Breaking Down the Parts of Medicare

Generally, the different parts of Medicare help cover specific services. Most beneficiaries choose to receive their Parts A and B benefits through Original Medicare, the traditional fee-for-service program offered directly through the federal government. It is sometimes called Traditional Medicare or Fee-for-Service (FFS) Medicare. Under Original Medicare, the government pays directly for the health care services you receive. You can see any doctor and hospital that takes Medicare (and most do) anywhere in the country.

In Original Medicare:

You go directly to the doctor or hospital when you need care. You do not need to get prior permission/authorization from Medicare or your primary care doctor.

You are responsible for a monthly premium for Part B. Some also pay a premium for Part A.

You typically pay a coinsurance for each service you receive.

There are limits on the amounts that doctors and hospitals can charge for your care.

If you want prescription drug coverage with Original Medicare, in most cases you will need to actively choose and join a stand-alone Medicare private drug plan (PDP).

Note: There are a number of government programs that may help reduce your health care and prescription drug costs if you meet the eligibility requirements.

Unless you choose otherwise, you will have Original Medicare. Instead of Original Medicare, you can decide to get your Medicare benefits from a Medicare Advantage Plan, also called Part C or Medicare private health plan. Remember, you still have Medicare if you enroll in a Medicare Advantage Plan. This means that you must still pay your monthly Part B premium (and your Part A premium, if you have one). Each Medicare Advantage Plan must provide all Part A and Part B services covered by Original Medicare, but they can do so with different rules, costs, and restrictions that can affect how and when you receive care.

It is important to understand your Medicare coverage choices and to pick your coverage carefully. How you choose to get your benefits and who you get them from can affect your out-of-pocket costs and where you can get your care. For instance, in Original Medicare, you are covered to go to nearly all doctors and hospitals in the country. On the other hand, Medicare Advantage Plans typically have network restrictions, meaning that you will likely be more limited in your choice of doctors and hospitals. However, Medicare Advantage Plans can also provide additional benefits that Original Medicare does not cover, such as routine vision or dental care.

© 2022 Medicare Rights Center. Used with permission.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.

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5 Retirement Plan Options for the Self-Employed

If you are self-employed or own a small business, worry not!

Today, I will discuss the five main retirement options that you can look into. They include; an IRA (traditional or Roth), a Solo 401(k), a SEP IRA, a SIMPLE IRA or a defined benefit plan.

Self-employment comes with some measure of freedom. However, this does not mean that you are exempted on saving for retirement.

Being self-employed requires self-discipline when it comes to saving for retirement. Unlike an employee who might access 401(k), those who are self-employed are often on their own.

The first step is to be aware of the amount of money you need to save for retirement. You may check online and find various retirement calculators to make this easier. Once you determine your yearly savings, it will be easier to determine the best account for you.

The second step entails determining where to put your money. The good news is that below is detailed information that will help you determine what is best for you;

1. Traditional or Roth IRA

Suitable for: This option is best for the individuals who are just starting out. In the case that you just left your job to start a business, you can roll your old 401(k) into an IRA.

Contribution limit: An IRA contribution limit in 2021 is $6,000 and $7,000 for those who are age 50 and above.

Tax advantage: Expect a tax deduction on contributions to a traditional IRA. For Roth IRA, the deductions are not immediate, but in retirement, the withdrawals are tax-free.

Employee element: For this option, there is no employee element; meaning that in case you have employees, they can set up and contribute to their individual IRAs.

Getting started: To get started, you can open an IRA at an online brokerage.

Further details:

 The IRA option is regarded as one of the easiest ways for those who are self-employed to begin saving for retirement. It does not require special filing requirements and you can utilize it whether you have employees or not.

 The challenging part may be deciding the type of IRA to open. From various research, it appears that the tax treatment of a Roth IRA might be the best if it’s early days for your business; this assumes that you are not making much money. If this is the case, there is a possibility of having a higher tax rate in retirement when you will be able to get that money out tax free.

N/B: There is an income limit for eligibility of the Roth IRA; individuals who earn too much cannot contribute.

2. Solo 401(k)

 Suitable for: It is best for a self-employed individual who does not have employees; except a spouse if applicable.

Contribution limit: As of 2020, the contribution limit was set at $57,000 plus an additional $6,500 catch-up for those who are age 50 and above; or 100% income: whichever is less. As of 2021, its $58,000 plus $6,500 catch-up contribution or 100% earned income, whichever is less. So as to understand these contribution limits, assume that you are two people; an employer (yourself) and an employee (yourself);

  • As an employee, you enjoy the same benefits that comes with a standard employer-offered 401(k); this entails salary deferrals of up to 100% of your compensation or $19,500 (plus that $6,000 catch-up contribution, if eligible), whichever is less.
  • As an employer, you can contribute an additional 25% of compensation.
  • Sole proprietors and single-member LLCs are allowed to contribute 25% of net self-employment income; this is your net profit less half your self-employment tax and your plan contributions.
  • As of 2020, $285,000 was the limit on compensation that was used to factor your contribution; this limit has since increased to $290,000 in 2021.

