Help Me Retire Podcast - Episode 16

Protecting your wealth, health, and privacy

Show notes:

This is the Help Me Retire Podcast… with your host… Mike Brown… Senior Wealth Advisor with Raymond James Financial Services… and head of Brown Family Wealth Advisors…

Mike is the best-selling author of Your Way to True Wealth: How to Make It Happen, Make It Last, and Make It Matter…

He and his team have been helping clients pursue their dreams of financial independence for the past 30 years… and in the Help Me Retire Podcast… he’ll share his best ideas with you…

And now… here’s Mike…

• We’re in the middle of explaining our seven-step journey to a successful retirement...

• We’ve talked about creating your own vision of what you want the rest of your life to look like...

• We’ve sketched out a spending plan... and a retirement income plan...

• And we’ve designed an investment plan... to bring your vision to life...

• Those are the first four steps in our process... and in today’s episode... we’re going to talk about protecting that vision... specifically... protecting your wealth... and your health... and your privacy...

• Clearly... that’s a lot of ground to cover... so we’re just going to touch on the basics in this episode...

• And we’ll start with your wealth... your money... right after this...

You know... you can have the best plan in the world...

• You can save a lot of money... invest it wisely...

• Put together a spending plan that allows you to squeeze as much as possible out of every dollar you spend once you retire...

• And you can study your pension and Social Security options... and come up with a strategy to maximize those benefits over the rest of your life...

• But unless you come up with ways to protect your plan from things unseen... unless you can manage the risks we all face once we stop working... all your planning could be for naught...

So, let’s look at some of those risks... one at a time...

• For example... we’re all going to die one day... but the risk is that you die prematurely... and leave people behind who have been depending on you... and maybe depending on the income you’ve been receiving...

  • To manage that risk... we buy life insurance... and retirement is a great time to review the coverage you have...

  • You might have group life insurance through your work... but in most cases... most or all of that coverage goes away when you leave your employer...

  • And you and your spouse may have bought life insurance policies on your own...

  • Well, if you’ve reached retirement... and the kids are grown... and the mortgage is paid off... and you’ve built this big nest egg... you might not need as much life insurance once you retire... if at all...

  • There might also be reasons to keep it... perhaps even increase your coverage... for different purposes... to pay estate taxes, for example...

  • There’s no simple formula... you need to sit down with someone around the time you retire... to see how much life insurance you still need... and the best way to pay for it...

• Another risk we’ll always face... are the big costs of having to replace your home or cars... or cover damages and theft of the things you own...

  • That’s where property and casualty insurance comes into play...

  • And just like life insurance... retirement is a great time to review your coverages... and adjust them for your new lifestyle...

• Same goes for another risk we never seem to get away from... getting sued... that’s what liability insurance is for...

  • You likely already have some coverage through your home and auto insurance policies... but it’s a good idea to consider umbrella liability insurance... to cover you above and beyond the limits in those policies...

• And while we’re talking about risk... what about the risk you face when you’re carrying too much debt?

  • Debt can cramp your lifestyle... especially once you retire and stop getting a paycheck every two weeks...

  • Sit down and come up with a plan... preferably before you stop working... to pay down those debts...

  • Credit cards first... then other high-interest debts... then car payments... and finally... your mortgage...

Again... a million details here... we can’t cover them all today... but before you retire if at all possible... have a plan for protecting... your... wealth...

Next... how to protect your health... in retirement...

It’s one of the biggest budget items in your retirement spending plan... staying healthy... and you can count on those costs increasing in retirement... faster than the other things you pay for...

• Now... once you turn 65, you’ll be eligible for Medicare... and that’s going to take a lot of pressure off your budget...

  • But if either you or your spouse retire before 65... you’ll probably need a plan to pay for insurance to bridge the gap...

  • It could be health insurance from your employer... COBRA benefits perhaps... maybe you’ll work part-time somewhere for a while to get benefits until Medicare kicks in...

  • Or, maybe you’ll have to bite the bullet and pay for your own health insurance through a private insurer...

  • My advice... if you’re in that situation... start getting familiar... quickly... with the Affordable Care Act portal... otherwise known as HealthCare.gov...

  • Again... you’ve got some big healthcare decisions ahead of you as you transition into retirement... you want to make these decisions months before you hand in your two-week notice...

• Speaking of Medicare... don’t fall for the assumption that once you turn 65... you won’t be spending anything for your health care...

  • For starters... there are some things Medicare doesn’t cover everything...

  • And almost everything it does pay for... is subject to limits... and deductibles... and co-pays... just like you were used to in your health insurance plan at work...

  • Medicare also is not entirely free...

    • You don’t pay for Medicare Part-A... which covers hospitalization...

    • But Part-B... which covers medical expenses like doctor visits... lab tests... and outpatient care... you pay for that coverage... comes right out of your Social Security check each month...

    • Medicare also has a Part-D for prescription drugs... that’s optional coverage... and you pay for that insurance as well...

  • Here’s where you start thinking about buying supplemental insurance for what Medicare doesn’t cover...

    • That’s called Medigap insurance... and you buy it through private health insurance companies...

      • You shop for that coverage during a process called open enrollment... and toward the end of every year... during that open enrollment period... you can change policies...

    • Also... you might want to look into Medicare Advantage... which rolls traditional Medicare and supplemental insurance together in one policy... under sort of an HMO model...

      • Medicare Advantage can be more cost-effective... especially if you’re in good health... but you’ll have less choice in which doctors you use and where you go for health care when you need it...

