Mike takes a look at the latest news on inflation and interest rates and how those factors have been affecting the markets. Plus, we hear from an economics professor about what the Federal Reserve may do in the future to slow down rising costs. Then, our Smart Retirement Plan series continues as Mike makes sense of the often-confusing Medicare landscape, and explains why you should reinvest your money for a successful retirement.

Call Mike now at 704-560-1573

Schedule a no-obligation consultation here.

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9.23.22: Audio automatically transcribed by Sonix

9.23.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Money Matters with Mike with your host Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you live from Fort Mill, South Carolina. Happy Saturday, people. What a great day to be alive in these United States of America. Fall is in the air, but today we are absolutely going to bring the heat again. The whole goal of our show is to arm you with information that you can actually use and give you plenty of meat on the bone to chew on each and every single week. I'm really excited for today's episode on how to take advantage of some smart health, smart care, smart reinvesting, planning. And once again today, I have the distinct honor and privilege of being joined by the one, the only, Mr. Matt McClure. Matt, how are you doing today?

Producer:
I'm doing great, Mike. It is my honor and my privilege to be here with you.

Mike Zaino:
Well, that's awesome, brother. You have a good week this week.

Producer:
I did. I did. You know, it was it was a good week. It was a busy week. But you know what I always say, if it's a busy week, that means you're getting stuff done. So I like.

Mike Zaino:
That. Yeah. As long as it's busy. Productive, right? We like busy. Productive. We don't like busy just to be busy.

Producer:
Exactly.

Mike Zaino:
Both of those types of weeks.

Producer:
You and me. Both that. That type. Busy just to be busy like. Like a chicken with your head cut off, you know, and you just don't know which way you're going or where you're where you're going to end up, certainly. But yeah, I know we got a lot of great stuff coming up here on the show today. As you mentioned, smart health, smart care, smart reinvesting. We're going to talk here in just a moment about inflation and interest rates and all that. So we get a lot of great stuff coming up. And as you say, the goal of the show is to educate listeners about their finances, about planning for the future, and also to give them a way to reach out to you. Mike Zaino at Money Matters with Mike Dotcom. That's Money Matters with Mike. Com or 7045601573. That's 7045601573. So yeah, you know, it's been a wild couple of weeks, especially in the markets. When we were looking a couple of weeks back here, which just week before last that it was a little insane, I think one day last week because this inflation report came out. Let's let's refresh our listeners memories about the unfortunate inflation report. We had the Consumer Price Index come out from the federal government on Tuesday of last week. You know, we saw a year over year increase 8.3% inflation in overall consumer prices. When you compare August to last August, overall prices rose month to month. So this is when you're comparing July to August that saw a 0.1% increase. And actually analysts had been hoping for a slight decline there. So that's what sort of spooked investors on Wall Street really and really kind of sent things a little crazy because that means then that maybe the Federal Reserve might raise interest rates more than we're thinking.

Mike Zaino:
Yeah, absolutely. I mean, last Tuesday was the worst day in the markets, all of the markets since June of 2020, when was basically the beginning of the pandemic. I mean, they really, really reacted. I mean, each of the markets were down four or 5%. It was a brutal day for investors and all because the drop wasn't as significant as they were hoping for. And we're not talking about by a lot, you know, they expected 8.1 and it was 8.3 and people lost their minds. They freaked out, started selling off everything because I mean, it just wasn't what was expected. Yeah, it wasn't an overreaction. I really hope so. But the pain is being felt by everybody, especially, you know, if you were had that fear of missing out and you wanted to go buy a house. Well, with all these interest rate hikes that the Fed has instituted, you know, mortgage rates topped over 6% this past week. So, I mean, that's a far cry from the 2% that they were just two years ago.

Producer:
Absolutely. That's it's crazy when you think about the difference, you know, because you look at the housing market has been so crazy and you've a good reason for that. It's been these record low interest rates and now you see the way that it's, you know, doubled, tripled in a lot of cases. And you're saying, okay, well, if I was in the market for a home either. A before. Previously, prior to these interest rate increases, that price of the home itself would be an obstacle for me to get into the housing market, but actually pull the trigger and make a purchase. And now I can afford less home as well because maybe prices have come down just a little, but the interest rate has really done away with any decrease in a price that might have happened. I mean, you know, I've seen because I've just been watching a little bit of the real estate market. And, you know, I live in Atlanta and I've been watching a little bit of the real estate market around here and houses and and condos and etc. are staying on the market for a little bit longer than they were. And sellers are having to come down off of those prices that they were, you know, wanting to see.

Mike Zaino:
And we're seeing the same thing here in Charlotte, in the metro Charlotte area. I would say that houses are staying on the market for a few days longer, but with real estate, if they're priced right, they're going to move right. Yeah, but you find less people being able to afford the same amount of house, like you said, because I mean, I refinanced my house a couple of years ago at 2.25% interest. I mean, to me, that's free money now it's 6%. I mean, you're talking a significant increase in monthly payment, which means for most folks a significant decrease in the amount of house or the area that they can purchase in. So yeah, pain is being felt across the board, whether it's through inflation, whether it's through the markets, whether it's through the housing industry. It's it's time for a change.

Producer:
Yeah, there you go.

Mike Zaino:
One badly.

Producer:
That's right. That's all we do need. We need relief from all the craziness that's that's been going on in the economy and in the markets. And actually, you know, I spoke with an economics professor about the Federal Reserve, the actions on interest rates and inflation just recently. Let's listen to a little bit of that conversation just a couple of minutes here, and we'll talk about it and continue with more of the show. On the other.

