social security benefits

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Apache is functioning normally

VA disability pay rates in 2023 range between $165.92 to $4,295.92 a month. The Department of Veterans Affairs (VA) publishes the rates annually. The severity of the disability and family circumstances can affect the rate. A claim takes 104.1 days on average to complete

.

The veterans disability compensation programs gives qualifying veterans a tax-free monthly payment to help them financially

. The program supports veterans who were disabled or had a condition that was made worse during military service.

Here’s how veterans disability payments are calculated, how to determine how much you might receive in benefits and how to apply for VA disability.

How are VA disability compensation rates calculated?

The VA calculates a veteran’s disability payment by considering three factors:

  1. The severity of the veteran’s disability.

  2. The number and types of dependents the veteran has.

  3. Whether a family member qualifies for Aid and Attendance benefits.

VA disability payments start with a base rate, which rises with the severity of the disability and the types of dependents

. The VA then adds extra money to the base rate if the person’s spouse qualifies for Aid and Attendance benefits, or if the veteran has multiple dependent children.

Severity of the disability

The VA assigns a disability rating to a veteran after reviewing evidence submitted as part of the benefits application or from military records. The VA requires applicants who don’t have enough medical evidence to support their claims to have a compensation and pension exam — sometimes referred to as a C&P

. This exam confirms that a disability is related to military service.

Disability ratings are assigned as percentages. Specifically, disability ratings rise in 10% increments up to 100% (fully disabled). The percentage represents how much the disability decreases the veteran’s overall health and ability to function.

🤓Nerdy Tip

Veterans who have more than one qualifying disability get a combined disability rating. This rating is not as simple as adding the disability percentages together. For example if a veteran has one disability rated at 50% and a second disability rated at 30%, the combined rating is not 80%. The VA determines a combined disability rating, which it then uses to calculate the monthly payment.

Number and types of dependents

The VA adjusts disability rates for veterans who are financially responsible for a spouse, children or parents in any combination. The VA requires proof of their financial dependency.

A spouse is anyone you have legally married, including someone of the same sex as you. The VA recognizes common-law marriages as well

.

To claim a child as a dependent for VA disability, the child can be biological, adopted or a step-child. Dependent children must be one of the following:

  • Under 18 years old.

  • 18 to 23 years old but unmarried and enrolled full-time as a student.

  • Deemed permanently disabled before turning 18.

Aid and attendance status

Certain family members of qualifying veterans are eligible for Aid and Attendance if they:

  • Require assistance to perform daily care activities such as bathing, preparing food and taking medication.

  • Live in a nursing home because of physical or mental incapacity.

  • Are bedridden.

  • Have 5/200 visual acuity or less in both eyes with glasses or contacts.

  • Have a concentric contraction of vision to 5 degrees or less.

Aid and Attendance is available for the:

  • Spouse of a living veteran.

  • Surviving spouse of a deceased veteran.

  • Permanently disabled children over age 18 who became disabled before turning 18.

  • Surviving parents that already receive Parent’s Dependency and Indemnity Compensation.

If a veteran’s family member qualifies, the VA tacks on an additional amount to their monthly payment.

2023 Veterans Disability Rates

Veteran disability rates are paid monthly. Because they follow the cost-of-living allowances Social Security applies to its benefits, every time Social Security benefits are recalculated to account for inflation, veteran disability rates change as well. This means that veteran disability pay rates can differ from year to year.

There are two categories of veteran disability pay rates: those for unmarried veterans and those for married veterans. Within each category, the combinations of disability rating and different types and number of dependents determine a veteran’s monthly payment. Because married veterans receive higher rates than unmarried veterans, it is important to double-check that you are looking at the correct table when looking up your rate.

VA disability rates for unmarried veterans

VA disability rates for married veterans

Additional amounts

Veterans with spouses who qualify for Aid and Attendance benefits, and veterans with more than one dependent child get additional funds each month.

Extra funds for spousal Aid and Attendance

Extra funds for additional dependent children

Examples of calculating monthly VA disability payments

Some monthly payment calculations will be more complicated than others, especially those where a veteran has several dependents. The three example scenarios below are calculated using the amounts in the tables above.

Example 1: Unmarried veteran with dependent children and a dependent parent

John has a disability rate of 40% and is unmarried. He has shared custody of three children, and his dad lives with him. Two of his children are under 18, and one child is over 18. His disability payment is calculated as follows:

Base rate: $849.86

Additional child under 18: $40.00

Additional child over 18: $129.00

Total: $1,018.86

John’s base rate is for a veteran who has one child and one parent as a dependent but no spouse. Because one child is included in the base rate, he can only claim the additional amounts for two children. The two children have different rates because one is under 18 and the other is over 18. No additional amount is provided for his dad, because he is included in the base rate.

Example 2: Married veteran with one child

Leanne has a disability rate of 80%. She is married with one child under 18. Her husband does not qualify for Aid and Attendance.

Base rate: $2,212.15

Total: $2,212.15

Leanne’s rate is only her base rate without additional amounts, because her husband and child are included in the base rate.

Example 3: Married veteran with spouse who needs daily assistance

Sarah has a disability rating of 30%. Her wife requires medical aid to help with daily activities when Sarah is not at home, which qualifies her for Aid and Attendance. Her wife has one child under 18 from a previous marriage.

Base rate: $612.05

Aid and Attendance: $56.00

Total: $668.05

Sarah’s base rate includes her wife and her step-daughter. Because her wife qualifies for Aid and Attendance, Sarah receives an additional amount that is also based on her disability rating of 30%.

How to apply for VA disability compensation

If you believe you are eligible for veteran’s disability pay, you’ll need to file a claim for Veterans Affairs to review. Here are the steps to apply.

  1. Decide on an application method. You can submit your application online, by mail, in person at a VA office or with the help of an accredited representative. If you are submitting your claim by mail, you’ll need to download VA Form 21-526EZ and fill it out. Regardless of which method you use, you’ll need to submit supporting documentation. If you need help filing the application and supporting evidence, you can call your regional VA office to ask for assistance.

  2. Gather documentation to support your application. This can include medical records from VA or private doctors and hospitals, as well as statements from people who are familiar with your disability. You do not have to submit your supporting documentation with your claim; however, the VA says that sending in all of your documents together with your application can help them work through the process more quickly.

