Should You Use a Robot Money Management Advisor?

Over the past few decades, robots have taken over many different types of jobs in areas such as manufacturing, airline reservations, banking and more.  However, would you trust a robot to manage your money and make investment decisions for your portfolio?  You might be surprised to know that Schwab has 120,000 Intelligent Portfolio robo-adviser customers, and more than half of them are over age 50.  Vanguard and Fidelity also have these type of managed financial accounts.

Currently, only about one-half of one percent of all investment assets are handled by robot-advisers.  However, it is estimated that by 2020 they will be responsible for approximately 5.6 percent of all financial assets.  Since it is likely that companies will soon be promoting these robo-advisory accounts, it would be a good idea for all of us to understand them better.

Over Half of Retirees Personally Handle Their Investments

According to an article in the April / May 2017 issue of AARP Magazine, titled "Should a Robot Manage Your Money?" many people simply handle their own investments.  According to them, only "52 percent of pre-retirees and 44 percent of retirees" actually consult with a human adviser.  The reasons for this are complicated, but often boil down to the fact that they believe human advisers are expensive and they are unsure how to find one they trust.  As a result, for better or worse, many people simply prefer to make their financial decisions without outside assistance.

How Does a Robo Advisor Work?

Robo advisers offer a variety of investment portfolio options, but they generally consist of stocks and bonds which are held in ETFs ... exchange-traded funds which are traded as stocks.

The robo adviser sends you an online questionnaire and they use your answers to choose the best combination of ETFs to put in your portfolio and meet your investment goals.  Your account can be either a tax-deferred IRA or a taxable account.

The robo adviser will re-balance your portfolio periodically so it stays within the range of your target allocations.  In order to help the robot, you can regularly update the questionnaire.

With a robo advisor, you do not have direct access to your investments.  You cannot quickly move the money in response to the market.  It is passive, long-term investing.  Once you retire, robo advisors can continue to manage your portfolio, if you choose, and assist you in calculating the required minimum distributions which you need to take once you reach the age of 70 1/2.  They can also help you choose which investments would be best to sell when taking the distributions.

How do Robo Advisors Perform?

According to the AARP article, there are no long-term studies which could help you compare results between humans and robots.  Their article contained some hypothetical comparisons, which I will not report here, because they were based on their best guess, not on actual results.

Your actual performance would reflect the performance of the indexes behind the ETFs in which your account is invested.  You would also have the advantage of low fees, approximately 0.25 percent of your portfolio value each year.  Human advisers typically charge between 1 and 2 percent.

A robo advisor will re-balance your portfolio regularly.  This would be accomplished by the automatic sale of investments which had gone up the most and investing the proceeds in investments which lagged.  In other words, you would be selling high and buying low.

Robo advisors are considered very safe, conservative investment managers, according to the Consumer Action advocacy group, because the accounts are so widely diversified, re-balanced regularly, and invested for the long term.  They are covered by SIPC insurance or the Securities Investor Protection Corporation.  It does not protect investors against loss, but does protect them if the financial institution goes broke.

What do Investors Lose by Having a Robo Advisor?

The most important thing you would lose by having a robo advisor is human advice.  The robots cannot answer your questions, or make recommendations regarding other aspects of your financial plan, such as the best time to take Social Security, whether or not you should get an annuity, or provide assistance with similar decisions.

More Thoughts about Robo Advisors

It is possible to have a hybrid solution.  For example, Vanguard's Personal Advisor Services combine a human advisor with a robo advisor.

Robo advisors are not right for everyone.  Some people may be more comfortable either handling their investments themselves or dealing with a human who can explain their investments to them and help with other financial decisions.  However, for the 5 or 6 percent of investors who will be using robo advisors in the coming years, it is important they understand how they work, as well as the advantages and disadvantages of using them.

For more information about financial planning, where to retire, common medical issues, Social Security, Medicare and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.


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Age Well with Yoga

In virtually every article which discusses reducing stress, recovering from a serious illness, increasing your flexibility or improving your overall health, yoga is mentioned.  Approximately 36 million Americans practice yoga and more than one-third of them are over the age of 50.  However, many more senior citizens are intimidated or uncomfortable with the idea of yoga.  Since virtually everyone would benefit from this relaxing form of exercise, it is important to understand it better.