• Now... here’s another big misconception people have about Medicare until they understand it...

  • When it comes to long-term care... Medicare pays next to nothing...

  • Nursing homes... assisted living... home health care... services many of us need at some point in our lives...

  • Not covered by Medicare...

  • You’ll need a strategy for covering that risk... whether it’s traditional long-term care insurance... a hybrid life insurance policy you can tap for long-term care...

  • Or if your nest egg is big enough... it might even be possible to self-insure... pay those costs out-of-pocket if and when you face them...

  • But you don’t want to make assumptions here... health care is too expensive to make guesses about...

    • You’ve got to make a plan from the start...

    • And you need to build those costs into your retirement spending plan...

    • Get some help on this one...

• One final item on health care... and I realize we’re just scratching the surface on this topic...

  • You’ll want to get some legal documents in place... in case something happens and you’re no longer able to make health care decisions for yourself...

  • This should be a part of your estate plan... and we cover that in Step 7... creating your legacy...

  • But as you start the transition into retirement... preferably well before... talk to an estate planning attorney to see what you need...

    • You’ll probably hear about two key documents at the very least...

    • An advanced directive... sometimes known as a living will... that spells out your preferences when it comes to the health care you want to receive if you become incapacitated or unable to communicate normally... 

    • And the second document is a health care power or attorney... which allows you to delegate health care decisions to someone else... typically your spouse or adult children... if you’re not able to make those decisions any more...

  • Keep in mind these are legal documents that could impact what happens to you late in life... don’t take shortcuts with these decisions...

    • Get some qualified advice... get your intentions on paper... and then update that plan every few years... or when circumstances change...

Okay... we’ve covered the two big areas that you want to make sure are protected as much as possible... your wealth... and your health...

Let’s wrap up this episode with one last part of your life you’ll need to protect... especially once you retire... and as you get older and more vulnerable to threats...

I’m talking about protecting your privacy... keeping your identity secure... and I shouldn’t have to tell you that with all the technology we’re dealing with these days... we’re all more vulnerable than we’d like to be... and it’s only going to get worse if we don’t learn how to protect ourselves...

If I were you... I’d start by thinking about how you store information...

• What records do you keep? Do you toss out your bills after you pay them... or do you have every electric bill you’ve paid since the 1980s?

• If you do keep records... tax returns... estate planning documents... insurance policies and so on... do you keep them in a filing cabinet in the basement? A fireproof safe in your bedroom?

• Or do you keep them virtually... somewhere in the cloud that you hope is secure?

How long should you keep these records?

• Electric bills and things like that... you probably can toss... especially if you’re comfortable looking them up online...

• But things like year-end account statements from your financial advisor... or tax returns... sure, you can access those electronically too... but personally... I’m more comfortable having physical copies in my files at home as well...

• I think what you’ll find... is that how long you should hang onto something... regardless of how you do it... depends on the kind of record you’re keeping... and how often you might need to go back to it...

Now... here’s something I see a lot... people have a meticulous filing system at home... you want to see all the gas bills we paid the year we got married? I got ‘em all, buddy...

• The will... the trust... power of attorney... all locked up in the safe... or the safe deposit box at the bank...

• You name the record... and you know exactly where to put your finger on it...

• But what if something happens to you?

  • Does your spouse know where to find this stuff?

  • Your adult children?

  • Does anyone know the password to your online document storage system other than you?

• Getting organized is a great home project to tackle right after you retire... right up there with cleaning out the garage and organizing family photos...

  • Once you’ve got a record-keeping system you’re comfortable with... whether it’s physical... virtual... or some combination... I’m not judging...

  • The next logical step is making sure other people you trust have access to that information when they eventually need it...

  • And that’s where some of these online document storage systems are good...

    • Not only do they help you get organized...

    • But you can also grant access to different members of your family... based on the type of document... and when they’re likely to need access to it...

• And once you’ve got your records system the way you want it... sit down and explain it to your family...

  • Make sure they understand what to do if something happens to you... where they can find what they need...

  • It’s a great discussion to have... regardless of how much you want to share with them now... versus later...

• Once recordkeeping is off your list... it’s time to make a plan to protect yourself from identity theft... and other kinds of fraud...

  • You’ll need to do some research here... it’s a broad topic... and we can provide you with some good resources if you need them...

  • How to make yourself less vulnerable to cyber-crooks...

  • What steps to take if your identity is stolen...

  • Freezing your credit report... and so on...

You know... I’ve crammed a lot of advice into one step... in our 7-step retirement process...

Protecting your wealth... your health... and your privacy... is a broad topic... and I know we just hit the high points today...

But as with the other six steps... it’s absolutely essential to think about these things... and make plans and decisions on your own timetable... and that likely means... before... you decide to retire...

If I haven’t given you all the answers today... I hope I’ve at least helped you understand the questions... so you can start getting the answers and specific advice you need...

Next episode of the Help Me Retire podcast... step six in our retirement process... the tax man cometh...

• We just don’t want him coming unexpectedly...

• And we don’t want him leaving with more of our money than he deserves...

Thanks for listening today... I look forward to talking with you again soon...

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Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC.

Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.  Brown Family Wealth Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.

Any opinions are those of Mike Brown and Brown Family Wealth Advisors and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a recommendation. There is no guarantee that these statements or opinions will prove to be correct. Investing involves risk, and you may incur a profit or a loss regardless of the strategy selected. Past performance is not indicative of future results. Prior to making an investment decision, please consult with your financial advisor about your individual situation.