4%20Common%20Mistakes%20to%20Avoid%20When%20You%20Enroll%20in%20Medicare"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/4%20Common%20Mistakes%20to%20Avoid%20When%20You%20Enroll%20in%20Medicare.jpg" alt="4 Common Mistakes to Avoid When You Enroll in Medicare" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="https://www.wisebread.com/4-common-mistakes-to-avoid-when-you-enroll-in-medicare">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/9-financial-mistakes-youre-making-at-the-doctors-office">9 Financial Mistakes You&#039;re Making at the Doctor&#039;s Office</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/why-health-care-should-be-part-of-your-retirement-savings-plan-too">Why Health Care Should be Part of Your Retirement Savings Plan, Too</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-get-health-insurance-if-you-missed-the-open-enrollment-deadline">How to Get Health Insurance If You Missed the Open Enrollment Deadline</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/15-important-financial-dates-to-mark-on-your-calendar">15+ Important Financial Dates to Mark on Your Calendar</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-one-more-year-of-work-can-transform-your-retirement">How One More Year of Work Can Transform Your Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance health care insurance medicare Mistakes open enrollment original medicare part a part b part c penalties Tue, 01 May 2018 08:30:19 +0000 Dan Rafter 2134243 at https://www.wisebread.com 3 Financial Penalties Every Retiree Should Avoid https://www.wisebread.com/3-financial-penalties-every-retiree-should-avoid <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-financial-penalties-every-retiree-should-avoid" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/old_couple_having_problems_with_their_home_finances_0.jpg" alt="Old couple having problems with their home finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Managing money effectively can be challenging enough, but paying unnecessary financial fines only makes it tougher &mdash; especially in retirement. Here are three hefty penalties many older people may face, and how to avoid them.</p> <h2>1. Failing to take RMDs</h2> <p>If you are age 70&frac12; or older, have money in a tax-deferred retirement account, and fail to take your required minimum distributions (RMDs), you will owe a penalty equal to half the required-but-not-taken amount. You'll also have to catch up on the amount you were supposed to take and pay tax on that.</p> <p>The potential penalty pertains to traditional IRAs and 401(k)s &mdash; any retirement account that enabled you to make tax-deductible contributions and defer taxes on investment gains. It does not pertain to Roth accounts.</p> <p>You see, Uncle Sam wants his money, and age 70&frac12; is as long as he's willing to wait. Even if you don't need the money, you have to start drawing it out of your account(s) and paying taxes on it or face the penalty.</p> <p>To determine the amount of your RMD for a particular year, take the account balance at the end of the prior year and divide it by the distribution period from the IRS's Uniform Lifetime Table found in <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/required-minimum-distribution-worksheets" target="_blank">these IRS work sheets</a>.</p> <p>For the year you turn 70&frac12;, your RMD must be taken by April 1 of the following year. For all subsequent years, it must be taken by the end of the year. If you have multiple accounts, you must calculate your RMD for each one. For IRAs, the total distribution amount can be taken from just one of the accounts or spread out across all of them, and it can be taken as a lump sum or little by little throughout the year. RMDs from employer-sponsored retirement accounts or inherited IRAs must be taken from their respective accounts.</p> <h2>2. Claiming Social Security too early</h2> <p>If you claim Social Security benefits when you are first eligible at age 62, you will lock yourself in to the lowest possible monthly payments. For those born in 1960 or later, it will be about 30 percent less than if you wait until your full retirement age of 67.</p> <p>The Social Security Administration's <a href="https://www.ssa.gov/planners/retire/retirechart.html" target="_blank">full retirement age chart</a> has the details. Even better, check the actual benefit amounts you'll be eligible for at different ages by creating your own account on the SSA's site.</p> <p>Some argue that by collecting even a reduced benefit beginning at age 62, that five-year head start is more beneficial than waiting. And it's true that there are some people for whom it may make sense to claim as early as possible. However, with longer life spans, waiting at least until full retirement age &mdash; and arguably, even waiting until the maximum age of 70 &mdash; will prove most beneficial for most people.</p> <p>Plus, consider a married couple's situation in which the man is the higher earner. Because women tend to live longer than men, and because widows are eligible to replace their monthly benefit with their husband's upon his death, that's one more reason why a higher-earning husband may want to wait until he's eligible for his highest monthly benefit. (See also: <a href="http://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age?ref=seealso" target="_blank">3 Reasons to Claim Social Security Before Your Retirement Age</a>)</p> <h2>3. Missing the Medicare sign-up deadline</h2> <p>Medicare eligibility begins at age 65. If you claim Social Security benefits at least four months before your 65th birthday, you'll be automatically enrolled in Medicare at the appropriate time. However, if you hold off on Social Security until you're older than 65 but you want Medicare coverage, you'll have to sign-up for it within a seven-month window that begins three months before your 65th birthday month. Otherwise, you'll face two possible penalties &mdash; one for Medicare Part A (hospital insurance) and one for Part B (medical insurance).</p> <p>Most people qualify for premium-free Part A coverage based on how much they or their spouse contributed to Medicare during their careers. However, if you don't qualify for free Part A coverage and don't sign up on time, opting for it later will cost you in the form of premiums that are 10 percent more expensive than they would have been otherwise.</p> <p>Those higher premiums will be in effect for twice the number of years that you've been eligible for coverage. In other words, if you sign up at age 67 (two years past the age when you were first eligible), you'll owe the higher premiums for four years. Bottom line on Part A? Most people should sign up when they are first eligible.</p> <p>The penalty for missing the sign-up window for Part B is even more significant &mdash; 10 percent higher premiums for as long as you have coverage. Plus, your earliest opportunity to sign up will be the next January-through-March period, with the policy going into effect on July 1, so you may experience a coverage gap.</p> <p>Of course, a prime reason why you might want to opt out of Medicare Part B is that you're still working, have health insurance, and don't want to pay the additional premium.