Tax advantage: This plan comes with a tax advantage that is similar to a standard employer-offered 401(k) where you make contributions before tax and distributions after age 59½ are taxed.

Employee element: This Solo 401(k) option does not accept contributions if you have employees. However, you can hire your spouse so that s/he contributes to the plan. In this case, your spouse can make a contribution up to the standard employee 401(k) contribution limit, you can include in the employer contributions an additional $58,000 total in 2021, plus catch-up contribution if eligible. This actually doubles what you can save as a couple.

 Getting started: Open a solo 401(k) at any online brokers. It is necessary to file paperwork with IRS annually once you have more than $250,000 in your account.

Further details:

Referred to as a “one-participant 401(k)” by the IRS, this plan is ideal for individuals who intend to have lots of savings for retirement or those who want to save a lot in years to come- especially when business is booming-and less in others.

Remember that the aforementioned contribution limits apply per individual person, and not per plan- so in the case that you or your spouse has an outside employment that offers a 401(k), the contribution limits cover both plans.

N/B: You can opt for a solo Roth 401(k) which simulates the tax treatment of a Roth IRA. This option is great if your income and tax rate are lower now as compared to your expectations in retirement.


Suitable for: Self-employed individuals or those owning small businesses with no or few employees.

Contribution limit: The lesser of $58,000 as of 2021 ($57,000 in 2020) or up to 25% of compensation or net self-employment earnings, with a $290,000 ($285,000 in 2020) limit on compensation that can be utilized to factor the contribution. To get the net self-employment income; it is the net profit less half of your paid self-employment taxes and your SEP contribution. There is no catch-up contribution.

 Tax advantage: It is possible for you to deduct the lesser of your contributions or 25% of net self-employment earnings or compensation-restricted to that $290,000 cap per employee as of 2021- on your tax return. In retirement, distributions are taxed as income. There is no Roth version of a SEP IRA.

 Employee element: For each eligible employee (you included), employers are required to contribute an equal percentage of salary. This implies that if you contribute 10% of your compensation for yourself, you are required to contribute the same percentage for each eligible employee’s compensation.

Getting started: With a few extra pieces of paperwork, you can open a SEP IRA at various online brokers similar to how you would a traditional or Roth IRA.

Further details:

It is easier to maintain a SEP IRA as compared to a solo 401(k); this is because of the low administrative burden due to less paperwork and an exemption of submitting annual reports to the IRS. Additionally, this option has similar high contribution limits and it offers flexibility in that you do not have to make yearly contributions.

For this option, the challenge that the employer faces is that s/he has to make equal percentage contributions for employees. This can be quite costly if you have more employees or if your intentions are to save a great amount for your own retirement. This SEP option does not allow you to save for yourself alone, you have to equally contribute a similar percentage for all eligible employee.

4. Simple IRA

Suitable for: Large businesses that have up to 100 employees

Contribution limit: As of 2021, the limit is up to $13,500 plus an additional catch-up contribution of $3,000 for those who are age 50 or older. The total contributions cannot exceed $19,500 if you are also contributing to an employer plan.

Tax advantage: For this option, the contributions are deductible. However, distributions in retirement are taxed. The contributions made to employee accounts can be deducted as a business expense.

Employee element: For a simple IRA, the contribution burden is not exclusively on you; this is because your employees can contribute through salary deferral. However, employers are mostly expected to either make matching contributions of up to 3% of employee compensation to employee accounts or up to 2% fixed contributions to ever eligible employee. The last option does not require the employee to contribute in order to earn your contribution. As of 2021, $290,000 is the compensation limit for factoring contributions.

Getting started: Similar to a SEP IRA, you can open a Simple IRA at an online broker. It is important to note that Simple IRA entails heavier paperwork load than your standard IRA.

 Further details:

If you own a company with less than 100 employees, The Simple IRA is quite a good option because you can easily set it up and the accounts are owned by the employees.

Note that if you have many employees who participate, then this option can be expensive.

Compared to a SEP IRA or Solo 401(k), the contribution limits on a Simple IRA, are considerably lower. The challenge, however, is that there is a possibility that you may end up making mandatory contributions to employee accounts, which may be expensive especially if you have many employees.

Another point of consideration is that the Simple IRA is inflexible; whereby, early withdrawals before age 59½ are treated similar to early 401(k) or IRA distributions; they are taxed as income and one incurs a 10% penalty. In the case that you decide to withdraw within the first two years of participation, this penalty increases from 10% to 25%. This means that it is not possible to roll over a Simple IRA to another retirement account within the two-year period.

