SafeMoney 6-22-24

Episode Transcript

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Good Saturday morning to all on thisfourth Saturday in June. Can you believe
that four Saturday in June twenty twentyfour, Dick schuligere and this is safe
money. We are here every Saturdayto share with you our listeners the strategies
we use with our clients to manageand protect assets, and to manage and

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protect those assets safely in today's veryunsafe world. We held our virtual community
meeting this past week with very verygood attendance. These meetings are for persons
who are aging into medicare and receivingall that solicitation material from various insurance companies.

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As you may know, some timeago, we conducted these meetings in
person, going to a meeting roomsomewhere and hosted these meetings in person.
When the COVID epidemic hit, webegan hosting these meetings virtually, and it
turns out that virtual hosting of theseeducational meetings actually resulted in increased participation.

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So our next virtual community meeting willbe July sixteenth and July eighteenth. Tuesday
July sixteenth, at ten o'clock inthe morning, Craig reviews the basics of
medicare and then focuses on the Medicaresupplement programs that are available. Two days
later, on July eighteenth, OnThursday July eighteenth, we again review the

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basics of Medicare and then focus onthe alternative to original Medicare, and that
alternative is the advantage plans. So, if this is your situation, folks,
if you are aging into Medicare turningage sixty five sometime in twenty twenty
four, I know you are beinginundated with solicitation requests from lots of companies.

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My gosh. With original Medicare.Remember that's what we call the three
card system. You have a Medicarecard issued by the federal government with parts
A and B of Medicare. Thenyou have a Medicare supplement plan issued by
a private insurance company. And thenyou have a third card, the prescription

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drug plan that's Medicare Part D.This is the three card system. That's
what Craig reviews that our Virtual Communitymeeting on Tuesday, July sixteenth, and
two days later, on Thursday,July eighteenth, Craig again reviews the basics

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of Medicare and then focuses on whatbut we believe is the most competitive of
the advantage plans, and that isthe AAARP Medicare Advantage Plan, the one
card system you know at any agehealth good health is a priority. When

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you retire, however, you willprobably focus more on healthcare than ever before.
Staying healthy is your goal, andthis can mean more physicis to the
doctor for preventive tests and routine checkups. There is also a chance that your
health will decline as you grow older, so increasing your need for costly prescription

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drugs and medical treatments. That's whyhaving health insurance is extremely important. So
if you are a sixty five orolder when you retire, your worries may
lesson when it comes to paying forhealthcare because you are most likely for certain

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health benefits. You are most likelyeligible for certain health benefits from Medicare,
a federal health insurance program, uponyour sixty fifth birthday, But if you
retire before age sixty five, youwill need some way to pay for your
health care until Medicare kicks in.Generous employers may offer extensive health insurance coverage

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to their retiring employees, but thisis the exception rather than the rule.
If your employer doesn't extend health benefitsto you. You may need to buy
private health insurance, which can bevery very costly now, so if your
employer doesn't extend health benefice to youto buy, you may need to buy

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additional private health insurance. So youmay extend your employer coverage through COBRA or
purchase an individual health insurance policy througheither a state based or a federal health
insurance exchange marketplace. But remember,Medicare, with all its complexities, will

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not pay for one thing, andthat which they will not pay for is
long term care benefits. You'll needto pay for that out of pocket or
rely on benefits from long term careinsurance. Or if your assets are income

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are low enough, you may qualifyfor Medicaid and more about Medicaid. As
mentioned, most Americans automatically entitled toMedicare when they turn sixty five. In
fact, if you are already receivingSocial Security benefits, you won't even have
to apply. You'll be automatically automaticallyenrolled in Medicare. However, you will

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have to decide whether you need onlyPart A care coverage, which is premium
free for most retirees, or ifyou want to purchase Part B of Medicare.
Part A, commonly referred to asthe hospital insurance portion of Medicare,
can help pay for your home healthcare, hospice care, and in patient

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hospital care. Part B helps coverother medical care such as physician care,
laboratory tests, and physical therapy.You may also choose to enroll in a
managed care plan for private fee forservice plan under Medicare Part C. That's

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a Medicare advantage plan, so ifyou want to pay fewer out of pocket
healthcare costs. If you don't alreadyhave adequate prescription drug coverage, you should
also consider join a Medicare prescription drugplan offered in your area. Offered in
our area by a private company orinsurer, that is, that has been

(07:06):
approved by Medicare. Unfortunately, Medicarewon't cover all of your healthcare expenses.
For some types of care, You'llhave to satisfy a deductible and make co
payments. That's why many retirees purchasean additional Medicare supplement, or sometimes called

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a Medicap policy. However, it'sillegal for an insurance company to sell you
a Medicap policy that substantially duplicates anyexisting coverage you have, including Medicare coverage
you don't need and can't buy amedic gap policy if you're enrolled in a

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Medicare advantage plan as Medicare Part Ccalled Medicare Advantage Plan, and you may
not need if you're covered through anemployer sponsored health plan after you retire,
or have your coverage through your spouse. Unless you can afford to pay for

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the things that original Medicare Parts Aand B doesn't cover, including the annual
co payments and deductibles that apply tocertain types of care, you may want
to purchase some type of Medicare supplementor medicapp policy when you sign up for
Medicare Part B. There are eightstandardized plans available to individuals new to Medicare.