Benefits of Yoga

There are a number of benefits of yoga, even for those who will never be able to get into the lotus position or gracefully flow into any of the better known positions.  Simply doing your best and carefully stretching as much as you can has tremendous benefits for nearly everyone.  Below are some of the positive benefits to your body if you practice yoga regularly:

* Increased flexibility
* Better balance
* Less Stress
* Fewer symptoms of depression
* Lower blood pressure and LDL cholesterol
* Better sleep, especially when yoga is done before bed
* Less back and neck pain
* Fewer headaches
* Reduced inflammation
* Better breathing
* Clearer thinking and focus
* Less weight gain as you age
* Greater aerobic capacity
* Easier cancer recovery
* Less urine leakage for women
* Better blood glucose levels

Personally, I began taking yoga 31 years ago with a friend who was being treated for breast cancer.  Her doctor had recommended it as a gentle way to for her to regain some of her strength after her surgery and other treatments.  She recovered and is alive today.  Although I started out merely to lend support to a friend, I have continued to faithfully take yoga classes over the years and it has helped me with many of the items on the list above, including greater flexibility and reduced stress and back pain.

You are Never Too Old to Start Yoga 

My current yoga instructor is 84 years old and many of the students in my class are in their 70s, 80s and 90s.  Many of them are unable to get into all the positions, especially if they have had surgery, a hip replacement, knee replacement or other medical concern.  Some of them have been told by their doctors not to do a position in which their head is below their heart.  All of this is perfectly okay.  Most yoga instructors are accustomed to making modifications to the positions so their students can stretch safely.


How to Get Started with Yoga

The best way to get started with yoga is to take a class.  Try a variety of classes until you find one which feels comfortable.  If you have trouble getting up and down from the floor, look for a chair yoga class or ask the instructor of a beginner yoga class if you can start out by sitting in a chair and doing as many stretches as possible while seated or standing.

While checking out the classes, observe whether or not the instructor is calm and relaxed, because this will help you relax, as well.  In addition, you want to make sure the instructor pays personal attention to the students and modifies the positions to meet their specific needs.  Pay attention to the atmosphere of the class, noticing things such as the music and temperature, and decide whether you think you would enjoy the class.  Keep looking until you find one which feels right to you.

You can find yoga classes at senior centers, YMCAs, and the recreation department of many cities.  Frequently they offer special classes for senior citizens or people with limited mobility.  In some communities, you may be able to find free or very low-cost classes.  There are also private studios, although their classes may be more expensive than ones from the facilities mentioned above.  However, once you are on Medicare, many Medicare policies have a Silver Sneakers benefit, which means they cover most or all of the cost of a gym membership in your area, and many gyms offer yoga classes.

Equipment costs are minimal, although you may want to buy a mat, a yoga strap and a couple of blocks.  The strap and blocks will make it possible for you to modify the positions so they are easier. You can find whatever you need in stores such as Target and WalMart. You may also want to take a towel or small blanket to class to make it easier to sit comfortably in certain positions.  You can choose to wear yoga pants or any loose fitting, comfortable clothing.

Finally, do not get discouraged if other students seem to be more flexible and capable of maintaining the positions than you.  They may have been practicing yoga for years.  In addition, you are not competing with them.  You are only trying to improve your own skills ... something which is sure to happen if you are consistent in your practice.  Yoga is truly an activity where you can be non-judgemental and proceed at your own speed.  If you have an injury, don't push through it.  Avoid any moves which could worsen your injury until a doctor tells you it is OK to put pressure on that part of your body.

Once you have learned the basic yoga moves, practice a stretch or two whenever you get a chance .... before you go to sleep at night, when you wake up in the morning, and even while you watch TV.  You may even want to enhance your home yoga practice by purchasing a Himalayan salt lamp or a healthy fresh sugar scented candle.  These types of mood enhancing items can help you create the perfect yoga atmosphere in your home. You'll love the way your body feels when it is flexible and moving smoothly! 

If you are interested in more information about common medical issues as you age, where to retire, financial planning, Social Security, Medicare, travel and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

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New Medicare Cards Coming Soon!

Beginning in April 2018, the federal government will start mailing out new Medicare cards to the 59 million people currently enrolled in the program.  The entire process is expected to take approximately one year, so it could be a number of months before some beneficiaries receive their cards.  The reason for the change is to remove Social Security numbers from Medicare ID cards.  This will help protect the identities of beneficiaries.

Why are Medicare Cards being Changed?

The reason for the change is simple.  When people have their wallets stolen, which often contain their Medicare card and driver's license, the information inside could easily be used to steal that person's identity.  In addition, phone scammers have preyed on the elderly by calling and asking for their Medicare number, claiming to be calling from a doctor's office or insurance company.  Because the current Medicare number has been the same as the Social Security number, this information enabled the scammers to divert Social Security payments or steal from the victims in other ways.

What Number Will Be on the New Cards?

