Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
At our phone lines. They are open to you right now.
If you've got a question for our retirement playing professionals
from Class Financial. The telephone number to get on the
air six oh eight three two one thirteen ten. That's
six oh eight three two one thirteen ten. This week
we're going to be talking insurance, but if you have
any type of retirement related questions, we do have our
professionals here for you. Just got to keep a pickup
(00:20):
phone gifts call six oh eight three two one thirteen ten.
That's six oh eight three two one thirteen ten. You
can learn more about cost Financial on their website Coss
Financial dot com. That's Coss k l aas Financial dot com.
They're telephone number six oh eight four four two five
six three seven. No charge for that initial get to
know your appointment at Costs Financial. It will be complimentary
(00:41):
to you again their number six oh eight four four
two five six three seven. Joined this week by CJ.
Closs and Eric Schwartze of Klass Financial. Eric, how or
excuse me? CJ. I'll go to you first. How you
doing this morning?
Speaker 2 (00:53):
I'm doing great? Sean? How are you?
Speaker 1 (00:55):
I'm doing really good? Great talk with you. Eric, how
have you been.
Speaker 3 (00:58):
I'm doing pretty well. You can you can do? You
can ask me first next time.
Speaker 1 (01:02):
I well, I definitely will. I was worried because I'm
I was like, oh it is Katie may have CJ
up first and then bring Eric up after want to.
I didn't want to cause I didn't want to cause confusion,
but definitely worriestuf we've got We're talking insurance this week,
and various insurance coverages and things need to be aware of.
Speaker 2 (01:21):
Which is.
Speaker 1 (01:21):
It's going to be a really really good topic and
an important topic as well. And each and every week,
of course, we have a lot of fun on this program,
but there's also really important conversations had. And if you
ever missed part of the show go over. You can
always listen back to the podcast at class financial dot com.
You can also subscribe right online at the website colss
financial dot com that's k l a as financial dot com.
(01:41):
And before we get to this week's topic, one of
the cool features of the show each and every week
is the Class Quiz Question of the week. Your chance
to win a fantastic prize. This week, no exception, our
friends from class Financial have provided a twenty five dollars
gift card to Starbucks. Tell you a little bit later
on in the program, specifically how you can win Little
Tipto if you listen closely. Just about every week, the
question and answer come up during the show, and before
(02:03):
we start this week's conversation about insurance coverages and some
of the things you need to consider when you before
and when you're retired, let's actually take a look back
at last week's program and get the question and answer
to the class quiz question of the week.
Speaker 3 (02:16):
Eric, absolutely so, thank you to everybody for listening as always,
and special congratulations to Peter from WannaKey.
Speaker 2 (02:24):
Who's our winner. Last week.
Speaker 3 (02:26):
The question was if you are under the age of
fifty this year, what is the maximum that you can
contribute to your four oh one K or four h
three B And we had multiple choice. It was either
twenty thousand or twenty three thousand, five hundred, and Peter
knew the correct answer was twenty three thousand, five hundred dollars.
Speaker 1 (02:43):
Ooh, and it was a really informative program as we
talk about contributions and other things. A really important program
last week as well, as I mentioned, you can of
course subscribe to the podcast right at classfinancial dot com. Also,
while you're there you and get to know the team,
you can learn a little bit more about the separate
division set colass Financial. Also on a cool feature on
the website classfinancial dot com is the weekly Market Pulse newsletter.
(03:03):
You can subscribe right at classfinancial dot com. So today
we're going to be talking about various insurance coverages that
folks should be aware of. Are there specific changes to
policies that folks may want to consider before they retire?
Speaker 2 (03:18):
Yeah, good question, Sean.
Speaker 4 (03:19):
So for those who know who have listened to our
show for a while, we do retirement planning, and so
this show is just all about answering people's questions as
they relate to preparing for and executing on a successful retirement,
and certainly as financial advisors, financial planners, retirement planners, whatever terminology.
Speaker 2 (03:39):
You want to use.
Speaker 4 (03:41):
Insurance is a huge part of that. And so there's
different kind of pillars that make up your financial life.
We often see them in the area of insurance, taxes,
estate planning, investments, and maybe banking or lending, and these
can if you get these wrong, these pillars can really
destabilize your overall financial life and So today we're talking
(04:02):
about insurance, and specifically four key areas of insurance. This
would be health insurance, life insurance, long term care insurance,
and property and casualty. Now you could add a fifth
into here, called like disability insurance, but we're just not
talking about that today. So anybody who's an insurance agent,
don't worry, we see you. We know there's more areas
of insurance besides these four key areas, but these are
(04:25):
some of the big ones that we want to discuss
with our listeners today. Now, before we get into these
four key areas, I do want to mention so class financial.
We're a fee based retirement planning firm. We do have
some individuals who are insurance license on our team, but
we do not sell insurance. We maintain those licenses at
this point because of well number one, some legacy business
(04:47):
from generations ago. But number two so that we can
speak with authority to this topic. So it's not me
saying I'm not licensed to talk about this. The beauty
is that I actually am licensed to talk about this. Okay,
with that kind of disclaimer out of the way, So again,
these four key areas health insurance, life insurance, long term
care insurance, and then P and C Property and casualty.
I'm going to begin with health insurance considerations.
Speaker 2 (05:10):
Number one.
Speaker 4 (05:10):
When you think about health insurance, since we are retirement
planners for US, the number one category of health slash
medical insurance is Medicare. Medicare is a federal health insurance
program for individuals sixty five and older. You can typically
enroll during a seven month window starting three months before.
Speaker 2 (05:29):
Your sixty fifth birthday.
Speaker 4 (05:32):
You can visit medicare dot gov for details, but you
don't want to miss that enrollment deadline. So first category
of health insurance is Medicare for people sixty five and older. Now,
if you're under sixty five, you can consider other options.
Check if your employer offers health insurance, if you have
a spouse who has employer sponsored health insurance. If you're
(05:53):
no longer employed but you were recently, you consider if
there's consider if they offer something called Cobra, which most
large group health insurance plans are required off for Cobra.
Speaker 2 (06:03):
Cobra.
Speaker 4 (06:04):
By the way, this is off the top of my head.
By the way, I think I believe that SUNDS for
consolidated I'm a budget Reconciliation Act. Eric might know anyway,
it doesn't matter. It's this weird, weird acronym for this
weird statement that just has to do with the extension
of the group coverage paid for out of pocket by
(06:24):
you after you leave an employer. Now, that is a
limited timeframe. I think it's typically eighteen to thirty six months.
It's the MAXI amount of time that you can get
extension of your group plan. Now, some of you are going,
but wait, what if I'm under sixty five, I don't
have COBRA, I don't have a spouse's employer plan, and
I don't have my own group employer plan. Am I
(06:45):
just you know SOL? And the answer is no. That's
where kind of the Affordable Care Act and the marketplace
comes in to impact you. And so certainly go to
go to the website to look up Affordable Care Act
and look at what might be available to you there. Typically,
when you're dealing with the Affordable Care Actor, the marketplace,
(07:06):
your what's called your modified adjusted gross income will have
a huge impact on whether or not that is inexpensive
or super expensive. And then finally, last kind of area
here of health insurance to think about is again within
the category of Medicare, but it would be Medicare supplements
and prescription plans known as Part D plans. So within
the traditional world of Medicare, you get Part A, which
(07:29):
is a hospital insurance, Part B, which is medical insurance.
