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When you reach age 65, you find that traditional Medicare offers very extensive medical coverage . . . up to a point.  Medigap plans provide coverage for those times when you go beyond those points.

Medigap plans are supplements to the traditional Medicare Parts A & B.  These plans offer coverage of the medical charges that are not covered by Parts A & B.  Although the companies involved vary state by state, the coverage provided by plans themselves, listed A through N, are fixed by the federal government.  (Note: Plans E, H, I and J are no longer being sold, but they can be retained by those that already have them.)  Although different companies may charge different amounts for different plans, the coverage provided by the plans themselves is uniform throughout.  With the new changes coming in 2011, the specifics of these plans will undoubtedly by modified, but their overall thrust will likely remain unchanged.

During the past decade, Congress introduced Medicare Part C, aka Medicare Advantage, in an attempt to reduce costs.  These plans offered broader coverage but limited the choice of doctors and hospitals.  Ironically, Congress legislated higher payments for these plans in an effort to entice people to change to them.  On the flip side, the amounts paid to doctors with traditional Medicare patients were reduced.  When physicians stopped accepted new Medicare patients as a consequence, Congress relented and reversed the cuts to traditional Medicare.  Your doctor should welcome your new Medicare status.

Now, with the new health care legislation, Congress is eliminating the price advantage of Part C while adding coverage for many preventative care measures to the traditional plans.  As a consequence, you will be able to keep your own doctors, and Medigap will likely live on.

Of all the Medigap plans, Plan F has been the most popular.  But that does not mean that is the one you should choose.  The different plans are for different situations, and you have to spend the time to determine what is best for your lifestyle, health, and wallet.  For example, some plans offer coverage for medical expenses while traveling abroad.  If you are not a traveler, it makes no sense to pay for that feature.

Some sites to visit for further information are -

Guide by Medicare

AARP Medigap description of plans

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Everyone who has entered the realms of retirement has to answer a question, “What do I do about money?” An annuity is often a simple answer, but not necessarily the best.

If you happened to buy a fixed annuity in 2006, you are feeling pretty good right now. With 2010 interest rates almost non-existent, a 6% fixed annuity can make you feel both relieved and smug at the moment. You should feel good, because you have a great deal . . . at least for the moment.

In principle, annuities should be a simple investment. Their basic purpose is to give you a monthly flow of income after you hand over to the company (typically an insurance company) a large chunk of your money. Insurance companies are professional investors. They are sufficiently confident in their management of money to offer either -

• fixed annuities, which pay a set amount per month, or
• variable annuities, whose payments can vary within a set of parameters.

The downside for annuities is twofold.

1. Your money is committed and no longer accessible to you, and
2. The rates of return for annuities are invariably lower, over time, than other investments available at the time of purchase.

As a result, you should be very careful when investing in annuities.

• They are usually a good deal for the salespeople who befriend the senior to whom that are selling, but often may not be a good deal for the senior.
• Annuities can be sold with some very complicated features. If it is too complicated, back off. Especially be wary of any fees that can be added.
• Do not put all your savings into annuities. At most, they should only be one component of your savings.
• If you are considering any annuity from any company, have at least one objective, knowledgeable person look it over carefully.
• Consider other alternatives. Typically, you can set this up yourself by investing the money in a safe fund and pulling a set amount out every month. Usually, this approach will allow you to control your own money and typically cost you less.

For further information, try -

• New Retirement.com
• CSMonitor.com
• Money Magazine

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Most of the things we buy repeatedly are bought locally. Groceries, clothes, fuel, and flowers are purchased from stores in our neighborhood. The store could be an outlet of a national retailer or a small independent, but it is local. However, many people now make their special purchases, i.e. items that are purchased infrequently or only once, from an online store.

Not too long ago, making a purchase at an online store almost qualified as an adventure. Today, anyone who is reading these words has, in all likelihood, made a number of online purchases. The intent of these comments is to provide an update, for myself as well as you, of the best shopping practices you should use.