Mike Zaino:
Side, it sounds like a good idea.

Producer:
The Federal Reserve keeps raising interest rates to combat inflation, but how could it affect your retirement? I'm Matt McClure with the Retirement Radio Network. Powered by a matter of life supply chain issues, the pandemic, energy prices and Russia's invasion of Ukraine have all been contributing factors to runaway inflation to fight rising prices. The Federal Reserve has been using one of its most powerful tools, raising interest rates.

Economics Professor:
So they started increasing the interest rates about, I guess, two meetings ago. So about three months ago when when they had the first increase of three quarters of a point percentage points to 75 basis points, which at that point was the largest increase in about 30 years.

Producer:
Tibor Best is an economics professor at Georgia Tech. He says it's surprising that the August reading for inflation did not see a decrease, especially given gas prices have been plummeting from recent astronomical highs.

Economics Professor:
Inflation is not going to stop all of a sudden, but what one is hoping for is that these increases start to decrease so that we start getting to levels that are sort of more manageable and more pleasing to the eye. If nothing else, it it was very surprising.

Producer:
That's why Bacevich says many analysts now expect the Fed to be even more aggressive with interest rate hikes in coming months. So what does this mean for you? Potentially higher payments on mortgages, other loans and credit cards.

Economics Professor:
Securing any sort of balance on any loan that doesn't have a fixed interest rate? Is it going to become more expensive?

Producer:
Bassett ish says it's important for consumers to cut back where they can to lessen the blow of inflation and interest rate hikes. And if you're in the market for a new home, it could be good to delay the purchase until rates or home prices come back down. So how do the Fed's actions on interest rates affect your wallet? That's a key question to consider as higher costs eat away at your hard earned money with a retirement radio network powered by a married life. I'm Matt McClure. So that was some of my conversation with the professor there, economics professor from Georgia Tech, about inflation, the interest rates and where we've been and where we could be going. It's just a little bit scary where we could be going. We've already been a long distance from where we were.

Mike Zaino:
So there.

Producer:
You go. Well, it is time for us to share a little bit of financial wisdom with the listeners.

Producer:
And now for some financial wisdom, it's time for the Quote of the Week.

Producer:
And yes, our words of wisdom this week come from a man you may have heard of. His name is Dave Ramsey, and he has said this, quote, It is human nature to want it and want it now. It's also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity. Act your wage. I like that. Act your wage.

Mike Zaino:
After your wage. That's right. You know, and and that's difficult for a lot of people to do because a lot of folks just get caught up in trying to keep up with the Joneses and that can get them into financial ruin.

Producer:
Hungry for something that you want. Here is some.

Mike Zaino:
Meat on the bone. We're actually going to talk about keeping up with the Joneses. And this is going to be taken directly from an article that's written by Ramsey Solutions so everyone knows who they are. You've met them before. They're probably the family living like no one else. Just a few houses down from yours. Mr. Jones drives the Bentley. Mrs. Jones drives the Mercedes. Their house is picture perfect. Their yard is the best in the neighborhood. Their children are so polite, they make even the Von Trapp kids look like heathens. The Joneses are the envy of social media. They throw the best parties, they drive the nicest cars. They have the big screen TVs in every single room. They sport the latest smartphones, and they go on the most Instagram worthy vacations. But the question is, how can they afford it? And even more important, is life just about keeping up with the Joneses? If you make decent money but still never seem to be able to invest, chances are you're living either at or above your means and you're guilty of trying to keep up with the Joneses. And here's the thing 78% of people in America are living paycheck to paycheck. Basically, that means almost eight out of ten people probably can't afford the home they're living in and can't afford the car they're driving. They might not even have the cash to cover the next emergency that pops up. That's kind of crazy, right? Why are so many people going into so much debt? Well, to be honest, it's about comparison. And trying to keep up with the Joneses can not only make you feel lousy about yourself, but it can also inspire extremely bad spending decisions.

Mike Zaino:
See, the issue stems from people making more money. Obviously, we all want to make more money. But the problem is when we start elevating our lifestyle and spending more money and when times are tough as they are for millions of Americans right now, it is way too easy to fall into bad money habits that can make you feel all warm and fuzzy in the moment. But they may be extremely devastating in the long run. So if you're sick and tired of being sick and tired, there are huge benefits of living like no one else. So what are those benefits? Number one, you'll gain more self control. You may have heard this before, but adults make a plan and they follow it. Children do what feels good when you're living like no one else. You'll be following your plan with ease. And no longer will you be swiping that credit card at the mention of the word sale. Number two, you'll radiate confidence when you're not focused on keeping up with the Joneses. You'll be surprised to find that you'll stop caring about what other people think, and you'll even pinpoint the people who are keeping you in debt. It's about chasing your goals and about building financial legacy for your family, not about the car you drive or even if you've got a fancy gold card. Number three is that you'll become more goal driven. Listen, you've already made the best goal ever, and that's to get out of debt.