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Each of these policies offer certain basiccore benefits, and all but the
most important basic policy Part A oftenvaries combinations of additional benefits designed to cover
what Medicare does not cover. Althoughall Medicare supplements or medic gap policies are

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available in every state, you shouldbe able to find a plan that best
meets your needs and your budget.When you first enroll in Medicare Part B
at age sixty five or older,you have a six month Medicap open enrollment
period. During this time, youhave the right to buy a Medicare supplement

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policy of your choice from a privateinsurance company, regardless of any health problems
that you may have. The companycannot refuse you a policy or charge you
more than other open enrollment applications.So think about the future, think about

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long term care insurance and Medicaid.The possibility of a prolonged stay in a
nursing home weighs heavily on the mindsof many the older Americans and their families.
That's hardly surprising, especially considering thehigh cost of long term care.
Most people in their fifties and sixtieslook to purchase a long term care insurance

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policy. A good long term careinsurance policy can cover the cost of care
in a nursing home and assist aliving facility or even in your own home.
But if you're interested, don't waittoo long to buy it. You
will need to be in good health. In addition, the older you are,

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the higher the premium you will pay. You may also be able to
rely on Medicaid to help pay forlong term care if your assets and your
income are low enough to allow youto qualify, but check first with a
financial professional or an attorney experienced inmedicaid planning. The rules surrounding this issue

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are numerous and complicated and often affectyou, your spouse and your beneficiaries,
and or your errors. When itcomes to planning for retirement income, it's
easy to overlook some of the commonfactors that can affect how much you'll have

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and how much you'll have and beable to spend. If you don't consider
how your retirement income can be impactedby investment risk, inflation risk, catastrophic
illness or long term care, andtaxes, you may not be able to
enjoy your retirement the retirement you invision. Different types of investments carry different

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risk. That's what we call theinvestment risk. So sound retirement income planning
involves understanding these risks and how theycan influence your available income in retirement.
Investment or market risk the risks thatfluctuations in the securities market may result in

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the reduction in or depletion of thevalue of your retirement savings if you need
to withdraw from your investments to supplementyour retirement income. Two important factors in
determining how long your investments will lastare the amount of withdrawals you take in

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the growth in or earnings your investmentsexperience. You might base the anticipated rate
of return of your investments on thepresumption that market fluctuations will average out over
time, and estimate how long yoursavings will last based upon an anticipated average
rate of return. Unfortunately, themarket doesn't always generate positive returns. Sometimes

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there are periods lasting for a fewyears or longer when the market provides negative
returns. Now, we've experienced thatin our working lifetime at the turn of
the century, in the year twothousand, two thousand and one, in
two thousand and two, for threeconsecutive years, the market was down,

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and the market was down considerably.So that's the investment risks that we face
during those periods. Constant withdrawals fromyour savings, combined with prolonged negative market
returns can result in the depletion ofyour safe of your savings far sooner than
you planned re invest reinvestment risk isthe risk that proceeds available for reinvestment must

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be reinvested at an interest rate that'slower than the rate of the instrument that
generated the proceeds. This could meanthat you have to reinvest at lower rate
of return or take an additional riskto achieve the same level of return.

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This type of risk is often associatedwith fixed interest savings instruments such as bonds
or bank certificates of deposit. Whenthe investment matures, comparable comparable instruments may
not be paying the same return ora better return as the matured investment.

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Interest rate risk occurs when interest ratesrise and prices of some existing investments drop.
For example, during periods of risinginterest rates, newer bond issues will
likely yield higher coupon rates then olderbonds issued during periods of lower interest rates,

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thus decreasing the market value of theolder bonds. You might also see
the investment the market value of somestocks and mutual funds drop due to interest
rate hikes because some investors will shifttheir money from those stocks and mutual funds
to lower risk Fixed investments pay ahigher interest rate compared to prior years.

