Enrollment Trends in Medicare Options | Squared Away
In 2002, two-thirds of retirees on Medicare purchased “Medigap” plans. These plans essentially serve as a second layer of insurance, covering all or a portion of the deductibles and coinsurance assessed by Original Medicare. But today, only about a third of retirees choose Medigap-style plans. Instead, more and more people are choosing Medicare Advantage plans. These plans have the same end result as Medigap plans (they lower the patient’s cost of services compared to those only on Medicare). One key difference with Advantage plans is that all billing goes directly through the insurer. With Medigap coverage, you’d be dealing with Medicare and the insurance companies. The Medicare plans offered by PERACare are Medicare Advantage plans.
Savings in 401(k) accounts are designed to be used in retirement. Take your money out before retirement, and you’ll face penalties. A new bipartisan bill, sponsored by Colorado Senator Michael Bennet, would waive penalties for a distribution of up to $1,000 for emergency situations. This exception would be available once per year. While taking money out before retirement poses a setback to saving, taking on high-interest debt to cover emergency costs could have even worse long-term effects.
This list of top states to retire to takes into account affordability, wellness, culture, weather, and crime. Of course, what’s good weather (or culture) for one person is bad weather for another. But lists like this do help show how thinking about retirement, including where to live, is a question best approached holistically—considering many factors at once. How did Colorado rank? It came in at 34, ranked in the top half of states for wellness and culture but in the bottom half in the other three categories.
Target date funds, like the ones offered to PERA members who use PERAPlus, are an effective way to maintain a diversified portfolio. The balance of stocks, bonds, and other asset classes automatically adjust as your retirement goal nears and your risk tolerance changes. But target date funds don’t take into account other investments you have. For example, if you have stock-heavy investments, you might consider a target date that occurs before your retirement date (and, as a result, is more conservative) to balance your overall portfolio. Or, if you have a large amount of cash in savings, you might consider choosing a target date beyond your retirement date, which would allow for a bit more risk.
News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.