That Part B is typically comes out of your Social
Security if you're drawing social Security, otherwise you have to
pay for it separately. But then there remains a gap,
and so that's where those Medicare supplement plans can fill
that gap. And then you often need a prescription plan
as well in case you need a prescriptions as you
(07:51):
go kind of further into retirement. So there's kind of
three core areas of health insurance to be thinking about.
Speaker 1 (07:56):
You know, CJ, when you were talking mentioned coolbra there,
I thought you were going to mention. I think for
a lot of folks that look into that as an option,
they suddenly really appreciate what their employer was because.
Speaker 4 (08:07):
That's right Sean, Yeah, we we I listen. I'm one
of the owners here at Class Financial along with Eric
actually is another one of our owners on the show
here today, and so we get the inside scoop on
these health insurance premiums and it's I mean, we are
proud and happy and just overjoyed that we can offer it,
but it's often we just try to like hold it
(08:28):
up in front of the entire team to say, hey,
just your health insurance alone is darn near one thousand
dollars a month, Like, let's at least acknowledge that as
a benefit instead of like you know, shoving it down
under the road.
Speaker 1 (08:40):
It's a pretty significant and it's important stuff. As we
talked this morning with CJ. Class and Eric Schwartz, our
retirement planning professionals from Class Financial. Of course you can
learn more online their website Class financial dot com. That's
coss k l a A S Financial dot com. And Eric,
what about life insurance? Is is that something that you
know if you're retired to it? Do I really need
to be thinking about that?
Speaker 3 (09:02):
You definitely need to be thinking about it. And before
I jump into that, CJA, you were so close, it's
the Consolidated Omnibus Budget Reconciliation Act.
Speaker 2 (09:10):
It rolls right off the target.
Speaker 1 (09:12):
So you can you got it?
Speaker 2 (09:14):
You bet? You bet?
Speaker 3 (09:16):
Yeah? Shad your question though about life insurance. This is
something we deal with with folks a lot because people
generally purchase life insurance earlier in their life. You know,
maybe they have young kids, or they have a mortgage
or something like that, and then it's kind of something
that just sits in the background for many years. And
then you know, you come to retirement and you have
to start thinking about your expenses and you look at
(09:39):
that life insurance premium and you say, gosh, is this
something that I need to keep paying for?
Speaker 2 (09:44):
And maybe not.
Speaker 3 (09:45):
So you know, if your children are financially independent, your
mortgage is paid off, and your your savings can support
you and your spouse, your life insurance needs have definitely changed,
and in many cases, you know, they've gone down. So
what you want to be thinking about is take a
look at the policies you have. First of all, figure
out what type do you have. Are they are they term?
(10:05):
Are they are they whole life? Are they you know,
in the case of a term policy, are you just
paying for a certain number of years whole life? Do
you have a cash value in there that you could
that you could access, Take a look at the death benefits,
and then very importantly, make sure you know how much
you're paying in premiums. Oftentimes those are just drawn automatically
(10:27):
from your bank account, and kind of can can slide
under the radar. And one other really important point that
CJ can speak to as well, double check who the
listed beneficiaries are on these policies. Because they are taken
out early in life, the people that are important to
you may have changed in that time. So who want
to make sure that if anything happens to you, your
(10:49):
benefits actually go to the person that you person or
people that you intend. So those are the things we
want to be thinking about reviewing. And then from there
you have they have to make the decision do I
retain these life insurance policies. So I want to just
go through a few reasons here why you might want to. Okay,
so I said earlier, you know, if your mortgage is
(11:11):
paid off, if your kids are are launched successfully, and
and you know you have enough savings, you may not
need insurance. But the things in retirement people will often
keep life insurance around for are things like covering funeral expenses.
We talked about this a few weeks ago on the show.
We talked about that costing you know, somewhere between eight
(11:32):
and ten thousand dollars, if not more. They'll keep coverage
around to protect their spouse from financial strain, especially if
your death reduces social security or pension benefits, so providing
some spousal support. People use it to provide inheritance for
their children, so you know, upon your death there is
(11:53):
a there's a death benefit that can that can go
to your kids that really isn't in acted by your
retirement spending, especially if you go into like a long
term care facility. And then for state planning purposes, people
will use life insurance to pay a state or income
taxes on inherited I arrays or just any taxable portion
(12:16):
of your estate that exceeds the current federal exemption. Now
the federal exemption is quite high right now, it's a
thirteen point nine to nine million dollars or twenty seven
point nine eight million dollars per couple, So those those
numbers are pretty high. They are a lot higher than
they used to be. So, you know, for a lot
of people, life insurance doesn't always come into play in
(12:38):
that case. But as you begin making these decisions, just
really move cautiously before you make changes to your coverage.
Make sure you're talking to a financial professional before you
you know, stop making those premium payments or call up
the insurance company and tell them to send you your
cash value because it is it becomes much more difficult
to qualify for new policies as you age because let
(13:01):
the insurance company is looking at you know your health
and how likely you are to live for for a
long time. So just move slowly in this, but definitely
something we want to be addressing as we move in
on retirement.
Speaker 1 (13:15):
Talking this morning with Eric Schwartz and CJ. Closs. They
are our retirement planning professionals from Class Financial website Class
Financial dot com. That's Coss k l aas Financial dot Com.
They're telephon number six oh eight four four two five
six three seven. No charge for that initial gets to
know your appointment at Coss Financial. It'll be complimentary to
you again. They're number six oh eight four four two
five six three seven. Talk a little bit more about insurance.
(13:38):
We'll get into things like long term care and other areas.
We will do that next. As Money in Motion with
Coss Financial continues right here on thirteen ten WIBA talking
with our retirement planning professionals from Class Financial, Eric Schwartz
and CJ. Closs. Of course, they're telephone number six oh
eight four four two five six three seven. No charge
for that initial get to know your appointment at COSS Financial.
(13:59):
It will be compliment entry to you again, they're telephone
number six O eight four four two five six three seven.
Of course, the website coss financial dot com. That's colss
k l a A S Financial dot com talking insurance
this week and the different types of products out there
and some of the things to keep in mind when
you are working through some of these decisions. And one
of those big decisions is long term care insurance and
(14:23):
CJ should people be looking into that or what's kind
of the guidance there?
Speaker 4 (14:28):
Yeah, possibly, you know, in many of these categories, you
do have to be cautious. We did a show a
while ago as it related to just different ways the
different financial professionals you may engage get compensated, and one
of our commentaries at that time was there there will
always be inherently more potential conflicts of interest if people
(14:49):
are selling a product.
Speaker 2 (14:51):
Versus a service.
Speaker 4 (14:53):
I repeat that there's inherently more potential conflicts of interest
if people are selling a product instead of a service.
