Women Urged: Pay Attention to Retirement Financial Plans
Certified Financial Planner John Hallosy
As part of an ongoing series of talks presented to the public by the Society of Financial Awareness (SOFA), Certified Estate Planner John Hallosy of Franklin met with interested people at the Bellingham Senior Center and the Bellingham Library to talk on the topic of Women Approaching Retirement. At the top of his list of what women should be concerned about? Healthcare and how to pay for it. He offered some basic principles about investing, then spent the remainder of his presentation explaining the transition from private health insurance to Medicare.
Hallosy urged the women present to take on the mindset of being the CEO of their own life. “Before you invest in anything,” Hallosy urged, “ask about commissions. Then ask for a statement with proof of your transaction.” He explained that this would reveal how much the person selling you a product is actually earning as a commission. He continued, “If anyone is unwilling to show you this, walk away and find someone who is willing to provide this proof. It clears out all the defensive operators.”
When talking about the transition to Medicare, Hallosy suggested that most people can expect healthcare costs to be higher once they are on Medicare rather than health insurance paid for by an employer. He then asked, “Where are you going to get the extra money to pay for medical expenses?” He continued, “Your first impulse will be to draw down the money from your retirement, which puts pressure on you to go into more risky investments to make up the difference, which can endanger your retirement assets with no time to make up for losses.”
Hallosy (pictured above) briefly explained the parts of Medicare: A, B, C, and D. Many of us have heard about the relatively new Part D that helps pay for prescription costs. Parts A and B cover doctor visits and hospital stays. But Part C? As Hallosy explained, “Part C, optional coverage, is the Medicare Advantage Program, which covers all the other parts.” But he warned, “There are different costs for different programs offered under Part C—you have to ask what you will get for the different premiums. And pay attention to the letters after the Blue Cross, United Health or other plans available. Is it an HMO, PPO, POS? HMOs will not cover you except for an emergency if you are out of state. These are important letters to understand.”
When deciding at what age to retire, Hallosy urged people to realize that, if you retire early at age 62, the amount of money paid out on a monthly basis is reduced to 75% of what you would have received if you had waited to 65 (or 66, depending on your birth year). “Medicare is an annuity,” he stressed. “If you retire early, your rate of return has just been severely reduced.”
Hallosy concluded his presentation by noting that the cost of healthcare during retirement, per person, is estimated to be around $200,000. “Our greatest risk facing retirement? We get lazy. We’re used to medical expenses being taken care of with our insurance while we’re working.” Hallosy pointed the audience toward making use of SHINE counselors, available by appointment at the Senior Center. He explained that the Medicare website has several helpful questionnaires to assist in finding the best plan for prescription coverage under Part D and has suggestions about additional sources of help. The websites benefitscheckup.org and needymeds.org have lots of information about resources for available services out there for those who qualify.
One of the biggest challenges for women is to pay attention to financial matters that are often left up to husbands to manage. Hallosy urged the women present to pay attention and get involved, rather than simply expecting someone else to look out for their finances. The sobering but useful message of this workshop: Ignorance is clearly not always bliss.