  3. Submit documentation. Once you have all of your documentation together, submit it with your application to complete your claim. If you filed an Intent to File form or submitted your claim without evidence, gather the documentation and submit it to support your claim.

🤓Nerdy Tip

If you do not have all of your documentation together but want to file a claim, use an Intent to File form instead. The date on which you file the claim becomes your effective date and is still active as long as you complete your claim within 365 days of the effective date. You might qualify for backpay.

Frequently asked questions

How long does it take to complete a claim for veteran’s disability?

The VA says that the average time to complete a claim is 104.1 days as of July 2023, which is about three and a half months.

Am I guaranteed veterans disability if I was injured during military service?

No, every claim for VA disability must be reviewed and supported with medical documentation.

Source: nerdwallet.com

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The tenant screening process is stressful, but you need to know that the people living in your properties can cover their monthly rent. If they can’t and a breach of contract leads to eviction, it’s a traumatic and emotional event for both you and the tenant. And, it’s definitely a costly headache for you. Evictions can cost a landlord many thousands of dollars in legal fees and court costs, lost rent, property turnover costs, etc. For the screening process, you’ll need to know how to verify employment, as well as do a full background and credit check. Knowing a would-be tenant’s income means you’ll see if they can afford their monthly rent. A traditional rule of thumb is to calculate that their rent would be 30 percent or less of their gross monthly income.

Keep in mind that in high-rent markets like San Francisco or New York City, this rule is difficult to follow. In fact, a Harvard Joint Center paper on housing affordability found that the number of renters paying more than 30 percent of their gross income on rent comprises more than half of all renters.

Your ultimate goal with income verification is just to see that the prospect has a steady source of income and will likely pay the rent in full and on time.

How to get started verifying a prospective tenant’s income

You could either ask for documentation or call a prospective tenant’s employer to verify income. But it’s worth your while to do both. For one, employers are not obligated to answer your questions. They may choose not to respond for legal reasons or to protect themselves from a possible breach of employee privacy.

You should do the employment verification once the rental application is completely filled out and you can see the self-reported income, at least, is going to cover monthly fees. Do the verification before heading into a background check in case there are any red flags. If there are, you might skip the background check and save yourself some time and money.

What to ask if you call your prospective tenant’s employer

First, make sure the tenant has given you the name of the correct person to contact. In a larger company, it’s likely the human resources department or payroll. You might take a quick check on the company website to make sure. In a smaller company, you might just speak with a direct supervisor. In some cases, there will be a specific phone number or email address for information on who handles employment verification.

Once you introduce yourself to the person on the phone let them know who you’re calling about and why you need the following information: job title/what the person does for the company, date of hire, employment status, salary. Be sure to document the name and contact information of the person you ultimately receive the information from. In fact, you should document the entire screening process by keeping all your notes and emails.

Note that some employers may only acknowledge employment status and dates of employment.

What documents will verify employment?

Pay stubs are the most common proof-of-income document. Ask to see several months since many people get paid twice a month. But there are other documents that a prospective tenant may use to prove income:

Income statement

People who work for an employer can verify their income by showing a W-2, which is the federal government’s form for showing wages and taxes. Self-employed people (freelancers and contract workers) will have 1099-Misc or 1099-NEC (non-employee compensation) statements. From these, you can glean how much pay your prospective received by various clients, which will give insight into monthly or yearly income.

Employer letter

You can ask a prospective tenant to send you a salary verification letter written and signed by his or her employer. It’s possible that the prospect could fake a salary verification letter. Require a work phone number and relevant employer contact information.

Social Security benefits statement

If a prospective tenant is on Supplemental Security Income (SSI) or receives disability payments, you can ask to see a benefit verification letter from the Social Security Administration.

Worker’s compensation letter

Perhaps a tenant receives income from a current or previous employer because they suffered an injury on the job. While you can see the tenant has steady wages, keep in mind this form of compensation is likely short-term.

Unemployment statement

Yes, this does prove income, but just as with worker’s compensation, it will likely end after a certain amount of time.

Bonus and incentive payments

If your renter has a commission-based job, he or she may receive bonus checks periodically. While their income may seem inconsistent, look at their income over time to see if they will be able to pay the rent each month.

Income tax returns

Looking at a return will show you how much your renter earns regardless of whether they’re a salaried employee or have 1099 compensation.

Bank statements

While this may seem intrusive, this form of income verification works well for a tenant who’s self-employed. You’ll be able to see monthly income deposits, which can help you determine if the person can afford the unit.

How can I tell if a prospective tenant is not being honest about employment verification?

It’s possible that a would-be tenant might give you a fake reference. They may have someone offer false employment verification. Or, they may even create fake wage statements.

Look closely at all the documents you’re given. For example, fake income statements may have all-around numbers, something that’s atypical. Look for typos, and these documents should look professional and not messy. Check that the letter “O” hasn’t been used for the number “0″ and vice versa. Make sure the Social Security numbers match. And, of course, verify the information on the document with the employer.

Verification is good for all

Knowing how to verify employment of a prospective tenant’s income is just one element in your arsenal as you prepare to allow someone to rent your property.

Checking a would-be tenant’s background and making sure they can afford the monthly payments is important for you as a landlord, as well as for the tenant. A tenant buried by rental payments can lead to all sorts of headaches.

Stacey Freed is an award-winning writer and former senior editor for Remodeling, a trade publication focused on the business of the remodeling and construction industry. As an independent writer, she continues to write about the building, design, architecture and housing industries. Her work has appeared in Better Homes and Gardens and USA Today special interest publications, Realtor magazine, This Old House, Professional Builder and online at AARP, Forbes.com, House Logic and Sweeten.com among other places.

Source: rent.com

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The Social Security Administration (SSA) requires you to fill out a form and provide proof of your identity and name change to update your Social Security card. There are three ways to request a name change on your card, and you can get a new card for free.

What you need to change your name on your Social Security card

You’ll need up-to-date records, and they must be original documents or copies that were certified by the agency that issued them

. In most cases, you can’t provide expired documentation. Photocopies won’t work.

Proof of identity

Because a Social Security card is a legal record, you’ll need to prove you are who you say you are. This type of document or record should include identifying information, such as your date of birth. The SSA also prefers that the documentation includes a recent photograph. You can use a:

  • U.S. driver’s license.

