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Presidential Elections
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Financial Transparency: Long-Term Financial Planning Tips for Couples
Financial Planning Tips for Couples: Build a Stronger Financial Future – Together
Openness is key to a strong and thriving relationship, especially when it comes to finances. When couples are transparent about their financial status, goals, and future plans, they build trust and foster better communication, both in their relationship and in their long-term financial planning. If you’re unsure how to approach money matters with your partner, this guide will highlight the importance of financial transparency and offer valuable financial planning tips for couples.
The Importance of Financial Transparency in a Romantic Relationship
Talking openly about money is often one of the toughest parts of a relationship, yet it’s one of the most important. Financial transparency means more than just revealing your account balances—it includes conversations about your financial mindset, goals, spending patterns, debts, and future plans. Here’s why it matters:
- Builds Trust. Honest conversations about money build trust and understanding between partners. When you’re open about your financial situation, it reduces the chances of misunderstandings, arguments, and hidden financial surprises down the road.
- Creates Unified Goals. Financial transparency allows couples to set joint financial goals and work together to achieve them. Whether it’s buying a house, saving for retirement, or funding your children’s education, shared goals give your financial planning purpose and direction.
- Facilitates Planning. Transparent discussions enable better financial planning. Couples can allocate resources strategically, make informed decisions, and adjust their plans as circumstances change.
- Reduces Stress. Money is a common source of stress in relationships. Open communication about finances can help alleviate this stress by allowing both partners to understand the bigger picture and share the responsibilities.
Related: Mid-Year Retirement Planning Checklist
Thinking Forward: Long-Term Financial Planning Tips for Couples
In addition to transparency and a commitment to open and honest communication, these financial planning tips for couples can help you prepare a joint roadmap for your shared future:
- Initiate Honest Conversations. Start by sitting down and discussing your individual financial situations openly. Share your income, savings, debts, and credit scores – this will lay the foundation for productive financial planning discussions.
- Define Shared Goals. Identify your shared short-term and long-term financial goals. Whether it’s buying a home, traveling, or retiring comfortably, having common objectives gives your financial planning a clear purpose. It’s one of the financial planning tips for couples that will also help you ensure that you’re both staying on the same page.
- Create a Budget Together. Collaboratively design a budget that incorporates both partners’ incomes and expenses – and be sure it’s realistic so you can be successful in following it. Think critically about your spending habits and find areas where you can cut back to save for your goals.
- Allocate Responsibilities. Divide financial responsibilities based on each person’s strengths and preferences. One partner might be better at investing, for instance, while the other excels at managing day-to-day expenses. Establishing clear roles prevents confusion and ensures both partners are actively involved.
- Emergency Fund. This is foundational among financial planning tips for couples. Build an emergency fund that covers at least three to six months’ worth of your joint living expenses. Having this safety net ensures you’re prepared for unexpected financial challenges without derailing your long-term plans – or facing undue financial stress that can negatively impact your relationship.
- Manage Debt Together. If either partner carries debt, work together to create a strategy to pay it off efficiently. A smart strategy is to prioritize high-interest debt, like credit cards, and explore consolidation options. By working together to eliminate debt, you and your partner will be able to improve your financial stability significantly.
- Invest Wisely. A smart way to build wealth is through savvy investing. Before you begin, research investment options and consult financial professionals if needed. The key is to diversify your investments to mitigate risks and properly align your portfolio with your long-term goals.
- Save for Retirement. Both partners should begin saving for retirement as early as possible. Consider opening retirement accounts like IRAs or 401(k)s and contribute consistently. If available, take full advantage of employer match programs as that’s free money that will contribute to the magic of compounding over time.
- Regularly Review Your Finances. Set aside time together, perhaps on a monthly or quarterly basis, to review your financial progress. Discuss any changes in your circumstances or goals and adjust your plan accordingly. Get creative, too. This is one of those financial planning tips for couples that can end up being fun if you turn it into a regular date night that incorporates your favorite takeout or a movie, too.
- Stay Flexible. Life is unpredictable – just like relationships – and financial plans might need to be adjusted over time. Be open to revisiting and modifying your strategy as circumstances change.
- Maintain Open Conversation. Using these financial planning tips for couples is helpful, yet they can’t be one-time endeavors. Regularly discuss your financial status, goals, and concerns. Ongoing communication is key to ensuring you’re both on the same page and working toward a shared future.
