Blog - Leonard Financial Solutions

Can You Combine Your Retirement Account with Your Spouse?

1/26/2022

A common question we hear from clients is whether or not they can combine their retirement accounts with their spouse. A joint retirement account makes sense, especially if you’re accustomed to combining money in a joint savings account. However, there is no such thing as a joint retirement account.

You can think of retirement accounts as being like credit scores. Each person has their own, and they can’t be combined when you’re married. But, there is a caveat. A spouse can name the other as a beneficiary. In this instance, your spouse would have access to your accounts and funds should something happen to you.

Why Both Spouses Should Open Up Separate Retirement Accounts

The IRS requires that 401(k) and IRA accounts remain in each person's name. This way, they can individually participate and contribute to their employer’s 401(k) plan. Over time, both plans will grow alongside each other, resulting in a diversified portfolio that includes a mix of short- and long-term assets.

Not only does having your own retirement accounts allow you to create a diverse portfolio, but also it allows you to receive the greatest tax benefits. For example, both traditional and Roth IRAs have the same contribution limits of up to $6,000. But with two accounts, you can make a total contribution of up to $12,000.

If One Spouse isn’t Working, a Spousal IRA is an Option

A spousal IRA may sound like a joint retirement account, but it’s not. However, it may be a great option if one spouse is unemployed or making a low income.

A spousal IRA allows the working spouse to contribute to an IRA that is in the name of the non-working spouse who has little or no income. This type of account allows both couples to contribute up to $12,000 annually. You can learn more about spousal IRAs here.

But…You Should Consolidate Your Retirements

Even though you can’t merge your retirement account with your spouse’s, you can consolidate your personal accounts to make your investments easier to manage. Consolidation is possible as long as the account is the same. For example, you can combine an SEP IRA with a traditional IRA, but you can’t combine a traditional IRA with a Roth IRA.

The benefits of consolidating your retirement accounts are:

View your portfolio holistically
Monitor your investments in one central location
Prepare your taxes more easily
Simplify your finances and retirement savings
Lower administrative costs

Even though you can’t combine your retirement accounts with your spouse, there are plenty of ways to maximize your savings, take advantage of tax breaks and prepare for a bright and healthy future. To discuss your retirement accounts and how to streamline them, contact Leonard Financial Solutions today.

Six Easy Ways Boomers Can Catch Up on Retirement Savings

1/20/2022

Even though financial experts recommend saving for retirement as early as you can, many people have a hard time following this advice. During your 20s and 30s, you’re working on establishing a career, buying a home and starting a family. In your 40s and 50s, you’re sending your kids to college. There’s not much extra cash to put toward retirement.

With this in mind, it’s no surprise that almost 40 percent of adults 55 and older have less than $50,000 in retirement savings and about one-third have less than $10,000. But what happens when retirement creeps up and you don't have enough in your savings? Fortunately, there are ways that you can catch up.

Get a Hold on Your Finances

If you’re going to start planning for your future, you need to know what’s going on right now. Sit down, perhaps with a financial advisor, and get a grasp on your expenses. You may have to cut back on some of the things that provide you with immediate gratification, such as dinners out or the latest iPhone, but you’ll be using this money to secure your future.

Pay Off Your Debt

If you want to save money, you need to make sure that you don’t owe any. As you take a closer look at your finances, write down all of your debts, including credit cards, school loans and your mortgage. Focus on paying down the debts with the highest interest rates. You may also want to look into consolidating your debt into one easy payment.

Use a Financial Planning Tool

Planning for retirement can be overwhelming, but a financial planning tool will help clear the path for you. You can use this tool to plan your savings, pick the best investment strategies and track your short- and long-term goals.

Take Advantage of Your 401(k)

One of the easiest ways to bulk up your retirement is by utilizing your 401(k) account, if you have one. This is especially true if your employer matches your contributions, as it’s essentially “free” money. Make sure you’re contributing the maximum amount so that you can get the full match from your employer. Also, there are “catch up” contributions for people over 50.

Look at Social Security Payments

Social Security will be an important part of your retirement, and it’s recommended to hold off on payments for as long as you can. This way, you can collect your full payments. Consider that for every year you delay your payments from ages 62-70, you get an 8 percent increase.

Automate Your Savings

Once you’re on a good schedule to save, make it a habit. It’s easy to forget when you’re caught up in the busyness of life. That's why we often recommend automating your savings. Automation is effortless, and it ensures that you stay on track with your goals no matter what life throws at you.