Mike Zaino:
So once you've achieved that, making and setting goals for yourself just gets easier and easier. You'll learn how to set smart goals that you can measure and then run hard to achieve them. And it all starts with becoming debt free. All right. Number four, you'll be able to give generously. And the best part of living like no one else is the fact that you can start giving like no one else. When you are no longer throwing your paycheck to your past, you're freed up to start living and giving the way that a lot of people expect to give. Number five you will leave a legacy. Imagine leaving an inheritance to your children or your grandchildren and heck, maybe even your great grandchildren. When you're living like no one else, you have the ability to set yourself up for the retirement of your dreams, give generously and make plans to leave a legacy that will change your family tree. It is human nature and perfectly normal for us to be want to be liked by other people. We want to be happier. We want to be socially accepted. So it is normal to think that the grass is greener just by having more stuff. Just remember, folks, the grass isn't always greener on the other side. It's greener where you water it. And if you want to learn how to water your grass, so to speak, and make your retirement dollars last year for the rest of your life, that's what our complimentary consultation is for, right?

Producer:
Matt Absolutely. That is right. Mike And you know, it's a full retirement plan, consultations, completely comprehensive, and it's at no cost to our listeners and completely free of any obligations going forward as well. You would only work with Mike Zaino if that. Is the thing that you both agree that you should do. And if it's a good situation there, he can help you, you know, analyze your specific, unique financial situation, closely examine any annuities that you might have, any other investment vehicles like that that you might currently have and discover, you know, how much you could be paying in fees right now and help you cut those the unnecessary costs out of things like your IRA, your 401. K, any other retirement savings account. And he could also help with Social Security, Medicare, all of those sorts of things. And really what it boils down to is comparing your current situation to what's possible if you work with Mike Zaino. So here's the thing. I know Mike, a lot of advisors right now, they got their heads buried in the sand. Right, because they don't want to even reflect. Yeah, exactly. Things have been so crazy. They don't want to they don't want to even look you in the eye.

Mike Zaino:
Yeah. If you if you haven't heard from your advisor lately, please give us a call. Let us give you a second opinion, a second set of eyes. We want to help you reach your financial freedom and all of the goals and objectives you set out for retirement.

Producer:
And you can do that. Folks at money matters with Mike com that is money matters with Mike it's all one WorldCom or you can give him a call 700 456015737045601573. And as I say all the time, that rings directly to Mike Zaino's phone. It's not a secret. He gives it out because he wants to help you and he wants to be there and be available. So if he doesn't answer immediately, he'll call you right back. And that is that's just how he is, folks.

Mike Zaino:
I couldn't have said that better myself, Matt. It's like we worked together before.

Producer:
I know. It's kind of crazy, isn't it? It's like. It's like, I know what you're thinking, but yeah. So that's a great opportunity for you folks. Really, really is a lot of wonderful value and opportunity there to make a better future for yourself and your family. Well, we're continuing today, Mike, on the show, our Smart Retirement Plan series. We took a little bit of a short break from it last week, but we're continuing it this week with a couple of segments that are, I think, going to be a little bit different than what we normally talk about on the show, but still very, very important. And I think that there are some some things that people might get confused about quite easily. And the first of those is smart health, specifically Medicare. So let's take a look here at Medicare and kind of make sense of these different options and different parts of Medicare that are available to folks. So let's start out with kind of some statistics on exactly how big Medicare is and how important it is. Right. More than 61 million Americans are covered by Medicare health plans right now. That's according to some statistics from the National Committee to Preserve Social Security and Medicare as of 2020. The Kaiser Family Foundation also did a study finding almost four out of ten Medicare consumers are also enrolled in Medicare Advantage plans. We'll tell you, of course, what those are in just a minute. 65% of respondents to a different survey by single care said that they would not know which part or parts of Medicare that they should enroll in. Wasn't even know. 65%, I.

Mike Zaino:
Thought was was was a staggering statistic. 65% like six out of ten, it's almost seven out of ten. People wouldn't know what parts of Medicare they should roll it.

Producer:
Yeah. And that goes to show you, I think what you know, what I alluded to a moment ago is how confused people can be by it. You know, they're like, okay, a, b, c, d, e, f, g, h, i, j, what are the all the different parts.

Mike Zaino:
Is very, very comprehensive and can be confusing plan.

Producer:
For sure. Exactly. Exactly. So we're going to hopefully help clear some of that fog here for folks. But you know, that Kaiser Family Foundation study that I spoke about a moment ago said that also for 2022, Medicare beneficiaries have access to 39 Medicare Advantage plans. So there's a whole laundry list of options for you, 89%. So almost nine out of ten Medicare Advantage plans offered include prescription drug coverage. And here's just kind of an idea about how big Medicare is. 18 and a half percent of the US population of the total US population is on Medicare.

Mike Zaino:
So it's been seen in a half percent.

Producer:
That's that's a lot of.

Mike Zaino:
People times .185 that is 55,500,000 Americans. That's a lot of people just on Medicare. Single payer, right?

Producer:
Yeah, exactly. That's that's pretty insane. An insane number. So and you know, I mean, with especially with the baby boomer generation, you know, aging into the Medicare system, that number is only going to grow really over these next several years. So let's sort of help people make sense of the different parts of Medicare and what they do and what they are. So go through it, if you will. Mike, let's start out with Medicare Part A.

