When someone enters their 60’s, most individuals begin exploring the idea of retirement and a number of important decisions they will need to consider.  One of the most significant, is insuring their health care needs are met once they stop working.  At 65, seniors become eligible for Medicare or Medicare Advantage.  Medicare Advantage is an alternative to Medicare that is provided by private insurers.  Deciding whether to take one or the other can be equally important as deciding when to actually stop working.

The Medicare many of us know is more than 50 years old, and an attractive program as 90% of doctors and hospitals in the U.S. accept it.  Most individuals will not need to change doctors if they enroll in the original Medicare.  This can be especially important when considering the value of your primary physician being aware of your medical history.  Also, specialists do not require a referral to see you within this original plan.

However, there are drawbacks to the Medicare system as it is not a comprehensive plan.  One must enroll in each individual component to receive coverage for that medical area.  For example, Prescription Drugs are covered under Plan D, a separate component of the original Medicare plan.  Basic coverage for dental, vision, and hearing are also not covered and there are no annual out-of-pocket limits for total medical expense exposure.

Alternatively, Medicare Advantage plans do have comprehensive packages.  The Advantage plans may incorporate all of the individual service components that Medicare offers, as well as prescription drug plans, vision, hearing, and dental into one complete plan. The private insurers providing these plans allow considerable flexibility in options and choices for individuals seeking coverage.

One disadvantage of the Advantage plans is their plan networks can change year to year.  Your primary care physician may not stay in the network after a network change, and these customized plans can also be more expensive.

The seven-month initial enrollment period for Medicare begins three months before the month of your 65th birthday and ends three months after that month.  Most people should enroll in Medicare Part A, which provides hospital care, when they turn 65.  However you are not required to do so if you’re still working.  Medicare Advantage plans include Part A and Part B if one decides to use that alternative instead.

Both plans have positive and negative considerations, and there is no clear-cut superior option.  You must evaluate your needs and requirements to make the right choice for your overall retirement plan.


This commentary contains forward looking statements and opinions. These opinions may not develop as predicted. It is our goal to help investors by identifying changing market conditions. However, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the market.

Most children today, born in the Western Developed world, will live past their 100th birthday, according to research compiled by London School of Economics Professors Gratton and Scott.

When the United States conceived Social Security in 1935, people were expected to work until retirement at age 65, and die by 67.  Social Security was never equipped to fund a 40 year retirement.  Scott and Gratton state “the gift of longevity carries the curse of having to cope with it financially and socially.”

It is important for everyone, whether younger or older, to begin structuring their lives differently today, so they can make the most of their longer lifetimes.  Gratton and Scott state “We can’t afford to retire at the age our parents did or will have to work so long that our mental and physical fitness, as well as our enthusiasm for life, could suffer.”  For people in their 40’s-60’s, we recommend becoming open to innovation, with consideration toward a multi-stage life and possibly several different career paths.

Most Americans currently in their 50’s and 60’s are woefully under-saved for retirement and will have to continue working through their 60’s and possibly through their 70’s, to support their lifestyle.

What can you do today?

– Look for ways to earn extra income
– Be open to another career in retirement
– Save more money and build a bigger nest egg
– Consider delaying Social Security Benefits if you have a reasonable expectation for longevity. Every year you
delay beyond “full retirement age” increases your annual Social Security income by 8%
– Plan for future health care expenses
– Maintain a diversified investment portfolio of stocks and bonds

 

*Source:  The 100- Year Life by Lynda Gratton and Andrew Scott

 


 

This commentary contains forward looking statements and opinions. These opinions may not develop as predicted. It is our goal to help investors by identifying changing market conditions. However, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the market.

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