N/B: There is a 401(k) version of a Simple, which works in a similar way with an exception that allows participants to take loans from their accounts. For this version, more administrative oversight is required as it can also be quite expensive to set up.

5. Defined benefit plan

 Suitable for: A self-employed individual who has a high income and does not have employees and intends to save a lot for retirement on an ongoing basis.

Contribution limit: The limit is calculated depending on the benefits you will receive at retirement, your age, and the anticipated investment returns.

Tax advantage: The contributions are mainly tax deductible, and distributions in retirement are taxed as income. An actuary has to figure out your deduction limit, which includes an administrative layer.

Employee benefit: In case you have employees, you as the employer generally offer this plan to them and make contributions on their behalf.

Getting started: You have more limited options for brokerage unlike the other plan options discussed above.

 Further details

Most times, we tend to complain about the decline of pension plans; if you are self-employed, it is possible to set up your own pension- an assured stream of income- in retirement by choosing a defined benefit plan.

The question is; why wouldn’t everyone do it? The answer is that these plans are expensive, with high annual and setup fees. If you have employees, these fees increase and you will be obliged to make contributions on their behalf. To add on, these plans have a heavy administrative burden each year and they also require an individual to commit a certain amount per year. If you intend to change that amount, be ready to incur additional charges.

The advantage of this plan is that you can stack lots of money; if you are close to retiring and earning a high income that you are certain that you will maintain and that gives you the opportunity to save a significant amount per year- for instance $50,000 to $80,000 or more- you might consider utilizing this plan to boost your savings efforts.

Where to open a retirement plan if you’re self-employed

Once you have identified the type of account to open, the next step is to decide where to do it.

A majority of online brokers will allow you to open the four most common account types: IRA, Solo 401(k), SEP IRA, and Simple IRA.

Each broker will take you through the whole process of opening one of these accounts by explaining any paperwork that you may need to file with the IRS. However, to be on a safer side, it is important to find an accountant.

What about selling my business?

Many small business owners don’t have retirement savings accounts and they’re counting on the value of their business and what they’re going to get from selling as a part of the retirement savings plan. There’s really nothing wrong with that strategy, however there’s a large percentage of business owners that don’t get a proper business valuation and they guess on what the value of their business is. Often, it’s lower than what business owners expect it to be.

This means your retirement savings from selling your business could be less. So I want to make two points;

  1. Make sure you get your business valued if you plan to sell it and use that money to live on in retirement.
  2. I believe that in order to have the most successful and financially well retirement, it’s important to save.

So, setting up a retirement savings plan is a really good strategy to have the retirement income you will need in retirement once you leave your business.

Listen to the podcast episode here!

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Retirement Convos: Portfolio Allocation

Convos R

Pre-Retiree: Here’s my perspective on our portfolio: we are retiring at age 60 next year. Approx 85% is in tax deferred accounts. We have an advisor and have a future looking financial plan. Our asset allocation is 60/40. We both have pensions and Plans are to delay SS drawdown and also converting to Roth between age 60-72 to reduce the taxes on future RMDs.

Her Retirement: Has your advisor suggested an option to the 40% in bonds? Bonds are at all time lows…he/she should be talking to you about alternatives. Check out this research/white paper:

Pre-Retiree: I totally understand yes about bonds. Advisor is very aware and recommended we stay with this asset allocation. you have to see the bigger view regarding bonds. Bonds are there to provide ballast- it’s also used for wealth preservation in the portfolio. Portfolio is in multiple seven figures. If the market crashes the bonds help protect from a bigger loss in retirement when you are needing the money to live on. It’s not always about making more money, it’s about preserving the portfolio we have built over the past 35 years. Does this help explain?

Her Retirement: In today’s interest rate environment, I believe (as does the research) that in order to create the “ballast” you mention there are much better low risk alternatives that can offer much more return than high quality short term bonds (10 year treasuries are at 1.35%)….near historical lows. Better safe money options exist. Why not have your cake and eat it too? I suspect that your advisor is a traditional advisor that only offers stocks and bonds? Check the research…many traditional advisors aren’t well versed in retirement optimized portfolios.

Pre-Retiree: Interesting comment. My fee only fiduciary financial advisor has been in the business for over 20 years so I’m not sure what you mean about him not being well versed. I’m intrigued by your alternative suggestions so would you please briefly explain these options you speak about?

Her Retirement: I have just seen many financial advisors with many years experience who have focused on the accumulation phase of life and the traditional portfolio. Many are good at what they do, but the same strategies for accumulation phase don’t apply to the distribution phase of life. Just need an advisor who understands the nuances of retirement portfolios. Alternatives could include structured notes that offer higher potential returns with lower risk, offered by high quality investment bank firms. Bonds offer lower return and higher risk in today’s low interest rate bond environment.

