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Category: Retirement Planning

Putting a Price Tag on Your Health

We constantly hear how important it is to maintain a healthy lifestyle. That is not always easy, especially in the face of temptation or the easy option of procrastination. For some, the monetary benefits of maintaining a healthy lifestyle may provide an incentive.

 

Being healthy not only makes you feel good, it may also help you financially. For example, a recent Johns Hopkins Bloomberg School of Public Health study determined that a 40-year-old who simply moves from being obese to overweight could save an average of $18,262 in health care costs over the rest of his or her lifetime. If that person maintains a healthy weight, the average potential savings increase to $31,447.[i]

 

If you’re wondering how your health habits might be affecting your bottom line, consider the following:

Regular preventative care can help reduce potential healthcare costs. Even minor illnesses can lead to missed work, missed opportunities, and potentially lost wages. Serious illnesses often involve major costs like hospital stays, medical equipment, and doctor’s fees. Preventative dentistry may help you reduce dental costs as well.

 

In a way, staying healthy helps our potential to save for retirement. If your health declines to the point where you cannot work, that hurts your income and your ability to contribute to retirement accounts. The threat is real: the Social Security Administration notes that a quarter of us will become disabled at some point during our working years.[ii]

 

Higher weight seems to be a factor in overall health care costs for many. Ask the Centers for Disease Control and Prevention; they note that per-year health care expenses are about 41% higher ($4,870) for an obese individual than for a person of normal weight ($3,400). The biggest factor in this difference: prescription drug costs.[iii]

 

Some habits that lead to poor health can be expensive in themselves. Smoking is the classic example. A pack of cigarettes costs anywhere from $5-14, which means ballpark expenses of $2,000-5,000 or more a year in expenses for a pack-a-day smoker. Smokers also pay higher premiums for health, disability, and life insurance.[iv]

 

By focusing on your health, eliminating harmful habits, and employing preventative care, you may be able to improve your self-confidence and quality of life. You may also be able to reduce expenses, enjoy more of your money, and boost your overall financial health.

 

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.bankrate.com/banking/savings/healthier-lifestyle-can-save-you-money/

[ii] https://www.cnbc.com/2018/11/11/protect-yourself-from-a-career-derailment-that-trips-up-1-in-4-workers.html

[iii] https://abcnews.go.com/Health/Healthday/story?id=8184975&page=1

[iv] https://money.usnews.com/money/personal-finance/family-finance/articles/the-real-cost-of-smoking

What is Medigap Insurance and How Do I Get It?

Establishing a national health insurance plan for senior Americans has followed a sometimes-wayward path through U.S. history.

President Teddy Roosevelt first began discussing the idea of implementing a system of health insurance in the United States more than a century ago. President Harry Truman called for developing a health insurance fund in 1945.[i]

President John F. Kennedy pushed unsuccessfully to create a national health insurance program for senior Americans.

In 1965, President Lyndon B. Johnson signed legislation that established Medicare. More than 58 million people now receive health insurance through Medicare.

Medicare Covers About 80%

Original Medicare—which includes parts A, B, and D—does not cover all medical expenses.[ii] Typically, those on Medicare still must pay 20% of the cost of their doctor’s visits and for other medical procedures.

Medicare.gov provides more in-depth explanations of payment schedules and treatment coverage.

Most people who have Medicare Part A (hospital insurance) don’t pay monthly premiums.[iii]

If you didn’t pay Medicare taxes for at least 30 quarters (7½ years) of work, you’ll have to pay $422 for Part A. If you paid Medicare taxes for 30-39 quarters, your standard Part A premium will be $232 a month.[iv]

A Quarter of Medicare Recipients Have Supplemental Insurance

Nearly 12 million people on Medicare—about one in four—have supplemental Medigap coverage.[v]

Medigap often covers all or most of the difference in health-care costs—that 20% not covered by Medicare.[vi] Policy and coverage choices include plans A, B, C, D, F, G, K, L, M, and N. Private companies provide the government standardized coverage.

Medigap covers copayments, coinsurance, and deductibles.[vii] Some policies provide coverage of services that Medicare doesn’t cover.

Medicare pays its portion of covered approved health-care services first before Medigap insurance pays its share.

Here are eight facts about how Medicare and Medigap work:

  1. You have to have Medicare Parts A and B.
  2. Medigap coverage is not Medicare Advantage, which is offered by private companies contracting with Medicare.[viii] Medicare Advantage includes:
  • Health Maintenance Organizations
  • Preferred Provider Organizations
  • Private Fee-for-Service Plans
  • Special Needs Plans
  • Medicare Medical Savings Account Plans

3.  Medigap only covers one person per policy. You and your spouse have to get separate policies.

4. Any state-licensed insurance company may offer Medigap coverage.

5. Renewal of standardized Medigap coverage is guaranteed. Your provider cannot cancel your policy if you’re paying your premiums.

