Medicare Retirement Planning

It is surprising the number of retirees who do not have a Financial Planner but with some basic understanding they can still grow your retirement nest egg. I personally know many clients who have done an exceptional job handling their own finances, but not everyone is skilled at doing this. 

I have clients who have paid up Life insurance policies and they dip into the accrued value to take out a loan for a short-term investment.  They pay back the insurance loan and keep the profit from the investment. It is their money and the loan is low interest.

Wealth growth and retirement

Not everyone has a Financial Planner. Those that do know that they are good at building wealth, but many spend little or no time on the cost of future health care, setting up a Trust, Minnesota taxes, or using insurance products to build wealth.

As a Medicare broker I look at all aspects of my client’s health and wealth. 

If you are still working, middle aged, and not ready for retirement. Here is an estimated timeline that you should consider when starting to plan for retirement or if you are now retired.

At age 50 start making catch-up contributions to your 401(k) and maximize your contributions as soon as possible. Once you have maximized your yearly 401(K) contributions then start putting monies into an IRA account. This way you can maximize your 401(k) and increase IRA contributions while you are still employed.

Know that at age 59 1/2 there are no more penalties on early withdrawals from retirement accounts. This would be a good time to look at Whole Life Insurance with long-term-care riders so you can have a buffer should you need long-term-care in the future. A hybrid Life insurance policy, with a Long-term Care rider will allow you to withdraw money when you need it for long-term care and still maintain your police face value.

At age 62 you can start receiving Social Security checks, but the amount will be greatly reduced because you did not wait till your full eligibility age. Unless it is necessary, I would not recommend you start drawing distributions from Social Security until you must. At age 65 you are eligible for Medicare benefits and increased distributions as well as having the option to retire or continue to work.

At age 70 1/2 is when you must start taking withdrawals from most investment accounts or be charged tax penalties. This is an ideal time to invest in a lump sum whole life insurance policy or give to local charities and churches. Here is a RMD calculator that shows your yearly mandatory distribution.  Here is the 2024 minimum distribution RMD table showing increased mandatory distributions over time.

Unlike market-based investments like annuities or stocks. Life insurance is guaranteed and protected. It is smart to be more conservative with your money, so having Life Insurance is a safe bet. If you become eligible for Medicaid your life policy is protected from the Medicaid Estate Recovery Program that demands repayment of all monies spent on your care.