</p> <p>According to Medicare, if your employer has less than 20 employees, you should sign up for Medicare Parts A and B when you are first eligible. It will become your primary health insurance, with any other coverage you have only paying expenses not covered by Medicare.</p> <p>If your employer has 20 or more employees and you are covered by a group insurance plan, you don't have to sign up for Medicare Part B (if you do, it will become your secondary insurance). However, when you leave that employer, you'll have to sign up within eight months or face the penalty mentioned earlier. (See also: <a href="http://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare?ref=seealso" target="_blank">How to Make Sense of the Different Parts of Medicare</a>)</p> <p>Clearly, as you get older, certain birthdays aren't just causes for celebration. They're reminders to make careful decisions about your tax-deferred retirement accounts, Social Security, and Medicare.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F3-financial-penalties-every-retiree-should-avoid&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F3%2520Financial%2520Penalties%2520Every%2520Retiree%2520Should%2520Avoid.jpg&amp;description=3%20Financial%20Penalties%20Every%20Retiree%20Should%20Avoid"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/3%20Financial%20Penalties%20Every%20Retiree%20Should%20Avoid.jpg" alt="3 Financial Penalties Every Retiree Should Avoid" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="https://www.wisebread.com/3-financial-penalties-every-retiree-should-avoid">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/3-unexpected-hurdles-you-might-encounter-when-applying-for-social-security-benefits">3 Unexpected Hurdles You Might Encounter When Applying for Social Security Benefits</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement benefits deadlines medicare penalties required minimum distributions rmd social security Thu, 22 Mar 2018 09:30:19 +0000 Matt Bell 2115992 at https://www.wisebread.com Best Money Tips: Ways to Maximize Medicare Benefits https://www.wisebread.com/best-money-tips-ways-to-maximize-medicare-benefits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-ways-to-maximize-medicare-benefits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/patient_doctor_forms_613751286.jpg" alt="Patient maximizing Medicare benefits" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found articles on how to maximize Medicare benefits, countries where you&rsquo;ll get the most bang for your buck, and a practical guide to saying no.</p> <h2>Top 5 Articles</h2> <p><a href="https://www.kiplinger.com/slideshow/retirement/T039-S004-7-ways-to-maximize-medicare-benefits-part-b-part-d/index.html">7 Ways to Maximize Medicare Benefits</a> &mdash; Many Medicare benefits are overlooked, underused or misunderstood. Learn how Medicare beneficiaries can get better care for less. [Kiplinger]</p> <p><a href="https://www.popsugar.com/smart-living/Where-US-Dollar-Strongest-43245792">20 Countries Where You'll Get the Most Bang For Your Buck</a> &mdash; Traveling to countries where the dollar is strong will allow you to get more value from your destination spending. [PopSugar Smart Living]</p> <p><a href="http://becomingunbusy.com/saying-no/">A Practical Guide to Saying No</a> &mdash; When you need to turn someone or something down, be honest and open about the overarching reason why you're saying no. [Becoming Unbusy]</p> <p><a href="https://modernsimplicity.org/2018/01/motivate-to-clean.html">How to Motivate Yourself to Clean and Organize Your Home</a> &mdash; When it comes to cleaning and organizing your home, getting motivated is half the battle. Use these tips to make this overwhelming task more manageable. [Modern Simplicity]</p> <p><a href="https://thetinylife.com/how-to-homestead-challenges-of-going-off-grid/">How to Homestead: Tackling the Challenges of Going Off-Grid</a> &mdash; The idea of homesteading &mdash; self-sufficiency, independence and forging your own way &mdash; can be really attractive, but be sure you first know how to handle some common challenges. [The Tiny Life]</p> <h2>Other Essential Reading</h2> <p><a href="https://www.csmonitor.com/Technology/2018/0222/From-fake-news-to-fabricated-video-can-we-preserve-our-shared-reality">From fake news to fabricated video, can we preserve our shared reality?</a> &mdash; These days, ordinary users can create fabricated videos of just about anyone doing just about anything. [The Christian Science Monitor]</p> <p><a href="https://mattaboutmoney.com/2018/02/27/lifes-biggest-financial-decisions-the-early-years/">Life&rsquo;s Biggest Financial Decisions &mdash; The Early Years</a> &mdash; How you navigate the big financial decisions in your early adulthood can make a big difference in whether you struggle with money or live with financial freedom. [Matt About Money]</p> <p><a href="https://zenhabits.net/nothing/">How to Develop a Mind That Clings to Nothing</a> &mdash; A mind that clings to nothing is constantly letting go of things that cause you to stress out. [zen habits]</p> <p><a href="http://mytwocentsandmore.com/diy-5-minute-plant-hanger/">DIY 5 Minute Plant Hanger</a> &mdash; Hanging your plants will help you clear some valuable space on your counters. This plant hanger only takes about 5 minutes to make! [My Two Cents &amp; More]</p> <p><a href="https://www.dumblittleman.com/balancing-work-and-study/">Balancing Work and Study: 4 Highly Effective Tips You Need to Try</a> &mdash; Look for jobs related to what you're studying. You'll be able to earn money while learning more about your field and gaining valuable experience to put on your resume. [Dumb Little Man]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="https://www.wisebread.com/best-money-tips-ways-to-maximize-medicare-benefits">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare">How to Make Sense of the Different Parts of Medicare</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-common-medicare-myths-debunked">5 Common Medicare Myths, Debunked</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-kinds-of-insurance-every-retiree-should-consider">5 Kinds of Insurance Every Retiree Should Consider</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/do-you-need-medigap-insurance">Do You Need Medigap Insurance?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/not-free-to-be-poor">Not free to be poor</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance best money tips medicare Thu, 01 Mar 2018 09:30:09 +0000 Amy Lu 2111221 at https://www.wisebread.com 5 Kinds of Insurance Every Retiree Should Consider https://www.wisebread.com/5-kinds-of-insurance-every-retiree-should-consider <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-kinds-of-insurance-every-retiree-should-consider" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/senior_couple_sit_on_steps_outside_their_house.jpg" alt="Senior couple sit on steps outside their house" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your insurance needs don't remain constant throughout your life. You need different insurance coverage when you're single and in your 20s than you do when you're raising a family in your 40s. When you retire, your insurance needs will evolve once again.</p> <p>There are certain types of insurance protections you'll no longer need after leaving the workforce, and other types that you'll want to add. Here is a primer on the kinds of insurance that every retiree should consider.