The new Medicare cards will no longer display the person's Social Security number.  Instead, they will be assigned a new, randomly generated 11-digit Medicare number.  It will not be purely numeric.  Some capital letters will be included.  This new Medicare number will be the one used to verify that you are eligible for Medicare services.

How Long Will It Take to Get the New Card?

Because the transition is expected to take a year, either the old or new Medicare cards will continue to be accepted by doctors' offices and hospitals until December 31, 2019.  Doctors and hospitals will also be able to use your old Medicare information during the transition period or look up your Medicare number on the computer, if you do not have your card with you.

The new cards will be mailed out on a rolling basis between April 2018 and April 2019.  The map above shows how states will be grouped together during the roll-out of the new Medicare cards.

The first states to receive the cards will be Alaska, California, Delaware, the District of Columbia, Hawaii, Oregon, Pennsylvania, Virginia and West Virginia, as well as American Samoa, Guam and the Northern Mariana Islands.  Recipients in those locations should receive their cards between April and June, 2018.

The last wave of states to receive their cards will be Kentucky, Louisiana, Michigan, Mississippi, Missouri, Ohio and Tennessee, along with the territories of Puerto Rico and the U.S. Virgin Islands.

Continue Using Current Medicare Advantage and Drug Plan Cards

If you are one of the nearly 18 million people who have their coverage through a Medicare Advantage plan, you will continue to use the current card which the plan issued to you.  These cards do not display your Social Security number.  Instead, the private insurance companies which offer these plans use their own identifying numbers for each member.

The same is true for prescription drug plans which are part of Medicare.  They are operated by private insurance companies and use their own identifying numbers, rather than a social security number.

You do not want to destroy your Medicare Advantage and drug plan cards.

Dispose of Your Old Medicare Card

Once you receive your new Medicare card, you will want to carefully dispose of the old one.  Do not simply throw it in the trash.  Either put it through a shredder or cut it up with a pair of scissors, being especially careful to destroy the Social Security number displayed on it.

Beware of Medicare Scams

Unfortunately, criminals also know that new Medicare cards are being issued.  As a result, some scammers are calling potential victims, using the new cards as an excuse.  There have already been reports of scammers asking people for their bank account information so Medicare could, supposedly, make direct deposits into the victims' bank accounts.  Never give bank account information to anyone who calls you.

In other cases, there have been reports of scammers threatening to cancel the victim's health insurance if they don't give the caller their current Medicare card numbers.  Never give your Medicare number to a stranger on the phone.  Your physician should have your Medicare information after your first visit.  If they need additional information, call the doctor yourself or give the information to them in person.

In another scam, people have been called and told they need to pay a fee in order to get the new cards.  There is no fee for these cards.

Remember: neither the government nor your insurance carrier will call or email and ask for your social security number, address and similar information.  They will definitely never call and ask for money.  If you believe they may need updated information, you should place the call to the Social Security Administration or your insurance provider yourself.  Do NOT give out personal information to anyone who calls you.

Make Sure the Social Security Administration has your Current Address

If you move prior to receiving your new card, you need to make sure the Social Security Administration has your correct address.  You can contact them by phone or online:

https://www.ssa.gov/myaccount
1-800-772-1213

If you wish to stay current with information about Medicare, Social Security, financial planning, where to retire, common medical problems and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional helpful articles.

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Medicare Coverage of Heart Disease

We are fortunate to have another guest post from Medicare expert, Danielle Kunkle, who has provided us with a helpful explanation of how your Medicare benefits cover your medical expenses if you develop heart disease.  This is important information, because heart disease is one of the top causes of death for senior citizens.  It is also important for retirees on Medicare to understand that your coverage will vary depending on whether you have Original Medicare only, a Medicare Advantage plan, or Original Medicare plus a Medicare supplement (Medigap) plan.  Danielle Kunkle's post provides information which is likely to affect nearly everyone during their retirement years. 

How Does Medicare Cover Heart Disease?

Heart disease is a broad term which covers a lot of different conditions which affect the heart and blood vessels. It’s the number-one killer of both men and women in the United States, according to The Heart Foundation. More people die of heart disease, also called cardiovascular disease, than from all types of cancer combined.

Although a heart disease diagnosis is serious, there are things you can do to treat it and lower your risk of serious complications. The good news is that there are Medicare benefits for people with heart disease or who are at risk of developing it.

What is Heart Disease?

Heart disease shows up in different ways in the body. It may cause a heart attack, stroke, or heart rhythm problems, for example. According to the American Heart Association, most of these heart conditions are caused by atherosclerosis.

