by Joe Hearn | Oct 10, 2012 | Medicare
Chances are good that you’ve seen or heard something about Medicare open enrollment recently. What is it? You become eligible for Medicare when you turn 65. You have a seven month window to enroll in the program. The window opens three months before the month you turn 65 and continues for three months after the month you turn 65. If you are already collecting Social Security before you turn 65 you will automatically be enrolled in Medicare.
Once enrolled, each year you have an opportunity to make certain changes to your coverage. That period is called the open enrollment period. It begins next Monday (October 15) and runs through December 7. Any changes you make will take effect on January 1, 2013.
During the open enrollment period you can:
- Change from Original Medicare to a Medicare Advantage Plan (or vice versa)
- Switch from one Medicare Advantage Plan to another
- Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to one that does (or vice versa)
- Join a Medicare Prescription Drug Plan
- Switch from one Medicare drug plan to another Medicare drug plan
- Drop your Medicare prescription drug coverage completely
You can review and compare coverage options at www.medicare.gov or by calling 1-800-MEDICARE. Also, feel free to call or email me if you have any questions.
~ Joe
Photo by Ben Lyon. Used under Creative Commons License.
by Joe Hearn | Oct 5, 2012 | Pursuits, Retirement
We spend a lot of time thinking about how we’re going to retire. “How” is an important question to ask, but don’t forget about “Why.”
If you don’t have a good answer for “Why,” you won’t have much success with “How.” That’s because we’re much more effective at doing things when we have a motivation for doing them. If you asked me to lift up a car to simply test my strength, I wouldn’t even try. If you asked me to lift a car that had rolled onto my daughter, I promise you I’d find a way to get it off the ground.
So as you make those 401(k) contributions, review your quarterly statements and meet with your adviser, don’t forget to ask “Why?” Why are you saving and sacrificing? Is it so you can have more money? Money is the means, not the end. It will enable you to retire, but then what? Why do you want to retire? The stronger your “Why” the more successful your “How.”
How strong is your “Why?”
~ Joe
by Joe Hearn | Oct 3, 2012 | Health, Lifestyle Design, Retirement
For the past year or so, I’ve noticed a disconcerting trend. Each time I step on the scale, the number gets larger. Has there been some sort of change in the gravitational pull of the earth or am I putting on weight?
In 2003 I ran the Marine Corps Marathon in Washington D.C. I weighed about 185 pounds and could run 10 miles without breaking a sweat. Now I weigh 215 pounds and get winded chasing my daughter around the park. If that trend continues, in 10 years I’ll weigh 245 pounds and will be pricing mobility scooters.
In life, there are certain problems that are easier to solve sooner rather than later (more on that below). I turn 40 in December and getting into shape is not getting any easier. Not only is my body clinging to calories like a tiger clings to its kill, but finding the motivation is getting harder as I get busier and take on more responsibilities. If I want to be around for another 40 years, however, I need to put the excuses aside and reacquaint myself with physical activity.
Fit by 40
And so, about a month and a half ago I started going to a personal trainer. I had been lamenting to my boss that I wanted to get in shape, but 1) I needed some accountability and 2) I needed to workout during the day because mornings and evenings were too busy with work and family.
As luck would have it, his son (who plays college football) had gone to a trainer for years. My boss had recently started going as well and he invited me to come along. Not only that, but he told me to take off work early three days a week and he would pay for it. Hard to argue with that.
My first day at the “gym” was pretty humbling. First off, it was not a gym, but a converted warehouse. Imagine that barn in the middle of Russia where Rocky trained in Rocky IV and you’ll have a pretty good idea of what I’m talking about. Lifting rocks—check. Chopping wood—check. Pulling Paulie on a sled through a snowstorm—well, you get the idea.
The people training there were serious: Elite high school, college and professional athletes; ultimate fighters (all wearing oxygen depravation masks to simulate altitude); and…me.
So far my time there has been great. My mantra is “Fit by 40.” The pounds have started to come off. I have more energy. Most of all, I feel good that I’m actually being proactive about a problem that I (and millions of other Americans) struggle with.