</p> <h2>1. Health insurance</h2> <p>You'll absolutely need health insurance after you've retired. Health care costs are only rising, and seniors tend to spend a large percentage of their income on medical care each year.</p> <p>A study released by Fidelity Benefits Consulting said that the average 65-year-old couple retiring in 2017 would need $275,000 to cover their medical expenses throughout retirement. That number isn't falling, either. Fidelity reported that the 2017 figure is up from the $260,000 that the average 65-year-old couple needed in 2016.</p> <p>Most seniors will qualify for Medicare, the federal health care insurance program, when they turn 65. Medicare isn't free, but it does cost far less than what you'd pay for private insurance. Medicare covers a lot, but it doesn't cover every medical service you might need.</p> <p>Do you need to purchase supplemental health insurance to boost the coverage you're already getting with Medicare? That's not an easy question to answer. It all depends on your health and how often you plan on visiting a doctor after you retire. For many retirees, Medicare may be adequate. (See also: <a href="http://www.wisebread.com/5-common-medicare-myths-debunked?Ref=seealso" target="_blank">5 Common Medicare Myths, Debunked</a>)</p> <h2>2. Homeowners or renters insurance</h2> <p>Will you still own a home after you retire? If so, you still need your homeowners insurance policy. This policy will pay out to help you rebuild if your home is damaged by a fire or other natural disaster. It will also help you pay for any items inside your home &mdash; such as electronics, clothing, furniture, and jewelry &mdash; that get stolen or damaged in a disaster.</p> <p>Renters insurance works the same way, but it protects people who are renting an apartment. If you plan on ditching your home and renting after you retire, make sure to invest in a renters insurance policy. Think about how much money you'd need to replace your valuables if they were stolen or destroyed. (See also: <a href="http://www.wisebread.com/5-reasons-you-definitely-need-renters-insurance?Ref=seealso" target="_blank">5 Reasons You Definitely Need Renters Insurance</a>)</p> <h2>3. Auto insurance</h2> <p>If you plan to keep driving after retirement, you'll need to pay for auto insurance. It's illegal in most U.S. states to drive without car insurance.</p> <p>Maybe you're planning to sell your car and move into an urban neighborhood after you retire. Instead of doing your own driving, you plan to walk, take public transportation, or Uber to grocery stores, movie theaters, and restaurants. In this case, getting rid of your car insurance might make sense. But even if you're hanging onto your car only for emergencies or long trips, you'll need to keep your auto insurance policy.</p> <h2>4. Life insurance</h2> <p>Life insurance is usually one type of policy you can drop after retirement. After all, life insurance is a way to protect your loved ones who are dependent on your income. Once you get to retirement age, these dependents &mdash; usually your children &mdash; should be self-sufficient. They won't need a payout after you die to pay their bills.</p> <p>But what if your spouse or children still aren't financially self-sufficient by the time you retire? If that's the case, you should hang onto your life insurance policy. Maybe you have a child with special needs. That child might still rely on financial assistance from you. What if you were gone and you didn't have a life insurance policy? Would that child still get the financial assistance necessary?</p> <p>In most cases, retirees no longer need life insurance policies. But for special cases, keeping the policy is the smart move. (See also: <a href="http://www.wisebread.com/when-dropping-your-life-insurance-is-the-right-decision?ref=seealso" target="_blank">When Dropping Your Life Insurance Is the Right Decision</a>)</p> <h2>5. Umbrella insurance</h2> <p>What if someone was visiting your home and seriously injured themselves? Would your homeowners insurance policy provide enough protection? Maybe. But umbrella insurance can provide retirees with the peace of mind that they'll be protected even if their homeowners insurance doesn't offer enough coverage.</p> <p>Umbrella insurance provides <em>extra </em>liability coverage above the limits of your homeowners and auto insurance policies. Basically, it pays out in cases where your homeowners and auto policies don't pay enough to cover all of the damages for which you are responsible.</p> <p>Say you get into an auto accident that ends up with a liability claim of $1 million. If your auto insurance only covers a maximum of $500,000 for liability, your umbrella policy would cover the remaining $500,000. (See also: <a href="http://www.wisebread.com/beware-your-insurance-may-not-cover-these-8-losses?ref=seealso" target="_blank">Beware: Your Insurance May Not Cover These 8 Losses</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-kinds-of-insurance-every-retiree-should-consider&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Kinds%2520of%2520Insurance%2520Every%2520Retiree%2520Should%2520Consider.jpg&amp;description=5%20Kinds%20of%20Insurance%20Every%20Retiree%20Should%20Consider"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/5%20Kinds%20of%20Insurance%20Every%20Retiree%20Should%20Consider.jpg" alt="5 Kinds of Insurance Every Retiree Should Consider" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="https://www.wisebread.com/5-kinds-of-insurance-every-retiree-should-consider">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/beware-your-insurance-may-not-cover-these-8-losses">Beware: Your Insurance May Not Cover These 8 Losses</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/4-times-when-bundling-insurance-doesnt-make-sense">4 Times When Bundling Insurance Doesn&#039;t Make Sense</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/why-health-care-should-be-part-of-your-retirement-savings-plan-too">Why Health Care Should be Part of Your Retirement Savings Plan, Too</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/15-surprising-insurance-policies-you-might-need">15 Surprising Insurance Policies You Might Need</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-ways-to-embrace-having-to-work-in-retirement">5 Ways to Embrace Having to Work in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance Retirement auto insurance dependents health care health insurance homeowners insurance life insurance medicare renters insurance umbrella insurance Thu, 01 Mar 2018 09:30:09 +0000 Dan Rafter 2107316 at https://www.wisebread.com How to Make Sense of the Different Parts of Medicare https://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-make-sense-of-the-different-parts-of-medicare" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/approved_medicare_application_form.jpg" alt="Approved Medicare application form" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're nearing retirement age, you probably know the gist of what Medicare does. The federal social program provides health insurance coverage to those age 65 or older, as well as younger people with certain disabilities. But do you know the specifics of each part of Medicare?