Retirement

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Retirement Q & A

Answers to common health benefits and financial questions from FPA

If you've recently changed jobs, started a family or are sending children off to college, planning for retirement may not be top of mind, but it should still rank among your priorities. While you may feel that it's important to spend money on your children or family instead of your retirement, they will feel better knowing that you will be more secure in your retirement plans.

Lifestyle, income and many other external factors impact when and how much one can contribute to one's retirement savings. CERTIFIED FINANCIAL PLANNER (CFP®)CERTIFIED FINANCIAL PLANNER (CFP®)
An individual who assists others in financial planning and has met the following qualifications from... more professional, Jonathan Guyton of the Financial Planning Association® (FPA®) offers answers to some common retirement questions.

• When should I start thinking of saving for retirement?
• How concerned should I be about health benefits coverage for retirement?
• What are my health benefits options if I retire before age 65?
• What are the new MedicareMedicare
  A Federal government program that provides health care insurance to people aged 65 years or older, a... more prescription drug options for someone retiring at age 65?
• Can I rely on my employer for health benefits after I retire?
• I have been self-employed for many years and would like to retire at age 60. What are my health benefits options?
• I am not currently employed. How can I begin planning for retirement?
• Will I be able to get MedicareMedicare
  A Federal government program that provides health care insurance to people aged 65 years or older, a... more health benefits once I reach age 65?
• Do I need to purchase life insurance?
• As a woman, are there any special needs I should keep in mind as I plan for retirement?
• What if my spouse and I don't retire at the same time?
• Do I need a financial planner?

When should I start thinking of saving for retirement?

Right away! The biggest challenge people talk about is saving for retirement early or jumpstarting your savings as needed. Ten or 20 years ago, people didn't start thinking about retirement as early as they do now, but recently there has been positive peer pressure to start contributing to your 401(k)401(k)
A 401(k) is a type of personal pension plan offered by an employer. It provides tax advantages on mo... more or Individual Retirement Account (IRA)Individual Retirement Account (IRA)
A tax-advantaged investment account in which a person may set aside income up to a specified amount ... more by your mid-twenties. Because companies often match your contribution, it's wise to start saving as soon as possible. If you do not have a company-matched contribution fund, consider opening and regularly adding to either a Roth IRA or Traditional IRA. For more information about opening an IRA, contact a CFP® professional, your bank or an investment management company.

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How concerned should I be about health benefits coverage during retirement?

Health benefits are worth thousands of dollars and protect you against financial risk in case of illness or accident. It is easy to take health benefits provided by an employer for granted. Unless your company provides full retiree health benefits, once you retire, you'll need to figure out how to cover these costs or a portion of them on your own, including monthly premiumspremiums
The amount charged by a health insurer for a health insurance policy. If you have a health plan thro... more, co-payments and other out-of-pocketout-of-pocket
Amounts such as copayments and deductibles that an individual is required to contribute toward the c... more health expenses in your retirement budget. If you retire before age 65, look into individual plans offered by insurers, or through different community organizations. Even if you're young and healthy consider options that qualify you to open a Health Savings Account (HSA)Health Savings Account (HSA)
This savings account allows people to pay current health care costs or save for future expenses. To ... more. This type of account allows you to save now, tax-free for a time when you will have higher out-of-pocketout-of-pocket
Amounts such as copayments and deductibles that an individual is required to contribute toward the c... more medical expenses.

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What are my health benefits options if I retire before age 65?

According to the Consolidated Omnibus Budget Reconciliation Act (COBRA), your employer must make coverage available for up to 18 months if you retire before turning age 65. If you retire before age 63 1/2, evaluate your health coverage needs, including doctor visits, prescription drugsprescription drugs
Medicine that requires a doctor's permission to buy. These drugs are different from over-the-counter... more, and potential long term care coverage. Then consider purchasing an individual health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more from your insurer or professional/alumni association you belong to, or look at groups that offer health plans, such as the Chamber of Commerce. You may also consider working part-time as some employers offer benefits to employees who work a minimum number of hours each week.

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What are the new Medicare prescription drug options for someone retiring at age 65?

