Tag Archives: Money

It’s More Than Just Finances: The Psychology Of Retirement

It’s More Than Just Finances: The Psychology Of Retirement

There are certain phases of life that most of us just naturally fall into with little to no psychological effort. Retirement, however, isn’t one of those phases. It’s a time of life that requires both careful forethought and changes to mindset.

Many think of retirement purely on a monetary level, particularly how their finances will change. Indeed, just managing current and future finances can be a full-time job during retirement. However, retirement also involves many psychological aspects.

For the last forty or more years, your career has been one of the main things that defined your life. Just think about how many times you’ve used your occupation to partly introduce yourself, give meaning to your life, or describe who you are. There’s often an initial feeling of overwhelming identity loss when retiring. If you’re not defined by the career you’ve spent the majority of your life building anymore, then you’re going to need to reinvent who you are now and who you plan to become in the future.

Start out by composing a list of what you’ve always wanted to do, but have never had the money or time to get done. Maybe you want to be a world traveler or volunteer for a cause close to your heart. Maybe you want to complete your education for personal satisfaction, start an entirely new career, or try your hand at being a business owner. Whatever is going to help you define the new you, it should be something that’s feasible and practical to accomplish.

Be careful about thinking that retirement is the end of monotonous work and the beginning of fun and exciting activity. Research has shown that there are potentially very serious consequences (such as boredom, depression, and feelings of being nonproductive) for many that don’t work after they retire.

Many retirees mistakenly think that a certain leisure activity that they’ve always loved or wanted to try will keep them interested and occupied. But, after just a few months, most usually find that monotony isn’t something unique to work activities. One way to avoid the pitfall of boredom during retirement is to test-drive various activities while you’re still working. It makes sense that if you get tired of playing golf every weekend for a year, then it certainly isn’t going to hold your interest during retirement. Likewise, if you plan on opening a business or starting a new career, then you can test-drive your new identity by taking night classes or working weekends in a business like the one you plan to open. Finding a new you will also help you to stay happy and productive, which will be essential considering you will now most likely be spending more time than ever with your significant other and family.

How Will You Pay for Long-Term Care?

How Will You Pay for Long-Term Care?

With costs for long-term care expected to quadruple by the time America’s 77 million baby boomers reach retirement age[1], there’s no time like right now to learn how you can help protect your assets.

Long-term care can be very expensive. As a national average, a year in a nursing home is estimated to cost as much as $65,985[2], with that cost doubling in some areas of the country. Home care can be less expensive, but it still adds up. Bringing a certified aide in to your home five times a week (two to three hours per visit) to help with dressing, bathing, preparing meals and similar household chores, can easily cost upwards of $2,000[3] per month. So who pays for long-term care? The chart shown here gives you a good idea of where the money comes from:

Who pays for long-term care?[4]

As you can see, 25 percent of all long-term care costs are paid out-of-pocket by individuals and their families. Only about 14 percent is paid by Medicare, with Medicaid picking up most of the balance of the country’s long-term care bill- either immediately for those meeting the federal poverty guidelines, or later on for those who “spend down” their assets and become eligible.

Let’s explore these options in greater detail:

Medicaid, Medicare and Medicare Supplement Insurance
Many people begin paying for long-term care on their own, but find that their savings are not enough to cover more than a few years of care. If they become impoverished, they turn to Medicaid to pay the bills. Because nursing home care is the primary type of care funded by Medicaid, this situation usually means entering or relocating to a Medicaid approved nursing home. Turning to Medicaid once meant impoverishing the spouse who remained at home as well, but changes in the law permit the at-home spouse to retain certain levels of assets and income.

If you are eligible for Medicare, some costs are picked up by Medicare – but only for short-term, skilled nursing home care following hospitalization and for some skilled at-home care when needed for short-term unstable conditions.

Medicare supplement insurance (often called Medigap or MedSupp) is private insurance that helps cover some of the gaps in Medicare coverage. Those gaps include hospital deductibles, doctors’ deductibles, and coinsurance payments – or what Medicare considers excess physician charges – but they do not include long-term care.

Health Insurance
Generally, neither the health insurance you may have on your own or through an employer will pay for long-term care.

Personal Savings
Considering what you’ve learned about the cost of long-term care, how long would your savings last in the face of an ongoing long-term care need? If you’re like many of us, your personal savings could not withstand several years of long-term care costs. Caregivers and/or those in need of long-term care often sacrifice savings earmarked for college tuition, retirement, or an inheritance for the next generation. Once these savings are depleted, Medicaid becomes the only option.

Long-Term Care Insurance
One option that many people are choosing is long-term care insurance. Like other types of insurance, long-term care insurance allows you to pay a pre-set premium that fits your budget and helps offset the risk of much larger out-of-pocket expenses. It’s important to know that in return for your premium, long-term care insurance policies pay for expenses associated with long-term care up to the policy limits that you choose.

No one can predict what type of care they’ll need in the future, or what the costs will be. But since the risk of having long-term care expenses is very real, and long-term care can be very expensive, you need to consider the best way to manage this risk and preserve your assets.

Will long-term care be a part of your future?
Thanks to advances in medicine and a greater understanding of how we stay healthy, we’re all living longer. The baby boomers are nearing retirement in record numbers, and those over age 65 makeup the fastest-growing segment of our society.[5] But while the number of older people is increasing rapidly, changes in families (more childless, one-child and step-families) and the increasing participation of women in the workforce mean that the numbers of those available to provide informal care for aging baby boomers is decreasing.