</p> <p>According to the 2017 EBRI Retirement Confidence Survey, only 8 percent of retirees are very confident about the future of Medicare benefits. This may be due to a lack of information about the various parts of the program and what each one of them offers. (See also: <a href="http://www.wisebread.com/5-common-medicare-myths-debunked?ref=seealso" target="_blank">5 Common Medicare Myths, Debunked</a>)</p> <p>Let's break down each of the Medicare parts.</p> <h2>Medicare Part A (hospital insurance)</h2> <p>Part A covers inpatient hospital stays, care in a skilled nursing facility (following a hospital stay), hospice care, and some home health care. It covers hospital services, including semiprivate rooms, meals, general nursing, drugs as part of your inpatient treatment, and other hospital services and supplies.</p> <p>Once you reach age 65, you usually don't pay a monthly premium for Part A coverage as long as you or your spouse paid Medicare taxes for at least 10 years. This is known as &quot;premium-free Part A.&quot; Those under age 65 may also qualify for premium-free Part A if they have a disability or end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS).</p> <p>For workers who paid fewer than 30 quarters of Medicare taxes, the standard Part A premium for 2018 is $422 per month. For those who paid 30 to 39 quarters of Medicare taxes, the standard Part A premium is $232 per month.</p> <p>It's important to understand that Part A coverage is the bare minimum in terms of health coverage and that you should plan to supplement this coverage with the additional parts of Medicare. Generally, you're only responsible for one deductible (about $1,340) for each benefit period and no coinsurance for hospital stays under 60 days per benefit period.</p> <h2>Medicare Part B (medical insurance)</h2> <p>This is medical insurance that covers doctors' appointments and many other medical services and supplies not covered by Part A. In most cases, you'll automatically get Part A and Part B starting the first day of the month you turn 65. You'll get your red, white, and blue Medicare card in the mail three months before your 65th birthday (or your 25th month of getting disability benefits).</p> <p>Part B helps pay for necessary services and supplies to treat your medical condition, as well as preventive services to detect or prevent illness at an early stage. Most preventive services have no cost as long as you get them from a health care provider accepting the amount that Medicare approves for payment. Part B includes payments for clinical research, ambulance services, durable medical equipment, and a second opinion before surgery.</p> <p>For 2018, the standard premium for Part B is $134 (and may be higher depending on your income). If you collect Social Security benefits, your premium may be slightly reduced.</p> <p>Since Medicare Part B requires a monthly premium even if you don't use it, you should consider delaying Part B if you're still receiving coverage through an employer group health insurance plan. Talk with your health plan administrator to learn more about how to delay Part B (and even Part A) without paying a penalty when enrolling later.</p> <p>Medicare coverage depends on federal and state laws. Use this <a href="https://www.medicare.gov/coverage/your-medicare-coverage.html" target="_blank">Medicare Coverage tool</a> to find if Medicare Part A and Part B will cover your test, item, or service. Note that there are certain things that Part A and Part B (also known together as &quot;Original Medicare&quot;) will not cover. For example, Original Medicare doesn't cover hearing aids and exams, eye exams, and most dental care. Part C and Part D can help you cover those gaps.</p> <h2>Medicare Part C (Medicare Advantage plans)</h2> <p>Americans enrolled in Medicare Part A and Part B are also eligible to sign up for health coverage plans, known as Medicare Advantage plans, with private health carriers approved by Medicare. The primary benefit of Part C is that you get a wider choice of medical providers and a more comprehensive prescription drug coverage. When you sign up for a Medicare Advantage plan, you must continue paying your Part B premium.</p> <p>There are different types of Medicare Advantage plans:</p> <ul> <li> <p>Health Maintenance Organization (HMO) plans: You generally must get your care and services from providers within the plan's network. Some HMO plans may allow you to get a referral from your primary care doctor for an out-of-network provider.</p> </li> <li> <p>Preferred Provider Organization (PPO) plans: You pay less as long as you use the doctors, hospitals, and health care providers within the plan's network and pay more when using those outside the network. Unlike an HMO, you're not required to choose a primary care doctor and you don't need a referral to see a specialist.</p> </li> <li> <p>Private Fee-for-Service (PFFS) plans: The main difference between a PFFS and other plans is that the insurance company, not Medicare, determines how much the provider receives and the beneficiary pays for a covered health service. PFFS plans offer flexibility but often at a higher cost.</p> </li> <li> <p>Special Needs Plans (SNPs) plans: An SNP is only available to individuals with specific diseases or characteristics, including cancer, dementia, diabetes mellitus, or end-stage liver diseases. Benefits are tailored to the specific needs of that condition.</p> </li> <li> <p>HMO Point of Service (HMOPOS) plans: An HMOPOS plan allows you to get some services out-of-network for a higher cost.</p> </li> <li> <p>Medical Savings Account (MSA) plans: Plans that combine a high deductible health plan with a bank account into which Medicare makes deposits to pay for health care services throughout the year.</p> </li> </ul> <p>To enroll in a Medicare Advantage plan:</p> <ul> <li> <p>Use the <a href="https://www.medicare.gov/find-a-plan/questions/home.aspx" target="_blank">Medicare Plan Finder</a> to search for plans in your ZIP code (for personalized search, use your Medicare number).</p> </li> <li> <p>Enroll in your selected plan by mailing an enrollment form, calling the plan administrator, or calling 1-800-MEDICARE (1-800-633-4227).</p> </li> </ul> <p>When joining a Part C plan, you'll need your Medicare number and start date of Part A and/or Part B coverage.</p> <h2>Medicare Part D (prescription drug coverage)</h2> <p>To help Americans with the rising cost of prescription drugs, the Social Security Administration established Medicare Part D in 2003. Like Medicare Part C, Part D is provided by private health insurance companies approved by Medicare. To enroll in Part D, you must have signed up for Part A and/or Part B. Deductibles and covered medications vary per plan. You are first eligible to sign up for Part D coverage during your Initial Enrollment Period (IEP), which typically takes place during the same seven-month window as your IEP for Original Medicare (Parts A and B).</p> <p>Medicare Part D is also available to those with Part C, though some Medicare Advantage plans may already provide prescription drug coverage. Medicare Advantage plans with drug coverage are sometimes referred to as &quot;MA-PDs.&quot; HMO and PPO plans often include some prescription drug coverage, while PFFS and MSA plans often require additional drug coverage through Medicare Part D.