In some cases, people need to delay retirement. Even a few years can make a big difference. You can continue working and putting money toward retirement without having to deplete your savings. To get a hold on your retirement, contact Leonard Financial Solutions. We have easy, effective ways to maximize your retirement savings while still living your best life.

Turning 65 in 2022? Here are 3 Things to Know.

1/7/2022

Turning 65 is a big deal. If 2022 is the year that you’ll be hitting this milestone, it’s important to know what to expect. So start planning that party because you have a lot to celebrate!

Here are some key points to keep in mind as you turn 65 years old.

1. You’re eligible for Medicare.

Medicare eligibility begins at 65, and you can even sign up for coverage three months before your birth date. You’ll want to enroll in Medicare on time because there are costly penalties that will make your Part B premiums more expensive if you don’t.

If you plan on signing up for Medicare, you’ll also need to select a Part D prescription drug plan as well. Even if you don’t take any prescription medications, it’s still worth having this plan. If you plan to join later, you’ll likely have to pay a late enrollment fee.

2. You can claim Social Security.

The earliest you can sign up for Social Security is 62, so if you’re turning 65, you may want to consider taking your benefits early. That said, waiting to claim your benefits until full retirement age (66 years) is often best, as this will allow you to get your full benefit.

Talk to your financial advisor in NJ about your options and when you should start claiming Social Security. If you’re still working and your retirement savings balance is strong, your financial planner will probably recommend waiting. But if you’re working less and need the income, you may find it best to take your benefits early.

3. You can keep working.

Some people retire at 65 years of age, but many don’t. In fact, 65 is no longer considered the full retirement age according to the Social Security Administration. By keeping your job, you can maintain your income and even receive group health insurance through your employer.

If you’re happy with your employer’s coverage, you can delay Medicare enrollment and avoid a late penalty. Or, you can sign up for Medicare Part A because it's generally free for enrollees. As secondary insurance, this can pick up the tab for hospital care that your primary insurance doesn't cover.

As you can see, turning 65 is a big year for Americans! Because everyone’s personal circumstances are different, it’s important to speak with retirement financial services in New Jersey. Leonard Financial Solutions will assess your current situation and the best ways to maximize your Social Security benefits.

A Closer Look at Why Medicare Part B Premiums Have Skyrocketed

1/6/2022

In November 2021, Medicare announced that Part B premiums would be increasing by $21.60, the largest dollar increase in the health insurance program’s history. While we were all anticipating an increase, most of us were surprised by how significant it was.

Now that you’re paying the new 2022 prices for Medicare Part B, let’s take a closer look at where your money is going.

New Alzheimer’s Drug

A large reason for the price increase is Aduhelm, a controversial new Alzheimer’s drug. In June 2021, the Food and Drug Administration greenlit the use of Aduhelm for treating Alzeheimer’s, a progressive brain disorder that affects 50 million people worldwide.

Medicare typically pays for FDA-approved drugs, and roughly 80 percent of potential Aduhelm patients are old enough to receive Medicare. But Medicare’s decision to cover the drug has not been made - at least not yet. Medicare plans to issue a preliminary decision on whether it will cover the Alzehimers drug in January.

Aduhelm is expensive, which is part of the reason why Part B premiums have increased. If Medicare does decide to cover Aduhelm, about 1.5 million Americans may be eligible. With higher premiums, there’s more money set aside in its reserves.

Higher Healthcare Spending

Another reason for the Part B premium increase is simple: more people are using the healthcare system. Some of the higher healthcare spending is being attributed to COVID-19. To date, the United States has surpassed 50 million COVID cases and over 800,000 deaths. In recent weeks, COVID cases and hospitalizations have increased due to the new Omicron variant.

The Baby Boomer generation is also getting older and needing more medical care. Baby Boomers are between the ages of 57-75 and living longer, though experiencing higher rates of obesity, diabetes, high cholesterol and hypertension. These conditions require long-term care and put a significant strain on health care costs.

Low Premium Increase in 2021

Due to the pandemic, Congress took action to significantly lower the Part B premium increase for 2021 to just $3. Congress added enough money to Medicare to cover healthcare costs to treat the coronavirus, as well as routine and preventive care during the crisis.

While last year’s break helped keep more money in Americans’ pockets, it’s now time to pay this back. This is also reflected in the Part B premium increase.

It’s highly recommended to speak with a financial advisor in NJ, if you haven’t already, to make sure you can cover your healthcare needs in retirement. To get in touch with an experienced financial planner who understands Medicare, contact Leonard Financial Solutions today.