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So another risk that we faces theinflation risk and inflation is the risk of
that purchasing power of a dollar willdecline over time due to the rise and
costs of goods and services. Ifinflation runs at its historic long term average

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of about three percent, the purchasingpower of a given sum of money will
be cut in half in twenty threeyears, will be cut in half in
twenty three years. If it jumpsto four percent, the purchasing power is
cut in half in eighteen years.That's the inflation risk. A simple example

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illustrates the impact of inflation on marketincome, assuming the consistent annual inflation rate
of three percent and excluding taxes andinvestment returns. In general, if fifty
percent satisfies your retirement income needs thisyear, you'll spend fifty one thousand,

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five hundred of income next year tomeet the same income needs. In ten
years, you'll need about sixty seventhousand dollars to equal the purchasing power of
fifty thousand dollars this year. Therefore, to outpace inflation, you should try
to have some strategy in place thatallows your income stream to grow throughout retirement.

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That's why, folks, we useour split annuity strategies. Our split
annuity strategies then provide a income alongwith a deferred annuity, and the intent

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of that split annuity is that whilewe are taking income from the immediate side
of that annuity, arrangement. Thenthe deferred side will replace the income that
we are drawing. Now, thehuge benefit of that split annuity strategy is

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that you can modify or adjust yourincome at the end of every usually I
program split annuities for a five yearor a seven year period of time,
and that period of time of thatimmediate annuity pay new income. Then the
deferred annuity will crew interest in accrueearnings that will replace the incumbent you're drawing

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from that immediate annuity. So that'san issue. Be happy to talk with
you about that. If you needmy help, give me a call call
me at five six three three threetwo twenty two hundred, or send me
an email. Go to my website. Go to dickshillig dot com and scroll

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over to the contact icon for myemail address and send me an email if
you'd like to correspond in that manner. Long term care the expenses associated with
long term care may be needed whenphysical or mental disabilities and impair your capacity

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to perform everyday basic tasks. Aslife expectancies increase, so does so does
the potential need for long term care. Pain for long term care can have
a significant impact on retirement income andsavings, especially for the healthy spouse.

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While not everyone needs long term careduring their lives, ignoring the possibility of
such care and failing to plan forit can leave you or your spouse with
little or no income or savings ifsuch care is needed. If you decide
to buy long term care endurance,don't forget to factor the premium cost into

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your retirement income needs. A completestatement of coverage including exclusions, exceptions and
limitations is found only in the longterm care policy. It should be noted
that carriers have the discretion to raisetheir rates and remove their products from the

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marketplace. Now there are fewer insurancecompanies than ever before that offer long term
care insurance. Many of our currentcarriers have increased the rates of long term
care insurance, They've increased the premiumsand have increased the premiums substantially. So

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that's one thing that you need totake a look at and be aware of
and make some plans for the needfor the potential need for long term care,
especially true for spouses. The riskwith long term care insurance is primarily
the risk for spouses because of onespouse is receiving long term care expenses,

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then that impact on those expenses isan impact on the savings or the retirement
savings for both spouses. So it'sa very very significant factor and that needs
to be planned for. So folks, if you are working with a financial
professional, make sure that financial professionalunderstands the cost of long term care and

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the risk that that brings to marriedcouples. That's extremely important. The cost
of catastrophic care is an issue thatwe need to consider as well. In
addition to that, the cost ofcatastrophic care and taxes. Taxes are in

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effect upon your retirement savings income andis often overlooked but significant aspect of retirement
income planning or is planning for taxes. Taxes can eat into your income,
significantly reducing the amount you have availableto spend in retirement. You know,

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I've mentioned you're often on safe moneythat years ago, when we looked at
retirement, we looked at retirement wewould be in a much much lower rate
of tax. Therefore, the investmentsthat we advocated years ago were to defer

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or to defer taxes until retirement.The thinking at that point was that when
we retire, we'd be in amuch lower tax bracket. Now, what
has happened has been just the opposite. Oftentimes, when people retire, they
are in a higher income tax bracketthan ever before. Consequently, we need

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to take a look at that andinclude taxation in our income planning for retirement.
So my question is to you,is that have you planned for these
factors when planning for your retirement?Consider these common factors that can affect your

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incommon savings. Now, what arethese factors? These are the factors,
the one that we spoke the onesthat we spoke about this morning. We
spoke about the risk that the investmentrisk, the inflation risks, the taxation
risks, and the potential of increasedhealth care costs risk, especially with long

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term care. So encourage you totake a look at them. Encourage you
to give me a call and let'stalk about these factors. Give me a
call at five sixty three three threetwo twenty two hundred or email. Go
to my website. Go to dickshilligdot com and scroll over to the contact
icon and drop down for my emailaddress and correspond with me in that manner.

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If you choose to do that,That's all I have for you this
morning. Keep those dates in mindcoming up in July July sixteenth and July
eighteenth for our virtual community meetings.Attendees that these virtual community meetings always tell
us at the end of the meeting, they say, now I understand,

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I understand the risk, and Iunderstand the need for planning for retirement.
Have a great, great weekend,Looking forward to talking with you again next
week. Good day,