</p> <p>Make sure to check your eligibility for your drug coverage from other organizations, such as Department of Veterans Affairs, workplace union, or TRICARE before signing up for a Part C or Part D plan. You use the same process to enroll in a Part D plan as you would for Part C.</p> <h2>The bottom line: Keep informed</h2> <p>You have unique medical needs. That is why Medicare offers a wide range of options for medical coverage. As you get closer to retirement age, keep on top of the latest developments of Medicare and its different parts so you can minimize your medical expenses. To learn more, use this <a href="https://www.medicare.gov/contacts/#findsomeone" target="_blank">directory to find Medicare contacts</a> using your state and organization or topic of interest.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-make-sense-of-the-different-parts-of-medicare&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Make%2520Sense%2520of%2520the%2520Different%2520Parts%2520of%2520Medicare.jpg&amp;description=How%20to%20Make%20Sense%20of%20the%20Different%20Parts%20of%20Medicare"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/How%20to%20Make%20Sense%20of%20the%20Different%20Parts%20of%20Medicare.jpg" alt="How to Make Sense of the Different Parts of Medicare" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="https://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-common-medicare-myths-debunked">5 Common Medicare Myths, Debunked</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/generic-drug-price-lists-for-six-major-pharmacies">Generic Drug Price Lists For Six Major Pharmacies - Updated</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/health-care-reform-good-for-people-like-me">Health Care Reform: Good for People Like Me</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/health-insurance-two-other-numbers-to-look-at">Health insurance: Two other numbers to look at</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/not-free-to-be-poor">Not free to be poor</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Health and Beauty Insurance coverage drugs health insurance medicare medicare part a medicare part b medicare part c medicare part d plans prescription retirement Tue, 20 Feb 2018 09:30:09 +0000 Damian Davila 2104316 at https://www.wisebread.com 5 Tax Mistakes Freelancers Need to Stop Making https://www.wisebread.com/5-tax-mistakes-freelancers-need-to-stop-making <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-tax-mistakes-freelancers-need-to-stop-making" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/modern_business_lady_at_paperwork.jpg" alt="Modern business lady at paperwork" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>No doubt about it, being a freelancer is hard. From serving clients to staying on top of your money game, there's no shortage of work to do. Sometimes, things may be overlooked or set on the back burner while you tackle pressing business matters. However, there is one major thing that just can't be ignored &mdash; taxes.</p> <p>As your own chief financial officer you'll need to be aware of major tax missteps that could ultimately ruin your business. Ideally, you'll engage the help of an experienced small business accountant who knows the ins and outs of tax strategies for freelance business owners. However, you've got to have your ducks in a row to double and triple check their suggestions and advice, too. (See also: <a href="http://www.wisebread.com/what-freelancers-and-side-giggers-need-to-know-about-income-taxes?ref=seealso" target="_blank">What Freelancers and Side Giggers Need to Know About Income Taxes</a>)</p> <p>These are the top tax mistakes freelancers really need to stop making.</p> <h2>1. Not paying self-employment tax</h2> <p>As a freelancer, you probably have a number of clients that pay you without deducting any taxes. Because you are a contractor, you are responsible for any and all taxes on your income.</p> <p>Self-employment tax is a term that covers two main taxes: Social Security and Medicare. As an employee of a company, your employer would cover part of this tax. However, lucky you, since you are your own employer, you get to pick up the tab on the entire tax bill.</p> <p>On the other side of paying all these taxes, you do get some reprieve by deducting a portion of these payments from your gross income, which can reduce the amount of taxes you owe overall.</p> <p>Just know that it's very important to pay self-employment taxes on your freelance income. If your client issues you a 1099 form, it's also transmitted to the IRS. The IRS becomes aware of this income and can demand you to make an accounting for that money if they suspect you owe taxes on it.</p> <h2>2. Not having an accounting system</h2> <p>Making a lot of money as a freelancer can also increase your tax liability. If you don't have a good system in place to track all of your income and expenses, you could end up paying more (or less) taxes than you're supposed to.</p> <p>Charleen Fariselli is a CPA who has worked with small businesses for over 10 years. She says that freelancers who don't accurately track income and expenses are at a disadvantage. &quot;This affects their taxes because they don't have a good accounting system and are often losing deductions so they pay more in tax,&quot; she says.</p> <p>Charleen also adds that a lack of a good accounting system can have an impact on making timely, accurate tax payments: &quot;These freelancers can't calculate what their taxable income is each quarter for making tax payments, so they over or underpay, if they pay at all.&quot;</p> <p>The good news is that there are many accounting software options out there to help you organize your books, including QuickBooks, Xero, Wave, and Freshbooks. You can also use a simple Google Sheets document. (See also: <a href="http://www.wisebread.com/5-free-accounting-tools-for-freelancers?ref=seealso" target="_blank">5 Free Accounting Tools for Freelancers</a>)</p> <h2>3. Mixing business with pleasure</h2> <p>One of the worst things a freelancer can do is allow their business expenses and income to spill over into their personal finances. For example, a business owner may use a business credit or debit card to cover a personal expense like purchasing groceries for their family.</p> <p>The biggest problem with this behavior is how it affects record keeping for tax filing purposes. Joshua Zimmelman of Westwood Tax &amp; Consulting says that bad record keeping can cause confusion for freelancers at tax time. &quot;Too many freelancers miss out on deductions because their finances are not organized,&quot; he says. &quot;Separating your expenses from the start makes filing your tax return so much easier.&quot;</p> <p>If you need help keeping your personal and business finances separate, you can opt for a business checking account or credit card. You could also use both.