Medicare - Are you turning 65 soon ?

Medicare
Are you turning 65 soon?
Then it’s time to get yourself up to speed with Medicare, the most important health insurance program in the United States.
What is Medicare?
Medicare is an initiative of the federal government targeted at people aged 65 and above. It is administered by the Centers for Medicare & Medicaid Services (CMS) department of the U.S. Department of Health & Human Services (HHS).
Like Social Security, Medicare is an entitlement program. That means all U.S. citizens have the right to enroll in this program as long as they pay their taxes, work at a job and follow the law of the land.
Medicare Plans
There are 4 parts to the Medicare program. The Original Medicare comprises of Part A and Part B, while Part C or Medicare Advantage, is essentially a private health insurance program approved by Medicare. Part D of Medicare covers prescription drugs only.
Here’s a quick overview of the 4 parts.
Medicare Part A
Medicare Part A is the original Medicare program that covers hospital insurance. It covers (in part or in full) the cost of hospital care, home health care services, nursing care facility and hospice care.
Medicare beneficiaries don’t need to pay a monthly premium to be eligible for this program. They will, however, need to have worked at least 10 years and paid taxes to become eligible.
 Medicare Part B
Medicare Part B is another original Medicare program that covers medical insurance. The benefits under this program cover non-hospital medical expenses such as X-rays, blood tests, diabetic screenings, visits to the doctors’ office, outpatient hospital care and medical supplies.
Beneficiaries are required to pay a monthly premium to be eligible for this program. Low income beneficiaries need not worry as their premiums are covered by Medicaid, another federal government program.
Medicare Part C – Also called as Medicare Advantage. This is an alternative to the federal government managed Medicare program wherein private insurance companies cover the cost of Medicare approved services. Medicare Advantage Plans may have different prices, restrictions, and benefits compared to the original Medicare program. Benefits may vary from one private insurer to another.
Medicare Part D – Part D is prescription drug coverage or a prescription drug plan administered by private insurance companies. The monthly premium varies from one insurer to another.
Medical Supplement Insurance (Medigap) – Medigap or Medicare Supplement Insurance covers health care costs that are not covered by the Original Medicare program. Specifically, Medigap covers deductibles, coinsurance and copayments. Medigap policies are sold by private insurance companies.
 Medicare Eligibility
Retirees may enroll in Medicare during a 7-month window which begins exactly 3 months before turning 65.
If you want the coverage to start the same month as you turn 65, then you should sign up at the start of the 7-month window. If you enroll too late, you will be levied a late enrollment penalty.
Visit Medicare.gov for all the details on Medicare Eligibility.
 You may also visit www.federalnationalfunding.com for additional program information. Should you have specific questions for our financial advisors at Federal National Funding, call 1-800-774-3056 for comprehensive information on Medicare and help with other federal, state, financial and insurance programs.

Should I save now or save later?

Should I save now or save later?

Fact of the matter is, the longer you put anything off, harder it is to get started on it later. Though you may feel that today’s expenses are a lot to take one with your current salary, there are still ways you can save for your retirement. if you wait to save for retirement, you risk not saving enough for retirement.

If you choose to save even a small amount each month, you may be able to save a great amount over time. One useful method is to choose a dollar amount or percentage of your salary every month to pay into your retirement savings. With this method, you will be essentially treating your retirement as a required expense.

Here’s a hypothetical example of the cost of waiting. Two friends, Chris and Leslie, want to start saving for retirement. Chris starts saving $275 a month right away and continues to do so for 10 years, after which he stops but lets his funds continue to accumulate. Leslie waits 10 years before starting to save, then starts saving the same amount on a monthly basis. Both their accounts earn a consistent 8% rate of return. After 20 years, each would have contributed a total of $33,000 for retirement. However, Leslie, the procrastinator, would have accumulated a total of $50,646, less than half of what Chris, the early starter, would have accumulated ($112,415).

This example makes a strong case for an early start on saving so that you can take advantage of the power of compounding. Your contributions have the potential to earn interest and so does your reinvested interest. This is a great example of having your money work for you.

Suppose you have trouble saving money on a regular basis. Try savings strategies that take money directly from your pay check on a pre-tax or after-tax basis. Examples of this include employer-sponsored retirement plans and other direct payroll deductions.

Which ever method you choose, it’s extremely important to start saving now and not later. Even small amounts can grow to large amounts in the future. Another saving strategy you could try is to increase contributions by as little as 1% each year as your salary grows.

For more information on saving for retirement, click here or call us today at 201-342-3300. One of our associates will be happy to speak to you.

Refinancing Methods

Refinancing Methods

As you may know, fixed mortgages were almost at their lowest in almost 30 years. If you are one of the many people who took out mortgages a few years prior to that, you may be wondering if you should look into refinancing.