  • U.S. passport.

  • Nondriver ID card issued by your state.

If you don’t have any of those records available, you can ask to use a different form of ID, such as one issued by your school or employer, or a health insurance card.

Proof of name change

You’ll need to prove to the SSA that you have legally changed your name. To do so, provide documentation that shows why you’re changing your name, such as a:

  • Marriage license.

  • Divorce decree.

  • Court order showing the approved name change.

  • Certificate of naturalization with the new name.

🤓Nerdy Tip

If you changed your name on other documentation more than two years ago, you’ll need to provide records that use your previous name. People under 18 years of age have a grace period of four years before this requirement kicks in.

Proof of citizenship

If you haven’t provided proof of citizenship to the SSA before, you’ll need to provide documentation showing your citizenship status. You can use a U.S. birth certificate or U.S. passport.

How to update your Social Security card

There are three ways to submit a request to change your name on your Social Security card. All three use the same application.

Submitting a request online

You can submit a request online to change your name on your Social Security card if you’re at least 18 years old and have a U.S. mailing address

. The online system walks you through the process by asking you one question at a time and alerting you if any of your answers requires you to apply in person.

Once you’ve submitted your request online, you’ll need to provide proof of identity. This must be done in person at either an SSA office or a Social Security card center within 45 days of submitting your application.

To request a name change online:

  2. Select the “Apply Now” button.

  3. Read the Privacy Act Statement, and select the “Next” button.

  4. Answer the required questions, which are followed by a red asterisk. Select the “Next” button to submit your answers and move to each new question.

  5. For the questions regarding race and ethnicity, choose whether you want to answer them. These questions are optional and don’t affect your application being approved.

  6. For documentation, choose the types of records you plan to provide and fill out the appropriate information for each one.

  7. The next page provides a summary of your information. Review it and make edits as needed. If everything looks good, select the “Next” button.

  8. On the final page, read the information and check the box to show that you understand how to submit your documentation. Once you’ve checked the box, select the “Submit Application Package” button. Your application won’t be submitted online if you skip this step.

  9. Gather the necessary documentation to prove your identity and name change.

  10. Take the documentation to an SSA office within 45 days to complete your application.

Printing out the application

If you prefer to fill out a traditional form or can’t complete the online application, you can download the application and do it offline. To do this:

  2. Decide how you want to fill it out: Download it and fill it out on a computer before printing it or print it first and fill it out by hand. Instructions for how to complete the form are on Page 3 of the document.

  3. Gather the necessary documentation to prove your identity and name change.

  4. Either mail the packet to an SSA office or go in person to submit your application and documentation.

While the agency will return any records you send, consider using certified copies to avoid losing an original document if your packet is lost.

Visiting a local SSA office

You can complete the entire process in person at an SSA office if you’d prefer to have someone help you. But the SSA warns that some offices might be too busy to see you the same day, and you may need to schedule an appointment

. You can search for the nearest office at SSA.gov.

To make the process as easy as possible:

  1. Get the necessary documentation together to prove your identity and name change.

  2. Locate the nearest SSA office.

  3. Call the SSA office to find out if you need an appointment and to learn what the average wait time is.

  4. Take your documentation to the SSA office and fill out an application in person when someone is able to see you.

Reasons to change your name on your Social Security card

You need to keep the SSA up to date if you change your name for any reason. The following are reasons you’re likely to need a new name on your Social Security card.

  • You got divorced and want to go back to your previous name.

  • You’ve been adopted.

  • You don’t want to be associated with your birth or family name for personal reasons.

  • You now identify yourself with a new name. For example, you transitioned and now identify as a different gender than what was assigned at birth.

  • You had to amend or correct your birth certificate.

  • You recently became a U.S. citizen.

Pros and cons of changing your name on your Social Security card

The benefits of changing the name on your Social Security card include:

  • Your government and nongovernment records will match to avoid issues with proving your identity in the future.

  • Government agencies will have the same name on file, which can avoid issues like your tax refund being delayed

    .

But there are a few downsides to changing your name on your Social Security card:

  • You have to update a lot of records, possibly including employment records, voter registration, insurance policies, utility and mortgage accounts, deeds, credit card accounts, credit reports, and doctor and pharmacy records.

  • You’ll have to get new physical IDs, including your driver’s license and passport.

  • If you file your taxes before your name change is complete, your tax return could be affected

    .

Getting help with updating your Social Security card

If you have trouble completing the application, you can call the SSA at 800-772-1213 and tell them you need help replacing your Social Security card. Its office is open Monday through Friday from 8 a.m. to 7 p.m. Assistance is available in English and other languages.

If you’re hard of hearing or deaf, you can call the SSA at TTY 800-325-0778 for assistance.

Frequently asked questions

How long does it take to change your name on your Social Security card?

The SSA estimates that it takes up to an hour to complete the application, but it will take up to 14 days for your application to be processed and to receive your new card in the mail.

Will I get a new Social Security number if I change my name?

No, your Social Security number will be the same after you change your name.

Which agencies do I need to notify of a name change?

You’ll need to notify some local and federal agencies to ensure your records match. You can find a list of recommended agencies at usa.gov.

Will changing my name affect my eligibility for Social Security benefits?

As long as you update your name with the SSA by requesting a new card, you should continue to receive benefits. If you want to be certain that you’ve done everything correctly, contact an SSA office.

Source: nerdwallet.com

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Medicare is the United States’ federally administered health care program.

The program was established in 1965 for the purpose of paying certain health care expenses for people age 65 and over, as well as for other select individuals, such as those who have end stage renal disease.

When originally established, there were only two parts. These were Part A for hospitalization coverage, and Part B for doctors’ services. Over time, the Medicare program has been expanded to offer additional coverage and choices for its enrollees.

We understand that any type of insurance coverage, from the best car insurance companies, best life insurance coverage, or best burial insurance for seniors, can be quite confusing. Remember, we are here to help!

