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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, and more. This show is an extension of the book How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
Welcome to how to retire on time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire on Time, which you can grab today on Amazon, or you can go to www.how to retire on time.com. My name is Mike Decker. I'm the author of the book, How to Retire on Time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much discuss whatever's on your mind. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational, not financial advice. With me in the studio today is my colleague, mister David Fransen. David, thank you for being here.
David:Hello. Thank you.
Mike:David's gonna be reading your questions, and I'm gonna do my best to answer them. Now you can send your questions in two ways. One way is by texting us to 913-363-1234. That's 913-363-1234, or email us your questions to hey mike at how to retire on time.com. Let's begin.
David:Hey, Mike. I want to retire at 60, but I can't seem to figure out how to cover my health care while I wait for Medicare. What would you suggest?
Mike:Yeah. Health care can be tricky. So there's a couple of layers here. If so this person's 60. Is that right?
David:60 years old.
Mike:K. So 60 years old. Medicare starts at 65. COBRA would not be able to extend that length of time. And so here's this is tricky because if you do retire at 60, there's a a good chance I say good chance.
Mike:It's basically you're going to if you're paying for, like, health insurance, which is good in some sense, We all need some sort of health insurance.
David:Probably wise. Yeah.
Mike:Yeah. That's that's probably a good thing. Yep. You're gonna end up on the Affordable Care Act insurance or the open market, or it's also been nicknamed Obamacare. Right.
Mike:So how do you do this? This is a health care conversation. It is also a tax planning conversation. And the reason is how you rate, how you can show yourself on the affordable care act is going to be influenced by your taxation or your taxable events that happen year over year. Medicare will also be influenced by your taxation year over year.
Mike:But time is your most precious commodity. Does it make sense to delay until 65 and then retire? No. That's 5 years of your life. If you can afford to retire at 60 years old and you want to retire at 60 years old, you should do that.
Mike:Yeah. Time is your most precious commodity and you should spend it how you want assuming that you're living within your emotional and economic limits. K? So with that said, typically, what I would see in the situation like this is you're gonna take COBRA for one full tax year. So let's say you were to retire September, October of a year, take COBRA and this is an overgeneralization, so your situation may be different, but you may wanna take COBRA from when you retire until all of the calendar year of next year.
Mike:And then you spend the current year and then one full calendar year making sure that you are organized from a tax standpoint. So if you need to do some IRA to Roth conversions, if you need to move assets into nonqualified accounts, you need to position things so that when you are 61 or 62 years old, and you go into the open market for Affordable Care Act, that you're able to do so being mindful of the tax liabilities you will have from 62, 63, 64, and 65 years old whenever you start Medicare. Because if you can do that, you can save yourself a lot of money. Your income's coming from your assets anyway. So be efficient with that.
Mike:You don't need to be worried about required minimum distributions. You don't need to be worried about a lot of things that may influence you later on in life. But you can look at that window and say, how can I be tax efficient? How can I be efficient with health care premiums? How can I be efficient in x y z while still maximizing my overall quality of life?
Mike:You wanna live the lifestyle that you wanna live.
David:Mhmm. Yes.
Mike:Once you get to that point, you've created your lifestyle plan. Then you need to work with a licensed Affordable Care Act agent. Not all insurance agents do this. So a lot of the agents that will do annuities and life insurance won't do ACA, Affordable Care Act health insurance. And then a lot of Affordable Care Act insurance agents won't do the other side of retirement planning when it comes to insurance.
Mike:And so finding an independent agent that doesn't just go to one company will allow you to start shopping around and explore the nuance of the different benefits and detriments of the different plans so that you can pick the right one from a cost standpoint, the right one for you. Do you notice the complexity here though of it's a tax conversation, it's an investment conversation, and it's a health care conversation. And those 3 industries usually don't talk. Yeah. But each one is going to affect the other.
David:Yeah. I didn't see this coming, honestly. I didn't think we'd get into taxes during this question.
Mike:Yeah. That that if you wanna pay a lot of health care premiums, show the government show the IRS that you're rich. And ways you can do that is you can actively trade a nonqualified portfolio and and run up your capital gains. It might be growing. Great.
Mike:Yeah. But you're signaling to the IRS that you have a lot of money, and that's that that may not be a good situation. If you're a landlord and you sell a property during this time period, and you don't use a 1031 exchange to a Delaware statutory trust because you wanted the assets to do something with other than a DST then that that you're signaling to the IRS. I got a lot of money. These agencies can talk.
Mike:So you you need to understand how to proceed and navigate through kind of a tricky situation because it all affects each other. Plan efficient portfolios. Put your lifestyle plan together. That's the most important thing. Then you start to navigate into efficiencies in this situation, health care efficiencies and tax efficiencies, which affect the portfolio structure and and so on.
Mike:And then you figure out the portfolio. Times your most precious commodity, so addressing it from a holistic standpoint like us at Kedrick, we we do this. We we are able to help you with affordable care act. We're able to help you with Medicare. We're able to help you with all things retirement.
Mike:I mean, it's comprehensive, but that's the reason why we're comprehensive is because we just felt that it would be impossible to do our job as fiduciaries if we also couldn't have a conversation about the other things, the other influencers within the the full scope of of everything here. So if you're wanting to retire before 65 years old, then that means you as an individual or you and your spouse give us a call. Request your wealth analysis. It gets incredibly tricky with this situation. If you wanna be efficient.
Mike:If you wanna just spend extra money to simplify your life, and I don't work with financial professionals, that's fine. You still have to go through an agent in one way or the other to go into the affordable care act. So
David:Right. Yeah.
Mike:You you can't get around it, but if you can kill 2, 3, 4 birds with 1 stone, why why not? So if you wanna retire before 65 and you're concerned about health care costs, you're concerned about market risk, you're concerned about portfolio structure, you're concerned about maximizing your lifestyle plan, then request our no cost analysis, Your Wealth Analysis, right now. Go to www.yourwealthanalysis.com or text keyword analysis to 913-363-1234. That's keyword analysis. To 913-363-1234.
Mike:Doesn't cost you a dime to explore your lifestyle and legacy potential. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist.
Mike:Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date. Go to www.yourwealthanalysis.com today to learn more and get started.