If you have a mortgage that was taken out within the past five years, it may be worthwhile to if you can get the financing at least one or two points lower than your current interest rate. You should plan on staying in the house long enough to pay off the loan transaction charges.

Based on your situation, you will have to see which type of mortgage suit you best. For example, if you plan on staying in your home for several years, and the current interest rate is rising, your best bet is a fixed-rate mortgage. Conversely, if you will be moving within a few years, an adjustable mortgage would be best. Please make sure that you will be able to cover the increasingly higher payments in the event that interest rates rise.

One way to use refinancing to your advantage is to take out a new mortgage for the same duration as your old one. The lower interest rate will result in lower monthly payments.

For example, if you took out a $150,000 30-year fixed-rate mortgage at 7.5 percent (including transaction charges), your monthly payment is now $1,049. Refinance at 6 percent with a 30-year fixed-rate mortgage of $150,000 (including transaction fees), and your payment will be $899 per month. That’s a savings of $150 per month, which you can then use to invest, add to your retirement fund, or do with it whatever you please.

Another option is to exchange your old mortgage for a shorter-term loan. Your 30-year fixed-rate payment on a $150,000 loan was $1,049 per month. If you refinance with a 15-year fixed mortgage for $150,000 — including transaction costs — at 6 percent, your monthly payment will be $1,266. This payment is only $217 more than your previous mortgage, but your home will be fully paid for several years sooner, for a savings of more than $150,000! And some banks around the country are beginning to offer 10- and 20-year mortgages.

If you are considering refinancing your home, please consider speaking to one of our financial advisors at Federal National Funding by calling 201-342-3300.

Effects of Inflation

Effects of Inflation

If you have long term savings goals such as saving for your children’s college education, or retirement, you’ll want to read today’s blog on the effects of inflation.

To put it simply, inflation is the increase of the price of products over time. The rate of inflation fluctuates over time, sometimes it can run high, other times, it’s so low we don’t notice. But all these fluctuations are generally short term, what we need to focus on is the long term.

Over the years, inflation can chew away at the purchasing power of your income and wealth. This means that even as you save and invest, your wealth buys less and less as time goes on. Those who put off investing and saving will feel this impact even more.

While one cannot deny the effects of inflation, there are ways to fight them. For starters, you should own at least some investments whose potential return is greater than the inflation rate. For example, if a portfolio earns 3% when inflation is at 4% the investment will lose purchasing power over time. While past performance isn’t an indicator of future results, stocks have provided higher long term returns than cash alternatives or bonds. Still, one has to be aware that even with that potential, there is greater risk and potential for loss. Because of this volatility stocks may not be the best option for the money you count on being available in the short term. You will also have to think about whether you have the financial and emotional capacity to ride out these ups and downs as you pursue higher returns.

Diversifying your portfolio — spending your assets across a variety of investments that may respond differently to market conditions — is one way to help manage inflation risk. However, diversification does not guarantee a profit or protect against a loss; it is a method used to help manage investment risk.

Remember, all investing involves risk, including the potential loss of principal. There is no guarantee that any investment will be worth what you paid for when you sell.

For more information about the effects of inflation, or for more strategies to fight against it click here, or call Federal National Funding today at 201-342-3300. One of our associates will be happy to speak to you.

How long will it take to double my money?

How long will it take to double my money?

The simplest way to figure this out is by utilizing the Rule of 72. The Rule of 72 is a tool that investors use to determine how long it will take for their investment to double in value.

How does the Rule of 72 work?

Let’s lay it out with an example, if you invest $10,000 at 10 percent compound interest, then the Rule of 72 states that in 7.2 years you will have $20,000. You divide 72 by 10 percent to get the time it takes for your money to double. The Rule of 72 is a rule of thumb that gives approximate results. It is most accurate for hypothetical rates between 5 and 20 percent.

I just figured out how long it will take to double my money with the Rule of 72. Is that all?

While to rule of 72 is a great ally to investors in helping them figure out how long it will take to double their money, one needs to remember inflation.

Compound interest is a good tool for investors, but it does not erase the effects of inflation. The real rate of return is the key to how quickly the value of your investment will grow. If you are receiving 10 percent interest on an investment but inflation is running at 4 percent, then your real rate of return is 6 percent. In such a scenario, it will take your money 12 years to double in value.

To learn more about the Rule of 72, click here. If you would like to learn more about us at Federal National Funding, click here, or call us at 201-342-3300. One of our associates will be happy to speak to you.

Difference Between Annuities

What is an annuity?

To put it simply, an annuity is a contract with an insurance company in which you would make one or more payments in exchange for a future income stream in retirement. Funds in an annuity accumulate tax deferred regardless of which type is selected. Because you do not have to pay taxes on any growth in your annuity until it is withdrawn, this vehicle is an attractive way to accumulate funds for retirement.

For more information on the basics of annuities, watch this video.