Now that that doesn't mean that life insurance is bad,
or that any form of insurance is bad. It just
means that typically the people who are selling it to
you are selling that product for a commission versus just
giving you advice for a fee as an example. So
(15:13):
that's one way that we act as a fiduciary in
behalf of our clients, as we say, Hey, I'm not
going to sell this to you. I'm not going to
get paid on this stuff, but I am going to
give you some guidance based on what I see in
your kind of global financial picture. This can be one
of the huge powers of working with a fiduciary advisor
if they are truly a fiduciary advisor, and that's a
big if, but if they are, it can be here's
(15:36):
what I see. You know Eric was talking about life insurance.
It could be Hey, I know you just got married
and I know you just had your first child here,
but like, you don't have any life insurance and if
something goes wrong, it's going to be a mess. So, like,
go get some insurance. The beauty is when Eric says
that to a couple, he gets paid nothing for that advice, right,
(15:56):
It's just his guidance based on his expertise and his experience.
So similarly, long term care insurance would fit this category
of like, you need to be educated and understand what
this is. So a couple things here, and these are
rules of thumb, So please talk to your insurance agent,
to your financial advisors you move towards this topic to
(16:17):
see what is right for you.
Speaker 2 (16:18):
But some rules of.
Speaker 4 (16:19):
Thumb would be Number one, consider this in the five
to ten year range before retirement or right after retirement. Again,
five to ten year range before retirement or right after retirement.
Now there can be some exceptions of that. If you're
retiring at seventy five, you should be looking at this
earlier than that. But I'm thinking if you're retiring somewhere
(16:39):
between sixty to sixty five, you might want to be
looking at or evaluating long term care between fifty and
sixty five, if that makes sense. So that's kind of
the window of time to evaluate. Secondarily, within the area
of long term care insurance, we often find it is
very difficult for you to buy it before you are retired,
or at least before you do a comprehensive retirement evaluation
(17:01):
with an advisor. And the reason is because listen, if
you're working. It's easy to say, sure, I've got three
thousand dollars a year to put towards long term care insurance,
but that's not going to be the majority of the
time that you're paying for it. The majority of the
time you're going to be paying for that policy is
when you're in retirement on more of a fixed income.
So you need to know if you can afford that three,
(17:22):
four or five thousand dollars a year in an annual premium.
So there's another kind of like tip or something to
be aware of. Number three would be insure yourself for
the gap, not for the entire cost. Now that's just advice.
That doesn't mean you have to do it that way.
But let me explain what I mean. Often people will
come back and say, I talk to a long term
care insurance specialist and they told me it could cost
(17:44):
me up to one hundred and twenty thousand dollars a
year to be in a memory care facility. And so
I got a policy for ten years up that pays
one hundred and twenty thousand dollars a year, And I go,
why why did you do that? Well, because that's the cost,
And I go, yeah, But you have seventy thousand dollars
a year between pensions and social security, you don't need
to ensure the full one twenty. You need to ensure
(18:06):
the gap. So you get the idea.
Speaker 2 (18:09):
You need to be.
Speaker 4 (18:10):
Nuanced and understanding kind of how this operates and what
kind of care you need. And by the way, you know,
people like to throw insurance agents under the bus saying, well,
it's their fault they oversold me. Not really, they're not
financial advisors. Their job is not to know all of
those details. Their job is just to tell you about
the risk and then try.
Speaker 2 (18:29):
To ensure you appropriately.
Speaker 4 (18:31):
So really you need to know, or your financial advisor
needs to know, and then you need to get into
the detail. So again, understand what long term care covers
what it doesn't cover, because different policies can cover different things. Also,
know your payment options. So most health and disability insurance
policies do not cover long term care. Medicare provides limited
(18:54):
coverage for long term care, and Medicaid will cover costs
of long term care only after most of your personal
assets are depleted. So know your options and that you
can't really say to me, oh, don't worry, I've got
disability insurance that'll cover it, or don't worry, I've got
Medicare that'll cover it, or I heard Medicaid will kick in. Listen,
these are like half truths, not even that, they're.
Speaker 2 (19:16):
Like quarter truths.
Speaker 4 (19:17):
You really need to become educated on what options are
available to you. And we'll just know that this is
not a This is not a concept for Eric or myself.
We live this every day, all day. The average age
of our client is sixty seven years old. We are
retirement planners. We know, both academically and through experience, what
(19:41):
risk long term care poses to certain estates. And Eric
can attest probably the number one risk to you and
your household of running out of money is living too
long with poor health. Now does that mean you should
get long term care insurance? No, that's not what I'm saying.
It means you need to know the number one risk
of running out of money, right, and it is living
(20:03):
too long with poor health. So you could set money
aside earmarked for long term care. You could buy a
long term care insurance policy, you could buy a life
insurance policy with a long term care writer. Or you
could just say screw it, if I run out of money,
and they put me in a medicaid facility. I don't mind.
We don't care how you address it. We just care
that you address it. So so a lot of things
(20:24):
that consider there. But again, talk to your financial advisor
and consider what's best for.
Speaker 1 (20:29):
You a lot of very important stuff this morning, as always,
so we talk with CJ. Closs and Eric Schwartz. They
are our retirement planning professionals from COSS Financial. The website
class financial dot com. That's Coss Klaas financial dot com.
They're tell for number six oh eight four four two
five six three seven, no charge for that initial get
to know your appointment at costs financial. It will be
complimentary to you. Again their number six oh eight four
(20:50):
four two five six three seven, probably saying well, what
about things like homeowners insurance some other areas haven't touched
on that yet, Oh we will. We'll do that next
as Money in Motion and with Class Financial continues right
here on thirteen ten WIBA and we're talking with our
retirement planning professionals from Class Financial, CJ. Closs and Eric Schwartz.
Their website Colss financial dot com. That's Clause Klaas financial
(21:12):
dot com. You can learn more about Class Financial. There's
separate divisions. You can also listen back to this in
previous shows. Podcasts. Also cool feature that weekly Market Pulse newsletter.
You can sign up right online at classfinancial dot com.
They're telephon number six so eight four four two five
six three seven. No charge for that initially gets no
appoyment at Laws Financial. It will be complimentary to you
again their number six O eight four four two five
(21:33):
six three seven. Talking insurance this week and homeowners insurance
is something that I think we all obviously we've got
a home, you're gonna probably carry something like that. Also
other property related coverages. What are some of the the
uh considerations folks should be making eric when it comes
to homeowners insurance and other type of proper property related coverages.
(21:55):
Easier said than spelled out.
Speaker 3 (21:59):
Yeah, Proper property and casualty insurance is another one of
those things, not unlike life insurance that sort of gets
put on the back burner, right. You get it put
in place and then renews every year, and you get
a letter now and then, and you hope you don't
have to use it. But in probably I would say
the last three to four years, it has come to
the surface a lot more because I'm sure listeners will
(22:21):
probably have this experience as well, opening that renewal letter
and saying, who's house or whose car are we insuring here?
Because it's certainly not mine. Mine isn't worth that much.