Pre-Retiree: Thanks  actually my advisor was chosen specifically because he specializes in taxes and tax strategies in Retirement (which is what I need with a $3m Portfolio). I’ll ask him about structured notes. Appreciate your thoughts.

PS, I just read a couple of articles on structured notes. Do you want to have this kind of risk of illiquidity?

Her Retirement: Great. Tax planning in retirement is critical. There are ETF structured notes that offer 100% liquidity. No issues. If you have $1.2 million of your portfolio in low yielding bonds, you’re leaving a lot on the table. Please do some additional research. Also check out Fixed Indexed Annuities and Guaranteed Annuities as they are another way to create efficiencies in your portfolio and create the ballast. It’s all in the retirement research by the likes of Wade Pfau. and Moshe Milevsky and the white paper I linked above. P.S. Even a $400,000 variable annuity could be purchased at 65 paying a guaranteed lifetime joint income of $16,000/year vs. 1.3% yield on a government bond, yielding $16,320. For the same “guaranteed” income for the rest of your life, you’d only invest $400,000 of your $1.2 and have another $800,000 in the market. Just some other ideas to explore. I recommend hybrid advisors like Your Retirement Advisor because they can offer investments, structured notes, insurance, tax planning and so much more. Best of luck. You’re in a great position to consider options to best optimize what you have for retirement.

Pre retiree: are the variable annuities you mentioned purchased with after tax dollars or can I use pretax investments (bonds) to purchase the variable annuity you mentioned? If I recall variable annuities have upper limit caps?. If I were to purchase a $400k variable annuity I would need to pull out more than $400k to pay income taxes on the withdrawal of tax deferred investments. Correct?

Her Retirement: You can transfer the $400k and purchase the VA tax free assuming the money is in a tax deferred account. You can utilize the FIA or VA with an income rider attached also. But be very careful to make sure your advisor has experience with these products (insurance licensed) because they can be complex and selecting from the many options prudently is essential to getting the right solution for you. I would test your advisor on all of this and if he/she doesn’t know about these strategies or poo poo’s them then consider if he has a lack of retirement strategy knowledge or a bias. I’m a little concerned that he hasn’t already discussed these alternative to bond strategies with you. He should. Perhaps you can benefit from a chat with Your Retirement Advisor as a 2nd opinion?  No harm. No fowl in my book. Hope this all helps and definitely do your due diligence. I like to say when you know more, you can have more.

Crucial Conversations You Need to Have Before Retirement

Being appropriately prepared for retirement involves far more than simply stashing away money in a 401(k), annuity, or some other savings instrument and walking off into the sunset.

When laying the foundation for one’s golden years, they should also discuss their retirement with a number of key people in their life – such as a spouse or domestic partner, children, employer, and maybe even employees if they’re a small business owner.

Almost all of these people will either be impacted by your retirement or will personally have an impact upon it, making such conversations incredibly important.

“Retiring is a major milestone in a person’s life, and it creates a ripple effect that impacts everyone close to the retiree,” says Marc Diana, CEO of MoneyTips. “Making sure your network is prepared for your retirement is vital to ensuring as smooth a transition as possible.”

Here are some of the key people to engage in discussion, both when you’re planning a retirement strategy and as your departure from the workforce gets closer to being a reality.

Your Spouse or Partner

It is often assumed by couples that they have a shared vision for retirement, or that the vision (even when it is shared) is realistic, says Delynn Dolan Alexander, a financial advisor with Northwestern Mutual.

To check whether you’re actually on the same page about your future plans, discuss what it is that you would like to do once you are no longer working, and whether there’s an expense associated with fulfilling those plans. If there is, how are you planning to pay for it?

Determining where it is you want to live, both the location the type of residence, is also important ground to cover, as is deciding whether you want to continue working in any capacity during retirement, and what your financial priorities will be.

“In other words, are you spending all of your savings, or leaving a legacy for the kids or charity?” explained Dolan Alexander.

Coming to an agreement regarding long-term housing plans is particularly important, stresses Jennifer Beeston, vice-president of mortgage lending at Guaranteed Rate Mortgage. Next to medical care costs, housing is the most expensive and couples vary wildly on what they envision for their housing upon retirement.

“Some people want to stay in their current home while others want to downsize or move to be closer to their children,” said Beeston. “You want to have a game plan regarding housing before you retire as each scenario requires a different set of monthly costs to consider.”

Your Children

Like a spouse, your kids will also likely be impacted by the changing finances associated with your departure from the workforce.

Have a frank discussion with children about your plans, especially if your retirement fund is not as established as you would like it to be, suggests Mark Charnet, founder and CEO of New Jersey-based American Prosperity Group.

In that conversation you may find yourself pointing out to your children that you will now be on a fixed or reduced income and that although you’d like to be as generous as you may have been in the past, it will no longer be possible. Charnet even suggests telling your children that they should no longer ask you for money.