End-of-Year Tips for Securing Your Retirement

12/20/2021

Preparing for retirement is something that you should be doing all year long, but there are certain things you’ll want to check off your list at the end of the year. By following through with these steps, you can set yourself on the path to financial security.

Let’s cover some of the best end-of-year tips for securing your retirement. With 2022 just around the corner, you’ll be right on target to hit your retirement goals.

Contribute to Your 401(k) Plan

Since Social Security isn’t enough to support you on its own, you’ll need to have other sources of income. For many people, one of the best nest eggs is a 401(k) plan, or employee-sponsored retirement plan.

You may find that your company offers a match if you contribute a certain amount. This “free” money can make a huge difference in your nest egg and help you build retirement security. If you haven’t earned your full employer match this year, contribute as much as you can in the next month, and make a plan to max out this match in 2022.

Look Over Your Social Security Earnings

Even though Social Security won’t cover your entire retirement, it’s still an important source of income. This is why you’ll want to make sure that you’re getting your full benefits.

Ideally, you should be checking your earnings record every year to make sure you’re getting full credit for the money you’ve put into Social Security. If you notice any discrepancies, correct the record as soon as you can. It’s easier this way because you’ll have the documentation in hand.

To check your earnings record, sign into your mySocialSecurity.gov account.

Max Out Your Tax-Advantaged Retirement Plans

Your 401(k) plan isn’t the only retirement account you should max out. Also look into getting help with a Roth or traditional IRA. You have until tax day in April to contribute to your IRA for the 2021 tax year, but it’s smart to get a head start on them now.

Roth and traditional IRA plans are typically matched by employers at the same rate as traditional 401(k) plans. You can easily bulk up your investment account by contributing to these accounts and earning as much of your employer match as possible.

Catch Up with Your Financial Advisor

You should meet with your financial planner in NJ at least once a year to assess your savings and investments. If you haven’t met with your financial advisor in 2021, be sure to schedule an appointment. The end of year is a good time to look over your progress and determine what you could do better in the next year to increase your nest egg and align yourself for a healthy retirement.

Social Security and your savings will most likely be your two main sources of income during retirement, so it’s important to keep on top of them. Whether retirement is just around the corner or a while out, it should not be an afterthought. Follow these tips and set up an appointment with your financial advisor as you head into 2022.

Why the End of the Year is a Good Time to Review your Financial Plan

12/15/2021

The end of the year is a good time to reflect on your accomplishments from the current year and set new goals for the future. By taking some time to meet with your financial advisor in NJ, you can make sure that you’re on track with your specific goals.

Now is also a good time to make strategic decisions regarding education savings accounts, healthcare enrollment, gifts for family and friends and retirement contributions. These are expenses that are likely to come up throughout the year.

Reviewing Your Financial Plan

First off, if you don’t have a financial plan, now is a great time to start one. According to Gallup, only 30 percent of Americans have a long-term financial plan. Fortunately, it’s easy to set one up. Meet with a financial planner in your area to get started.

If you do have a financial plan, make sure to review it regularly. These plans are not “set it and forget it.” Ideally, you should review your plan once a year to make sure that you are on track with your goals. Here are a few key elements to include in your financial plan:

Your budget. How realistic was your budget? Do you need to make changes to account for additional expenses in the new year?

Retirement accounts and investments. Are your investments helping you reach your goals? Your financial advisor in New Jersey can determine if you need to rebalance your portfolio to accommodate your goals.

Taxes. Will your tax situation change next year based on your income? For instance, if you plan on earning more, you’ll have a higher tax burden to account for.

Potential risks. Does your plan have gaps that can put your finances at risk? If something unexpected happens, such as a job loss or illness, will you have enough put away to cover these expenses?

Setting Realistic Goals

Many people look toward a new year with high hopes and aspirations. Maybe they want to travel more, open a business or pay for a college education. No matter what you hope to achieve, it’s important to set realistic goals and include them in your plan.

Keep in mind that it takes time to reach goals. You have to start slow and work with the resources you have. A financial advisor can help you set realistic goals that will work within your budget, as well as creative ways for how to get there.

Meet with Your Financial Planner in New Jersey

It doesn’t take much to create a financial plan, but you do have to keep up with it. Make it a goal to meet with your advisor at least once a year to review your plan. And if anything major comes up, let your financial advisor know so that they can adjust things accordingly. This way, you can make the most of your budget while putting money toward your retirement.

Medicare Has Released its Part B Premiums - and It's the Largest Increase Ever

12/2/2021

During the month of November, the Centers for Medicare and Medicaid Services (CMS) released the premiums, deductibles and coinsurance amounts for Part A and Part B programs for 2022, as well as the Part D income-related monthly adjustment amounts. And, as you may have guessed, prices are increasing. In fact, it’s the largest dollar increase in the health insurance program’s history.

