HEALTH CARE COSTS MAY EAT HALF OF YOUR SOCIAL SECURITY INCOME

6a017c332c5ecb970b01a5116fb332970c-320wiJim Lorenzen, CFP®, AIF®

The 2016 Retirement Health Care Costs Data Report recently released by Healthview Services found that health care costs are continuing to rise, as if any of us are surprised, of course.

According to Marlene Y. Satter, writing for BenefitsPro.com in the July 2016 issue of Retirement Advisor, a healthy person retiring in 2016 can expect to spend $288,400 in today’s dollars on lifetime Medicare Parts B, D, and supplemental insurance premiums.

There’s more.  Ms. Satter indicates that Social Security isn’t going to be of much help, either:

  • A 66-year-old retiring this year will need 57% of the Social Security to cover health care costs.
  • A 44-year-old retiring in 10 years will need 88%.
  • A 45-year-old couple will require 116%!

And, she says, it’s going to get worse!  A 30-year-old female retiring at 65 can expect to pay $548,098… $118,632 more than a male the same age.

Wow.

What to do?

The simple truth for long-term investors is that nothing beats growth; but older investors may be tempted to grab any “sure thing” that comes down the path – thus the popularity of annuities, even at current low interest rates.

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But, before you leap, it’s worth doing some homework.  You can begin with the Income Annuity Primer.  It won’t tell you everything you need to know; but, it’s a start.

Naturally, the Social Security claiming decision can be a costly mistake if not made properly.  We have a LifeGuide on retirement and Social Security you might like, as well. You can get it here.

Enjoy!

 

Jim

 


Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991.   Jim is Founding Principal of The Independent Financial Group, a  registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

 

Pension Plan Retirement Options

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Jim Lorenzen, CFP®, AIF®

Choosing between pension options can be a difficult task.   Choosing an option that guarantees your spouse pension benefits after your death means extra security but also lower monthly benefits.

On the other hand, choosing a pension option that only pays through your lifetime can provide larger monthly payments, but requires a lump sum to protect your spouse if your spouse  outlives you.   So, what’s the best choice?  You need to get some numbers.

If you’d like see a calculation to help decide which pension option works best for your particular retirement needs,  this is the information you will need to conduct an analysis.

The input regarding your pension and plan retirement options information you’ll need to provide:

  • Your current age
  • Retirement age
  • Your health status and life expectancy
  • Spouse’s current age
  • Spouse’s health status and life expectancy
  • Single monthly pension amount at retirement
  • Joint monthly pension amount at retirement
  • Rate of return on your investments (be careful, many miscalculate and overestimate this because they fail to include all their financial assets)

I’ve put together a series of concept pages on Retirement Pension Decisions you might find helpful.  Just click on this link:  Retirement Pension Decisions Guide

If you need help putting an analysis together, you can schedule an introductory phone call with me.  A reminder:  You will need the above information for our call.

Jim


Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991.   

Jim is Founding Principal of The Independent Financial Group, a  registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Investment Returns Can Be Misleading.

financial freedomJim Lorenzen, CFP®, AIF®

This sign represents the off-ramp many pre-retirees are seeking; but, there are usually many unforeseen detours before getting there; and, too often, far too many unpleasant road closings after finding it.

Example:  Average annual (arithmetic) returns tend to reflect how an investment has performed, while it’s compound (geometric) return may be more indicative of how the investor actually fared; but, that’s only part of the story.  In the real world, most portfolios have cash flows.

During our working years, we’re adding money to our investment nest egg; but, at retirement we begin taking money FROM our investments.  This presents a very different dynamic when a down market hits and we’re reducing our assets via withdrawals, too – and, it can change the probabilities of success going forward.

Understanding Investment Returns just might help pre-retirees, as well as those already retired, to better grapple with the sometimes confusing overwhelming data provided by financial product distributors who can sometimes make it into a shell-game.

You can get yours here.

Enjoy.


Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991.   Jim is Founding Principal of The Independent Financial Group, a  registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.