</p> <p>If you do have to use money from your business dealings to cover personal expenses or vice versa, make sure you keep a record of such transfers. A small business CPA can help you categorize (loan, owner draw, paycheck, etc.) the transactions so that you don't run into problems with record keeping or tax liabilities. (See also: <a href="http://www.wisebread.com/the-5-biggest-mistakes-freelancers-make?ref=seealso" target="_blank">The 5 Biggest Mistakes Freelancers Make</a>)</p> <h2>4. Neglecting retirement savings</h2> <p>The freelance life can be a roller-coaster ride of feast or famine, but it's still important to keep savings in the equation &mdash; especially retirement savings. Saving for retirement is not only critical for your golden years, but can also help you save on taxes.</p> <p>When you put money away for retirement, it reduces the amount of your income tax withholding. Joanna Zarach is a consultant who helps freelancers plan for retirement. She says, &quot;Solo retirement plans are the most effective way to lower your tax bill now and to build tax-free growth in your investment accounts.&quot;</p> <p>There are different options to save for retirement. Some smart options include:</p> <ul> <li> <p>Individual 401(k): This type of account is ideal for solopreneurs who want higher contribution limits. You can save with pretax dollars while receiving tax deductions for employer contributions (you are the employer) as well.</p> </li> <li> <p>SEP IRA: Tax-deductible contributions are made by the employer (in this case, you). Growth is tax-deferred until withdrawal.</p> </li> <li> <p>ROTH IRA: With this type of retirement account, you save after-tax income that grows tax-free forever.</p> </li> </ul> <h2>5. Neglecting health care contributions</h2> <p>Paul Jacobs is a CPA, EA, and officer at Palisades Hudson Financial Group. He says he often sees freelancers, &quot;Forgetting to deduct health insurance premiums. A great tax break that is available to the self-employed is the ability to deduct this expense.&quot;</p> <p>As a small-business owner, there are tax benefits when you pay insurance premiums for yourself and family members. Premiums for medical, dental and, in some cases, long-term health insurance qualify.</p> <p>Reporting these premiums on your taxes can reduce your adjusted gross income (AGI) which can make you eligible for certain tax breaks. The only caveat here is that you may now have to itemize deductions in order to take advantage of this deduction come tax time due to the recent Tax Cuts and Jobs Acts of 2017.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-tax-mistakes-freelancers-need-to-stop-making&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Tax%2520Mistakes%2520Freelancers%2520Need%2520to%2520Stop%2520Making.jpg&amp;description=5%20Tax%20Mistakes%20Freelancers%20Need%20to%20Stop%20Making"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/5%20Tax%20Mistakes%20Freelancers%20Need%20to%20Stop%20Making.jpg" alt="5 Tax Mistakes Freelancers Need to Stop Making" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/aja-mcclanahan">Aja McClanahan</a> of <a href="https://www.wisebread.com/5-tax-mistakes-freelancers-need-to-stop-making">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-13"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/heres-how-your-taxes-will-change-after-you-start-a-small-business">Here&#039;s How Your Taxes Will Change After You Start a Small Business</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/self-employed-heres-how-to-get-your-apartment-application-approved">Self-Employed? Here&#039;s How to Get Your Apartment Application Approved</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-budget-consistently-without-a-steady-paycheck">How to Budget Consistently Without a Steady Paycheck</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-myths-about-money-in-retirement">5 Myths About Money in Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Entrepreneurship Taxes accounting bookkeeping deductions freelance health care medicare retirement savings self employment social security tax mistakes Wed, 07 Feb 2018 09:00:06 +0000 Aja McClanahan 2095995 at https://www.wisebread.com How to Overcome These 4 Common Retirement Fears https://www.wisebread.com/how-to-overcome-these-4-common-retirement-fears <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-overcome-these-4-common-retirement-fears" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/mature_businesswoman_portrait_in_her_office.jpg" alt="Mature Businesswoman Portrait In Her Office" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Modern retirement is a somewhat daunting prospect. Unlike previous generations, today's workers generally cannot count on a pension to fund their retirements &mdash; which means the buck stops with you when it comes to saving up the necessary money to live comfortably after you hang up your hat. Add to that the constant rhetoric about Social Security's imminent demise and the spiraling costs of health care for an aging population, and it's no wonder that thinking about retirement is heartburn-inducing.</p> <p>But even though many common retirement fears are perfectly rational, you do not have to feel overwhelmed by your concerns. Here's how you can overcome four of the most common retirement fears and plan for a fulfilling retirement.</p> <h2>I can't count on Social Security</h2> <p>The Social Security Trust Fund has been losing value since 2013, and it is projected to be entirely depleted by the year 2034. This fact is often touted as a reason for current workers to give up on the idea of receiving Social Security benefits at all once they reach full retirement age.</p> <p>After all, the Trust Fund will be empty by the time many current workers retire, and projected tax revenues will cover only 79 percent of promised benefits. This could mean anyone who is entitled to a $1,500 monthly benefit will only receive $1,185.</p> <h3>How to overcome this fear</h3> <p>While it is absolutely true that the Trust Fund will be depleted in less than 20 years, that does not mean that Social Security will simply dry up for current workers. American workers can count on Social Security to be there when they retire, no matter how old or young they are.</p> <p>Here's why you don't need to panic: To begin with, the dwindling of the Trust Fund is neither new nor imminent. It's also important to note that the United States is the only country in the world that attempts to predict the 75-year longevity of its social insurance funds, which means we are in a position to do something about the anticipated shortfall.</p> <p>Over the next couple of decades, it is likely that our government will make relatively small changes to the Social Security program in order to make up the 21 percent anticipated shortfall that will occur once the Trust Fund has run dry.</p> <p>In addition, 79 percent of promised benefits is much more than nothing. Even if we face the worst case scenario of no solution being proposed between now and 2034 (which seems unlikely, considering how popular Social Security is), there will still be something available for current workers, even if it is less than what was originally promised. (See also: <a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over?ref=seealso" target="_blank">5 Sobering Facts About Social Security You Shouldn't Panic Over</a>)</p> <h2>I'm going to outlive my money</h2> <p>Not having enough money in retirement is a truly frightening thought. And since it is impossible to know for certain how much money you will need in retirement, it's not possible to entirely dispel this fear, even if you have a robust retirement account.