• Check on spyware - It is tragic, but necessary to start with that comment. Spyware exists, and if you, or one of your visitors, opened an email that said, “Congratulations, you’ve just (fill in the blanks)”, spyware that can capture your credit card information may be lurking on your system. Do a scan, e.g. PCTools, and check to make sure you are safe.
• Read the reviews - It used to be that you could go to the library, find the category in Consumer Reports, and feel confident that you could discover the basic things you needed to know before making a reasonably informed buying decision. Although you can still use that approach, you can also find a fair amount of information on the Internet. Just enter ‘review (name of specific product)’ into your search engine, and any number of information sites will vie for your attention. Typically, one or two of them are quite through. For example,

1. Consumers Search can be helpful, and
2. cNet provides detailed advise on technology products.

• Find the Best Deal - Once you have identified the specific product you are after, i.e. manufacturer and model number, you can start looking for the online merchant that will best serve your purchasing requirements. Since the price comparison sites all vary slightly in their approach, it is in your best interest to try a few. Even these reviewers are reviewed, and one good comparison can be found at Smart Money. Since some online merchants will offer special deals through one pricing site and not another, it is best to search a few before you make your final decision. For example, try -

1. Price Grabber,
2. Yahoo Shopping,
3. Dealtime,
4. NexTag,
5. Shopzilla, or
6. Street Prices.

For travel deals, try -

1. Kayak, or
2. Travel Zoo

For special deals, try -

1. Fat Wallet, or
2. Finders Cheapers

• Carefully Select Your Merchant - Product price is definitely NOT the only factor. The cost of shipping can change the monetary profile of a deal. Obviously, the best shipping charge is ‘free’. Beyond that, your have to shop online just the way you shop locally, i.e. find a merchant you can trust. The price comparison sites recognize this need and most of them rate their vendors. Choosing a vendor with a high performance rating can seem like wisdom if something happens to the shipment or later to the product.

Once you click, enjoy the anticipation. Your purchase will appear at your door in just a few days.

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Ever since the passage of the Health Care Reform Act on April 23rd, I’ve been looking for a good summary of its components. Of course, any legislation with that many pages will be difficult to summarize, but someone had to take a swing at it. I guess no one will be surprised that it was the AARP that took up the challenge.

At the link, AARP User’s Guide to Health Care Reform, you will find a summary that doesn’t take that long to read. It does, however, have a sufficient sweep and level of detail, that you can develop a sense of the legislation.

Three things to note -

1. Medicare will finally start to cover its most foolish lack, i.e. some preventative services. Catching conditions sooner rather than later should always reduce the cost of their care.
2. The Part-D Donut Hole will be phased out over the next decade.
3. The overpayments for Medicare Advantage Plans will be phased out.

Every senior should read this summary. Thanks AARP, you did a good job!

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Since last observed, Reverse Mortgages have experienced some changes.

The fundamental idea hasn’t changed at all. Financially, you are making a bet that you are not going to leave your house for a nursing or funeral home before you have received enough payments to equal the value of your home. The government-approved bank is betting that you will.

Since our last look, the rules have changed a bit.

• The qualifying age, 62, is still the same. At 62, however, you’ll only receive about 30% of the qualifying amount of the home while a 95 year-old could receive 80%.
• The maximum amount that you can receive, which can vary based upon your geographic location, was increased from $417,000 in 2008 to $625,000 for 2009. Next year, it’s predicted to decrease because of the loss of home values.
• The origination fees that you can be charged have been capped at $6,000.

Despite these changes, the principles haven’t changed.

• Because this type of transaction entails a risk for the bank, you will never get the full value for your home. The best way to achieve that value is to eliminate the risk, i.e. to actually sell your house on the open market. Then, you can move into a smaller home or a rental property and pocket the difference.
• These transactions entice seniors because it means that they do not have to move out of the familiar, old homestead. To combat that obstacle, however, start looking at travel brochures. You would be able to pay for a VERY nice vacation with the money you would otherwise abandon through this transaction.
• Those people for whom this is a suitable transaction, should NEVER mix it with other investment transactions, e.g. annuities, funds, etc. These different transactions should be evaluated independently and on their own merits.

If you are still tempted, you MUST do your research. For starters, review -

• A Description of Reverse Mortgages
• AARP’s Guide to Reverse Mortgages
• Government Reverse Mortgage Guide from HUD
• Consumer Law’s Tips for Seniors

Once you’ve learned a bit more about reverse mortgages, read the recent Report by Consumer Law entitled, “Subprime Revisited”. If that is too detailed, at least read the Consumer Reports Article. Both review the current marketing practices being used by lenders today. The conclusion is BEWARE.

After all the research, ask yourself the same question that Clint Eastwood would ask. “Do you feel lucky?”