Long-Term Financial Planning for Couples: Do You Need Professional Guidance?
Financial transparency is essential for a strong partnership, allowing couples to work through the intricacies of long-term financial planning together. By having open discussions, setting mutual goals, and managing your finances collaboratively, you can build a solid foundation for a stable and rewarding future. Keep in mind that reaching your financial objectives is a continuous process. Applying financial planning tips for couples and maintaining honest communication will help you navigate any obstacles that arise along the way.
Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.
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Q3 2024: In Review
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Medicare Changes for 2025
This article was written by Elaine Floyd, CFP® and modified from the original, found here.
Medicare open enrollment is about to begin
Over the next few weeks, Medicare beneficiaries will receive their latest plan documents, which explain how the plans will change for the coming year. Those on Original Medicare will want to check their standalone prescription drug plans, while those in Medicare Advantage plans will want to check those plans. If you want to keep your same plan, you don’t have to do anything. If you wish to make a change, you can sign up for a new plan anytime between October 15 and December 7. You can do this directly through the insurance company, through a licensed agent, or through Medicare. Once you are signed up for the new plan, Medicare will take care of dropping the former plan. Changes take effect January 1.
There are several reasons to look more closely at your plan documents this year. They have to do with a number of changes being brought about by the Inflation Reduction Act as well as certain rule changes that could cause insurers to try to make up for the resulting hits to their bottom line. More than in previous years we could see higher premiums, higher copayments, drug formulary changes, and, in the case of Medicare Advantage plans, narrower provider networks and cutbacks in optional covered services such as dental. As the insurers evaluate their business prospects, there is likely to be wide variation in plan changes across the country depending on where insurers are located and how extensive they perceive the financial impact of the changes to be.
As explained in this article, Relief From High Part D Drug Costs Starts in 2024, drug plan changes arising from the Inflation Reduction Act started in 2023 with the $35 monthly cap on insulin. In 2024 and 2025 out-of-pocket spending by the enrollee is capped at $3,300 and $2,000, respectively, with drug plans picking up most of these costs. As you can see from the chart below, in 2024 costs above the coverage gap—the catastrophic phase—were covered by drug plans (20%) and Medicare (80%). In 2025 the coverage gap is eliminated and the share of costs covered by drug plans in the catastrophic phase jumps from 20% to 60%, with drug manufacturers covering 20% and Medicare 20%. With insurers covering more costs next year, it is expected these costs will be passed on to enrollees—in one way or another.
This is why it will be more important than ever to know how your drug plan will operate next year—and to make sure the plan you have suits your individual needs based on the drugs you take (or not). It will NOT be business as usual for the drug insurers, so please be on alert to these developments. The cap on out-of-pocket costs certainly helps people with high drug spending, but if insurers raise premiums and copayments to make up for it, it could hurt everyone else. It’s also worth noting that drug plans are not required to adhere to the Medicare standard drug plan design; they may offer better, or different, coverage as long as it is actuarially equivalent.
Related: Original Medicare vs. Medicare Advantage
The overall generosity (or lack thereof) of a particular drug plan is nearly impossible to assess on the surface. Some may waive the annual deductible and instead charge higher premiums. Some may offer very good coverage for lower-priced generic drugs and make up for it by cutting back on coverage for higher priced drugs. So, rather than trying to analyze how much a drug costs and how much of it the plan will cover, the simpler way to analyze drug plans is to use the Medicare Plan Finder and just look at the out-of-pocket costs. Go to medicare.gov, click on “Find Health and Drug Plans” and follow the prompts. To find the best plan, you will need to enter the drugs and dosages you take. The tool will show a selection of plans and the out-of-pocket costs for each based on zip code and drug regimen. This really should be done every year, but especially this year.
One more change taking effect in 2025 is a new midyear notification to Medicare Advantage policyholders. In response to a study by the Commonwealth Fund that found that three in ten beneficiaries in Medicare Advantage plans did not use any of their plan’s supplemental benefits in the past year, starting in 2025, Medicare Advantage plans will be required to send policyholders a personalized “Mid-Year Enrollee Notification of Unused Supplemental Benefits” in July. It will list all supplemental benefits the person hasn’t used, the scope and out-of-pocket cost for claiming each one, instructions on how to access the benefits and a customer service number to call for more information.