How Coverage Works

The Medicare program today is divided into four parts, and each of these covers a different area. These parts include:

  • Part A – Hospital Coverage. Part A coverage will help an enrollee pay for inpatient care in a hospital or in a skilled nursing home facility. It also covers some types of home health care, as well as some hospice care. In most cases, there is no cost for participating in Part A.
  • Part B – Medical Coverage / Doctors’ Care. Part B helps to pay for doctors’ services, as well as for a variety of other medical services and supplies not covered in Part A. Those who are enrolled in Part B will be required to pay a monthly premium. In 2015, most people pay a premium of $104.90 per month. This can vary, however, based upon the individual’s income and on whether they file their tax return jointly with a spouse or as a single individual.  This article goes in depth about the  income limits and fees that high earners -“Medicare IRMAA brackets“- may have to pay regarding Part B and Part D coverage.
  • Part C – Medicare Advantage / Managed Care. Part C is also referred to as Medicare Advantage. It provides a managed care approach to delivering Medicare-covered services, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Those who are eligible for Parts A and B may alternatively choose to receive all of their services through a Medicare Advantage provider organization under Part C. The premium one pays for Part C will depend upon the plan that is chosen, as well as on the enrollee’s geographic location. You can learn more about this coverage HERE.
  • Part D – Prescription Drug Coverage. Part D helps to pay for prescription drugs doctors prescribe for the treatment of a patient. The premium charged for a Part D policy will depend upon the prescriptions you are taking, and thus, the actual plan that is chosen.

Recipients of Medicare, also referred to as beneficiaries, are able to choose coverage via the Original plan – which is actually Parts A and B – or they may choose Part C – which is Medicare Advantage.

Who Qualifies?

In order to be eligible, an individual must have lived in the United States for at least 5 continuous years, and also be a permanent resident of the U.S.

In addition, qualified recipients of benefits must be at least 65 years of age or over, or have a specific type of qualifying disability.

For a person to be considered permanently disabled, they must be entitled to receive benefits from Social Security, and they must have been receiving those benefits for a minimum of two years.

An individual who is diagnosed with end stage renal disease and who also requires kidney dialysis or a kidney transplant may also be considered eligible for benefits from the program.

With the high costs of health care it makes sense for those eligible for Medicare to take advantage of this government administered health care program.

Adults Over 65

Most adults in the United States are eligible for Medicare when they turn 65. Individuals must be U.S. citizens or permanent residents and enroll in the Medicare program to qualify.

Individuals who are already receiving Social Security benefits will be automatically enrolled in the Medicare program. Approximately three months before their 65th birthday, an enrollment package will be sent and must be completed to activate coverage.

Medicare Part A, which covers hospitalizations, requires no payment. However, adding Part B – which is for doctors visits, outpatient procedures, or additional coverages, such as prescription drug coverage, does cost money. The premium is determined based on income level. So, individuals must decide what plan is best for them when enrolling and what they can afford to have.

Individuals with Disabilities

Medicare coverage is also available to individuals with disabilities regardless of their age. Once an individual has been collecting social security disability payments for twenty-four months, they become eligible for Medicare during the 25th month.

An enrollment package will be sent a few months before a person becomes eligible for Medicare coverage. If a person with Social Security disability does not receive the enrollment package, they should contact their local social security office to request a packet.

Like an individual who is over age 65, disabled persons who have been getting Social Security disability payments are automatically eligible for Medicare. There is no reason to decline coverage, as Medicare Part A costs nothing and covers hospital care and nursing facility care.

However, if a disabled individual would like, they can decline Medicare Part B coverage, which would require premium payments. There is a card that comes with the enrollment package that the individual can mail back declining Part B coverage.

Who Does NOT Qualify for Medicare

People who are not already receiving Social Security benefits will need to contact their local Social Security office to apply for Medicare coverage. This should be done three months before the individual’s 65th birthday.

The enrollment period begins in the three months before the month of the 65th birthday and ends three months after. If one enrolls during this time frame, there is no cost for enrollment and coverage should begin at the start of the 65th birthday month or shortly thereafter (if one applies after their birth date).

If, however, one does not apply during that enrollment period, then fees apply. So, it is important to apply on time, and as close to the three month prior date as possible. This will ensure everything is done correctly and coverage starts at the beginning of the individual’s birth month.

How to Enroll

To begin receiving benefits, an eligible individual must enroll through the office of Social Security. There is only one exception to this rule, in that those who are already receiving benefits through Social Security or the Railroad Retirement Board are automatically enrolled when they turn age 65.

All other potential recipients must submit an application for coverage during the open enrollment period. This period of time begins three months prior to the applicant’s 65th birthday and it ends seven months after.

Those who do not enroll in Part A and/or Part B when they are originally eligible are allowed to alternatively enroll between January 1 and March 31 each year. For those who do, their coverage will begin on the following July 1.

Medicare is Not Medicaid

Because their names sound so similar, people can oftentimes confuse Medicare with Medicaid. These two programs, however, are not the same. Medicaid is a joint state and federal program that provides medical assistance to those who meet very specific low income requirements.

In addition to medical necessity, a person must be considered at his or her state’s poverty level in terms of income and assets for Medicaid qualification purposes.

Through the Social Security Act, those who have income and resources not considered to be sufficient enough to meet the cost of their needed medical care, as well as certain long-term care needs, can qualify for Medicaid’s benefits. Therefore, Medicaid is considered a “means” tested program.

When determining which assets “count” toward qualifying for Medicaid, funds and property are divided into three different classes.

These include the following:

  • Countable Assets – Countable assets include any personal assets that the individual either owns or controls. These funds are required by Medicaid to be spent on the applicant’s care before he or she will be able to qualify for Medicaid’s benefits. Some examples of countable assets may include cash, stocks and bonds, and deferred annuities (provided that the annuities have already been annuitized).
  • Non-Countable Assets – Even though non-countable assets are still acknowledged by Medicaid, the particular types of assets are not necessarily utilized when making a determination regarding an applicant’s eligibility for Medicaid benefits. Non-countable assets can include household belongings, such as furniture, appliances, term life insurance policies, a burial plot owned by the Medicaid applicant, and the applicant’s primary residence – as long as the value of the home does not exceed a certain amount.
  • Inaccessible Assets – Assets that are inaccessible are those considered to be resources that would have had to be spent on a person’s care; however, the assets have instead been transferred to another individual or into a trust. This transfer has therefore made the asset inaccessible. With inaccessible assets, Medicaid has the right to review the applicant’s financial records at the time that the application for benefits is made. In most cases, if assets were transferred within a certain amount of time prior to a person’s application, Medicaid may deem the individual as being disqualified from receiving benefits – at least for a certain period of time.