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With retirement comes the gift of time. And one way to use that time, recharge your batteries, and perhaps scratch a long-postponed yen, is to travel. Even though the finances of most people have been downsized over the past year, the economy has also created many bargains for those that have anything left. It may be time to scratch that itch.

Whether its around the block or around the world, travel brings an exposure to new vistas and experiences that shakes us out of our same-old-same-old routines. That bit of shaking gives us all a new sense of time, an event to mark our lives. In that way, it can be very healthful and rewarding, especially if it is shared.

But travel also brings its own set of challenges - planning, expenses, preparation and inconveniences - that can prove to be a hassle for many. For a successful trip, its imperative that we meet those challenges with a sense of fun.

Planning -
Both a weekend bus tour and an extended trip overseas take careful planning, and it’s fun to do. Part of the fun is discovering what is possible, learning more about the history and culture of an area, and targeting or avoiding local events that can draw extra crowds. To start,

• Set a Budget - No sense planning for a trip that breaks the bank. Pick a number, assume you’ll exceed it by 10%, and then explore what that number makes possible. Since sleeping is often the largest travel expense, how long you travel can have a greater impact on expenses than how far.
• Picking your Style - It’s silly to force yourself into a style you abhor, but the style that you find to be fun can have a major impact on your choice of destinations and budget. Guided tours are efficient, but less spontaneous. Cruises can feel exquisite to some and confining to others. For the physically fit, Elder Hostel & trekking may be the only way to go.
• Finding Destinations - One of the most interesting aspects of planning a trip is choosing your destination(s). exchange rates may influence the countries you choose, but this isn’t even an issue if you stay within your own borders.
• Selecting Travel Times - You can stretch your budget a lot if you avoid peak seasons and big events. If your desire is to do a museum crawl in Europe, February can be an excellent time.
• Using Travel agents - If you feel intimidated by the mass of information that the Internet delivers, you can always use a travel agent. Quite often, the fees that they charge may be offset by the deals they can discover.

Preparation -

• Read a Book - Once you’ve decided and locked in your itinerary, you can begin your preparation. The first thing I like to do is find an historical novel about the area to become steeped in its history.
• Travel guides - Find a good travel guide that is oriented toward your style. Make sure that it is light enough to carry, because you’ll want to take it along, as well as sufficiently detailed so that you can become informed as you go.
• Chart your Route - Learn enough about the locations that you can chart your overall course as well as the specific path you want to take through the cities or countryside.
• What to pack? - The short answer is ‘Less’. Everyone always takes too much. Plan to do some laundry, especially at anyplace you are staying for a couple of nights. We lessen drying time by rolling wet garments in a towel and stepping on it.

Have Fun -
Once you arrive, make certain you have some fun. Daily burdens can sometimes make people forget how to have fun, and travel is one way to force yourself out of that rut. Travel always brings some inconveniences, but is also brings adventure. So what if no one speaks your language or the bed sags. Use gestures, move the mattress to the floor, and laugh. Adventures are fun!

Helpful Links -
There are many. Here are some favorites -

• For airfare and other quotes from multiple sites try Kayak.
• Another source of both travels opinions as well as multiple quotes for fares, hotels, etc. try TripAdvisor.
• For alerts on travel specials, try TravelZoo.
• Elder Hostel offers diverse adventures for seniors.
• For packing and all sorts of other advice, go to the Rick Steves site.
• Of course, AARP Travel offers lots of info and specific tours.
• Lastly, if you’re headed beyond US borders, go to the government site for the latest information.

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When we were all younger, our “big purchases” made a social statement. It could be a house, a car, or a boat, but it qualified as “big”. It typically required a loan, and with that loan people often would reach a bit beyond their means assuming that their earnings would not only catch-up but surpass any financial requirements.

One of the delights of our senior years is that people are no longer impressed by such social statements. What now impresses our contemporaries are our health status and our attitudes toward living. The house is now a roof and the car is transportation. “Smart” means less maintenance, not styling.

Last year, we bought a roof on the other side of the country from our last roof. Since we took the downsize challenge very seriously, our new roof is only half the size of our old roof which sheltered our family when it was growing. Sometimes, it can seem a bit tight, but that is an emotional response. In truth, we have plenty of space. But it is more of a roof than a statement.