But insurance property and casualty insurance premiums have increased quite
a bit in the last Like I said, three to
four years, rates have risen significantly due to inflation and
(22:45):
climate related risks and increased catastrophic weather events. So we
want to make sure that we're checking in on this,
And I mean we're talking about this sort of as
a as it relates to retirees. But waiting your coverage
on a regular basis is a great idea. It can
save you money in the long run. It is a
(23:05):
little bit of legwork, but it is it is worth it.
So make sure that in the case of your home,
you are insured for the replacement cost of your property
rather than rather than just you know what what your
house would sell for. Right now, we are more looking
for what would it cost to rebuild your home if
(23:27):
you had a disaster. Check for something like well. Check
for discounts in general, but retiree discounts are available in
some cases, some insurers offer them, you know, due to
lower risk factors at times. So you know, not only
can you get can you get ten percent off of culvers,
but you might be able to get a discount on
your insurance as well. For for retirees specifically, we will
(23:52):
sometimes get people saying, well, you know, I don't I
don't have a mortgage on my house, so I don't
really need to have insurance on it. I can I
can self ensure. You can certainly do that. I'm going
to strongly encourage people in most cases, I say most
cases not to self ensure. Your home is often one
of your largest, if not your largest assets, and to
(24:16):
be to have some insurance to protect it makes makes
great sense. Now there are situations where where it may
may not make sense, depending on where you live and
weather and cost of insurance, but for most folks listening here,
I strongly encourage you not to not to self insure
your home. Moving on to auto insurance, that's another part
(24:40):
of property and casualty coverage. This is another place we
want to check for discounts, not only for retirees, but
you know, for bundling insurance and especially in the case
of retirees with reduced driving, you'll often see lower rates.
So this is an area where it makes sense to
shop around and try to get try to get a
(25:02):
better rate, you can do things like taking a defensive
driving course. These are offered by like AARP and TRIPLEA,
and insurance companies will sometimes give you a break on
your premiums for that. If your car is over ten
years old, you may want to evaluate whether it makes
sense to have comprehensive coverage on the car anymore. And finally,
(25:23):
downsizing to one car could save uninsurance and maintenance costs.
So we see this with couples as they move further
through retirement, I find they're not driving as much or
going places as much.
Speaker 2 (25:34):
They they'll go down to one car.
Speaker 3 (25:38):
The last part I want to talk about as it
relates to property and casualty insurance is umbrella insurance. I
would CG you may agree with me on this. I
would say this is in many cases one of the
one of the big risks we see that people face
because they don't have umbrella insurance and they don't know
(25:58):
that they should. Okay, So umbrella insurance is essentially liability coverage.
So the name umbrella is think of an umbrella kind
of going over the top of you and stopping water
from hitting you. This is sort of putting an umbrella
over you from a liability risk standpoint. For the for
the cost of coverage. I know we've been talking a
(26:20):
lot about, you know, reducing premiums and and now I'm saying, hey,
if you don't have umbrella insurance, you should add that.
The fact of the matter is for the risk of
liability that you have and the cost of umbrella coverage.
It's it's a very it's a very prudent financial decision
to make sure that you're protecting yourself from the risk
(26:42):
of liability. So my final thoughts here is if you're
evaluating and adjusting your insurance policies before retirement, that can
have a significant impact on your financial security. So work
with a professional and make sure that you're making informed
choices around these time.
Speaker 1 (27:00):
Thanks really great to conversation this week about insurance. Don't
forget missed any part of the program. Head on over
to classfinancial dot com. That's coss klaasfinancial dot com. Also,
while you're there, you get an opportunity maybe submit a
question for our Money in Motion listener question corner. As
a matter of fact, Daniel took the time to write in.
He says, I'm sixty sixty years old, married with a
household income of over a three hundred and seventy five
(27:22):
thousand dollars per year. As I contribute to my four
oh one K? Should I be putting money into a
wrath or a traditional four oh one K? Which option
makes the most sense for my situation given that I
plan to work five more years. CJ, We'll put this
one on you.
Speaker 2 (27:39):
Yeah.
Speaker 4 (27:39):
Well, first off, Daniel, thanks thanks for submitting the question,
and as Sean said, anybody who's listening can do the
same thing on our website or certainly call into the
show and we can submit questions like this either live
on the air or after the show. Number two Daniel
high income earner. So congratulations there, You and your household
are certainly in higher income category earning three hundred and
(27:59):
seventy five thousand dollars a year. But your question is
a good one. Should I do ROTH or traditional? As
a reminder to our listeners, traditional four to one K
contributions or what are called pre tax or deductible contributions
from your income, They come off of the top of
your income, whereas ROTH contributions are post tax contributions that
grow tax free, but they do not reduce your taxable
(28:21):
income today. So the answer to your question is pretty intuitive, Daniel.
It's because your income is so high, which you know,
looking at twenty twenty five marginal income tax brackets, you
would be in the twenty four percent marginal income tax
Under most circumstances, we are going to suggest that you
should do pre tax. There certainly can be exceptions to that.
(28:44):
But if you can save today at the twenty four
percent marginal bracket, because again at three seventy five, taxes
in the United States are marginal, you're paying twenty four
percent on those dollars that could go into the four
to one K plan. If we can save that twenty
four percent today, not only do we get the compound
growth over the next five years before you retire, but additionally,
when you go to pull it out in retirement, even
(29:06):
if you needed one hundred and fifty thousand dollars a
year to live off of, that's going to be at
a lower marginal bracket than the twenty four percent. So
you get the idea save the twenty four get all
of the compound tax tax or TAXA for growth, then
pull it out into the future at a lower rate.
That's kind of a win win win. Again, there can
(29:27):
be exceptions to this, Daniel, but generally speaking we would
suggest pre tax.
Speaker 2 (29:31):
So thank you for submitting the question.
Speaker 1 (29:34):
Great question, Daniel, and again you two can be like Daniel.
You can of course email it in through Cossfinancial dot
com or give them a call at the office six
oh eight four four two five six three seven. Speaking
of that number, don't forget no charge for that initial
get to know your appointment tech costs Financial. It will
be complimentary to you again their number six oh eight
four four two five six three seven. You're also going
on hold on to that telephone number because it's time
(29:55):
now for the COSS Quiz question of the week. Whorks
like this. In just a moment, I'll ask you the
class quiz question. You will then have thirty minutes from
the in today's program to call the Class Financial office
right here in Madison and again that number six oh
eight four four two five six three seven. First call
with correct answer win this week's prize, which is a
twenty five dollars gift card to Starbucks. This week's class
quiz question Leek, is this true or false? As you
(30:18):
plan for retirement, you should review your beneficiaries on your
life insurance policies. Is that true or is that false?
Telephone number six oh eight four four two five, six
three seven first call. Correct answer in the twenty five
dollars gift card Starbucks Again, that's Loss Financials Office right
here in Madison. That number six oh eight four four
two five six three seven CJ Eric. Always great chatting
(30:40):
with both of you guys. Have a great day.
Speaker 2 (30:42):
Thanks Sean.
Speaker 1 (30:42):
Thanks Sean, Doctor Greaz next year. On thirteen ten, WIBA
At our phone lines. They are open to you right now.