If you would like Lane Hipple to review your Medicare plan documents prior to, or during, this fall’s open enrollment period, please call 856-638-1855 and request a Medicare Review.
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Original Medicare vs. Medicare Advantage
Understanding the Key Differences
The second most important decision clients make with respect to Medicare—after they’ve decided to enroll in Medicare in the first place—relates to how they want to get their care. Faced with the choice of Original Medicare and Medicare Advantage, people often fail to understand that this decision can affect both the quality and cost of health care they receive both now and in the future.
Original Medicare
Thanks to aggressive marketing, Medicare Advantage plans have firmly established themselves as “the way to get your Medicare.” Completely lost in the shuffle is what Original Medicare actually is. It is health insurance, pure and simple, funded by the U.S. government. From its inception in 1965 Medicare Part B has always been based on the classic health insurance model where the insured pays a monthly premium (taken out of the Social Security check) and when a medical bill is incurred the patient pays an annual deductible plus 20% of the bill. The federal government pays the rest. Implicit in this is that the insured has complete freedom and control over how and where to get their health care. The only requirement is that the provider must accept as payment the amount Medicare has set for any given service (which may be less than what others will pay). Most providers do accept Medicare because it covers so much of the population.
There has always been a place for private insurance in the Medicare world as a supplement to Medicare. Originally, these policies were designed mainly to cover prescription drugs. When Part D was instituted in 2006, an official public/private partnership was established specifically for drug coverage where private insurance companies offer various prescription drug plans with both the insurers and the federal government bearing the costs. Medigap policies remained viable, however, covering some of the key costs not covered by Medicare, mainly the Part A deductible and the Part B 20% coinsurance.
A typical insurance plan under Original Medicare involves enrolling in Parts A and B, choosing a drug plan under Part D, and also choosing a Medicare Supplement (Medigap) policy. With Original Medicare a person is free to go to any doctor who accepts Medicare, and there are virtually no prior authorizations or denials of care. If a provider orders a service and Medicare covers it, it will be covered with little or no out-of-pocket costs to the patient.
Medicare Advantage
Medicare Advantage, originally called Medicare+Choice, was kicked off by the Balanced Budget Act of 1997. This expanded private health insurers’ involvement in Medicare and now encompassed the delivery of care, not just the payment of bills submitted by providers. Under Medicare Advantage, the government pays private insurers an annual “rate” theoretically equal to what it would cost to insure a person under Original Medicare. In exchange, the insurer promises to deliver all care under Parts A and B. This was deemed a cost-cutting and risk-mitigation effort by the federal government.
The key difference for enrollees is that Medicare Advantage plans may offer additional benefits and lower premiums, but they also place restrictions on care. Patients must choose a provider within the plan’s network and many services and procedures must be authorized beforehand—and may even be denied.
There is a lot to say, both good and bad, about how private insurers’ involvement in Medicare has evolved. Most people have an opinion about which is better, Original Medicare or Medicare Advantage, based on their own experience or what they’ve read. But it usually comes down to this:
- If your main concern is high-quality care and you’re willing to pay higher premiums for the assurance of seeing the provider you want and getting the care you need, either now or in the future, go with Original Medicare.
- If your main concern is costs and you’re willing to accept an insurer’s assessment of what you need in the way of care, go with Medicare Advantage, understanding that if your health worsens and you do need care, your costs could end up being higher.
The following table, contributed by Rich Arzaga, illustrates the choice in a simple manner:
Good Health/Low Meds Fair Health/More Meds Priority on saving money Medicare Advantage
(save ~$1,000 per year in premiums)Medicare Supplement Plan Priority on the health care experience Medicare Supplement Plan Medicare Supplement Plan So there you have it in a nutshell. I wish we could say that your decision would not be binding, that you could start with one form of Medicare and switch to the other if you’re not happy with your plan or if your health care needs change. And to some degree that’s true. There are on- and off-ramps for both of these options. But the one hard sticking point in most states is the Medigap Open Enrollment period. If you don’t buy your Medigap policy within six months of enrolling in Part B, you will be subjected to underwriting and may be denied a policy. So, starting out with a Medicare Advantage plan with the intent of switching to Original Medicare after a few years may not be feasible.
References and further reading
The History of Medicare Advantage: From Inception to Growing Popularity
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- If your main concern is high-quality care and you’re willing to pay higher premiums for the assurance of seeing the provider you want and getting the care you need, either now or in the future, go with Original Medicare.