Now, I’m considering replacing a car. The only car I ever connected with emotionally was a ’66 Mustang. (That love affair ended when it was stolen.) The car I’m thinking of replacing is the original ’95 Aurora, one of the few American cars designed by engineers rather than accountants. This car still runs, but at fifteen years of age, I know its reliability (It’s been outstanding.) will start to diminish. So I’m starting to look at cars again.

The last car we purchased was a Prius, which I viewed as the only intelligent choice at that time. I still feel that way, but I don’t want to get one more of the same. I’m looking for more innovations. I’d love to see a bit more storage topped by a roof with solar cells. I’d insist on a household current converter so that I could charge the car from the house, or visa-versa.

In short, I’m not trying to make a statement. I’m after safe, reliable, and green. Prius is the best right now. Wouldn’t it be wonderful if this GM Company that we now own could produce such a green car? That would be my hope. My suspicion is that two or three years from now my only choice will be a Prius-III, which I’ll buy by then if I have no other choice. It’s not a statement, it’s transportation.

Once you are retired, one of the first steps you may wish to consider is to sell the family home. Whether you are downsizing, relocating, or cashing out, buying or selling a home is not an easy process. Typically, you will wind up feeling a bit disatisified. Both buyer and seller simply want a fair deal that happens quickly. But a fair deal only occurs when the buyer and seller are equally dissatisfied. That is simply the way negotiations work.

If you are selling -

1. Choose your best selling season. A hot selling season, e.g. Spring, has the most buyers but also the most competition. A slow season, e.g. Winter, has the least competition and the least number of buyers. Often, the best timing is the end of a slow season as the first crop of new buyers start to appear. Learn the details of what is happening in your particular market.
2. Start preparing the home at least six months before your target listing date.
3. Address obvious eyesores and problems. Don’t explain about the wobbly step. Get it fixed.
4. Paint. Use neutral shades that open the space and permit buyers to imagine their own furniture in the room. For interiors, use whites, off-whites, beiges, or pale grays. White exteriors also sell well.
5. Remove clutter. Rent a storage locker if need be, but it is critical for rooms and closets to be free of clutter. If you must, move the clutter to the garage which is the only place people might discount some of its impact.
6. Clean, clean, clean. A lack of cleanliness can cost thousands of dollars.
7. One or two months before your target listing date, interview three different real estate agents. A good agent will inspect your home, give you more ideas about preparing it, learn about your objectives, and provide you with a written market analysis and pricing recommendation. Don’t be afraid to ask for discounts; some brokers will offer them outright.
8. Consider staging your property. Professional designers can reposition furniture, add a plant, and even assemble some rented furniture to show off your home to its best advantage.
9. Choose your agent. If none make you feel comfortable, consider doing the job yourself.
10. Decide upon your asking price. This is your most important decision. It is far better to be realistic than greedy. You want to price right where the market would expect it to be. Check Zillow Home price estimates for your neighborhood.
11. Sign the documents and list the home.
12. A weekday open house for agents and a weekend open house for buyers will announce to opportunity to the world. With all your preparation, you should feel proud of your home as your neighbors and potential buyers traipse through.
13. Disappear whenever the house is being shown. Buyers are uncomfortable when the owner is present.
14. Anticipate specific feedback from any showing and react (e.g. add a brighter bulb), if possible.
15. If your home is shown to a number of buyers and it is priced correctly, you should expect to receive at least one offer during the first month, even if it is too low. However, If there is little to no activity, lowering the price is the most important change you can make. Don’t be bullied, but don’t be foolish either.
16. If you must move, and the market in your area is simply too slow, consider renting. It can be a frustrating choice, but one that might make financial sense.

If you are buying, there are a number of questions you should ask yourself.

1. Why do you want/need to move?
2. Is there a schedule you must meet?
3. What price range are you considering?
4. How many bedrooms and bathrooms?
5. Approximate size or square footage of the home?
6. Approximate size of the property?
7. What are the requirements for schools?
8. What style or age of home are you targeting?
9. What are the requirements for basements and garages?
10. Are there any local travel requirements?
11. Are you looking for an urban, suburban, or rural location?
12. Have you picked specific neighborhoods or communities?
13. How close to shopping would you like to be?
14. Are there any special health-related requirements?
15. What physical or community amenities do you desire?
16. Are there any special features desired for the home?

Once you are able to answer these questions, you will have a very specific idea of the home you are looking for. Also, check other web resources, e.g. Federal Government Home Buying Information.