Mike Zaino:
Yeah, so. So. Before we jump in directly to a medicare can really be broken down into four parts if you think A, B, C and D, and then there can also be what's called a medicare supplement, right? So we can see easily how that can be extremely confusing to our listeners. And who does Medicare affect? Well, those who are of age, which the qualifying age is 65. So at 65, you can definitely get confused by this stuff if, if, if you weren't already earlier in life. So Medicare Part A and all of the information that I'm going to give you can be found on the Medicare official website, which is medicare.gov or not, but medicare.gov. That is an official government website. So Medicare Part A can be thought of as hospital insurance. It covers your inpatient hospital stays. It covers skilled nursing facility care, it covers hospice care, and it can even cover some home health care. And the best thing about Medicare Part A is that for most folks, it is premium free at age 65. What does that mean? That means you don't pay for it. Why? Because if you look at your pay stub, every time you get paid, you're going to see deductions being taken away from you during your entire life. So it's free if you or your spouse has paid Medicare taxes for a certain amount of time while you've been working, it is free if you already get benefits of retirement benefits from Social Security or the Railroad Retirement Board or the Office of Personnel Management. You're eligible. It is free if you're eligible for these benefits, but you have just not filed yet for whatever reason. And then you or your spouse had a medicare covered government employment. So it can also be free for you. That is part A and the best thing about it, like I said, for the majority of America, it is premium free.

Producer:
Very good. And that's that's great news. Free falls right into my budget, you know.

Mike Zaino:
So that's three is for me.

Producer:
Yeah. There you.

Mike Zaino:
Go.

Producer:
I like free we say a lot. Yeah, I love that we say, you know, a lot of times we were talking about certain annuities. We'll say zero is your hero while free is for me. There we go. We got got another little rhyme to share that is. That's it. I love it. Well okay so that's part a let's move on now, Mike, to to part B.

Mike Zaino:
Okay. So Medicare Part B is also known as your medical insurance. Now, this is going to cover certain doctors services. It's going to cover outpatient care, medical supplies and preventative services. Some people automatically get part B, but other folks actually have to enroll. And when do you enroll? Well, at age 65, you get the three months prior to your 65th birthday, the month of your 65th birthday, and then the three months after your 65th birthday. And you could be subject to a late enrollment fee if you don't sign up for Part B when you first become eligible. Unlike Medicare Part A, you will definitely pay a premium for Medicare Part B, and the premium is determined by how much your household brings in in income. So the cheapest premium this year for the year 2022 is $170.10 per month each month, every month. Pretty cost effective. Now, if you are a high income earner and you make over 500,000 a year as a single filer, or if you file a joint return and make over 750,000 a year, then that premium can go as high as $578.30. So there is a wide swing in how much your Medicare cost will be, and it's dependent upon how much your household brings in in income. And so Part B, premiums are typically deducted from your benefits payments. If you get benefits from Social Security, if you get benefits from the railroad retirement board or from the Office of Personnel Management, if you were a former federal employee. There you.

Producer:
Go. Okay. So before that, either that check comes in the mail. If you still do it the old fashioned way or before that direct deposit goes into your bank account, that is already taken out. So it's you don't you don't even really feel it, but you know that it's gone toward your Medicare Part B coverage that that premium every month. So we're going to we're going to do a little bit of skipping around in the alphabet here. So we've covered Medicare Part A, medicare Part B. Now we're going to go to not part C but part D. We'll get to see in a minute. But part D, so talk A. This to me is the one that makes the most logical sense when I'm thinking about the parts of Medicare because of what it covers exactly.

Mike Zaino:
D just think D for drugs. And so we're going to come back to Part C because we're going to compare and contrast whether or not a Part C plan is good for you versus a medicare supplement plan being good for you. So Part D, as you just said, covers your drugs in a wide, wide variety of prescription drugs. There are some protected classes of drugs, such as drugs that might treat HIV or AIDS that most plans will absolutely cover. And to get a plan's list of the drugs that are covered, you're actually going to ask for what's called the formulary part D plans have different tiers of drugs. So you're going to have like Tier one, Tier two, Tier three and Tier four. And so typically your lower tier drugs are going to cost a lot less than your higher tier drugs, especially if there are generic drugs on the plan that are available to you. So what will you pay for in a Part D plan? Will you get to pay a low premium? You'll pay a yearly deductible, you'll still pay copayments and co insurance. You'll have some coverage gap costs, some extra help costs, a late enrollment penalty, which is a permanent penalty that is added to your premium. And then why would you pay a late enrollment penalty? Well, if, again, you don't enroll in Medicare Part D during your initial enrollment period, you have 63 days or more where you don't have Medicare drug coverage or any other creditable prescription drug coverage. That's when you're going to pay the late enrollment penalty.

Producer:
Yeah. So you've got to make sure that you have that in place and avoid that penalty because you don't want to be paying any more out of pocket than than you should be paying or then then you otherwise would be. So that's something definitely to keep in mind for folks when you're eligible enroll because you got that got that kind of grace period in there of a couple of months, either side, three months, either side of your birthday. So, okay, so that covers like the main letter D parts of Medicare, right? Part A, part B, part D. So part A just to recap is hospital costs. Part B is basically doctors like doctor services, outpatient care, medical supplies, preventative care, all that kind of thing. So that's part B, part D, which you just talked about is drug coverage. And so now here's where I think probably could be the most confusing for people, but we're going to try and make it as simple as as humanly possible. Here is the Medicare supplement versus Medicare Advantage. People kind of can conflate those two things and get them confused a little bit. So so tell us, the difference is between those.