Another important topic to cover with children prior to retirement is your housing plans.

“Many people are surprised at the vehemence with which children are attached to an old childhood home, or conversely many retirees hold on to homes even though children have set up independent lives and households elsewhere,” says Diana.

Familiarizing your children with your medical directives and providing them with the contact information for your financial advisor, estate planning attorney and CPA, is also advised.

This process can be simplified by establishing an online vault for all of your important documents and giving your children access, says Brian Saranovitz, co-founder of Your Retirement Advisor.

“While not everyone will be comfortable sharing their financial details with children, it’s good to give them some insight into your financial preparations for retirement and any financial directives in your will,” adds Saranovitz. “Sharing your plan will not only help them upon your death, but also during your retirement if you need assistance. It can also teach them some valuable lessons about preparing well for retirement.”

Your Employer

There’s no getting around it – employers have a profound impact upon retirement. During working years, an employer plays a key role in the growth of your nest egg. And as retirement nears, it’s time to find out if there are any company policies that may impact pensions or other retirement income.

“It’s important to seek help from your employer on transitioning out of the workplace and making sure you understand your options with your company 401(k) or pensions, profit sharing, and healthcare options,” said Saranovitz. “If your employer doesn’t offer these services, a financial or retirement planner can help you, especially with the options for rolling over your 401(k).”

Additionally, it’s a good idea to give your employer ample notice of your planned departure date. “A rule of thumb is that for however many years of experience an employee has, that’s how many months it takes to replace him or her, so the more warning you can give your employer the smoother the transition will go,” suggests Diana.

Financial Planner or Advisor

Retirement can seem like a dark cloud hanging over many people’s heads. Not because we don’t want to retire, but rather because of the money questions surrounding that all-important distant horizon.

Fears about retirement preparations need to be faced head on, and a financial planner can help, says Dawn-Marie Joseph, founder of Michigan-based Estate Planning & Preservation.

“Most people dream about not going to work every day and having freedom from their alarm clock. But when you think of retirement and the amount of money you have or have not saved, it can be overwhelming,” says Joseph. “There’s no time like the present to think about and act on the savings you will need for retirement.”

Begin by creating a draft retirement budget for yourself and then meet with a financial planner to help map out a solid game plan that includes helping your money last for as long as you think you will need it. Bring your spouse or partner to that meeting with your financial planner, and work as a team to put together a realistic, long-term financial strategy.

“The last thing you want to do is outlive your savings,” says Joseph. “Retirement savings can be accomplished. It is all about planning to get it done.”

To find out if you’re having the right conversations to plan for retirement, or how to have those conversations please email us at or call 508.798.5115.

Her Retirement Rolls Out New Corporate Financial Wellness Program

We’re excited to announce our new financial and retirement wellness program for employers.

Our mission is simple…to empower your employees, and make preparing for retirement easier and living in retirement more prosperous. We want to take the work and worry off your employee’s plates with our Her Retirement approach to retirement planning, regardless of whether you’re employee is 35 or 65 and getting ready to retire.

Our workplace financial wellness solutions include onsite Lunch-n-Learns where we come into your facility and teach a number of no cost financial and retirement workshops. We then offer older attendees a complimentary “Am I Ready” Assessment to help them determine when they can retire and if they will have enough income to last throughout retirement.  For younger employees, we offer a fee-based 401(k) assessment that helps them determine:

  • Am I putting enough money away for retirement?
  • Do I have the right investments in my plan?
  • Do I have the proper allocations?
  • What will be my best withdrawal strategy to minimize the effect of taxes?

In addition to this assessment, we offer a number of other assessments and full planning services. This is a great value added service to offer your workforce.  Consider a few facts below and then contact us about bringing our program to your organization.

“More than 88 million employees are responsible for managing their own retirement assets. However, it’s estimated that these same employees lose $100 billion every year due to investment mistakes!”(1)

The Society for Human Resource Management (SHRM) noted in its 2016 Employee Benefits survey report that 61 percent of HR professionals polled last year described their employees’ financial health as no better than “fair,” and 17 percent reported their employees were “not at all financially literate.”

Other research highlights why these benefits are needed. PricewaterhouseCooper’s (PwC’s) 2016 Employee Financial Wellness Survey, with responses from 1,600 full-time employees, showed that:

  • 52 percent of workers overall are stressed about their finances. And the younger the worker, the more likely he or she is to be worried: 64 percent of Millennials said they are stressed about their finances.
  • 46 percent of workers spend three or more hours during the workweek dealing with or thinking about financial issues.
  • 45 percent said their finance-related stress had increased over the last 12 months.

“The benefits to employers of addressing employee financial stress are significant. Financial wellness programs drive engagement, productivity and success, and they also engender increased loyalty and connection.”