There are a several types of annuities, but for now we will focus on the four most common ones: fixed, immediate fixed, deferred fixed, and deferred variable.

Fixed Annuities

With a fixed annuity, you can fund it either with a lump sum (say, with the proceeds from a large gift) or with regular payments over time. In exchange, the insurance company will pay and income stream that will last a specified period of time.

Fixed annuity contracts are issued with guaranteed interest rates. Although this rate may be adjusted, it will never fall below a minimum rate that has been specified in the contract. This guaranteed rate acts as a “floor” to potentially protect a contract owner from periods of low interest rates.

Additionally, fixed annuities provide an option for an income stream that could last a lifetime. The guarantees of fixed annuity contracts are contingent on the financial strength and claims paying ability of the issuing insurance company.

Immediate Fixed Annuity

Usually, an immediate annuity if funded with a lump sum premium to the insurance and payments begin within 30 days or can be deferred up to 12 months. Payments can be made monthly, quarterly, annually or semiannually for a guaranteed period of time or for life (whichever is specified in the contract). Only the interest portion of each payment is considered taxable income. The rest is considered a return of principal and is free of income taxes.

Deferred Fixed Annuity

With this type of annuity, you can make regular payments to an insurance company over time and allow the funds to build an earn interest during the accumulation phase. During this process, taxes are postponed, and you get to keep more money to work and grow for you. This means that an annuity may help you accumulate more over the long term than a taxable investment. Any earnings are not taxed until they are withdrawn, at which time they are considered ordinary income.

Deferred Variable Annuity

Rather than fixed returns, a variable annuity provides fluctuating returns instead of the usual fixed ones. The key feature is that you get to choose how to control and invest your premiums by the insurance company. Therefore, you decide how much risk you want to take on and you also bear the investment risk.

Most variable annuity contracts offer a variety of professionally managed portfolios called “subaccounts” (or investment options) that invest in stocks, bonds, and other vehicles. A part of your contributions can be placed in an account that offers a fixed rate of return. Your premiums will be allocated with the subaccounts you select.

Unlike a fixed annuity, with pays a fixed rate of return, the value of a variable annuity contract is based on the performance of the investment subaccounts you choose. These subaccounts will fluctuate according to market conditions, in fact, the principle may be worth less than you the original cost of the annuity when surrendered.

Another great thing about variable annuities is that they have the double benefits of investment flexibility and potential for tax deferral. The taxes on all interest, dividends, and capital gains are deferred until withdrawals are made.

When you reach a point where you want to receive income from your annuity, you can choose a lump sum, a fixed payout, or a variable payout. The earnings portion of the annuity will be subject to ordinary income taxes when you begin to receive income. Annuity withdrawals are taxed as ordinary income and may be subject to surrender charges plus a 10% federal income tax penalty if made prior to age 59½. Surrender charges may also apply during the contract’s early years.

Annuities have contract limitations, fees, and charges, which can include mortality and expense risk charges, sales and surrender charges, investment management fees, administrative fees, and charges for optional benefits. Annuities are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company.

For an annuity quote, click here. If you would like to learn more about annuities, click here, or call us at 201-342-3300. One of our associates will be happy to speak to you. 

Depression in Seniors

Depression in Seniors

Is your elderly loved one more tired or irritable than usual? Are you noticing that they are eating less than normal? Have they lost interest in things they would normally enjoy and indulge in?

These are not typical signs of old age. These are common signs of depression.

Depression among seniors is unfortunately, more common than you might think. About one in five seniors in America have either full blown depression or a form of depression.

You may be asking yourself, what is depression? Depression is a common but serious mood disorder that effects millions of people around the world. It causes people to be less active in many areas of life, (eating less, going out less, sleeping more) and it can also be coupled with worry and anxiety. Depression is often considered synonymous with sadness, but it is a stretch. Often, people who are depressed often cannot pinpoint why they are depressed, because it’s caused by an imbalance of chemicals in the brain.

Sometimes symptoms of depression in seniors are confused with that of dementia. For example, slow movements and memory might be off with both dementia and depression affected elderly people. However, seniors with depression have no problem with remembering dates, places or things.

As for treatment, there are options. First off, there’s psychotherapy. This is where a social worker, or psychologist worth in hourly sessions with the client with proven methods to overcome the depression and to develop healthy coping mechanisms. Depending on the cause of the depression, solutions might vary. For example, if the depression is caused by loneliness, the solution might be to visit friends and family and community involvement. Another option is medication. Antidepressants are designed to regulate the chemical imbalance in the brain.

Unfortunately, there is a stigma associated with mental illness that is a greater among older people. Thus, many seniors will refuse to initially admit that they have depression. But if left untreated it can deteriorate the quality of life for a person. If you suspect that your loved one may have depression we recommend that you see a geriatric health care specialist.