If you've got a question for our retirement playing professionals
from Class Financial. The telephone number to get on the
air six oh eight three two one thirteen ten. That's
six oh eight three two one thirteen ten. This week
we're going to be talking insurance, but if you have
any type of retirement related questions, we do have our
professionals here for you. Just got to keep a pickup
(00:20):
phone gifts call six oh eight three two one thirteen ten.
That's six oh eight three two one thirteen ten. You
can learn more about cost Financial on their website Coss
Financial dot com. That's Coss k l aas Financial dot com.
They're telephone number six oh eight four four two five
six three seven. No charge for that initial get to
know your appointment at Costs Financial. It will be complimentary
(00:41):
to you again their number six oh eight four four
two five six three seven. Joined this week by CJ.
Closs and Eric Schwartze of Klass Financial. Eric, how or
excuse me? CJ. I'll go to you first. How you
doing this morning?
Speaker 2 (00:53):
I'm doing great? Sean? How are you?
Speaker 1 (00:55):
I'm doing really good? Great talk with you. Eric, how
have you been.
Speaker 3 (00:58):
I'm doing pretty well. You can you can do? You
can ask me first next time.
Speaker 1 (01:02):
I well, I definitely will. I was worried because I'm
I was like, oh it is Katie may have CJ
up first and then bring Eric up after want to.
I didn't want to cause I didn't want to cause confusion,
but definitely worriestuf we've got We're talking insurance this week,
and various insurance coverages and things need to be aware of.
Speaker 2 (01:21):
Which is.
Speaker 1 (01:21):
It's going to be a really really good topic and
an important topic as well. And each and every week,
of course, we have a lot of fun on this program,
but there's also really important conversations had. And if you
ever missed part of the show go over. You can
always listen back to the podcast at class financial dot com.
You can also subscribe right online at the website colss
financial dot com that's k l a as financial dot com.
(01:41):
And before we get to this week's topic, one of
the cool features of the show each and every week
is the Class Quiz Question of the week. Your chance
to win a fantastic prize. This week, no exception, our
friends from class Financial have provided a twenty five dollars
gift card to Starbucks. Tell you a little bit later
on in the program, specifically how you can win Little
Tipto if you listen closely. Just about every week, the
question and answer come up during the show, and before
(02:03):
we start this week's conversation about insurance coverages and some
of the things you need to consider when you before
and when you're retired, let's actually take a look back
at last week's program and get the question and answer
to the class quiz question of the week.
Speaker 3 (02:16):
Eric, absolutely so, thank you to everybody for listening as always,
and special congratulations to Peter from WannaKey.
Speaker 2 (02:24):
Who's our winner. Last week.
Speaker 3 (02:26):
The question was if you are under the age of
fifty this year, what is the maximum that you can
contribute to your four oh one K or four h
three B And we had multiple choice. It was either
twenty thousand or twenty three thousand, five hundred, and Peter
knew the correct answer was twenty three thousand, five hundred dollars.
Speaker 1 (02:43):
Ooh, and it was a really informative program as we
talk about contributions and other things. A really important program
last week as well, as I mentioned, you can of
course subscribe to the podcast right at classfinancial dot com. Also,
while you're there you and get to know the team,
you can learn a little bit more about the separate
division set colass Financial. Also on a cool feature on
the website classfinancial dot com is the weekly Market Pulse newsletter.
(03:03):
You can subscribe right at classfinancial dot com. So today
we're going to be talking about various insurance coverages that
folks should be aware of. Are there specific changes to
policies that folks may want to consider before they retire?
Speaker 2 (03:18):
Yeah, good question, Sean.
Speaker 4 (03:19):
So for those who know who have listened to our
show for a while, we do retirement planning, and so
this show is just all about answering people's questions as
they relate to preparing for and executing on a successful retirement,
and certainly as financial advisors, financial planners, retirement planners, whatever terminology.
Speaker 2 (03:39):
You want to use.
Speaker 4 (03:41):
Insurance is a huge part of that. And so there's
different kind of pillars that make up your financial life.
We often see them in the area of insurance, taxes,
estate planning, investments, and maybe banking or lending, and these
can if you get these wrong, these pillars can really
destabilize your overall financial life and So today we're talking
(04:02):
about insurance, and specifically four key areas of insurance. This
would be health insurance, life insurance, long term care insurance,
and property and casualty. Now you could add a fifth
into here, called like disability insurance, but we're just not
talking about that today. So anybody who's an insurance agent,
don't worry, we see you. We know there's more areas
of insurance besides these four key areas, but these are
(04:25):
some of the big ones that we want to discuss
with our listeners today. Now, before we get into these
four key areas, I do want to mention so class financial.
We're a fee based retirement planning firm. We do have
some individuals who are insurance license on our team, but
we do not sell insurance. We maintain those licenses at
this point because of well number one, some legacy business
(04:47):
from generations ago. But number two so that we can
speak with authority to this topic. So it's not me
saying I'm not licensed to talk about this. The beauty
is that I actually am licensed to talk about this. Okay,
with that kind of disclaimer out of the way, So again,
these four key areas health insurance, life insurance, long term
care insurance, and then P and C Property and casualty.
I'm going to begin with health insurance considerations.
Speaker 2 (05:10):
Number one.
Speaker 4 (05:10):
When you think about health insurance, since we are retirement
planners for US, the number one category of health slash
medical insurance is Medicare. Medicare is a federal health insurance
program for individuals sixty five and older. You can typically
enroll during a seven month window starting three months before.
Speaker 2 (05:29):
Your sixty fifth birthday.
Speaker 4 (05:32):
You can visit medicare dot gov for details, but you
don't want to miss that enrollment deadline. So first category
of health insurance is Medicare for people sixty five and older. Now,
if you're under sixty five, you can consider other options.
Check if your employer offers health insurance, if you have
a spouse who has employer sponsored health insurance. If you're
(05:53):
no longer employed but you were recently, you consider if
there's consider if they offer something called Cobra, which most
large group health insurance plans are required off for Cobra.
Speaker 2 (06:03):
Cobra.
Speaker 4 (06:04):
By the way, this is off the top of my head.
By the way, I think I believe that SUNDS for
consolidated I'm a budget Reconciliation Act. Eric might know anyway,
it doesn't matter. It's this weird, weird acronym for this
weird statement that just has to do with the extension
of the group coverage paid for out of pocket by
(06:24):
you after you leave an employer. Now, that is a
limited timeframe. I think it's typically eighteen to thirty six months.
It's the MAXI amount of time that you can get
extension of your group plan. Now, some of you are going,
but wait, what if I'm under sixty five, I don't
have COBRA, I don't have a spouse's employer plan, and
I don't have my own group employer plan. Am I
(06:45):
just you know SOL? And the answer is no. That's
where kind of the Affordable Care Act and the marketplace
comes in to impact you. And so certainly go to
go to the website to look up Affordable Care Act
and look at what might be available to you there. Typically,
when you're dealing with the Affordable Care Actor, the marketplace,
(07:06):
your what's called your modified adjusted gross income will have
a huge impact on whether or not that is inexpensive
or super expensive. And then finally, last kind of area
here of health insurance to think about is again within
the category of Medicare, but it would be Medicare supplements
and prescription plans known as Part D plans. So within
the traditional world of Medicare, you get Part A, which
(07:29):
is a hospital insurance, Part B, which is medical insurance.