Learn more about Her Retirement’s workplace solutions here

1Help in Defined Contribution Plans – 2006 Through 2012, Financial Engines and Aon Hewitt, May 2014.

What’s Your Retirement I.Q.?

Most Americans Fail Retirement Planning Literacy Quizzes…How Do You Compare?

Americans are woefully uninformed when it comes to retirement planning and more specifically when it comes to income planning, which is perhaps the most important planning you will do for your retirement.

At Her Retirement we believe that helping to educate individuals and families about retirement planning, investing, estate planning and other important financial topics is an integral part of helping people live the life they desire now and in retirement.

According to The American College of Financial services, roughly 75% of survey respondents failed a 38-question retirement planning quiz. In addition to the failure rate, only 6% of survey participants scored an A or B. According to David Littell, the Retirement Income Program Co-Director at The American College, “the results are alarming and a stark reminder of the need to be prepared for the decades in retirement when you are not earning a steady stream of income.”

The survey asked Americans aged 60-75 with at least $100,000 in investable a series of questions covering a variety of important retirement topics such as when is the best time to retire; how to maximize Social Security; employer-provided benefits, and how much can be safely withdrawn from a portfolio. All of these issues are deemed critical in the retirement planning process, particularly when planning income. The survey is similar to a 2014 survey in which the literacy results yielded similar results. The research surveyed a total of 1,244 Americans between February 16, 2017 and March 1, 2017. The literacy rate survey had a sampling error at the 95% confidence level of +/- 2.8%.

Although a majority of the respondents failed the quiz, many people perceive themselves to be much better educated on retirement planning topics than they really are. As an example, nearly two-thirds believed they were highly knowledgeable on the subject of retirement planning. Experts agree, this overconfidence could lead to retirement planning problems, as many believe they know more than they do when it comes to retirement planning.

Women faired more poorly than men (17% vs. 35% score) which is somewhat troubling for women as they face even greater retirement obstacles such a longevity and lower lifetime earnings. Those participants with higher levels of wealth and education fared better on the quiz. Littell noted that, “the drastic demographic differences are unsettling because all Americans – regardless of background – deserve to live out their retirement comfortably. This divide underscores how important it is for everyone to plan ahead.” These differences in affluence, education and literacy indicate the need for social programs to help all Americans have access to retirement education and planning resources.

In another recent retirement planning study by Fidelity, respondents were asked eight questions about retirement, including the estimated amount of savings they would need, what percentage of savings should be withdrawn each year, and how many years someone retiring at age 65 should expect to live in retirement. In addition to most of the participants getting the questions wrong, the study also proved that retirement myths and misconceptions hold many people back from having the right retirement plan in place.

So does retirement literacy really matter? And is it a determinant of retirement success? According to the research, it appears that retirement literacy leads to better planning, higher confidence, and improved retirement planning satisfaction. For those survey participants with a passing grade, they were most likely to have:

  • a long-term care plan in place
  • more likely to feel confident managing their own investment assets
  • more likely to have an estate plan
  • more likely to have a comprehensive written retirement plan, and
  • higher confidence in their assets lasting throughout retirement

So it’s clear that knowledge does lead to more confidence in retirement which leads to less stress, which leads to better health. We encourage everyone to learn more about retirement planning…sooner rather than later. There’s a myriad of things you should be doing to prepare for your retirement where time is your greatest asset.

In addition to making an effort to learn more, we believe that it’s important to seek out the assistance of a retirement specialist who can both guide you and implement a plan with the proper research-backed strategies. Before you hire anyone, make sure you do your due diligence, get referrals, talk to a number of advisors, check out their education and credentials, and understand how they are compensated. Read more about Why Her Retirement affiliated advisors are better here


Take the American College IQ Test Here

Take the Her Retirement IQ Test Here

Here’s the 8 Fidelity questions…Are you able to answer them?* Contact us for the answers (

  • Question#1: Roughly how much do investment professionals estimate people save by the time they retire?
  • Question #2: How often over the past 35 years do you think the market has had a positive annual return
  • Question #3: If you were able to set aside $50 each month for retirement, how much could that end up becoming 25 years from now, including interest if it grew at the historical stock market average?
  • Question #4: Given the current average life expectancy, if you want to retire at age 65, about how long would you need your retirement savings to last?
  • Question#5: Approximately how much did the average monthly Social Security benefit pay in 2016?
  • Question #6: About what percentage of your savings do many financial experts suggest you withdraw annually in retirement?
  • Question #7: What do you think is the single biggest expense for most people in retirement?
  • Question #8: About how much will a couple retiring at age 65 spend on out-of-pocket costs for health care over the course of retirement?

*Fidelity Retirement IQ Survey, 2017

Perks of Starting an Encore Career!