As of 2006, if you are older than age 65 and have MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more, you are eligible for Medicare Part DMedicare Part D
A government supported health insurance plan that helps cover prescription drug costs for qualified ... more. Medicare Part DMedicare Part D
A government supported health insurance plan that helps cover prescription drug costs for qualified ... more (Medicare Prescription Drug CoverageMedicare Prescription Drug Coverage
Sometimes called Medicare Part D coverage, a pl... more) helps cover the cost of prescription drugsprescription drugs
Medicine that requires a doctor's permission to buy. These drugs are different from over-the-counter... more. Most Medicare AdvantageMedicare Advantage
Medicare Advantage is a health benefits plan provided by a carrier as an alternative to traditional ... more plans (such as an HMO or a PPO) already provide Medicare Part DMedicare Part D
A government supported health insurance plan that helps cover prescription drug costs for qualified ... more prescription drug benefits to recipients at an additional cost.

Join a MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more prescription drug plan as soon as you are eligible (for more information on MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more, see Health Care Options After Retirement). If you wait, you may pay a penalty to join later. Plans vary by cost, number of drugs covered and pharmacies you can use, but all plans must meet a minimum standard for drug coverage that is set by MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more. Work with your doctor, a MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more providerprovider
A licensed health care facility, program, agency, physician or other health professional that delive... more or a CFP^® professional to find the Medicare Part DMedicare Part D
A government supported health insurance plan that helps cover prescription drug costs for qualified ... more plan that best meets your prescription drug needs.

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Can I rely on my employer for health benefits after I retire?

Find out from your human resources department or company benefits website whether or not your company offers retiree health benefits. Then find out the details of your retiree benefits package. Be aware that some companies are trimming benefits or doing away with them altogether for future retirees. If you are not employed, but your spouse is considering retiring, ask about any spousal benefits his or her employer may offer. Become informed about your health benefits options, such as purchasing individual or group coveragegroup coverage
Plans supported by an employer or employee organization that provide health coverage to employees as... more on your own, and plan for out-of-pocketout-of-pocket
Amounts such as copayments and deductibles that an individual is required to contribute toward the c... more health care costs.

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I have been self-employed for many years and would like to retire at age 60. What are my health benefits options?

If you retire five years before MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more coverage becomes available to you, at age 65, you should evaluate other health benefits options. Since you are self-employed, talk to your individual health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more providerprovider
A licensed health care facility, program, agency, physician or other health professional that delive... more about extending your benefits into retirement. You may also consider purchasing an individual health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more from a professional/alumni association you belong to, or look at groups that offer health plans, such as the Chamber of Commerce or AARP. Some retirees choose to work part-time as a number of employers offer benefits to employees who work a minimum number of hours each week.

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I am not currently employed. How can I begin planning for retirement?

If you are married, you and your spouse should begin retirement planning together by reviewing your health benefits and financial needs. Find out what kind of retirement benefits your spouse's employer offers including health benefits after retirement or a pensionpension
A retirement fund for employees (usually tax exempt) paid for or contributed to by an employer as pa... more.

If you are single, have previously worked and paid MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more federal taxes for at least 10 years, Medicare Part AMedicare Part A
A government supported health insurance plan that helps cover inpatient hospital care, care in nursi... more health benefits will become available to you, premium-free, when you reach age 65. If you are married and your spouse has worked and paid MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more taxes, you will receive the same MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more benefits. If you do not qualify for MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more without a premium, you can still purchase Medicare Part AMedicare Part A
A government supported health insurance plan that helps cover inpatient hospital care, care in nursi... more coverage at age 65.

If your spouse plans to retire before age 65 you may consider purchasing an individual health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more. COBRA offers coverage for up to 18 months before you turn 65. Another option is to purchase an individual health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more from a professional/alumni association you belong to, or look at groups that offer health plans, such as the Chamber of Commerce or AARP.

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Will I be able to get Medicare health benefits once I reach age 65?

MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more is a government supported health insurance plan. If you have paid for MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more through taxes while working, you will be enrolled for Part A coverage (for hospital costs) at age 65, free of charge. Part B coverage (for doctors' fees) will become available to you for a monthly premium. While MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more covers certain basic medical expenses, it does not cover everything. For example, it does not typically pay the total cost of covered services or supplies. Many people purchase Medicare AdvantageMedicare Advantage
Medicare Advantage is a health benefits plan provided by a carrier as an alternative to traditional ... more (Part C) plans and/or Medicare prescription drug coverageMedicare prescription drug coverage
Sometimes called Medicare Part D coverage, a pl... more plans (Part D) from health insurance companies to help offset expenses that are not covered by MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more. Become informed about MedicareMedicare
A Federal government program that provides health care insurance to people aged 65 years or older, a... more and plan for out-of-pocketout-of-pocket
Amounts such as copayments and deductibles that an individual is required to contribute toward the c... more costs.

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Do I need to purchase life insurance?

Purchasing life insurance is a way to protect loved ones from a financial pitfall when you pass away. It can be used to cover funeral expenses, pay off a mortgage, fund a child's education, pay taxes or supplement your family's income. Deciding on how much life insurance to buy depends on your age, the ages of your family members, your lifestyle and your debts. For more information talk to a CFP® professional, because setting up your life insurance policy correctly can mean the difference between your family inheriting all of your retirement investments and the government getting a considerable amount of your hard-earned savings.

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As a woman, are there any special needs I should keep in mind as I plan for retirement?

On average, women tend to live longer than men, and experts say they are 50% more likely than men to need long term care. Because of this, married women should be involved in all aspects of retirement planning and budgeting of the couple's pensions, Social Security and savings, as well as their long term care options. Couples should especially consider purchasing a long term care policy in the older spouse's name to preserve their savings. For more information on long term care coverage, see Making Sense of Long Term Care.

The North American Menopause Society expects there to be more than 50 million postmenopausal women in the U.S. by the year 2020. As postmenopausal women head into retirement, they should be aware of special health and dietary needs. The Centers for Disease Control and Prevention recommends women keep up-to-date with health screenings such as mammograms and colorectal cancer tests. Women experience an increased risk for heart disease, osteoporosis and certain types of cancer. This is a time when a diet rich in fiber and calcium, along with plenty of exercise, can improve your overall health.

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What if my spouse and I don't retire at the same time?

Couples in this situation have a unique opportunity to receive health benefits coverage from the working spouse's employer, if offered. When planning for retirement, base your timeframe on the younger spouse. Both spouses should be involved in benefits planning, in case one spouse dies, the other can be well informed to make sound financial decisions for their future.

If you and your spouse both work, discuss when to start taking Social Security Retirement BenefitsSocial Security Retirement Benefits
A government supported retirement benefit program funded through a federal income tax and paid to Am... more. It is often best for the spouse with the smaller Social Security check to begin taking benefits earlier, around age 62, and the other spouse to wait until age 65 or 67. When one spouse dies, the other spouse keeps only one check, but it doesn't have to be his or her own; it can be the larger of the two checks.

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Do I need a financial planner?

A CFP® professional offers knowledge and professional experience that can make planning easier and more effective. While a CFP® professional cannot predict your financial path, they can advise you on how to respond to events during your retirement journey. In addition, while not everyone can afford to use a CFP® professional, many local Financial Planning Association (FPA) chapters conduct free seminars on retirement planning. Financial Planning Association's online tool, PlannerSearch can help locate a CFP® professional near you.

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What resources can I use to get started on planning for a healthy retirement?
Books, websites, seminars and workshops can be helpful in getting you on the healthy retirement planning path. See below for more resource recommendations.

• Visit Daydreaming About Retirement for key retirement health and financial benefits information.
• Check out the interactive Plan for Your Health^SM Healthy Retirement Readiness Tool for tips on the retirement planning process specific to your needs.
• Local Financial Planning Association (FPA^®) chapters conduct seminars and work-shops that are often free of charge.
• Cornerstone Wealth Advisors Inc. has a News You Can Use section with relevant articles and book recommendations.
• Contact your health benefits providerprovider
  A licensed health care facility, program, agency, physician or other health professional that delive... more about options for long term care, individual health plans for early coverage and MedicareMedicare
  A Federal government program that provides health care insurance to people aged 65 years or older, a... more health plans.

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