Mike Zaino:
Medicare supplement insurance versus Medicare Advantage plans are two totally different things can definitely be confusing if you are not aware of how they differ. So these types of insurance plans are designed to fill gaps, coverage gaps in what part A and Part B don't cover. But see, here's the thing. You can't have both plans. You can't have a supplement plan and an advantage plan. So according to Investopedia, about 81% of beneficiaries who have Parts A and B supplement their coverage with either a supplement with Medicaid or some employer sponsored plan. And about 48% of beneficiaries pay for Part D coverage. So what are the differences? Well, let's look at Medicare Plus a medicare supplement. Supplements are going to cost you more money, but the plan is the plan is the plan. It's regulated by the government. So if you have plan N or plan F for any of the plans that are offered as a supplement plan and those change from time to time, it would be the same as if you bought a pair of jeans at Target or you went to Wal Mart. The only thing that is different, it's the same pair of jeans. The only thing that is different is how much you're going to pay for that supplement. It's going to cover any hospital, any doctor that accepts Medicare. And there is no need for prior authorizations, no need for a referral from your primary doctor. It is also a supplement plan is also covered anywhere in the United States, which is great for folks who like to travel often, and it's really good for people who have specific doctors or hospitals that they want to use.

Mike Zaino:
Contrast that to a medicare Advantage plan, which is also known as Part C. They're either going to have no premium whatsoever or an extremely. Low monthly cost in comparison to a medicare supplement plan. And the advantage plans cover both hospitals and doctors and also include prescription drug coverage a lot of times and other coverages that aren't included in Part A and part B. So Medicare Advantage plans can operate both as what's known as a health maintenance organization. A lot of people have heard them referred to as an HMO. They limit people who are covered by this type of plan to certain doctors and hospitals in their network. But they can also operate as a preferred provider organization, which is a PPO, which can definitely offer you a lot more flexibility. So you can see that if you're somebody that goes to the doctor a lot of times, like you're going to the doctor often then a supplement might work better for you because you're going to have to pay some co-pays when you go to the doctor with an advantage plan. But you're not going to with a supplement or excuse me with yeah, with a supplement plan. I'm almost confusing myself.

Producer:
There you go. Well, and see, it can happen to anybody. But seriously, though, it's good to know, though the difference is between those two things. You know, Medicare Advantage, also known as part C, that's the either the HMO or the PPO. The other is, you know, completely government regulated plan that would be a medicare supplement. And they both sort of try to try to reach a similar goal, but in very different ways. They try to do that. They try to offer this coverage. That's not in the other parts of Medicare.

Mike Zaino:
Yeah, Medicare can be extremely confusing. I think we've just proven that. And so when you are turning 65, as soon as you turn 64, you're going to be placed onto every turning 65. That's the name of the list that gets put out to all of these companies who sell advantage plans and supplements. So if you want to just forgo all of that, if you have questions on how Medicare works and which one will work best for you, whether it's a, a part C, Medicare Advantage plan or whether you're better off with a supplement, then just give me a call. Let me let me save you a lot of grief and a lot of headache, because let me tell you, and for those of you who are nodding right now in agreement, when you turn 64, you're going to your phone's going to blow up off the hook. You're going to get more junk mail than you know what to do with about these companies that are trying to sell you something. So if you want to sort through the mess and just get down to the nitty gritty, just give me a call and I'll be happy to help you through that.

Producer:
Yeah, absolutely. And that number of folks is 70456015737045601573. To reach Mike Zaino directly and and have that conversation, it's absolutely free. So when it comes to paying for, you know, because we talked about ock vast majority of people get part a medicare part a premium free, right. So then there are costs associated with the other parts of Medicare and or Medicare supplement plan. So how then the question becomes, okay, when you're planning for retirement, how do you sort of look ahead and make a plan to pay for that coverage that you're going to have to pay for out of pocket?

Mike Zaino:
Right. So you may open up a savings account and just put some earmark some money over there. But smart retirees actually can open up an annuity that is designed specifically to cover the cost of their Medicare supplement plans, plus any other co-pays or deductibles. And we can help you with that today if you want to cover those costs and not have to worry about it. Yes. You know, you'll pay some taxes on the distributions from the annuity, but what it will give you is peace of mind in that you won't have to worry about where those dollars are coming from. And then you can also start generating income when you turn 65. So if you have an old 401 k and old 403, be an old IRA. You can actually roll that into an annuity and put it to use so that that annuity income will cover those medical costs.

Producer:
And it doesn't matter where that money is. If it is in a 401. K or a checking account or if it's under the mattress, wherever it is. Right. You can take it and move it and then put it to use for you in helping you with those medical costs. So yeah, so that's great. That's sort of the smart health portion of our conversation for the show today. And now we're going to move into the smart care. So you might say, okay, well, what's the difference between smart health and smart care? I usually think of those two words kind of as one word as health care. We're sort of separating out the two today. And by smart care, we're talking really about long term care, right?

Mike Zaino:
Yes, long term care, assisted living care, nursing home care, in-home health care. How do you and how can you plan to handle what could be exorbitant costs? Of long term care living and assisted living in nursing home and all of that. Right. So the according to Genworth, the average hourly rate for somebody that needed in-home health care was $27 an hour, just under $62,000 a year. Matt. I mean, I know a lot of retirees that that would absolutely cripple their retirement savings if they had to pay for that, right?

Producer:
Yeah, absolutely. That that would be just, you know, bankrupting basically to to a lot of folks. Yeah.

Mike Zaino:
I mean, devastating. And then the average annual cost, the median cost for a private room in a full blown nursing home. $108,405. What? Wow. So, wow. So the average stay in a nursing home is between 2 to 5 years. Well, let's look at the worst case scenario. Five years, that's over $500,000 of your nest egg being wiped out. If you have to go into a nursing home again, can devastate retirement savings.