What is Supplemental Insurance and What Does It Cover?

Medicare supplement insurance plans are a type of insurance coverage supplemental to what Medicare covers. This type of coverage can pay for some – or in some cases, all of the copayments and/or deductibles so that the enrollee does not need to pay such expenses out-of-pocket.

Medigap insurance is specifically designed to supplement Medicare’s benefits, and it is regulated by both federal and state law. A Medigap policy must be clearly identified as being Medicare Supplement insurance, and it must provide benefits that help to fill in the gaps in Medicare’s coverage.

Although the benefits are identical for all supplement plans of the same letter (i.e., all Plan A policies offer the same coverage options), the premiums may vary from one insurance carrier to another, as well as from one geographic area to another.  There are even three states that do not use the letter system, but have different ways of designating their plans.

What is Medicare Advantage and How Does It Work?

A Medicare Advantage (MA) plan, similar to an HMO or PPO, is type of Medicare plan available to those who are eligible for “Original Medicare”, or Parts A and B. This option is also referred to as Part C. These plans are actually offered by private insurance companies approved by Medicare.

When an individual joins a MA Plan, Medicare pays a fixed amount of their premium every month to the companies that offer these plans. These companies are required to follow strict rules on coverage.

Each of the Advantage Plans are allowed to charge different out-of-pocket costs, and they may also have different rules as to how enrollees can receive their services. For example, some plans may require participants get a referral before going to a specialist. And, these rules may change every year.

MA Plans also have an annual cap on how much participants will pay for their Part A and Part B services throughout the year. This annual, maximum out-of-pocket amount can differ from plan to plan. You can get a full understanding of how MA plans can be a benefit to you HERE.

How to Find the Best Coverage

When seeking Supplemental or Advantage coverage, it is best to work with a company that has access to more than just one insurer.

That way, you can obtain information on numerous different benefits and quotes to see what your options are and what benefits are available to you.

When you’re ready to begin the process, you can use the form on this page and a top independent agent will work with you to get the best policy at the best rates.

Source: goodfinancialcents.com

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Want tax-free investment growth? Want more control over your retirement savings? Want to leave a bigger inheritance? If so, you should consider contributing to or converting existing retirement savings to a Roth IRA.

For Not-Yet-Retirees

The biggest difference between a Roth IRA and a traditional IRA is the tax treatment of contributions and withdrawals. With the Roth, contributions aren’t tax-deductible, but withdrawals are tax-free (as long as you follow the rules). For the traditional IRA, contributions might be deductible; investments grow tax-deferred, but withdrawals are taxed as ordinary income — the highest rate possible.

To decide which is best for you, start by determining if you’ll be able to deduct contributions to a traditional IRA. If you’re not covered by a plan at work, a contribution to a traditional IRA is fully deductible. If you are covered, then deductibility begins to phase out at an adjusted gross income (AGI) of $55,000 for single filers ($89,000 for married couples) and is gone completely at an AGI of $65,000 ($109,000). Contributing to the Roth is then a no-brainer, assuming you’re eligible (see fact sheet below).

If you can deduct your contribution to the traditional IRA, you’ll have to do some calculations to decide whether a traditional IRA or Roth makes the most sense. The conventional wisdom is that a traditional IRA is better if your tax bracket today is higher than what it will be in retirement. But if you’re more than 10 years away from retirement, this is a guessing game. Go with a Roth for all the other benefits.

Another bonus for younger savers: Contributions to a Roth IRA can be withdrawn anytime tax- and penalty-free, even if you haven’t reached age 59-1/2 (but you will pay a 10% penalty on earnings you withdraw early). So if you’ll need the money before then, you can get it. Finally, there are two other important differences between a traditional and Roth IRA: There no required minimum distributions at age 70-1/2 from a Roth IRA, and you can contribute beyond that age as long as you have earned income.

For Retirees

Since there are no required minimum distributions from a Roth, you can let your investments grow tax-free for as long as you don’t need the money. And unlike distributions from a traditional IRA, non-taxable distributions from a Roth IRA aren’t included in the calculation that determines whether your Social Security benefits will be taxed, which might mean double the tax savings.

For Heirs

The tax treatment of IRAs is the same for owners and beneficiaries. Anyone who inherits a traditional IRA will have to pay ordinary income taxes on the distributions. Not so with the Roth. The account will still maintain its tax-free status. And nothing says “I love you” like giving someone tax-free retirement savings. (Keep in mind that all accounts, IRAs or otherwise, are subject to estate tax if the combined value of a decedent’s assets exceeds the exclusion amount, which is $3.5 million in 2009.)

Roth IRA Fast Facts

Who can contribute? Anyone with earned income. Eligibility begins to phase out for single taxpayers with an adjusted gross income above $105,000 and married taxpayers above $166,000.

How much can I contribute in 2009? $5,000 (plus another $1,000 if you’re age 50 or older).

Are contributions tax-deductible? No.

How are withdrawals taxed? They’re tax-free, as long as you’re age 59-1/2 or older and the account has been open at least five years.

Must I take money out at age 70-1/2? No.

Why is it called a “Roth”? Named after Delaware Sen. William Roth Jr. (also known for leading investigations into Pentagon overspending that uncovered the infamous $9,600 wrench and $640 toilet seat).

Why is it so good for colds? You’re thinking of “broth.”

Should You Convert to a Roth IRA?

A traditional IRA can be converted into a Roth IRA by anyone whose modified adjusted gross income is below $100,000. The converted amount will count as taxable ordinary income in the year of the conversion (unless the IRA contained non-deductible contributions). But for many people, that one-year tax bite is worth the subsequent years of tax-free growth.

Here are the factors to consider:

  • Generally, convert only if you can pay the taxes from sources other than the converted funds, especially if you’re younger than 59-1/2 and will have to pay a 10% penalty on the money you withdrew to pay the taxes.
  • If you’re near retirement and you expect to be in a much lower tax bracket, the conversion probably won’t be worthwhile. This is also true if the conversion will push you into a higher bracket than where you’ll be when you take money out of the Roth.
  • If you’re in a lower tax bracket now but required minimum distributions at age 70-1/2 will push you into a higher bracket, converting portions of your traditional IRA to a Roth over a few years (partial conversions are okay) might smooth out your taxes.
  • If you expect to pay estate taxes, a conversion will save your heirs money because the taxes you pay today will reduce your estate, and assets in a Roth for your heirs will be subject to estate taxes, but not income taxes.