In a previous blog, we looked at the benefits of a Phased Retirement.  Basically, the main benefit was to keep the mind active and help the recent retiree have a purpose in their daily life.  Another route to fulfill these needs can be through an encore career.  There are many different ways to fulfill this, either through paid or unpaid, new or known career knowledge.  Below we highlight a few ways to start an encore career.

  • Volunteer Work: For those who are truly financially independent in their retirement, meaning they have enough to live the life they envisioned or are comfortable in their retirement life, volunteer work is a great way to keep the mind active and have a feeling of purpose, like they are making a difference in their weekly life. Volunteer work is also fulfilling because the retiree can choose which field they would like to work in, such as volunteering in the field of early childhood or helping those struggling to get back on their feet.  This flexibility may help the recent retiree feel fulfilled and passionate about what they are doing with their golden years.
  • Turning a hobby into a business: This is a path that many experts warn to think through carefully, because far too many people have plunged their entire retirement savings into a passionate hobby that simply didn’t turn into a business. But if the retiree has a limit of what they are willing to invest in their new visionary business, then this may be a path that is very fulfilling!  A hobby, such as knitting or gardening, in today’s internet age, can take off to a whole new sphere of success!  And doing what one loves (such as in the field of volunteer work) AND receiving a supplemental income from it can seem like a win-win: extra money and a passionate reason to get out of bed each morning.
  • Phased Retirement: As mentioned in a previous blog, phased retirement can benefit the retiree because they are able to stay active, it is in a field that they have vast knowledge in and they can receive a supplemental, part time income (depending on how many hours are scaled back). The need to have a weekly purpose is easily fulfilled and is an easier path than starting a new business.
  • A part time career: This is one that is most familiar to retirees, be it a greeter at a store, a cashier at the local grocery store or some other part time job, many retirees find this the easiest path to transition into.  There is no great commitment or taxing work to be done, but includes a flexible schedule and some form of supplemental income.  There are many businesses that actually look for recent retirees because they find that they are more dependable than some teenage part time workers and that they are flexible are in their schedule.
  • A brand new career: Similar to a part time career, this entails going into a new field, possibly an earlier passion that may not have been financially possible before. For example, being a tour guide at a local museum or national park or a speaker to children at a school, about what life was like back when.  Or it could be a totally new career, such as an Uber or Lyft driver, where the hours are decided by the retiree.
  • Advisor: Similar to a Phased Retirement path, becoming an advisor (either for a company that the retiree has worked for or a competitor) can help the retiree with supplemental income, but also to help feel needed and as if they are making a difference somewhere.

Regardless of which path the retiree chooses, we here at Her Retirement feel that staying mentally and physically active is important to maintaining a healthy lifestyle during their golden years.  Because after all, the golden years are meant to be enjoyed and to feel like there is a purpose to getting out of bed each morning.

Saving for Retirement vs College Funding

A trend of high student debt has developed in recent years and decades that has left many soon to be retired Americans with a choice: do I fund my child’s college education, to help them fulfill their dream or do I continue to fund my retirement, in order to live a comfortable life later on?  For many, this pulls at the heart string, because everyone wants to do as much for their child as possible.  But experts agree, that there can be a major down side to neglecting your retirement in order to fund your child’s college education.

We, as parents, want the best for our children.  We raise them with the best experiences we can give them, from extracurricular activities to family vacations.  This continues, for many, even after their children leave the home to go study at college.  With college tuitions rising drastically, many parents are left with the decision of letting their children take out loans, which may put them into exponential debt after college, derailing them from being able to choose a job, but instead accepting a job to simply pay their student debt.  Or, the parents borrow or stop investing in their retirement in order to save their children from huge student debt.  Although there are programs and loans through the government, that help students to pay lower interest rates, it is tough for many parents to teach their children that they can be whatever they want to be, when in reality, their children may not be able to fund a career because of oppressing student debt.

If the parents choose to fund their child’s college education, there are, for some, the hope that their child will take care of them in their retirement years.  The idea is that their children are an investment, and that the investment will pay off for them during their retirement years, when their child is a world renowned doctor or successful business person.  The downside to this thinking is the stress that this may put on the child AND the relationship between the child and parent.  There are many cultures where children are expected to take care of their parents, from Europe to Asia, the Middle East to Africa.  Unfortunately, this is not a trend that has translated into many family cultures in America.  Instead, sociological studies show that we tend to value the individual over the benefit of the group as a whole.  Obviously, this varies from family to family, but as a whole society, many children move away and want to live their lives.  This is not meant to be a negative observation, but rather one that looks at the reality of what our society values.

With this mentality intact, isn’t it fair to translate this need to take care of oneself into parenthood?  There is a trend in Mommy circles imploring mothers to take time for themselves.  This may be in reaction to the idea that the mother (and father as well) are to be sacrificial for the family.  But the analogy that gets used over and over again is, that if your glass is not full how can you give to your family?  And it’s fair to translate this into retirement savings.  If we do not invest wisely in our own retirement, then how can we be independent later on in life?