Producer:
I mean, 100%. And then even, you know, we are talking about something like assisted living where you don't need the nursing care that's still expensive, you know, I mean, it's what was it that same gen worth study said and the annual meeting cost for assisted living $54,000. And that also, you know, can see a big range in the monthly cost. Right. So I think the cheapest was in Missouri at 3000 a month, the most expensive in D.C., District of Columbia, almost 7000, just shy of $7,000 a month. So crazy costs.

Mike Zaino:
There. Yeah. Bottom line is that the overall cost of care is increasing year over year over year. And why is that? The cost of everything is increasing year over, year over year. So you have to have a plan to be able to combat this stuff and make sure that it doesn't wipe out or significantly attack deteriorate your nest egg. Because if those of you that don't have a plan get faced with a catastrophic life event that causes you to go into either having in-home health care, assisted living or full blown nursing care. Say goodbye to your nest egg without a plan. Say goodbye. Hasta la vista, baby. It's gone. And then what are you going to do?

Producer:
Yeah, exactly. That. That you're just up the creek, as they say, no paddle in sight. So that's definitely something that you have to plan for. And, you know, there are several different ways, many different options. I mean, a laundry list of options out there to help you do that. And the important thing to note, too, is that Medicare does not cover long term care needs. It is not at all. And, you know, but there are some other options that folks can use to to cover those long term care needs. Right.

Mike Zaino:
There are a lot of a lot of the new school life insurance policies that we talk about in the new school annuities. They offer benefits for those that need nursing, assisted living or other long term care. Assisted living care now is 2.7 more times expensive than adult day care, like adult health care. And if you're concerned about those ever rising costs of how you're going to tackle that head on because you don't have a plan in place, then call me 7045601573 or go to Money Matters with Mike Dotcom and fill out our Contact US page and I'll contact you.

Producer:
There you go. And you know what? It's just kind of thought came to my mind here where it can be a difficult thing for people to think about. People don't want to think about ending up in a nursing home or in assisted living or some long term care facility, and hope to God that that doesn't happen. But if it does, you really need to have that plan in place because of exactly the things that you just listed with that nest egg being completely gone.

Mike Zaino:
And it's that whole ostrich effect, right? You stick your head in the sand and pray that it never happens. But what if it does? Right? And so the products that we offer address the what ifs in life. Stand alone long term care insurance for somebody who's already in their sixties is expensive and it keeps getting more expensive for something that you pray to God you never have to use. Well, if you get it earlier on in life, obviously it's still going to increase in price, but that would be one thing. But then the other thing was to to take advantage of some of these new school life insurance and annuity products that address these long term care needs. If and when the need arises, it can help you tackle some of those costs head on without just evaporating your life savings.

Producer:
Yeah, and that is that's the goal is to to hang on to that money. And, you know, even in retirement, hopefully you can still have that money doing some work for you. And that's sort of where our next segment comes in here with Smart reinvesting. So we talked. Smart health, smart care. Now some smart reinvesting. And you know, what do we mean when we say reinvesting? People are talking, you know? Well, you know, I've been planning for retirement or maybe I'm thinking about planning for retirement. I hear a lot about investing, you know, my money in regards to that. What do we mean by re investing?

Mike Zaino:
Well, that's taking the money that you're receiving and putting it back to work for you. And a lot of retirees don't reinvest the money that they receive, but they should. You've got to be very, very careful to make sure that you don't run out of money. The number one fear of most people entering retirement. And what you also don't want to do is put all of your money into a checking account. Why? Because if it's in your checking account, guess what you're going to do, Matt? You're going to spend it. Okay? Don't put it all your money into a regular savings account. Why? Well, they just don't pay anything. And again, when you reinvest the money that you receive in retirement, you're making sure that your hard earned money is working hard for you, just like you did for it. So when you put your money into a checking account, into a savings account, or into a bank CD, we like to call that the melting ice scenario, because what does ice do? It melts in pretty much. You have this block and after a while you really don't have anything right. But you can do much better, much better in what's called a multi year guaranteed annuity, which is MIGA for short. Or you could put your money into a fixed indexed annuity. And a lot of people don't know that you can get a fixed indexed annuity with shorter surrender periods. So if you're somebody who is concerned about market volatility, if you took a big hit last Tuesday when the market's dropped the worst day since they did since June of 2020, let's go ahead and invest your money into a shorter term, fixed indexed annuity that has a certain length of protection put in place.

Mike Zaino:
And when you invest, you're able to select the index that you like. So if you like the S&P, you can participate in the gains without any risk of loss. If you like the NASDAQ, you can participate in the Nasdaq and participate in gains without any risk of loss. And whatever you're interested in, there are numerous indices that are available to you. And with all of them, all of the principal, plus all of the money that it's gained is 100% principal protected gains in an investment like this look like stair steps. They go up and then they go up and then they go up. All right. As opposed to the OECD effect. All right. The up and down, up and down, up and down. Like the equity markets and with fixed indexed annuities, again, your money is invested into 100% safe products like the ten year US Treasury and with interest rates higher than they've been in a very, very long time. These insurers have more to invest in the Treasury for you. So in a fixed indexed annuity, again, your money is protected so you're better off when the market loses value. None of my clients have lost not one single penny due to market volatility this year. I don't know how many advisors can say that, right? Matt Yeah, so we have products that are illustrating well over 10% a year now. Past performance is obviously not indicative of future results, but these products, a reasonable rate of return is what I explain to people.