Want some help crunching the numbers? Fiddle around with the calculators on The Motley Fool retirement page.

For more information on the wonders of the Roth, check out the Get Rich Slowly series on Roth IRAs: What is a Roth IRA and why should you care?, How to start a Roth IRA (and where to do it), Which investments are best for a Roth IRA, and Questions and answers about Roth IRAs.

Source: getrichslowly.org

Apache is functioning normally

With the S&P 500 still down more than a third from its 2007 high, we’re all a little unsure about our retirement plans these days. So it’s time for some good old-fashioned elbow grease. A little effort now should make for a lifetime of security and peace of mind. And the first step is to run your numbers through financial calculators to estimate whether you’ll have enough saved to kiss the boss goodbye. (Metaphorically, of course.)

The calculators’ answers are important information. But what’s even more useful is changing the variables to see what most improves your chances for success. A retirement plan has a lot of moving parts — how much you save, where you live, when you start taking Social Security benefits — and some decisions will have a bigger effect on your nest egg than others.

The factors that have the biggest impact on a retirement plan vary from person to person. But to demonstrate how you can fiddle with your factors to analyze your own plan, let’s examine the retirement prospects of a hypothetical worker — whom we’ll call Hilda, as I’m a sucker for good German names — and see how dialing her numbers one way or the other changes her projected retirement income. Here are Hilda’s particulars:

  • Age: 55
  • Marital status: Single
  • Current income: $60,000
  • Desired retirement age: 65
  • Desired retirement income: $45,000
  • Estimated age at death: 95
  • Current savings: $100,000
  • Annual contributions to retirement accounts: $6,000
  • Assumed annual return on investments: 8%

For our analysis, we’ll use the “Am I saving enough? What can I change?” calculator found among the retirement calculators at The Motley Fool. Once you’ve entered your numbers and hit the “results” button, the calculator provides the number of months that it estimates your savings will last given your desired retirement income. In Hilda’s case, here’s the calculator’s analysis: “Your living expenses after retirement will be fully funded for 127 months.” Divide by 12, and you see that her money is expected to last 10.6 years. Unfortunately, that’s not good enough. If she wants to retire at 65 and expects to live until 95, she needs her money to last 30 years, or 360 months.

So what should Hilda do? Here are her options and possible outcomes, adjusted a single factor at a time.

Save More
Hilda’s current savings rate is 10% of her income. What if she ups that to 15%, or $9,000 this year? According to our calculators, that will make her income last 155 months — an additional 2.3 years. That’s a fine first step, but it still has her running out of money in less than 13 years.

Let’s say she, through a drastic lifestyle reduction, managed to contribute the maximum to her 401(k), which in 2009 is $22,000 for someone age 50 and older. That would supersize her portfolio enough to last an estimated 322 months, much closer to the 360-month mark. But she probably can’t save 36% of her income. She’ll have to look at other options.

Spend Less in Retirement
What if Hilda decides she can live on a retirement income of $40,000 instead of $45,000? After all, she’ll no longer be stuffing her 401(k) or paying Social Security and Medicare taxes (7.65% of each and every paycheck), and her income-tax bill will drop, too. Maybe she’ll also have eliminated her mortgage by then.

Dropping her annual income requirements by $5,000 adds 51 months (4.3 years) to her portfolio’s estimated lifespan. Not huge, but not negligible, either. However, Hilda feels this would be cutting costs a little too close. She wants to look at other possibilities.

Retire Later
What happens when Hilda continues to save just 10% of her income but retires at 68 rather than 65? In that case, she’d have three more years of saving, a higher Social Security benefit (because of her higher lifetime earnings and her beginning benefits later), and she’d need her money to last just 324 months.

In this case, her money would last 255 months, or 21.3 years. By retiring three years later, she’s doubled the longevity of her portfolio. But it still won’t last until age 95. However, if she retires just one more year later — at 69 — the calculator estimates her money will last longer than she will, which is the goal of any retirement plan.

Work in Retirement
Unfortunately, Hilda can’t stand the thought of working full-time for more than another decade. However, she’s open to the idea of working part-time for the first five years of her “retirement.” If she earns $30,000 in each of those five years, her portfolio’s life expectancy improves from 127 months to 237 months, or almost 20 years. That doesn’t get her to age 95, but it’s a significant improvement. In fact, for every year she works part-time in retirement, she adds about two years to the estimated endurance of her portfolio.

Quick note: Because Hilda’s “full retirement age” for Social Security purposes is 66, she shouldn’t begin taking Social Security until then if she’s still working. When you begin benefits before your full retirement age but then earn work-related income, your benefit can be significantly reduced.

Tap Home Equity
There are a few ways to use home equity to boost your retirement. Let’s see how Hilda could add these to her calculations.

First, let’s assume that she no longer needs her family-sized home. She actually has some equity in the home, so she sells it, buys a smaller home, and comes out with an extra $50,000. Realistically, given the state of real estate these days, it would take at least a year to sell her house and actually get that $50,000 into her hands to invest. If it earns 8% a year, it would add 58 months — almost five years — to the longevity of her savings. That’s a decent-sized boost, and that’s not counting the lower cost of heating, cooling, maintaining, and paying property taxes on a smaller home.

The other option is a reverse mortgage, which is when a bank pays you money based on the value of your home, and you don’t pay it back until you move. A reverse mortgage on a home currently worth $300,000 could provide a check of $1,200 every month that the borrower stays in the house, according to www.reversemortgage.org. Our retirement calculator doesn’t have an input field for reverse mortgage, but since it operates essentially like a pension, that’s where we’ll add the $1,200. Input “30” in the “Years you will receive payments” field, and check the “First payment adjusted for inflation” button (but not the others). Click on the results and — voila! — Hilda’s retirement is fully funded.

