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2023 • Quarter 3 • Issue 7 |
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Robert Dumais
Principal, LBA
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SPECIAL EVENT ANNOUNCEMENT! |
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Friends in Labor,
We are EXTREMELY excited to announce that we will be hosting a free local premiere of the new film “The Baby Boomer Dilemma” at Showcase Cinemas in Seekonk, MA on Tuesday, September 26th!
What is “The Baby Boomer Dilemma”?
The baby boomer generation is facing unique and intimidating challenges as they approach retirement:
- Social Security is underfunded and benefits may be cut
- Pensions have decreased or are in jeopardy
- 401Ks have shifted the investment and income risk to retirees
- Tax changes may harm IRAs and 401Ks to pay for national debt
The Baby Boomer Dilemma is an expose of the current retirement situation, featuring intimate interviews and narratives from some of the country’s most knowledgeable economic experts, stirring your emotions as it explores many thought-provoking questions you may not have considered.
This film shines a spotlight on the journey towards finding true bliss in retirement through financial security and peace of mind. It highlights our joys, struggles, and triumphs encountered by this generation as we navigate the complex landscape of retirement. So many individuals have dedicated their lives to work, only to be confronted with the daunting question of what lies beyond the 9-to-5 routine.
You’ll learn about how we ended up here and more importantly what you can do NOW to be better prepared!
The LBA team will be present to answer any questions that you may have after the showing. We’ve met with thousands of retirees and are here for you so that you don’t have to be a retirement expert!
What: The Baby Boomer Dilemma
When: Tuesday, September 26th at 6:00 PM
Where: Showcase Cinemas in Seekonk, MA
Please join us! We welcome you to share the experience with friends and family, but seating is limited so please sign up early to reserve your spot. Complimentary popcorn and drinks will be provided as well!
Click Sign Up below to watch the movie trailer and reserve your free tickets!
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We believe this is the first time the movie has been shown in the RI area and look forward to your feedback! See you at the movies!
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"If you rest, you rust. Keep moving!" |
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LBA 911
Are You Paying Too Much For Medicare Part B?
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Medicare Part B is the component of Medicare that covers outpatient medical services and supplies. It helps pay for doctor visits, preventive services, outpatient care, and durable medical equipment. While Medicare Part A is available at no cost for most people, Medicare Part B requires beneficiaries to pay a monthly premium.
Did you know that the cost of Medicare Part B can vary from year to year and is also subject to adjustment based on income? Most Medicare beneficiaries pay the standard monthly premium amount set by the government. However, some individuals with higher incomes may be subject to an additional cost known as the Income-Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to the standard premium and is based on a person's modified adjusted gross income (MAGI).
If applicable, IRMAA increases the cost of Medicare Part B for individuals with higher incomes. The IRMAA thresholds change annually and are based on the income reported on tax returns obtained from the IRS from two years prior. The Social Security Administration (SSA) uses this information to determine if a Medicare beneficiary owes an IRMAA.
If you find yourself in a situation where you believe your income has or will significantly decreased since the two-year period used for your IRMAA determination, you can file paperwork with the SSA to request a reconsideration or adjustment. This process is known as filing an IRMAA reconsideration request. While the paperwork seems simple, as with most government paperwork it’s very easy to complete the form incorrectly.
You will need to provide evidence of your reduced income, such as tax returns or a statement from an employer, to support your case. If your request is approved, your Medicare Part B premium may be reduced.
It's important to note that filing an IRMAA reconsideration request is only applicable if you experienced a life-changing event or a significant reduction in your income since the two-year period used for IRMAA determination. Examples of life-changing events include marriage, divorce, death of a spouse, work stoppage, reduction in work hours, or retirement. Each case is reviewed individually, and the SSA determines if the circumstances warrant an adjustment.
If you believe you qualify for an IRMAA adjustment, it's advisable to contact the SSA or visit their website to obtain the necessary paperwork and guidance on how to proceed with the reconsideration request. They will be able to provide you with specific information and help you through the process. Visit the SSA by Clicking Here.
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The advisors at LBA know the paperwork and are ready to offer assistance when you need it. |
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SPECIALTY DRUGS ARE EXPENSIVE
HOW WILL YOUR MEDICARE PLAN COVER THEM?
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Specialty drugs are medications that are used to treat complex or chronic conditions such as cancer, multiple sclerosis, HIV/AIDS, and rare genetic diseases. These drugs are usually very expensive, and may require special handling or administration. They are the drugs you often see advertised; a few that you may have heard of include Humira, Enbrel, Ozempic, and Remicade.
Though we have discussed specialty drugs in the past, as they continue to carve out a bigger slice of the healthcare expense pie, we need to keep them in focus. Most people will require one or more specialty drugs at some point in their lives, and it's important to understand how these drugs are covered under Medicare.
There are several Medicare components that may provide coverage for specialty drugs:
- Original Medicare: Includes Part A (hospital insurance) and Part B (medical insurance). Part B covers some specialty drugs that are administered in a doctor's office or outpatient clinic, such as chemotherapy drugs. However, Part B does not cover most self-administered specialty drugs that are taken at home.
- Medicare Advantage: Plans are offered by private insurance companies that contract with Medicare. These plans must provide at least the same level of coverage as Original Medicare, and may also offer additional benefits, such as coverage for self-administered specialty drugs. However, each plan has its own formulary (list of covered drugs), and some plans may require prior authorization or impose other restrictions on certain medications.
- Medicare Part D: Is a prescription drug plan that provides coverage for self-administered medications, including many specialty drugs. Each Part D plan has its own formulary and cost-sharing requirements, and some plans may require prior authorization or impose other restrictions.