Why am I mentioning this? Two reasons:
First, I don’t want to publicly fail in front of hundreds of readers who I respect and admire. Thanks for the motivation! 🙂
Second, and more importantly, I wanted to get you thinking about issues or problems in your own life that need some sort of solution. Too often we sweep our problems under the rug because we’re too busy or scared to deal with them. Then someday, when we shed the competing tasks and responsibilities that used to drown out our problems (a.k.a. retirement) those problems come bubbling to the surface.
Rather than enjoying a meaningful, rewarding retirement we spend our time trying to salvage our marriage, get in shape, recover from a preventable illness, mend neglected relationships or figure out what we really want out of life. Don’t ignore your problems. They’re only going to get worse.
Is there something you need to fix? Start down that path today. If I can help, just let me know how.
~Joe
Photo by Laura Gilmore. Used under Creative Commons License.
by Joe Hearn | Sep 28, 2012 | Lifestyle Design, Retirement
When the Pope asked Michelangelo how he knew what to cut away when he was sculpting the statue of David, Michelangelo reportedly answered “Simple. I just chipped away everything that didn’t look like David.”
There are two kinds of processes that artists use when making their art. The first, used by Michelangelo when sculpting David, was a Subtractive Process. You start with something—a block of marble or a hunk of wood—and you slowly chisel, carve and otherwise remove bits of that something until what you’re left with is the finished product.
The other process is an Additive Process. There you start with nothing—a blank canvas, a hunk of clay, an empty lot—and then you paint, shape, mold or build until you have the finished product. Think Van Gogh, Alberto Giacometti or Frank Lloyd Wright.
To create the life you want in retirement you need to use both the Additive and Subtractive Processes.
You need to channel your inner Michelangelo and remove everything that doesn’t look like the life you want. You need to make the “Stop Doing” list that I’ve talked about here many times before and then begin to chip away, purge, streamline and simplify.
At the same time, you need to figure out what you really want out of this life and start adding, shaping and building. What will you do? How will you pay for it? Who needs to be there? What skills do you need? You have a blank canvas. Paint a Rembrandt. You have an empty lot. Build Fallingwater.
“Every block of stone has a statue inside it and it is the task of the sculptor to discover it.” ~Michelangelo
Photo by Scott Ableman. Used under Creative Commons License.
by Joe Hearn | Sep 27, 2012 | Distribution Planning, Retirement
Your 401(k) is a great tool for accumulation, but it’s probably not the best place to leave your money once your goals shift to distribution. After retiring, it usually makes sense to roll your money out of your 401(k) and into your IRA. Here’s why:
Simplification. The average person changes jobs several times over the years. That could mean multiple retirement plans at former employers in addition to your IRAs and other investment accounts. During retirement, you will need to begin drawing money from those accounts. The more accounts you have, the more complicated that becomes. If you have multiple 401(k)s, roll them into an IRA. If you have multiple IRAs, consolidate them into a single account. Doing so will cut down on paperwork and expense and will make your distribution strategy easier to manage.
More choices. Your 401(k) likely has a limited number of investment options. That’s not the case in your IRA, where you can invest in pretty much any stock, bond, mutual fund or ETF. More choices typically means more money, because you can choose funds with better performance and lower expenses.
More control. When it comes to accessing your money, your IRA has fewer limitations and rules than your 401(k). For example, you can take penalty free early withdrawals from your IRA for things like higher education or certain medical bills. In addition, your 401(k) may have restrictions on how often you can make changes to your investment allocation. Finally, most people prefer to call the shots on their account rather than having to deal with their former employer every time they need to make a change or take a distribution.
Better beneficiary options. Your 401(k) will typically require you to list your spouse as the primary beneficiary unless he or she consents to you naming someone else. That can complicate planning for those in their second marriage who want to keep certain assets separate. Also, if your spouse dies first and you haven’t named someone else, the 401(k) will typically default to your estate when you die. That can result in unwelcome tax consequences.
With an IRA, you can name anyone as your beneficiary and that beneficiary has more distribution options than they would if they were inheriting from your 401(k). With the IRA, they can choose to distribute the money over their lifetime, rather than being forced to take it all at once as with the 401(k). That can spread the taxes out over many years.
Easier Required Minimum Distribution (RMD) calculations. When you turn 70 ½, you are required to begin taking minimum amounts from your IRA and 401(k) accounts. The fewer accounts you have, the easier it will be to calculate the correct amount and take the proper distribution. Make a mistake and you will owe a big penalty to the IRS.
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