To help you prepare for the changes that will take effect starting January 1st, 2022, let’s cover what you need to know about Medicare’s rising charges.

Medicare Part B Premium and Deductible

Medicare Part B covers doctors’ appointments, lab tests, certain home health services, durable medical equipment, outpatient hospital services and others.

Each year, the Social Security Act sets the premium, deductible and coinsurance rates. Medicare Part B enrollees will now be paying $170.10 in 2022, up $21.60 from $148.50 in 2021.

The annual deductible for Part B beneficiaries will be $233 in 2022, an increase of $30 from last year’s $203 deductible.

Keep in mind that this is a rough breakdown of what the majority of Medicare beneficiaries will be paying for healthcare starting January 1st. However, if you are a high earner, your rates will be higher.

Medicare Part A Premium and Deductible

Medicare Part A covers inpatient hospital services, inpatient rehabilitation, some home health care services and others. Premiums for Part A are also increasing in 2022.

The Medicare Part A inpatient hospital deductible you’ll pay will be $1,556 in 2022, an increase of 72 from $1,484 in 2021.

However, about 99 percent of Medicare beneficiaries do not have a Part A premium because they have at least 40 quarters of Medicare-covered employment. So this price hike will only affect about 1 percent of beneficiaries.

Why is Medicare Going Up?

As financial advisors in NJ, we certainly don’t like reporting price increases to our clients, but Medicare is one of those things that can change every year. Sometimes it stings less when you know the reasons for the price increase, sometimes it doesn’t. But it still helps to know why you’ll be paying more.

Here are some of the main reasons why Medicare premiums and deductibles are increasing:

Congress fought to keep rates low last year due to the pandemic. In 2021, the Part B premium increased by only $3 a month. Congress directed CMS to pay this back over time starting in 2022.

Reserves are being set aside for a new Alzheimer’s drug, Aduhelm, which was approved by the FDA earlier this year. It’s still unknown if Medicare will cover the drug, but money is being set aside just in case.

Due to the pandemic, an aging population and other factors, Medicare is accounting for the increased usage of the healthcare system and its rising prices.

Find Out What You’ll be Paying for Medicare in 2022

If the new Medicare rates have come as a surprise to you, they have to us, too. But we will adjust, as we always do. To find out what you’ll be paying in Medicare premiums and deductibles, contact Leonard Financial Solutions today. We’ll make sure you have all the coverage you need while being able to put money away each month.

Last Call: December 7 is the AEP Deadline

11/29/2021

December 7th, 2021 is the last day that you can join, switch or drop a Medicare plan. Every year starting October 15th, Medicare offers its Annual Enrollment Period or AEP. This period gives Medicare beneficiaries a chance to make changes to their healthcare coverage. Any changes that are made will go into effect on January 1st.

If you haven’t had the chance to sit down and review your coverage, now is the time to do so. This post will walk you through the Medicare enrollment period and the different things you can do.

What is Medicare Open Enrollment?

Medicare’s open enrollment period is referred to as the Annual Enrollment Period. This period runs from October 15th to December 7th every year. The purpose of the enrollment period is to give beneficiaries the opportunity to choose a plan that better meets their needs.

Medicare health and drug plans notify customers of their changes in September, and it’s possible that you won’t be happy with your new coverage. Not to mention, your health can change a lot in the course of a year or two, so you may need more coverage.

For example, it’s not uncommon for people to test out a Medicare Advantage plan and then return to Original Medicare. It’s also not uncommon for people to add a Part D prescription drug plan. Just make sure that your plan gets your request by December 7th.

What Can You Do During Medicare’s AEP?

During this time, Medicare plan enrollees can reevaluate their coverage and join, switch or drop a plan. Because insurance can be confusing, it’s best to discuss your options with a trusted financial advisor in NJ.

Here is what you can do during Medicare’s AEP:

Switch from Original Medicare to Medicare Advantage
Switch from Medicare Advantage to Original Medicare
Switch from one Medicare Advantage plan to another
Switch from one Medicare Part D prescription drug plan to another
Enroll in Medicare Part D if you didn’t enroll
Drop your Part D prescription drug plan altogether

What Can’t You Do During Medicare’s AEP?

There are a few things you can’t do, however. The AEP does not apply to Medigap plans. You can usually only make changes during your initial enrollment period and during special enrollment periods.