Oh, the Places You’ll Go!

“I wish I had time to travel to…” is a phrase that many of us think or say throughout our lives.  Some of us may even have lists of places we want to see during retirement while others may just visit a destination on a whim.  Some things to consider before traveling are:

  • Do I have money saved up to fund my traveling adventures? Traveling should be an added expense to your retirement planning.  Just like with any part of your life, extra money should be put aside to fund traveling.  With that said, how much will it cost?  This also depends on…
  • How much time do I want to spend there? Are you going for a week to San Diego or a month to Tuscany, to paint and enjoy the Italian surroundings? This will factor in to how much you should save to make sure you are truly able to enjoy your travels.
  • Will I be physically able to travel there? If pondering this question, ask yourself, “how long of a plane or train ride is it?” “Will a layover, to stretch your legs, be a good option? Or is a direct flight better?”  “Is it a tourist attraction, where your main objective is to see the historical, artistic or architectural sights or are you looking to see the wonders that nature has given us, which entails walking and hiking?”
  • If traveling internationally, where is the closest embassy or consulate? This is important to note in the case of an emergency.  If you lose a passport or need help, in any way, the embassy or consulate can be your safe haven away from home.
  • Will your medical insurance cover you, if traveling internationally? If you happen to fall ill or hurt yourself (especially if you’re hiking or walking a lot), will you be covered by your insurance and will you be able to seek medical attention at your destination?
  • Are there any discounts that you can receive, for being a senior citizen? Finally, this is on a lighter note from the previous examples, but many places offer a discount for senior citizens because they know that the retired population has a disposable income that they are looking to enjoy and traveling may be how they want to spend their money.

Adventures are meant to be enjoyed.  And for many, this is not possible until the time and funds are available, usually after the kids have left the house and the career has come to an end, where time and money are at your disposal, letting YOU decide what to do with those hours and dollars as you see fit.  So why not travel the USA and the world, to see what you have always wanted to see and experience.  Go ahead, we dare you J

Thinking of Relocating During Retirement?

They’re known as snowbirds.  During the winter months, thousands of them descend from the north and enjoy the warmer climate of the southern states.  You’ll find them throughout Arizona and Florida, enjoying the warm weather and basking in the sun.  Unlike other migratory creatures, they do not do this yearly, but rather towards the end of their life.

Snowbirds, otherwise known as the retired population of American citizens, sometimes dream and excitedly talk about their retirement relocation plans.  After all, what is not to love about warm weather, away from snow and ice, clearing the driveway and cars and bundling up in freezing temperatures?  But before moving, here are a few things to consider:

  • Have you spent time here before? Living somewhere verse seeing that life on television or print can be drastically different.  It is important to note what life is really like there.  Have you vacationed here often? Have you been here only a few times?  The more you are familiar with the area, the better you’ll be able to gauge if this is really a place where you want to relocate.
  • What is the difference between vacationing and living? Vacationing somewhere and living there can be drastically different. When on vacation, we tend to eat at restaurants more and see tourist attractions.  But once you live somewhere, is this going to be too much (as far as eating at a restaurant) and enough (eventually, you will have seen all the tourist attractions in the area).  Can you live here as a resident and not just a visitor?
  • How much does a plane or train ticket cost to come “home” for the holidays? If your children still live nearby, how involved are you in their daily life?  Do you have regular meals together?  Do you work as a grandparent daycare for your grandchildren?  Being used to being involved in someone’s life every day to not seeing them but a few times a year can be a drastic change and tough for some snowbirds to handle.  The solution then to consider is how much does it cost to fly between the two destinations?  Make sure to also consider the influx of price during the busy seasons, holidays and summer travel.
  • How much will it cost to live there? This is a practical consideration to research.  Just as when you considered where to live to start your family, what are the property taxes for the area?  What about the average mortgage?
  • What amenities are there for the retired population? Is there a doctor’s office nearby?  What about a pharmacy?  As health needs increase in retirement, it is important to make sure there are necessary amenities, as well as leisure amenities.  Do you enjoy swimming?  Is there a swimming pool nearby?  Do you like hiking?  Are there reasonable hiking trails in the area?  All of these will help to make sure that you don’t regret your move and yearn to move back “home”.
  • Do you know people in the area, to help with household chores? As we become more comfortable and further into our retirement, it is important to note that there will be certain household chores that you will not want to or cannot do.  Do you have friends in the area who will come and mow the lawn?  Or are there affordable businesses who will take care of such chores?  What about fixing household repairs?

Relocating is meant to be an adventure, but making sure that the adventure is fulfilled and worthwhile is the realistic portion of living the dream and may guard against any regret you may have about leaving “home” in the rearview mirror.