</p> <p>However, most Americans have very little money set aside for retirement. According to an Employee Benefit Research Institute survey from April 2017, 47 percent of American workers have less than $25,000 set aside for retirement. Considering the fact that it is prudent to withdraw no more than 4 percent of your nest egg per year during retirement to avoid outliving your savings, $25,000 would only net $1,000 of retirement income per year, which is nowhere near enough to live on.</p> <h3>How to overcome this fear</h3> <p>If you are among the 47 percent of American workers with less than $25,000 saved for retirement, the best way to deal with your fear of outliving your savings is to increase those savings.</p> <p>As of 2017, you can contribute up to $18,000 per year to a 401(k) or 403(b) plan, plus an additional $6,000 if you are over age 50. You may also contribute $5,500 to an IRA, plus an additional $1,000 if you are over 50. Maximizing those contributions can do a great deal to help you prepare for retirement. Even if contributing the maximum is out of your financial reach right now, upping your contribution by 1 or 2 percent can make a big difference in your nest egg's health.</p> <p>If you are already saving as much as you can for retirement and still worry about outliving your money, doing some research into the costs of what you want to do in retirement can help you overcome those fears. Knowing the real costs of retirement when you have already been a diligent saver can help you put your fears in perspective. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h2>Illness in retirement will bankrupt me</h2> <p>According to Fidelity Benefits Consulting, the average cost of medical expenses for a 65-year-old couple retiring in 2016 will be an estimated $260,000. What's even more frightening about this enormous dollar figure is the fact that Fidelity based its calculations on 65-year-old retirees &mdash; meaning that the hypothetical retiring couple is already eligible for Medicare.</p> <p>Health care costs are undeniably high, and retirees are vulnerable to the high cost of medical care since it is difficult to shop around for better prices or stretch a fixed income. This means it's perfectly reasonable to worry that you might get sick after you retire and spend down all of your nest egg.</p> <h3>How to overcome this fear</h3> <p>It's true that health care is likely to be one of your biggest expenses in retirement, but that does not necessarily mean that an illness will bankrupt you.</p> <p>The first thing to do is learn about what you can expect from Medicare. Medicare Part A covers inpatient hospital care, home health care, and hospice care. Part B functions much like the typical health insurance you are familiar with from your workplace. Between these two, Medicare will cover about 80 percent of most of your medical needs. If you have a tough medical diagnosis, Medicare will cover your treatment, and careful money management can help you stay financially fit. (See also: <a href="http://www.wisebread.com/5-common-medicare-myths-debunked?ref=seealso" target="_blank">5 Common Medicare Myths, Debunked</a>)</p> <p>However, Medicare does not cover long-term care. This type of care &mdash; which describes the nonmedical help the elderly might need for daily living &mdash; is the aspect of your health care that can quickly overwhelm a nest egg.</p> <p><a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it" target="_blank">Long-term care insurance</a> is a good option for some middle-income retirees, as it will make sure assets are protected in case you need long-term care. This kind of insurance can be pricey, however, which can put the cost out of reach for some retirees.</p> <p>If long-term care insurance is not in the cards for you, recognize that Medicaid will pay for your long-term care once you have exhausted your own resources. This is hardly an ideal option, but it can help ease your stress if you recognize that you will be able to get the care you need, no matter your financial situation.</p> <h2>I won't know who I am in retirement</h2> <p>The 2002 Jack Nicholson movie <em>About Schmidt</em> does an excellent job of showing how isolating retirement can be for some career-oriented workers. Nicholson's Warren Schmidt feels lost after retiring from several decades of working at an insurance company, and he returns to his office to try to recapture some of his sense of himself as an expert in his field, only to be brushed off by the young man who has taken his job.</p> <p>It's natural to be afraid of such a major life transition, particularly if you have always defined yourself by your career. Entering retirement without the structure of a daily routine can induce anxiety and fear, which can hardly help you to start writing your new chapter.</p> <h3>How to overcome this fear</h3> <p>One of the most important things our culture needs to do is stop looking at work and retirement as two distinct things, and start looking at them as two different parts of your whole life. Both your career and your retirement are your life, and you need to see it all as something that you can use to define yourself.</p> <p>That means structuring your life while you are working to include the things you will want to do when you are retired. For instance, if you dream of traveling in retirement, don't wait until you are retired to start your journeys. If you commit to making trips while you are still working, you will be well-prepared to be a traveler in retirement, and you will already define yourself by more than just your work.</p> <p>The best part about working to overcome this fear is that it gives you the opportunity to do the fun things you love while you are still in the midst of your career. With a little advance planning, retirement can provide a fulfilling evolution of the identity you've cultivated throughout your career.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-overcome-these-4-common-retirement-fears&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Overcome%2520These%25204%2520Common%2520Retirement%2520Fears.jpg&amp;description=How%20to%20Overcome%20These%204%20Common%20Retirement%20Fears"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;">&nbsp;<img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/How%20to%20Overcome%20These%204%20Common%20Retirement%20Fears.jpg" alt="How to Overcome These 4 Common Retirement Fears" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="https://www.wisebread.com/how-to-overcome-these-4-common-retirement-fears">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-revamp-your-budget-for-retirement">How to Revamp Your Budget for Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-myths-about-money-in-retirement">5 Myths About Money in Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/13-financial-steps-to-take-before-retiring-abroad">13 Financial Steps to Take Before Retiring Abroad</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement health care long term care medicare outliving money retirement fears social security Wed, 18 Oct 2017 08:00:07 +0000 Emily Guy Birken 2037739 at https://www.wisebread.com 5 Common Medicare Myths, Debunked https://www.wisebread.com/5-common-medicare-myths-debunked <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-common-medicare-myths-debunked" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/medicare_application_form_with_stethoscope.jpg" alt="Medicare application form with stethoscope" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There is no larger health insurance program in the United States than Medicare. According to the Centers for Medicare &amp; Medicaid Services, more than 57 million people were receiving health benefits through the program as of March 2017.