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Today is the day for our high-definition digital TV purchase. The choice will be a close-out model. The new models may double their contrast ratings and offer novel super-hero innovations, but not enough to make a difference. Frankly, the stuff that is out there now is good enough for most eyes. This close-out model has a compelling feature, it offers the best bang for the buck!

The parameters of this particular HDTV selection are many.

• It is the largest size possible for the space into which it must fit.
• LCD was chosen instead of plasma because -
  • LCD is a simpler, more reliable technology.
  • The side-view, motion-blur, and deep contrast limitations of older LCD’s were nearly impossible to observe both during a fast sport scene or a studio interview setting.
  • The fine 1080 detail, rich colors, and brightness of the LCD display were compelling. It would not require a darkened room.
• It is configured with multiple interfaces to permit future adaptation.
• Since Sony is closing out this model, it is currently enjoying a 30% price discount.

Because of the rapid aging and latest-is-best psychology of technology pricing, a slightly older model can often provide the best value for technology purchases. Technology evolves in a series of plateaus. Be it a TV, computer, or camera, it takes about three years, at any given plateau, for the functionality to mature and the product stability to occur.

Now, LCD TV’s have reached that level. It was reached for digital cameras a couple of years ago. Personal computers really haven’t changed since the year 2000. Once a plateau is reached, these products become commodities, with volume quantities driving prices ever lower.

One technology that is in flux and looking for a new plateau is the pocket tech device. It has left the comfort of its cell phone capability. It has added digital camera, audio player, computer, and global positioning functionality. But none of these changes have brought it to a new plateau. Innovation will continue there until a new set of stable capabilities emerges. It will then become a very compelling product, but you have time. . . . . wait three years.

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If you are turning 65 this year, and you haven’t yet joined the “Social Security Club”, then this is your year to enroll. The questions that you will encounter in this process are presented below with a few typical answers.

1. When do I qualify for full retirement benefits?
   People who turn 65 during 2009 will not qualify for full retirement benefits until they reach age 66. You can choose to start benefits earlier, but you will pay a hefty penalty for that choice. You can assess your retirement benefits using the BEST calculator for Social Security Benefits.
2. Why should I enroll this year if I don’t qualify for full retirement benefits until next year?
   Although those born 1944 do not qualify for full retirement benefits until they reach age 66 during 2010, Medicare benefits still begin at age 65.
3. Do I need to register for Medicare if I am still covered by my company’s health plan?
   You need to check with your company’s health plan. Their plan may revert to a Medicare supplement when you turn 65.
4. When, during this year, should I enroll with the Social Security Administration?
   Typically, you should sign up for Medicare about three months before you turn age 65. This allows time for your records to be fully activated prior to your birth date.
5. Medicare has different plans, A, B, C and D. What is the difference?
   These letters represent the different parts or plans in Medicare.
   • Part A is Hospital Insurance that the government pays.
   • Part B is Medical Insurance for visits to doctors that you must pay monthly to be enrolled.
   • Part C is the HMO/PPO type of non-government private plan, called “Medicare Advantage”, that you must pay for monthly.
   • Part D is the prescription drug insurance for which you must pay monthly.
6. What is the difference between traditional Medicare, the new Medicare Advantage Plans, and the Medigap plans?
   • The traditional Medicare plan is a government program whose benefit amounts are set by the government program. Physicians accepting Medicare patients are also agreeing to accept the Medicare benefit amounts as their payment. Seniors can choose their own doctors and hospitals with traditional Medicare.
   • Medicare Advantage works either like an HMO, where you use assigned doctors and hospitals, or a PPO, where you select from a list of pre-approved doctors and hospitals. Although subsidized by government payments, these are private plans that set their own rules.
   • Today, most seniors still select the traditional Medicare program. Some will supplement that with a private Medigap policy which provides coverage for the few things that Medicare doesn’t cover. The coverage provided by these policies is strictly formalized by Medicare, i.e. F-level coverage from two different companies must provide identical benefits.
7. What is this November 15th - December 31st enrollment period that I hear about?
   Each year, people enrolled in the Part D (Drug) program may change to another plan or provider without penalty. It is called the Free Enrollment Period.
8. If I do nothing, what happens?
   Obviously, you will receive no benefits. In addition, if you change your mind and decide to enroll later, you may be assessed some penalties. The website of the Social Security Administration offers a number of other answers about Medicare.

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