That Part B is typically comes out of your Social
Security if you're drawing social Security, otherwise you have to
pay for it separately. But then there remains a gap,
and so that's where those Medicare supplement plans can fill
that gap. And then you often need a prescription plan
as well in case you need a prescriptions as you
(07:51):
go kind of further into retirement. So there's kind of
three core areas of health insurance to be thinking about.
Speaker 1 (07:56):
You know, CJ, when you were talking mentioned coolbra there,
I thought you were going to mention. I think for
a lot of folks that look into that as an option,
they suddenly really appreciate what their employer was because.
Speaker 4 (08:07):
That's right Sean, Yeah, we we I listen. I'm one
of the owners here at Class Financial along with Eric
actually is another one of our owners on the show
here today, and so we get the inside scoop on
these health insurance premiums and it's I mean, we are
proud and happy and just overjoyed that we can offer it,
but it's often we just try to like hold it
(08:28):
up in front of the entire team to say, hey,
just your health insurance alone is darn near one thousand
dollars a month, Like, let's at least acknowledge that as
a benefit instead of like you know, shoving it down
under the road.
Speaker 1 (08:40):
It's a pretty significant and it's important stuff. As we
talked this morning with CJ. Class and Eric Schwartz, our
retirement planning professionals from Class Financial. Of course you can
learn more online their website Class financial dot com. That's
coss k l a A S Financial dot com. And Eric,
what about life insurance? Is is that something that you
know if you're retired to it? Do I really need
to be thinking about that?
Speaker 3 (09:02):
You definitely need to be thinking about it. And before
I jump into that, CJA, you were so close, it's
the Consolidated Omnibus Budget Reconciliation Act.
Speaker 2 (09:10):
It rolls right off the target.
Speaker 1 (09:12):
So you can you got it?
Speaker 2 (09:14):
You bet? You bet?
Speaker 3 (09:16):
Yeah? Shad your question though about life insurance. This is
something we deal with with folks a lot because people
generally purchase life insurance earlier in their life. You know,
maybe they have young kids, or they have a mortgage
or something like that, and then it's kind of something
that just sits in the background for many years. And
then you know, you come to retirement and you have
to start thinking about your expenses and you look at
(09:39):
that life insurance premium and you say, gosh, is this
something that I need to keep paying for?
Speaker 2 (09:44):
And maybe not.
Speaker 3 (09:45):
So you know, if your children are financially independent, your
mortgage is paid off, and your your savings can support
you and your spouse, your life insurance needs have definitely changed,
and in many cases, you know, they've gone down. So
what you want to be thinking about is take a
look at the policies you have. First of all, figure
out what type do you have. Are they are they term?
(10:05):
Are they are they whole life? Are they you know,
in the case of a term policy, are you just
paying for a certain number of years whole life? Do
you have a cash value in there that you could
that you could access, Take a look at the death benefits,
and then very importantly, make sure you know how much
you're paying in premiums. Oftentimes those are just drawn automatically
(10:27):
from your bank account, and kind of can can slide
under the radar. And one other really important point that
CJ can speak to as well, double check who the
listed beneficiaries are on these policies. Because they are taken
out early in life, the people that are important to
you may have changed in that time. So who want
to make sure that if anything happens to you, your
(10:49):
benefits actually go to the person that you person or
people that you intend. So those are the things we
want to be thinking about reviewing. And then from there
you have they have to make the decision do I
retain these life insurance policies. So I want to just
go through a few reasons here why you might want to. Okay,
so I said earlier, you know, if your mortgage is
(11:11):
paid off, if your kids are are launched successfully, and
and you know you have enough savings, you may not
need insurance. But the things in retirement people will often
keep life insurance around for are things like covering funeral expenses.
We talked about this a few weeks ago on the show.
We talked about that costing you know, somewhere between eight
(11:32):
and ten thousand dollars, if not more. They'll keep coverage
around to protect their spouse from financial strain, especially if
your death reduces social security or pension benefits, so providing
some spousal support. People use it to provide inheritance for
their children, so you know, upon your death there is
(11:53):
a there's a death benefit that can that can go
to your kids that really isn't in acted by your
retirement spending, especially if you go into like a long
term care facility. And then for state planning purposes, people
will use life insurance to pay a state or income
taxes on inherited I arrays or just any taxable portion
(12:16):
of your estate that exceeds the current federal exemption. Now
the federal exemption is quite high right now, it's a
thirteen point nine to nine million dollars or twenty seven
point nine eight million dollars per couple, So those those
numbers are pretty high. They are a lot higher than
they used to be. So, you know, for a lot
of people, life insurance doesn't always come into play in
(12:38):
that case. But as you begin making these decisions, just
really move cautiously before you make changes to your coverage.
Make sure you're talking to a financial professional before you
you know, stop making those premium payments or call up
the insurance company and tell them to send you your
cash value because it is it becomes much more difficult
to qualify for new policies as you age because let
(13:01):
the insurance company is looking at you know your health
and how likely you are to live for for a
long time. So just move slowly in this, but definitely
something we want to be addressing as we move in
on retirement.
Speaker 1 (13:15):
Talking this morning with Eric Schwartz and CJ. Closs. They
are our retirement planning professionals from Class Financial website Class
Financial dot com. That's Coss k l aas Financial dot Com.
They're telephon number six oh eight four four two five
six three seven. No charge for that initial gets to
know your appointment at Coss Financial. It'll be complimentary to
you again. They're number six oh eight four four two
five six three seven. Talk a little bit more about insurance.
(13:38):
We'll get into things like long term care and other areas.
We will do that next. As Money in Motion with
Coss Financial continues right here on thirteen ten WIBA talking
with our retirement planning professionals from Class Financial, Eric Schwartz
and CJ. Closs. Of course, they're telephone number six oh
eight four four two five six three seven. No charge
for that initial get to know your appointment at COSS Financial.
(13:59):
It will be compliment entry to you again, they're telephone
number six O eight four four two five six three seven.
Of course, the website coss financial dot com. That's colss
k l a A S Financial dot com talking insurance
this week and the different types of products out there
and some of the things to keep in mind when
you are working through some of these decisions. And one
of those big decisions is long term care insurance and
(14:23):
CJ should people be looking into that or what's kind
of the guidance there?
Speaker 4 (14:28):
Yeah, possibly, you know, in many of these categories, you
do have to be cautious. We did a show a
while ago as it related to just different ways the
different financial professionals you may engage get compensated, and one
of our commentaries at that time was there there will
always be inherently more potential conflicts of interest if people
(14:49):
are selling a product.
Speaker 2 (14:51):
Versus a service.
Speaker 4 (14:53):
I repeat that there's inherently more potential conflicts of interest
if people are selling a product instead of a service.