While that’s encouraging, we should mention that it assumes Hilda’s mortgage is paid off before she takes out the reverse mortgage. If she moves before she passes away, she’ll have to pay off the loan. Plus, reverse mortgages can be expensive. So our preference is to put off taking out a reverse mortgage for as long as possible, perhaps using it only in the case of an emergency, such as needing in-home long-term care.

Note: There’s a helpful infographic on reverse mortgage myths which can be useful on seeing if this might be the right choice for you.

Change Your Expiration Date
Of course, Hilda’s original retirement plan is perfect as long as she dies within 127 months of retiring. All jokes aside, it’s worth remembering that we’re playing it very safe by assuming she’ll live to 95. According to the Social Security actuarial tables, only 10.3% of 55-year-old women make it to 95. If Hilda’s not in good health or longevity doesn’t run in her family, she might assume she’ll die at age 90. That doesn’t change how long her portfolio will last, but it does change how long she’ll need it to last.

A Mixture of the Factors
We looked at many variables in isolation, but the best solution for Hilda is to tweak several categories to find a combination of changes that she finds palatable. For example, if Hilda downsizes to a smaller home (resulting in a $50,000 investment a year from now), saves $200 more a month, delays retirement to age 66, and works part-time for the first two years of her retirement, her money will last until she’s 95. Considering all her options, Hilda decides these are adjustments she can live with.

The Bottom Line
Retirement calculators are very handy tools, but they’re not crystal balls. The results are based on many variables — such as inflation, investment returns, and Social Security benefits — that we can’t predict and could turn out worse than expected.

How should you handle this uncertainty? Run your numbers once a year, using updated account balances, savings or cd rates, and benefits projections (for example, put in the estimated Social Security benefit found in the statement you receive in the mail three months before your birthday each year).

Also, different calculators provide different results, so don’t rely on just one. For additional opinions, check out:

Despite their shortcomings, retirement calculators do a good job of estimating the value of one decision over another. For Hilda, the variable that had the biggest impact on her plan was retiring a few years later. But it will be different for other people. As one example, boosting a savings rate from 10% to 15% would have a much bigger payoff for younger investors than it did for Hilda, who was already within a decade of her target retirement date.

What will provide the most power to your plan? There’s only one way to find out. Visit a financial calculator and start plugging away.

Source: getrichslowly.org

Apache is functioning normally

Navigating income taxes during retirement can be complex and your golden years are a time to relax and enjoy your hard-earned cash. Your IRAs, pensions, taxable accounts and Social Security distributions create various tax implications. So, it’s vital to understand them and implement strategies to reduce your tax liability and maximize your retirement funds. You may want to speak with a financial advisor to get a more personal look at how your income will be taxed in retirement.

Federal Tax Rates for Different Types of Retirement Income

Federal tax rates vary by income type and level. It’s important to evaluate what each type of income you expect is going to look like so that you can plan for retirement. Here’s a breakdown of the most common taxes during retirement:

IRAs and 401(k)s

Traditional IRAs and 401(k)s offer tax-deferred growth, meaning you don’t pay taxes on the contributions or investment earnings until you withdraw the funds in retirement. Withdrawals from these accounts are generally taxable income. The tax rate depends on your total income, filing status and the federal income tax brackets in effect during the year of withdrawal.

On the other hand, you fund Roth IRAs and Roth 401(k)s with after-tax contributions, meaning you pay taxes on the money before it goes into the account. Qualified withdrawals from Roth accounts, including both contributions and earnings, are tax free.

Taxable Accounts

Taxable accounts, such as brokerage and savings accounts, use after-tax money. Therefore, you’ll pay taxes on any interest, dividends or capital gains earned from investments in these accounts. Specifically, interest income incurs regular income tax rates, while dividends and capital gains receive different rates depending on how long you hold the investments before selling (short-term vs. long-term).

Selling assets after holding them for less than a year creates short-term capital gains taxes, which the government treats as regular income. On the other hand, selling assets after holding them for a year or more creates long-term capital gains taxes, as seen below:

Pension Income

Monthly payments from your employer’s pension program or a private annuity will incur standard income taxes. In addition, if you opt for a one-time lump sum payment that empties your pension, you’ll owe income taxes for the entire amount.

Remember, employer pension payments come to you after having a specific amount of taxes subtracted. This feature means a large tax bill won’t wallop you when you file (provided you haven’t had an unexpected infusion of income from elsewhere that year).

Earned Income

Earned income receives standard tax rates, like many other types of income listed. However, wages from an employer or self-employment are subject to Social Security and Medicare taxes, also known as FICA. FICA taxes incur an additional 7.65% rate on income from a part-time job and 15.3% from self-employment income (you’ll receive half of that back when you file taxes).

Remember, earned income can run up against Social Security benefits if you make too much. Specifically, for 2023, earning more than $21,240 results in a $1 reduction for every $2 earned after the threshold if you’re under what the government considers full retirement age. Once you reach full retirement age, the limit changes to $56,520 and the penalty is a $1 reduction in benefits for every $3 earned.

Social Security

Social Security also receives taxation based on your income level and filing status. The Social Security Administration adds your adjusted gross income with nontaxable interest income and half of your Social Security benefits when calculating income thresholds for taxes. Then, the government charges federal income tax rates on 50% or 85% of your Social Security check.

The chart below outlines the different possible circumstances and tax rates:

Single Filers
Income Percentage of Social Security Income Taxed
$0 – $24,999 0%
$25,000 – $34,000 50%
$34,001+ 85%
Married Filing Jointly
Income Percentage of Social Security Income Taxed
$0 – $31,999 0%
$32,000 – $44,000 50%
$44,001+ 85%

Keep in mind, if you are married and choose to file a separate tax return, it is likely that you will be required to pay taxes on your benefits.

How to Minimize Your Tax Liability in Retirement

Most people have the very similar goal of trying to reduce the potential tax liability during retirement. While the income you bring in and where you live are going to play a huge role in the taxes you pay, there are some things you can do to improve your situation. In fact, the tips below can help reduce your tax burden during retirement.

1. Remember To Withdraw Your Money From Your Retirement Accounts

Once you reach the age of 73 (or 70½ if you were born before July 1, 1949), you must begin taking required minimum distributions (RMDs) from most retirement accounts, such as traditional IRAs and 401(k)s. Failing to withdraw the RMD amount results in a 25% penalty on the neglected sum plus the income tax it would have incurred.