Mike Zaino:
Heck, if you could get three, four or five, six, 7% with the occasional double digit return and you substitute it with zero loss of principle, you're going to be far ahead of those that, you know, experience a 20% loss and then have to make up that loss over time in retirement. Most of the time, you don't have the time to be able to make it up. So if you're interested in potential gains like I've just described, without the possibility of any losses, give us a call. You also want to try to avoid fees because fees can eat away at the gains that your money is making for you. So if you're making this but then the fees are this and then you only have that much profit, you can do better than that. And so fixed indexed annuities, multi year guaranteed annuities, they offer much higher rates of return than CDs from a brick and mortar bank. And a lot of fixed indexed annuities can give you either a bonus, a cash bonus on your money right away. They can add a bonus to the income that you'll derive from it in the future. And so there are there's a lot of flexibility on how they can be designed. We can design them for growth, we can design them for income, or we can design them for growth for several years and then income down the road if that's what you want. But again, if you want to have the potential of making. Money without the possibility of losing money. Give us a call.

Producer:
Yeah, and not all annuities, because we've talked about my guess, the multiyear guaranteed annuities. We talked about fiAs, the fixed indexed annuities. Not all annuities are created equal, right? I mean, there's there are some that could be better than others out there for folks.

Mike Zaino:
Yeah. Yeah. We've used the the analogy before of Goldilocks and the three Bears and we've compared these annuities. And just to remind everybody, variable annuities, we like to call them variable annuities. The word variable means change. And so while they may be good for younger investors, as you enter into retirement, you don't want change. You don't want the possibility of losing money. So in the Goldilocks and three Bears comparison, we'll say that variable annuities, they're too hot, they're in the market, they're at risk, they have fees. And then on the complete opposite end, you have fixed annuities. And the fixed annuities are typically fixed at fairly low interest rates. They're like a bank CD. They're not beating inflation extremely low. So we'll say using the Goldilocks and Three Bears comparison, those are two cold, but a fixed indexed annuity is just right because again, only participate in market linked gains, never participate in any of the volatility. As far as losing is concerned, they can be set up for growth. If we can set up for income, you have a lot more flexibility. And when we have them illustrating for the past decade plus at close to 10% levels, that's going to be really, really hard to beat.

Producer:
Yeah, absolutely. And that's I love that illustration with the too hot, too cold just right Goldilocks and the three bears. It's you know, your your experience with porridge may differ but no, I had to work in porridge somewhere just because it was Goldilocks. But yeah, no, that's great. And a great sort of way for folks to I think think about that, the differences between the different kinds of annuities that are out there. And again, to sort of get all of this dispelled, folks, you can go to money matters with Mint.com and Matt.

Mike Zaino:
What blows my mind? Sometimes some people say, well, I don't want to lock my money up in an annuity, but then they go purchase a five year CD. And I'm thinking, you just put your money into a vehicle at a bank that's going to pay you less than inflation. And you just locked it up for 60 months, right? When you can do the same with in a shorter multi year guaranteed annuity and get a much higher interest rate. Yeah. So just again, people aren't aware that these products exist and that's why it's so important that they talk to a financial professional that is licensed in this type of environment and can speak in articulate in plain English. I like to break things down so that everybody I talk to understands exactly what it is that they're getting. I won't talk over you. I won't make you feel small and everybody has a different level of sponge. And so from an education standpoint, some people are just going to be like, Mike, you take care of it. Other people want to know and they want to learn a little bit more. So I'll teach you as much as I possibly can, because once you understand the why behind my recommendations, you have buy in and it just makes sense and it clicks and we grow your retirement nest egg together.

Producer:
Yeah. And that's wonderful to have that sort of companionship and, and working as a team together to to make that happen. And you know, you mentioned liquidity a second ago. People say they don't want to tie their money up in an annuity. But, you know, even with something like an FIA fixed indexed annuity, there are, you know, liquidity options there. There are, you know, penalty free withdrawals that you can make from the contract. Like, I mean, it's it's a very you know, there are there are different options. As I say, not all different types of annuities are created equal. Not all annuity products individually are created equal as well.

Mike Zaino:
So I had I'm going to speak exactly to that thing. I had a client that had a couple of million dollars and they wanted to take or considering taking $1,000,000 and putting it into a fixed indexed annuity. The person said, I'm just a little concerned about not being able to get at my money because he was thinking that these annuities were the old school annuities where they just kept your money for ten years and you didn't have any access to it. And I asked him, I said, When's the last time you wrote a check for 100,000? And he kind of looked at me puzzled and he goes, I've never written a check for 100,000. And I said, So what's the likelihood of you writing a check for $100,000 every year for the next decade? He said That's never going to happen. I said, that's the ability of the 10% free withdrawals on an annual basis. You can get it 10% of your money every year should you so desire. And whether that's somebody that's doing a half a million dollars. Och when's the last time you wrote a check for 50 grand or 250,000. But when's the last time you wrote a check for 20? 5000.

Mike Zaino:
I think most people will answer never or very rarely. So the likelihood of you doing it time and time again, year in and year out, is slim to none. And Slim has already left town. So that's why the addition of these liquidity features in the new school annuities don't lock up your money and are so advantageous for those because again only participate in gains protected from downside access to your money can address a lot of those long term care issues and the money stays in the family forever and that you're going to name beneficiaries that can then either choose to take the money as a lump sum or can choose to roll it into their own inherited IRA and stretch that money out over a ten year period to minimize the taxation each year. Over those ten years, it's really kind of like that Swiss Army blade of products because it addresses so many of retirement's complex problems with one solution and it tackles them head on. So I'm all about having a plan in place that addresses the what ifs in.