Now that that doesn't mean that life insurance is bad,
or that any form of insurance is bad. It just
means that typically the people who are selling it to
you are selling that product for a commission versus just
giving you advice for a fee as an example. So
(15:13):
that's one way that we act as a fiduciary in
behalf of our clients, as we say, Hey, I'm not
going to sell this to you. I'm not going to
get paid on this stuff, but I am going to
give you some guidance based on what I see in
your kind of global financial picture. This can be one
of the huge powers of working with a fiduciary advisor
if they are truly a fiduciary advisor, and that's a
big if, but if they are, it can be here's
(15:36):
what I see. You know Eric was talking about life insurance.
It could be Hey, I know you just got married
and I know you just had your first child here,
but like, you don't have any life insurance and if
something goes wrong, it's going to be a mess. So, like,
go get some insurance. The beauty is when Eric says
that to a couple, he gets paid nothing for that advice, right,
(15:56):
It's just his guidance based on his expertise and his experience.
So similarly, long term care insurance would fit this category
of like, you need to be educated and understand what
this is. So a couple things here, and these are
rules of thumb, So please talk to your insurance agent,
to your financial advisors you move towards this topic to
(16:17):
see what is right for you.
Speaker 2 (16:18):
But some rules of.
Speaker 4 (16:19):
Thumb would be Number one, consider this in the five
to ten year range before retirement or right after retirement. Again,
five to ten year range before retirement or right after retirement.
Now there can be some exceptions of that. If you're
retiring at seventy five, you should be looking at this
earlier than that. But I'm thinking if you're retiring somewhere
(16:39):
between sixty to sixty five, you might want to be
looking at or evaluating long term care between fifty and
sixty five, if that makes sense. So that's kind of
the window of time to evaluate. Secondarily, within the area
of long term care insurance, we often find it is
very difficult for you to buy it before you are retired,
or at least before you do a comprehensive retirement evaluation
(17:01):
with an advisor. And the reason is because listen, if
you're working. It's easy to say, sure, I've got three
thousand dollars a year to put towards long term care insurance,
but that's not going to be the majority of the
time that you're paying for it. The majority of the
time you're going to be paying for that policy is
when you're in retirement on more of a fixed income.
So you need to know if you can afford that three,
(17:22):
four or five thousand dollars a year in an annual premium.
So there's another kind of like tip or something to
be aware of. Number three would be insure yourself for
the gap, not for the entire cost. Now that's just advice.
That doesn't mean you have to do it that way.
But let me explain what I mean. Often people will
come back and say, I talk to a long term
care insurance specialist and they told me it could cost
(17:44):
me up to one hundred and twenty thousand dollars a
year to be in a memory care facility. And so
I got a policy for ten years up that pays
one hundred and twenty thousand dollars a year, And I go,
why why did you do that? Well, because that's the cost,
And I go, yeah, But you have seventy thousand dollars
a year between pensions and social security, you don't need
to ensure the full one twenty. You need to ensure
(18:06):
the gap. So you get the idea.
Speaker 2 (18:09):
You need to be.
Speaker 4 (18:10):
Nuanced and understanding kind of how this operates and what
kind of care you need. And by the way, you know,
people like to throw insurance agents under the bus saying, well,
it's their fault they oversold me. Not really, they're not
financial advisors. Their job is not to know all of
those details. Their job is just to tell you about
the risk and then try.
Speaker 2 (18:29):
To ensure you appropriately.
Speaker 4 (18:31):
So really you need to know, or your financial advisor
needs to know, and then you need to get into
the detail. So again, understand what long term care covers
what it doesn't cover, because different policies can cover different things. Also,
know your payment options. So most health and disability insurance
policies do not cover long term care. Medicare provides limited
(18:54):
coverage for long term care, and Medicaid will cover costs
of long term care only after most of your personal
assets are depleted. So know your options and that you
can't really say to me, oh, don't worry, I've got
disability insurance that'll cover it, or don't worry, I've got
Medicare that'll cover it, or I heard Medicaid will kick in. Listen,
these are like half truths, not even that, they're.
Speaker 2 (19:16):
Like quarter truths.
Speaker 4 (19:17):
You really need to become educated on what options are
available to you. And we'll just know that this is
not a This is not a concept for Eric or myself.
We live this every day, all day. The average age
of our client is sixty seven years old. We are
retirement planners. We know, both academically and through experience, what
(19:41):
risk long term care poses to certain estates. And Eric
can attest probably the number one risk to you and
your household of running out of money is living too
long with poor health. Now does that mean you should
get long term care insurance? No, that's not what I'm saying.
It means you need to know the number one risk
of running out of money, right, and it is living
(20:03):
too long with poor health. So you could set money
aside earmarked for long term care. You could buy a
long term care insurance policy, you could buy a life
insurance policy with a long term care writer. Or you
could just say screw it, if I run out of money,
and they put me in a medicaid facility. I don't mind.
We don't care how you address it. We just care
that you address it. So so a lot of things
(20:24):
that consider there. But again, talk to your financial advisor
and consider what's best for.
Speaker 1 (20:29):
You a lot of very important stuff this morning, as always,
so we talk with CJ. Closs and Eric Schwartz. They
are our retirement planning professionals from COSS Financial. The website
class financial dot com. That's Coss Klaas financial dot com.
They're tell for number six oh eight four four two
five six three seven, no charge for that initial get
to know your appointment at costs financial. It will be
complimentary to you. Again their number six oh eight four
(20:50):
four two five six three seven, probably saying well, what
about things like homeowners insurance some other areas haven't touched
on that yet, Oh we will. We'll do that next
as Money in Motion and with Class Financial continues right
here on thirteen ten WIBA and we're talking with our
retirement planning professionals from Class Financial, CJ. Closs and Eric Schwartz.
Their website Colss financial dot com. That's Clause Klaas financial
(21:12):
dot com. You can learn more about Class Financial. There's
separate divisions. You can also listen back to this in
previous shows. Podcasts. Also cool feature that weekly Market Pulse newsletter.
You can sign up right online at classfinancial dot com.
They're telephon number six so eight four four two five
six three seven. No charge for that initially gets no
appoyment at Laws Financial. It will be complimentary to you
again their number six O eight four four two five
(21:33):
six three seven. Talking insurance this week and homeowners insurance
is something that I think we all obviously we've got
a home, you're gonna probably carry something like that. Also
other property related coverages. What are some of the the
uh considerations folks should be making eric when it comes
to homeowners insurance and other type of proper property related coverages.
(21:55):
Easier said than spelled out.
Speaker 3 (21:59):
Yeah, Proper property and casualty insurance is another one of
those things, not unlike life insurance that sort of gets
put on the back burner, right. You get it put
in place and then renews every year, and you get
a letter now and then, and you hope you don't
have to use it. But in probably I would say
the last three to four years, it has come to
the surface a lot more because I'm sure listeners will
(22:21):
probably have this experience as well, opening that renewal letter
and saying, who's house or whose car are we insuring here?
Because it's certainly not mine. Mine isn't worth that much.