However, if you have multiple retirement accounts, you have some flexibility in choosing which account(s) to withdraw from. By strategically planning your withdrawals, you can control the timing and amount of taxable income and optimize your tax situation.

2. Understand Your Tax Bracket

Understanding your tax bracket is crucial for retirement planning. You can minimize your tax liability by managing your taxable income to stay within a lower tax bracket. So, it’s best to use the tables above and the federal income tax brackets for the year to calculate a comfortable amount of income without exposing your money to higher rates.

3. Make Withdrawals Before You Need To

You can plan your withdrawals strategically if you have a mix of taxable and tax-advantaged accounts, such as a 401(k) and a Roth IRA. Making withdrawals from taxable accounts or tax-free accounts like Roth IRAs before you need the funds can help reduce your future RMDs and potentially lower your overall tax burden in retirement.

4. Invest in Tax-Free Bonds

Tax-free bonds, such as municipal bonds, can be an attractive investment option for retirees seeking tax efficiency. Interest income from municipal bonds is usually exempt from federal income tax and sometimes from state and local taxes.

5. Invest for the Long-Term, Not the Short-Term

Holding investments for the long term, particularly in taxable accounts, can be advantageous from a tax perspective. Specifically, when you sell investments held for more than one year, you qualify for long-term capital gains tax rates, which are typically lower than ordinary income tax rates. By avoiding frequent buying and selling, you can minimize the realization of short-term capital gains, which receive the standard federal income tax rates.

For example, say you’re a single filer with a $44,000 income. Part of that income is from capital gains. However, if the capital gains are short-term, your marginal tax bracket is 12%, while your long-term capital gains bracket is 0%.

6. Move to a Tax-Friendly State

Some states have lower or no state income taxes, which can significantly impact your overall tax burden in retirement. If feasible, consider relocating to a tax-friendly state. However, before making such a decision, it’s essential to assess various factors like cost of living, healthcare and personal preferences. Remember, the states that don’t charge personal income taxes are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

The Bottom Line

The type of income that you receive in retirement could change the way that it is taxed. Many can avoid some of this by moving to a tax-friendly state, but most people can’t avoid it entirely. It’s important to understand what your personal tax liability could potentially become and to plan accordingly so that you’re prepared for retirement when it comes.

Tips for Being More Tax-Efficient

  • The road to financial stability in retirement looks different for everyone. Your investment account types, medical conditions and desired lifestyle can present unique challenges but a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

    • Photo credit: ©iStock.com/courtneyk, ©iStock.com/Inside Creative House, ©iStock.com/AndreyPopov

    Source: smartasset.com

    Apache is functioning normally

    Americans believe they will need $1.27 million to retire comfortably, according to the latest set of findings from Northwestern Mutual’s 2023 Planning & Progress Study. That number continues to increase, up from $1.25 million reported last year. High-net-worth individuals – those with more than $1 million in investable assets – believe they’ll need $3 million to retire comfortably.

    Consider working with a financial advisor as you plan your retirement.

    Most workers have got a ways to go with their savings, the report finds. On average, Americans have set aside $89,300 of the $1.27 million they think they’ll need. That average ranges from slightly less than $36,000 in retirement savings for those in their 20s, to nearly $114,000 for people in their 70s – leaving them far off from their required savings goals.

    A Positive Development

    However, even in the face of a 20% loss in stocks during 2022 and soaring inflation, workers still managed to increase the average retirement savings balance by 3% from the 2022 average of $86,869.

    “The good news is that they are saving and investing more for tomorrow, even in this time of high inflation and market volatility,” said Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. “That is a step in the right direction and a reverse of what we saw last year when the gap widened rather than narrowed. The challenging news is that there continues to be a big disparity between what they think they’ll need to retire and what they’ve saved to date.”

    The study found that people in their 20s had saved an average of $35,800 for retirement. To hit the $1.27 million goal, someone 25 years old with that starting balance would need to invest about $306 per month for the next 40 years at an annual return of 7%. Someone 35, with the average current balance of $67,400 would need to save about $668 a month for the 30 years until they near retirement.

    A 45-year-old with the average $77,400 in savings, with just 20 years to save, requires monthly savings of $1,973 per month. At 55, with a current retirement asset balance of $110,900 and 10 years until they near retirement, a worker would need to sock away the unlikely total of $6,344 per month.

    Expectations as Retirement Nears

    On average, the study found that 52% of people say they expect to be financially prepared for retirement when the time comes, with Gen Z coming in the most optimistic, at 65%. Gen Xers are the least optimistic, with just 45% saying they expect to be ready. Millennials are right in the middle at 54%, while 52% of Baby Boomers who have yet to retire think they’ll be financially set to retire.

    The study also found that, on average, Americans expect to work a bit longer before they can call it quits than they did in previous surveys. Currently, they expect to work until age 65, up from 64 last year and 62.6 in 2021. The full retirement age for Social Security benefits is 67 years old for anyone born in or after 1960.

    When it comes to feeling ready for retirement, the study found that creating a well thought-out financial plan brought a real boost of confidence. Survey respondents who described themselves as disciplined financial planners knocked two years off their retirement age, expecting to quit at 63, while people who described their planning as informal or having no plan figured they’d be retiring at age 67.

    Bottom Line

    Finding the answer to the question, “What’s your number?” is an essential piece of financial planning, so that investors can understand the amount of appropriate risk necessary to meet their investment and retirement goals. Typically, experts recommend saving 10% or 15% of salary for the bulk of your working years. Workers also can consult their own Social Security estimate to get a full picture of their potential retirement income.

    Tips on Retirement

    • While many investors obsess about trying to “beat the market,” smart investors understand that they simply need to meet their own periodic goals to “make their number” – their desired total retirement assets before they leave work. One way to get help figuring out your number is to work with a financial advisor who can help you answer all your questions about retirement options. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
    • Fidelity recommends that you have 10 times your annual income saved for retirement by age 67. To find out if you’re on track, try SmartAsset’s retirement calculator. This free tool will estimate how much you’ll have when the time comes to retire.

    Photo credit: ©iStock.com/adamkaz, ©iStock.com/, ©iStock.com/Tom Merton

    Source: smartasset.com