And, if you didn’t enroll in Medicare when you were first eligible, you can’t use the fall open enrollment period to join. You’ll have to wait until the Medicare general enrollment period which runs from January 1st to March 31st to sign up for Medicare.

Leonard Financial Solutions can help with your Medicare coverage whether you’re a new or existing client. Contact us today for Medicare help in New Jersey. We'll be happy to review your coverage and provide you with free quotes for Medigap plans.

Do's and Don'ts for Medicare's Annual Enrollment Period

11/20/2021

The Annual Enrollment Period (AEP) for Medicare started on October 15th and goes until December 7th, which is just around the corner. If you want to join, switch or drop a plan, you need to make these changes by December 7th.

By now, you should know if you want to make changes to your Medicare plan, such as by switching from Medicare Advantage back to Original Medicare or changing your Part D plan. If you haven’t taken a look, do so now and connect with a financial advisor in NJ who can guide you through the process.

Below are the do’s and don’ts for Medicare’s Annual Enrollment Period.

Do: Review your plan for changes.

If your Advantage or Part D plan is changing, you should have received an Annual Notice of Change letter during September. This letter details the changes that will take place starting January 1st, 2022. Some of the things to look for include eliminating drugs or dosages from the formulary and increasing premiums and other out-of-pocket costs.

Do: Make a list of your prescription medications.

Most Advantage plans offer prescription drug coverage. To ensure they’ll be covered next year, it’s helpful to write down a list of the medications you take, along with their dosage. Also include whether you take the generic or brand-name version. If a formulary doesn’t include your medications or dosage, it’s likely your medication won't be covered.

Do: Schedule an appointment with your financial advisor.

Your financial advisor can provide insight on healthcare costs and Medicare benefits. For instance, Leonard Financial Solutions helps clients choose between Original Medicare and Medicare Advantage. We can also compare Medicare quotes for Part D prescription drug insurance, as well as Medigap plans.

Don’t: Assume you can enroll in any Medigap plan.

You might think that AEP is a good time to add a Medigap plan to your Original Medicare coverage. But Medicare’s AEP only pertains to Part C (Advantage) and Part D (prescription drugs). Medigap is separate from these parts, so chances are, you’ll have to wait to enroll in a Medigap plan.

Don’t: Wait until next year to make changes.

The purpose of AEP is to give you a head start on your plan so that you’ll be happy with your coverage in the new year. Advantage plans often make changes to their plans, but you don’t have to be unhappy with yours. Take a bit of time to get your ducks in a row - otherwise you’ll have to wait a whole year to change your plan.

Leonard Financial Solutions still has appointments available! Contact us today to discuss your Medicare coverage and how you can add, drop or switch your plan.

What COVID-19 Has Taught Us About Disability Income Insurance

11/15/2021

Being unable to work due to an injury or illness may seem foregin to some people, particularly those who are in their younger working years. However, the COVID-19 pandemic has shown us that you don’t have to be old to get sick and be out of work for an extended period of time. This is starting the conversation about disability income insurance and its importance, regardless of your age.

What is Disability Income Insurance?

Disability insurance in NJ is a supplemental policy intended to protect policyholders if they are unable to work after suffering an illness or accident. Policyholders receive monthly benefits to help them cover their regular expenses while they are out of work. It’s an excellent way to bridge the gap so that a person does not fall behind on their bills.

While disability income does not guarantee 100% of your income, it does replace between 45% and 65% of your gross income. Most employers provide their employees with disability insurance or you can purchase this coverage through a life insurance broker. Both short- and long-term disability insurance are available.

Will Disability Insurance Pay for COVID-19-Related Disabilities?

Generally speaking, NJ disability insurance provides income benefits when you’re unable to work for a medical reason. What this means is that unemployment in itself is not covered. If you’re staying home because of quarantine, for example, this is not a form of injury or illness and your income will not be covered.

And, if you test positive for the virus but are able to work from home, you probably won’t qualify for disability benefits either. However, if you are unable to work for an extended period of time due to being sick from the virus, you may qualify for benefits. A series of conditions will have to be met in order to establish eligibility, but disability insurance does cover the virus.

Where to Find Disability Income Insurance

Individual disability insurance can be a great choice if you don’t receive disability insurance through work. It’s also an option for high earners looking for extra coverage. This type of policy will stay with you even if you change jobs. Even if your employer does offer disability insurance, you may still choose to supplement your policy with additional coverage.

Leonard Financial Solutions offers short term disability insurance in NJ from a number of carriers. Let us get you an insurance quote that will offer you the protection you need. Contact us today for a consultation.