What does all this mean for your long-term care needs in the future? It means that you need to plan now for the care you may need independently of relatives who could once be relied upon for help. A long-term care policy would provide the funds to help pay for the care you might need.

1 The American Council of Life Insurance, “Can Aging Boomers Avoid the Nursing Home?,” 2000. – 2,3 Genworth Financial 2007 Cost of Care Survey. 4 Health Care Financing Administration, Office of the Actuary, National Health Statistics Group. 1999 – 5 The American Council of Life Insurance, Insurance Facts, 1998

Four Solutions to Medical Bill Problems

Four Solutions to Medical Bill Problems

There’s just something a little scary about receiving a medical bill or a letter from your insurance company claiming you owe money. These tiny sheets of paper have the power to send many of us into full-on panic mode.

As soon as you receive a medical bill or explanation of benefits (EOB) from your insurance provider, do you immediately whip out your checkbook and mail in your payment? Are you terrified you’ll be turned over to a collection agency if you don’t pay the bill right away?

Not so fast! Before you cough up the cash for that medical bill or EOB, it’s important to do a little homework. Don’t simply assume that you have to pay the bill. First of all, it could be a mistake. Secondly, the doctor’s office or hospital will not send your bill to collections right away. And most importantly, if you pay the bill only to realize later that it was covered by your insurance, it can be extremely difficult to get a refund.

So, put away that checkbook and read on to learn the solutions to four common medical bill problems:

Common Problem #1:  You receive a bill for a covered service.

Let’s your medical provider sends you a bill for a service or procedure that your insurance has always covered in the past. Don’t assume your insurance provider has simply changed their coverage. More often than not, this just means that the insurance company hasn’t had a chance to pay the bill.

If you receive a bill for commonly covered service, let it sit for 30 days. This should give your insurance provider plenty of time to pay off the bill. However, if you receive another bill from the medical provider, give your insurance company a call to find out what’s going on. You should also call the medical provider to let them know that you’re working with the insurance company to make sure they pay.

Common Problem #2: You see the word “DENIED.”

You go to the doctor or dentist for a standard service that’s usually covered by your insurance company. However, a few weeks later, you receive a claim stamped with the menacing word, “DENIED” in bright red letters.

Don’t freak out because it’s probably just a mistake. The medical provider may have incorrectly coded the treatment. Call your insurance company and make sure the claim matches the actually service you received. If not, let them know what happened, and find out the proper code for your treatment. You may need to follow up with the medical provider, as well.

Common Problem #3: You have a jumbled pile of EOBs and bills and no idea what you owe.

If you have a whole mess of EOBs and medical bills, it can be difficult to figure out what goes with what and how much you need to pay. That’s why it’s important to keep all of your medical records as organized as possible. A little bit of organization could save you a whole lot of time, money and frustration down the road.

When you receive a bill from your medical provider, staple it to the coordinating EOB from your insurance company. Keep all of your bills in a folder so you can easily and quickly access them. If you call your insurance company or medical provider to discuss a particular claim, write notes on the EOB or bill to keep track of who you talked to and what you discussed.

Common Problem #4: Only a portion of your claim was paid.

Let’s say you received a standard medical treatment that’s typically covered in full by your insurer. But a few weeks later, you discover your insurance company covered only a portion of the claim. It could be a slip-up on the insurer’s end or the medical provider could have coded the treatment incorrectly. But more often than not, this happens when you go to an out-of-network provider.

If that’s the case, you’ll probably have to pay this claim. When you go to a provider that is not part of your insurer’s network, you often have to pay more out of pocket. However, if you receive this kind of bill and you’re certain you saw a network provider, give your insurance company a call. It could simply be a mistake.

Of course, this is just a handful of medical billing problems. Patients deal with these and countless other medical billing issues day in and day out. So, the next time you receive a bill or EOB in the mail, don’t panic. When in doubt, call your insurance company and/or the medical provider to discuss your concerns.

Qualified Medical Expenses

Qualified Medical Expenses:

Starting January 1, 2011 you will no longer be able to pay for over-the-counter medications from your HSA as a qualified medical expense. Until the end of this year, you can reimburse yourself or pay from your HSA the money used to buy over-the counter medications. The new law removes over-the-counter drugs not prescribed by a physician from being paid from an HSA, FSA, or HRA on a tax-free basis.

CD vs. Tax deferred annuity

Let’s take a apples to apples approach at looking at some of the differences between a CD (Certificate of Deposit) and a annuity.

CD’s have immediate tax liabilities,; this creates the need for a higher rate of return

With a fixed annuities, you will eventually have to pay taxes on the money you withdraw.  However, as the numbers below shows, fixed annuities require a much lower interest rate to generate the same return as a CD.

For example, if your income places you in the 28% tax bracket and you purchase a tax-deferred fixed annuity with a guaranteed interest rate of 4.25 percern, you’d need a CD with an interest rate of more than 5.9 percent to outperform the annuity.

Now let’s say that your income places you in the 25 percent tax bracket and you purchased a fixed annuity with a guaranteed interest rate of 3.5 percent, you would need to purchase a CD with an interest rate of more than 4.67 percent to outperform the annuity.

If your CD’s are not performing like you would like them to, let’s talk about how annuity might be able to help you out.  I offer annuities through multiple carriers and ranging in years from 2-14.

Oh and with most annuities unlike most CD’s you can withdraw a portion of the annuity without any penalties from the carrier.