But insurance property and casualty insurance premiums have increased quite
a bit in the last Like I said, three to
four years, rates have risen significantly due to inflation and
(22:45):
climate related risks and increased catastrophic weather events. So we
want to make sure that we're checking in on this,
And I mean we're talking about this sort of as
a as it relates to retirees. But waiting your coverage
on a regular basis is a great idea. It can
save you money in the long run. It is a
(23:05):
little bit of legwork, but it is it is worth it.
So make sure that in the case of your home,
you are insured for the replacement cost of your property
rather than rather than just you know what what your
house would sell for. Right now, we are more looking
for what would it cost to rebuild your home if
(23:27):
you had a disaster. Check for something like well. Check
for discounts in general, but retiree discounts are available in
some cases, some insurers offer them, you know, due to
lower risk factors at times. So you know, not only
can you get can you get ten percent off of culvers,
but you might be able to get a discount on
your insurance as well. For for retirees specifically, we will
(23:52):
sometimes get people saying, well, you know, I don't I
don't have a mortgage on my house, so I don't
really need to have insurance on it. I can I
can self ensure. You can certainly do that. I'm going
to strongly encourage people in most cases, I say most
cases not to self ensure. Your home is often one
of your largest, if not your largest assets, and to
(24:16):
be to have some insurance to protect it makes makes
great sense. Now there are situations where where it may
may not make sense, depending on where you live and
weather and cost of insurance, but for most folks listening here,
I strongly encourage you not to not to self insure
your home. Moving on to auto insurance, that's another part
(24:40):
of property and casualty coverage. This is another place we
want to check for discounts, not only for retirees, but
you know, for bundling insurance and especially in the case
of retirees with reduced driving, you'll often see lower rates.
So this is an area where it makes sense to
shop around and try to get try to get a
(25:02):
better rate, you can do things like taking a defensive
driving course. These are offered by like AARP and TRIPLEA,
and insurance companies will sometimes give you a break on
your premiums for that. If your car is over ten
years old, you may want to evaluate whether it makes
sense to have comprehensive coverage on the car anymore. And finally,
(25:23):
downsizing to one car could save uninsurance and maintenance costs.
So we see this with couples as they move further
through retirement, I find they're not driving as much or
going places as much.
Speaker 2 (25:34):
They they'll go down to one car.
Speaker 3 (25:38):
The last part I want to talk about as it
relates to property and casualty insurance is umbrella insurance. I
would CG you may agree with me on this. I
would say this is in many cases one of the
one of the big risks we see that people face
because they don't have umbrella insurance and they don't know
(25:58):
that they should. Okay, So umbrella insurance is essentially liability coverage.
So the name umbrella is think of an umbrella kind
of going over the top of you and stopping water
from hitting you. This is sort of putting an umbrella
over you from a liability risk standpoint. For the for
the cost of coverage. I know we've been talking a
(26:20):
lot about, you know, reducing premiums and and now I'm saying, hey,
if you don't have umbrella insurance, you should add that.
The fact of the matter is for the risk of
liability that you have and the cost of umbrella coverage.
It's it's a very it's a very prudent financial decision
to make sure that you're protecting yourself from the risk
(26:42):
of liability. So my final thoughts here is if you're
evaluating and adjusting your insurance policies before retirement, that can
have a significant impact on your financial security. So work
with a professional and make sure that you're making informed
choices around these time.
Speaker 1 (27:00):
Thanks really great to conversation this week about insurance. Don't
forget missed any part of the program. Head on over
to classfinancial dot com. That's coss klaasfinancial dot com. Also,
while you're there, you get an opportunity maybe submit a
question for our Money in Motion listener question corner. As
a matter of fact, Daniel took the time to write in.
He says, I'm sixty sixty years old, married with a
household income of over a three hundred and seventy five
(27:22):
thousand dollars per year. As I contribute to my four
oh one K? Should I be putting money into a
wrath or a traditional four oh one K? Which option
makes the most sense for my situation given that I
plan to work five more years. CJ, We'll put this
one on you.
Speaker 2 (27:39):
Yeah.
Speaker 4 (27:39):
Well, first off, Daniel, thanks thanks for submitting the question,
and as Sean said, anybody who's listening can do the
same thing on our website or certainly call into the
show and we can submit questions like this either live
on the air or after the show. Number two Daniel
high income earner. So congratulations there, You and your household
are certainly in higher income category earning three hundred and
(27:59):
seventy five thousand dollars a year. But your question is
a good one. Should I do ROTH or traditional? As
a reminder to our listeners, traditional four to one K
contributions or what are called pre tax or deductible contributions
from your income, They come off of the top of
your income, whereas ROTH contributions are post tax contributions that
grow tax free, but they do not reduce your taxable
(28:21):
income today. So the answer to your question is pretty intuitive, Daniel.
It's because your income is so high, which you know,
looking at twenty twenty five marginal income tax brackets, you
would be in the twenty four percent marginal income tax
Under most circumstances, we are going to suggest that you
should do pre tax. There certainly can be exceptions to that.
(28:44):
But if you can save today at the twenty four
percent marginal bracket, because again at three seventy five, taxes
in the United States are marginal, you're paying twenty four
percent on those dollars that could go into the four
to one K plan. If we can save that twenty
four percent today, not only do we get the compound
growth over the next five years before you retire, but additionally,
when you go to pull it out in retirement, even
(29:06):
if you needed one hundred and fifty thousand dollars a
year to live off of, that's going to be at
a lower marginal bracket than the twenty four percent. So
you get the idea save the twenty four get all
of the compound tax tax or TAXA for growth, then
pull it out into the future at a lower rate.
That's kind of a win win win. Again, there can
(29:27):
be exceptions to this, Daniel, but generally speaking we would
suggest pre tax.
Speaker 2 (29:31):
So thank you for submitting the question.
Speaker 1 (29:34):
Great question, Daniel, and again you two can be like Daniel.
You can of course email it in through Cossfinancial dot
com or give them a call at the office six
oh eight four four two five six three seven. Speaking
of that number, don't forget no charge for that initial
get to know your appointment tech costs Financial. It will
be complimentary to you again their number six oh eight
four four two five six three seven. You're also going
on hold on to that telephone number because it's time
(29:55):
now for the COSS Quiz question of the week. Whorks
like this. In just a moment, I'll ask you the
class quiz question. You will then have thirty minutes from
the in today's program to call the Class Financial office
right here in Madison and again that number six oh
eight four four two five six three seven. First call
with correct answer win this week's prize, which is a
twenty five dollars gift card to Starbucks. This week's class
quiz question Leek, is this true or false? As you
(30:18):
plan for retirement, you should review your beneficiaries on your
life insurance policies. Is that true or is that false?
Telephone number six oh eight four four two five, six
three seven first call. Correct answer in the twenty five
dollars gift card Starbucks Again, that's Loss Financials Office right
here in Madison. That number six oh eight four four
two five six three seven CJ Eric. Always great chatting
(30:40):
with both of you guys. Have a great day.
Speaker 2 (30:42):
Thanks Sean.
Speaker 1 (30:42):
Thanks Sean, Doctor Greaz next year. On thirteen ten, WIBA
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