It's important to note that not all specialty drugs are covered by Medicare, and even if a drug is covered, there may be significant out-of-pocket costs. Some Medicare beneficiaries may qualify for financial assistance to help with these costs, such as the Extra Help program for Part D enrollees with limited incomes and resources. Some LBA clients have also had success contacting the manufacturer of a specific drug directly, seeking financial relief.
In summary, Medicare provides coverage for some specialty drugs, but the extent of coverage depends on the specific Medicare option chosen and the individual's medical needs. It is important to carefully review the drug formularies and cost-sharing requirements of each plan to determine which option is best suited for your needs.
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Expensive prescription drugs can play havoc with your finances. The LBA advisors can provide the guidance you need. |
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The federal government has many options to address the long-term financial challenges facing Social Security. Here are some potential strategies that have been proposed or discussed: |
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1. Adjust the payroll tax rate: One option is to increase the payroll tax rate, which is the primary source of funding for Social Security. Currently, both employees and employers contribute 6.2% of earnings, up to a cap. Gradually increasing the tax rate could help bolster the program's finances.
2. Increase or eliminate the payroll tax cap: Currently, there is a cap on the amount of earnings subject to Social Security taxes. In 2023, this cap is set at $147,000. One proposal is to raise or eliminate this cap, requiring high earners to contribute more to the program.
3. Raise the full retirement age: Another option is to increase the full retirement age—the age at which individuals can receive full Social Security benefits. The full retirement age is gradually increasing from 65 to 67, but further increases have been proposed to reflect increasing life expectancy.
4. Adjust the cost-of-living adjustment (COLA): Social Security benefits are adjusted annually based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Modifying the COLA formula could slow the rate of benefit growth, helping to reduce costs for the program.
5. Means-testing: Means-testing involves adjusting Social Security benefits based on income or wealth. This would reduce or eliminate benefits for higher-income individuals who may have other sources of retirement income.
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6. Increase immigration or workforce participation: Increasing the number of workers paying into the Social Security system, either through immigration or policies that encourage workforce participation, can help increase the program's revenue base.
7. Invest the Social Security Trust Fund differently: Currently, the Social Security Trust Fund holds mostly special-issue government bonds. Exploring alternative investment strategies, such as a more diversified portfolio, could potentially increase the fund's returns.
8. Explore alternative revenue sources: Considering additional revenue sources beyond payroll taxes, such as taxes on other forms of income or implementing a consumption-based tax, could help supplement Social Security funding.
It's worth noting that these options are not mutually exclusive, and any changes to Social Security would likely require a combination of strategies to achieve long-term financial stability. Ultimately, decisions regarding Social Security reforms involve consideration of economic, political, and social factors, and would require legislative action by the federal government.
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Unfortunately, LBA has no control over the federal government’s decisions moving forward. However, we can however help you “plan for the best, but prepare for the worst”. |
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THE 10 YEAR WINDOW IS CRITICAL |
What you do during the five years before and after your retirement will play a crucial role in determining your future financial stability. Here are several reasons why this time is so important: |
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1. Income and Savings: The period leading up to retirement allows you to maximize your income and savings. During these years, you typically have a steady income from employment, which provides an opportunity to save more and contribute to retirement accounts such as a 401(k), an individual retirement account (IRA), or any other qualified account. Accumulating a substantial nest egg before retirement can significantly impact your financial stability later on.
2. Debt Management: Prior to retirement, it's essential to prioritize debt reduction. Paying off high-interest debts, such as credit card balances or loans, helps reduce your financial obligations during retirement. By eliminating debt, you free up more resources to cover essential expenses and ensure a smoother transition into retirement.
3. Retirement Planning: The period leading up to retirement allows for comprehensive retirement planning. You can assess your financial situation, estimate retirement expenses, and create a detailed retirement budget. By planning ahead, you gain a clearer understanding of the income needed to sustain your desired lifestyle in retirement, enabling you to make any necessary adjustments.
4. Investment Strategy: The years preceding retirement are crucial for refining your investment strategy. As retirement approaches, many individuals opt to adjust their investment portfolio to reduce risk and focus on income generation rather than aggressive growth. Diversifying your investments, considering low-risk options, and consulting with a financial advisor can help protect your assets and ensure a stable income stream in retirement.
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5. Social Security and Pension Benefits: Understanding the implications of Social Security and any pension benefits you may be eligible for is vital. The decisions you make regarding the timing of claiming Social Security benefits or selecting pension payout options can significantly impact your retirement income. Educate yourself on the rules and options available, and make informed decisions that align with your long-term financial goals.
6. Healthcare Planning: Healthcare expenses tend to increase with age, making proper healthcare planning critical during the years leading up to retirement. Evaluate your health insurance options, including Medicare, and consider purchasing long-term care insurance if necessary. Planning for potential medical costs in advance can protect your financial stability during retirement.
7. Transitioning to a New Lifestyle: The years immediately following retirement involve significant lifestyle changes. It takes time to adjust to a new routine, find fulfilling activities, and manage your time effectively. Financial stability during this transition phase is essential to ensure peace of mind and avoid unnecessary stress.
The decisions and actions you take in the five years before and after retirement can have a lasting impact on your financial well-being for the rest of your Life. By focusing on income, savings, debt management, retirement planning, investment strategy, benefits optimization, healthcare planning, and the transition to a new lifestyle, you can lay the foundation for a financially stable and secure retirement.
The LBA team has helped many people retire, and they can help you too!
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LBA consultants are members of OPEIU Local |
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Robert Dumais, Principal
275 West Natick Road
Suite 450
Warwick, RI 02886
401-868-1400 (O)
774-991-3369 (M)
401-737-0330 (F)
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P.S. Add me to your contacts so we can continue to keep you in the know and don't hesitate to hit "reply" to contact us. |
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