Producer:
Life and money matters With Mike, Dotcom is the place to go to learn more and get in touch with Mike and reach out for that free consultation if you want to find out more as well. Well, you know, we've been talking a lot about, of course, reinvesting, smart, reinvesting here. And along those same lines, I wanted to sort of recap for our listeners here, Mike, some some smart rules to follow. A few weeks ago when we were talking about smart investing, we brought these rules up. But now with smart reinvesting, we want to relook at them as we as we go through here. So let's let's start out with these. We got three rules for people. And these are these rules folks are the good kind. These are not the, you know, oh, god, you're making me follow rules. These are the old kind, because these can make you more money.

Mike Zaino:
They absolutely can. The first rule, Matt, would be like the rule of 100. And this rule states that your portfolio should contain a risk percentage equal to 100 minus your age. For an example, if you're 70 years old, then you want to be 70% safe and your portfolio could contain as much as 30% risk. If that is you, if you don't want to risk 30%, well then that's up to you. Two people that live longer are spending more time in retirement. So if you have longevity in your family and with the advancements of technology and medicines and what they can do today as opposed to even 20 to 50 years ago, people are just living longer. So the old rules may not always provide you with enough money to maintain your current standard of living. And that's why these are just general guidelines. But basically, again, the rule of 100 is take your age and subtract it for 100. And what's left over is how much risk that you could should that be your desire to entertain in those later years.

Producer:
Yeah. Well, see, even I can do that math that that's, that's pretty easy.

Mike Zaino:
That is pretty simple math. Right.

Producer:
Don't even have to get off calculator for that one.

Mike Zaino:
The second rule is also pretty simple math. It's called the 4% rule. And if you're not good with percentages, just in my mind, just think that, hey, you know what four times 25 is? What? 100, 100. So 4% should last 25 years. If your money was in a vacuum, 4% times 25 years is 100% of your money. And so the 4% rule says that with retirees can withdraw an amount equal to 4% of their savings every year during retirement. But you've got to be very, very careful with this rule, because if your money is not replacing what you're drawing out, right, that can get you in trouble if you have put your money in place, so to speak, you've put it at risk in the market. And the market takes a downturn and you experience you suffer a loss. That 4% rule goes out the window. Your money will never last as long. And so you're definitely going to have to reevaluate. But as a general rule, if your money was in a vacuum, meaning you don't gain anything, you don't lose anything, it should last 25 years, right? One of the advantages of working with me is that I take losing money off of the table. It's removed as a variable in the equation, which means that any money that your funds gain will prolong the longevity as far as how long they last. So that's the 4% rule. And then the last rule, Matt, that I wanted to talk about and just kind of recap was that rule of 72 and that was Albert Einstein came up with this rule. It's a very easy way to estimate how quickly your investments will double given a fixed interest rate. So if you take 72 and you divide it by the expected annual rate of return, for an example, if you invested $1 and you got an annual expected rate of 10%, the rule of 72, it states that it'll take 7.2 years to grow to $2, and that's 72 divided by ten is 7.2. Ten is the expected rate of return. So it's only an estimation tool, but with lower rates of return, they can be extremely accurate.

Producer:
I mean, the math sort of gets more complicated as you go through those just a little bit. I like the rule of 100, as I said, because it's because it's the simplest. But that's that's just me and my math skills. I get out my graphing calculator for some of these. But no, seriously, though, there are there are pretty simple rules really to follow, to have in mind and to hopefully help you have a better retirement.

Mike Zaino:
Yeah, they are. And if you're not good at math, if you're not somebody that's especially paying attention to the financial markets and and you've not been one that's been a successful investor, then you need some help. And there's there's no there's no sense in going through life thinking that you can't get help, even if you are an expert investor and you consider yourself a guru. Think about this. The best athletes in the world still had a coach right in his in his prime and heck, well beyond his prime. Michael Jordan was arguably and I will have this debate, the best basketball player of all time, Tiger Woods. It was the best golfer in his prime. I mean, he was winning tournaments by double digits in strokes. But guess what? Michael Jordan had a coach, Tiger Woods as a coach. So whether you are an expert or whether you are a fledgling, you could use some help. And that's what I'm here to do, is help if I can help you in any way. A rising tide lifts all ships 100%.

Producer:
And once again, folks, the website is Money Matters with Mike. That's Money Matters with Mike. The telephone number 70456015734. That free consultation. 7045601573. Well, that is just about all the time we've got for this week, Mike, but some great information, a lot of it here as we've been continuing our Smart Retirement Plan series. We'll do it once again next week, sir.

Mike Zaino:
Hey, Matt, again, thank you for being my co host. Everybody out there in listener land. Thank you guys for listening to the show. Without you, the show does not exist. I say that every week, but I mean it from the bottom of my heart. And also, if you know anyone who could benefit from the information provided on this show, please pass out money matters with Mike Dotcom. Pass out my telephone number 704 5601573. It is not a secret, whatever your plans are for the remainder of the weekend, I hope you have a phenomenal weekend again from the bottom of my heart. Thanks for listening. And as always, make it a great day.

Producer:
Thanks for listening to Money Matters with Mike. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money to schedule your free No. One. Obligation consultation. Visit money matters with Mike. Or pick up the phone and call. 704560 1573 that's 7045601573. Not affiliated with the United States government, Mike does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. A pro life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness. Are the results obtained from the use of this information?

Producer:
Fixed annuities, including multi year guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

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