Atherosclerosis develops when fatty substances, called plaque, build up on the walls of the blood vessels. The plaque narrow the vessels, making it difficult for blood to flow freely. Often, the plaque ruptures and causes blood clots to form.

When a blood clot blocks the flow of blood to a part of the heart, a heart attack occurs. If the clot interrupts blood flow to parts of the brain, it causes an ischemic stroke.

How is Heart Disease Diagnosed?

 

Some of the most common risk factors for heart disease include:

●       Smoking

●       High blood pressure

●       High cholesterol

●       Diabetes

●       Being overweight

If you are at high risk for developing heart disease, your doctor may order screening and diagnostic tests. These might include blood tests for cholesterol and triglycerides, blood pressure checks, and lab work to rule out diabetes.

If you have symptoms of heart disease, your doctor may order other tests to confirm the diagnosis. You may have an electrocardiogram (ECG), an ultrasound of the heart, a stress test, or even an MRI or CT scan. In some cases, you may have cardiac catheterization, an outpatient procedure which lets the doctor see your heart and blood vessels to check for abnormalities.

What Does Medicare Cover? 

PartB covers cholesterol screening blood tests once every five years at no cost to you if your doctor accepts Medicare assignment. If you have symptoms of heart disease, Medicare may pay for a diagnostic cholesterol test, if your doctor thinks it is medically necessary. You pay 20% of allowable charges once you meet your deductible. You may also qualify for heart disease counseling with your doctor once each year at no cost to you.

If you have risk factors for diabetes, Medicare may pay for two screening exams a year at no cost to you if your doctor accepts assignment.

Part B generally pays for any diagnostic tests and exams your doctor thinks are medically necessary based on your symptoms and risks for heart disease. You pay your 20% coinsurance after you’ve met your deductible. 

How is Heart Disease Treated?

 

There’s no one-size-fits-all treatment for heart disease. Your doctor may recommend any combination of the following types of treatment, depending on your exact condition and how severe it is:

●       Changes in lifestyle to lower your risk of life-threatening complications. This may include losing weight, reducing the fat and cholesterol in your diet, and exercising more. If you smoke, your doctor will help you try to quit.

●       Prescription medications to control your disease and risk factors. Your doctor may recommend medications to treat high blood pressure, lower the cholesterol in your blood, or better manage your blood sugar.

●       Surgical procedures to repair damage. If the heart disease is severe, you may need angioplasty, stent placement, or even cardiac bypass surgery.

What Different Medicare Plans Will Cover

Depending on where you get treatment, Part A or Part B covers medically necessary heart disease treatment. For example, if you are hospitalized for heart surgery, Part A pays after you meet your deductible. You may also have coinsurance if your stay goes beyond 60 days. If you get outpatient treatment, Part B pays for your care.

If you smoke, Part B covers 8 face-to-face smoking cessation sessions each year with a qualified provider. If your provider accepts assignment, you pay nothing for these sessions.

You may also qualify for weight loss counseling if you are very overweight. Again, these are covered 100% under Part B if your provider accepts Medicare assignment.

Depending on the type of heart disease you have, your doctor may recommend a cardiac rehab program. If you qualify, Part B will pay 80% of the allowable charges after your deductible is met.

Unfortunately, most prescription medications to treat heart disease aren’t covered under Original Medicare. If you have Medicare Part D coverage for prescription drugs, your heart disease medications are likely covered.

If you have a Medicare Advantage plan, you may have extra benefits beyond Part A and Part B. Medicare Advantage plans are offered by private insurance companies approved by Medicare. They must cover everything that Original Medicare covers at a minimum, but they often have other benefits helpful to people with heart disease. For example, your plan may cover Silver Sneakers, which gives you free access to participating gyms. Most Medicare Advantage plans also include Part D prescription drug coverage. Some may even help with over-the-counter medications such as aspirin your doctor recommends for heart disease.

If you have Original Medicare and worry about your out-of-pocket costs for heart disease treatment, you may want to consider a Medicare Supplement Plan. These plans pay some or all of your Part A and Part B costs after Medicare pays. They don’t, however, pay your Part D prescription drug costs.  You can purchase a separate plan to help with drug expenses.

About the author:

Danielle Kunkle is the co-founder of Boomer Benefits, an insurance agency specializing in Medicare-related insurance products.  They help baby boomers new to Medicare learn about their benefits and coverage options across 47 states.

If you have not prepared your tax returns yet, you have until June 17 in 2018.  You may be able to do it yourself with H&R Block software.

If you are interested in learning more about Medicare, Social Security, financial planning, where to retire, common medical problems and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional helpful articles.

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