6. Some Medigap policies sold before January 1, 2007 provided prescription coverage. Those sold after that date are legally prohibited from providing drug coverage. Medicare’s Part D    plans cover prescription drugs.

7. You are not permitted to buy a Medigap policy if you already have a Medicare Advantage Plan, unless you’re dropping the plan to go back to Medicare.

8. If you’d like more information about your financial options or to learn more about your financial needs, we’re happy to help. Contact us at 800.929.1001.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.medicareresources.org/basic-medicare-information/brief-history-of-medicare/

[ii] https://www.investopedia.com/terms/m/medigap-insurance.asp

[iii] https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance

[iv] https://www.medicare.gov/your-medicare-costs/part-a-costs

[v] https://www.gomedigap.com/blog/medicare-supplement-trends/

[vi] https://www.investopedia.com/terms/m/medigap-insurance.asp

[vii] https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap

[viii] https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans

What Would You Like Your Retirement to Look Like?

 

You’re on a beautiful golf course. It’s a sunny afternoon. Once you finish the 18th hole, you’re on your way to meet with friends for lunch at the new restaurant on the corner.

Perhaps you prefer putting your life skills to work by volunteering at a charity or maybe working part time at the local home supply store.

‘Tis retirement. You decide how you spend your leisure.

You’re no longer constrained by the demands of a job or a work routine. You set your own schedule. You choose how you’ll spend your day. Those long years of employment are over, and you’re setting sail for your golden years, on your own terms.

Questions and concerns about retirement

While the scenes described above appear idyllic, they do require preparation and planning.

How do you envision your retirement? What do you want it to look like? And, most important, what do you plan to do, and what kind of retirement strategy will you implement during your working years to pursue your retirement goals?

Those are some of the questions you should ask yourself. In the years prior to retiring, you should begin painting that picture. You’ll have to compare and contrast your retirement dreams with your financial ability to sustain a comfortable lifestyle.

Here are additional questions to consider as you shape your financial strategy:

How long do you want to keep working full time? Are you interested in taking part-time work once retired? If so, do you want to pursue something in your current profession or try something new?

Once you’re retired, with or without a part-time job or doing charity work, what types of hobbies or activities do you wish to do?

How do you want to spend most of your time? If you’re so inclined, plot out your typical day of retirement.

Sometimes planning for retirement and being retired can feel like work. But the “work” is necessary. After all, you can probably expect to live nearly another two decades[i] or more, according to estimates.

Are you healthy?

As you dig deeper into developing your plan, consider these questions: Are you healthy? What do your genetics reveal about your longevity? Does your family line have predispositions or tendencies to certain conditions (heart disease, cancer, diabetes)? In other words, what do you think is your projected lifespan, and how do you expect to maintain an active lifestyle during those years?

As you start laying out your retirement plan, you also have to assess your financial condition. The federal government requires seniors to make minimum withdrawals (required minimum distributions) from certain accounts, including your IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts at the age of 70 ½.[ii]

Basically, you have to look well into the future—sometimes as much as 35 years or more depending on your health and lifestyle—in determining your budget. To oversimplify it, how can you make your retirement savings stretch across several decades or so of retirement? Your investments have the potential to continue generating interest income over your retirement.

Don’t forget your health maintenance. Medical expenses, which may include long-term care, in the later years of retirement must be factored into the equation. Some estimates put health and medical costs for a retired couple at $280,000.[iii]

Shifting gears

The shift from work to retirement can feel jarring. Some people ease into it while others take the leap. After retiring, some retirees, still healthy and active, work part time to keep income at a comfortable level.

Delaying taking Social Security allows retirees to increase their benefits by about 8% per year after their full retirement age to a maximum of about 125% of your full retirement age amount.[iv]

Consult with a financial professional to help you wade through the financial morass of retirement preparations. Financial professionals have the tools, the resources, and the experience to help you develop the most productive retirement plan to suit your needs.

If you’d like more information about your financial options or to learn more about your financial needs, we’re happy to help. Call CapSouth at 800.929.1001 or visit our website.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.forbes.com/sites/wadepfau/2016/08/25/how-long-can-retirees-expect-to-live-once-they-hit-65/#72e7700b6b4f

[ii] https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

[iii] http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/

[iv] https://www.ssa.gov/OACT/quickcalc/early_late.html

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