</p> <p>But just because millions are on Medicare doesn't mean that most people, especially those who have yet to hit 65, understand how this government program works. Most people instead believe several easily debunked myths about what Medicare does, how financially healthy it is, and what it doesn't do.</p> <h2>1. Medicare won&rsquo;t be around for me</h2> <p>You might worry that Medicare won't be around to cover your health care needs by the time you retire. Here's some good news: Medicare is not broke ... yet.</p> <p>The Medicare program had about $200 billion in reserves at the end of 2015. So the program does have money.</p> <p>There is some concern, though. Medicare is projected to run a surplus every year through 2020, when a growing number of Baby Boomers will start retiring. This means that Medicare will then run at an annual deficit beginning in 2021. If nothing is done to prevent this, the program will exhaust its reserves by the year 2028.</p> <p>That will be a big problem if it is allowed to happen. There are possible solutions, though, even though they will require some financial pain. The most obvious one would be to raise Medicare taxes. That won't make anyone happy, but it is the simplest way to ensure that Medicare does have enough dollars to cover all of its beneficiaries.</p> <h2>2. There's only one type of Medicare</h2> <p>Medicare is a complicated system. In fact, there are actually <em>four </em>types of Medicare coverage.</p> <p>Medicare Part A and Part B are part of what is known as original Medicare. Medicare Part A, known as hospital insurance, covers inpatient care received at hospitals and nursing facilities. Part B covers services and supplies that you need to treat health conditions. This part of Medicare covers outpatient care, preventive services, ambulance rides, and medical equipment.</p> <p>Medicare Part C is a bit more complicated: It's the part of the program that makes it possible for private health insurance companies to provide Medicare private health plans &mdash; in the form of HMOs and PPOs &mdash; known as Medicare Advantage Plans. You can elect to receive your medical benefits through a combination of Medicare Part A and Medicare Part B or from one of these private Advantage Plans. (See also: <a href="http://www.wisebread.com/8-tips-for-getting-the-most-out-of-your-medicare-plan?ref=seealso" target="_blank">8 Tips for Getting the Most Out of Your Medicare Plan</a>)</p> <p><a href="http://www.wisebread.com/how-to-compare-medicare-part-d-plans-a-beginner-s-guide" target="_blank">Medicare Part D</a> subsidizes the cost of your prescription drugs. This part of the program is often referred to as the Medicare prescription drug benefit.</p> <h2>3. You'll never have to pay for health insurance once you're on Medicare</h2> <p>Medicare will cover much of your health insurance needs. But there are some costs that you'll still need to cover on your own.</p> <p>For instance, Medicare does come with deductibles that you must pay before the insurance kicks in. These deductibles can change each year. For 2017, Medicare Part A comes with a $1,316 deductible per benefit period for your hospital stays. This means that if you do end up in the hospital, you'll have to pay this amount out of your own savings before Medicare will cover the rest of your expenses.</p> <p>Medicare Part B has a deductible of $183 for 2017. Again, you'll have to pay this amount before your Medicare coverage kicks in. And even after Part B coverage begins, you'll still have a copay. Medicare Part B generally covers 80 percent of your medical services. You'll have to cover the remaining 20 percent of these costs on your own.</p> <p>There are also coinsurance payments. If you must stay in a hospital for more than 60 days, you'll have to make a coinsurance payment for your Medicare Part A benefits.</p> <h2>4. Medicare covers all my medical needs</h2> <p>There are some medical services that Medicare does not provide any coverage for. Unfortunately, these services aren't exactly frivolous ones.</p> <p>Medicare does not provide dental coverage. It also doesn't pay for vision examinations for glasses. You can't rely on Medicare to cover the costs of dentures or hearing aids. And if you need long-term care, Medicare again won't provide coverage.</p> <p>You can purchase specialized insurance programs to cover these medical expenses. But you'll have to pay for the plans on your own. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long Term Care Insurance Worth It?</a>)</p> <h2>5. I won't have to pay any premiums for Medicare</h2> <p>Most people won't pay any monthly premiums for their Medicare Part A coverage. That's the good news. The bad news? You will pay a monthly premium for Medicare Part B.</p> <p>As of 2017, the Part B premium stood at $134 a month. Medicare, though, says that most people who get Social Security benefits pay less than that, for an average monthly premium of $109. This premium is usually deducted directly from your Social Security benefits. You won't be writing a check each month, but you'll still be paying for that Part B coverage.</p> <p>You'll also have to pay a premium each month if you elect to sign up for a Medicare Part C plan. These premiums will vary depending on your plan. Medicare Part D comes with a monthly premium, too, though this will vary according to your specific plan.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-common-medicare-myths-debunked&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Common%2520Medicare%2520Myths%252C%2520Debunked.jpg&amp;description=5%20Common%20Medicare%20Myths%2C%20Debunked"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/5%20Common%20Medicare%20Myths%2C%20Debunked.jpg" alt="5 Common Medicare Myths, Debunked" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="https://www.wisebread.com/5-common-medicare-myths-debunked">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare">How to Make Sense of the Different Parts of Medicare</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-myths-about-money-in-retirement">5 Myths About Money in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-to-get-health-insurance-if-you-missed-the-open-enrollment-deadline">How to Get Health Insurance If You Missed the Open Enrollment Deadline</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/women-pay-more-for-health-care-heres-how-to-pay-less">Women Pay More for Health Care — Here&#039;s How to Pay Less</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/health-insurance-how-to-fight-back-against-4-common-claim-denials">Health Insurance: How to Fight Back Against 4 Common Claim Denials</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Health and Beauty Insurance coverage deductibles health care medical medicare myths premiums retirement social security Thu, 05 Oct 2017 08:00:06 +0000 Dan Rafter 2030973 at https://www.wisebread.com