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Episode #630 - Healthcare Before Medicare: Your Options

“Recalibration of the mind means clearing our perceptions and recovering our capacity for pure observation.” - Ilchi Lee

Roger: Hey there. Welcome to the show dedicated to helping you have the clarity so you have the comfort and the confidence to lean into your own retirement and make the most of it. My name is Roger Whitney. I'm honored to be here with you today. Today is our second of a month long series on navigating health care before Medicare and filling that gap so we don't miss our life unintentionally. And today what we're going to do is observe what our options are for health care if we're not yet 65. Last week we sort of shocked ourselves with the cost and that was intentional because we have a, it's a lot of money, there's a lot of disruption to your life with health care, but that doesn't mean that you can't navigate it. And so today we're going to do some observing of what the options are. And next week we'll talk about strategies around income and to manage that cost. And then in the last episode of this month, we'll try to put it all together to give you a basic game plan or framework to think through it.

Observing can be hard because of assumptions. Heard a great quote related to relationships. I think was Henry Winkler the other day. Assumptions are the termites of relationships. That's a good one. Assumptions are bigger than termites when it comes to decision making. When we make assumptions about the cost of health care or our options based off of our previous experience, maybe four or five, 10 years ago, the news or articles that we've read or videos that we've watched, when we make assumptions on very incomplete information that has some dangers to it, we get trapped in those assumptions that we make. Oh, I can't retire before 65. Healthcare is just way too expensive. So I'll keep working. We just get trapped rather than really exploring it. Exploring it. And one of the dangers is it just shuts down all curiosity because we've already determined it in our minds and sometimes this happens in a subconscious way. It's not a conscious decision. We just sort of fall into all of the messaging that we're getting around healthcare. So it shuts down curiosity. And that's dangerous when you're considering retirement because you may miss your life based off of bad assumptions of something that's easily navigated.

Second, one of the other dangers is it can create false trade offs. If you make assumptions about what your options are, you're going to frame your decision in those Limited options. Not realizing that if you just gained a different perspective or were able to clear your mind and just purely observe with fresh eyes, there might be a solution that is very obvious, but you can't see it because of the lens, the glasses that you have on that are your assumptions. And then psychologically, and I think this one is bigger than we give it credit for. And I don't hear it talked about a lot. There is a lot of change that happens in retirement. Not just with the money part going away, but we lose that money going away, we lose a lot of agency. We're going to lose our identity, we're going to lose being important to our team and the atta boys and atta girls that we receive in our, in our company. We don't know what we're going to do every day. And so sometimes we can use these totems. Healthcare is too expensive. I need to earn more money because of the markets or because of this or that. We can use these, these tokens. Totems, I think, is a word I'm actually looking for that we hold up to stay where we are and to avoid uncertainty. They give us psychological cover not to enter that forest because we really don't want to, or we're a little bit afraid of it. I think that's a big element sometimes. So today, and this is what I use these series for, by the way, for myself and my team is let's think about today. Let's think about the options that we have to navigate health care before Medicare without any prejudgment. All right, with that set up, we're gonna go and look at the options, look at them at a high level, and then we're going to answer some of your questions and set a smart Sprint and create, a great retirement. all right, today we're going to talk about health care before Medicare options. We have the sticker shock that we got last week, as I mentioned. Hopefully you've recovered, you're off the floor. What, how much could it be? Next week we'll talk about how to mitigate that cost.

But now let's talk about what the options are. And we are going to start with option one, which is COBRA insurance. So if you have employer coverage through your work or, your employer or your spouse's employer, and you separate from the employer or have reduced hours, we'll talk about that. They are required, assuming your company has over, I think it's 20 people to offer you a continuation of coverage as a bridge, not permanent coverage for as Long as you're not working there, but as a bridge to help you transition your health care. And that's called COBRA. And so the benefits of COBRA, and we're going to talk about the eligibility, the duration, the cost, etc. The benefits of COBRA is really you're just keeping your same insurance. So if you're on an insurance plan at your company and you're looking to retire, if you retire you could sign up for COBRA and you have exactly the same insurance. So there's no change in providers. The system is going to operate like it's operated with your providers and your pharmacy. Your how much you've paid on your deductible throughout the year will continue for that year, just continues on. So there's, and there's no interruption in providers. Now what makes you eligible for to be offered COBRA? Like I said, the company has to be large enough. I believe the last I looked it was like 20 people plus they have to offer it. but your eligibility is if you have a reduction in work hours making you ineligible for coverage as a full time employee, then they have to offer you COBRA. And that could be separation of service, you leave or you're laid off or you're retired, divorce or legal separation from a covered employee. So if you're a spouse and you're on your, your spouse's insurance and they you separate or you divorce and you lose that coverage, you get offered Kovra. Or if you're married and your partner and you're on your partner's coverage and they pass away, the the company will offer you COBRA as a bridge. And that's the important thing to remember here with this option. This is just a bridge, it's a temporary fix, but it does buy time for you to navigate this amongst all the other disruption you might be having because of retirement or layoff, et cetera. So how long do you get COBRA? I'm talking about it being bridge. How long is this bridge if you were to select this option? Well, if you lose your job or you have reduced hours that disqualify you for long for full time coverage, it is available to you for 18 months and we'll talk about how when that clock starts. So basically a year and a half, you can stay on your employer's coverage after you separate service or have one of these qualifying events. Now if you're divorced or separated, or you have a dependent aging out, it's actually 36 months. So if you get divorced you actually have a 36 month window. And if you become disabled during the first 60 days after leaving. We'll talk about that. It could be up to 29 months. So the duration, it's a decent bridge, not a permanent fix, but it could fill the gap if you're 63 and change to get you to Medicare or to get your spouse to Medicare. And only one of you has to go on the aca, which we'll talk about in a minute. So it's a good tool, especially if you're close to Medicare, to continue coverage just to fill that gap or bridge you to Medicare. All right, we know there's a cost because everything costs money in healthcare. So what is the cost if you choose the COBRA option? Well, essentially the cost is what the cost of the health care is without the employer subsidy. Remember, we talked last week and let me go get those numbers here. So let's assume it's family coverage. And this comes from the Kaiser Family foundation annual Employer Survey 2024. If it's family coverage, the average total premium is 25,500. And typically an employer is coming. Employer on average is covering 75% of that. So if you elect COBRA, the employer stops contributing to your health care and you end up bearing that entire cost. And if you're single again, I'm referring to the Kaiser study, the annual Premium is about $8,950 a year for a single person. And on average, the employer covers about $7,500 or 84% of that. So what happens with COBRA typically, and it's not, there's always exceptions, is that you pay that entire amount and the employer subsidy goes away. So this can be pretty expensive and depending on what your option is in aca. Because remember, you're looking at all this stuff with fresh eyes, with lack of judgment. We're putting judgment aside. We're just trying to gather facts here. And it's important to understand the facts of what this option is so you can integrate this into your plan of record and make a good decision for yourself. All right, now, how do you get enrolled? What are some of the requirements about enrollment? And these are things to pay attention to. The employer has to notify the administrator of your healthcare plan within 30 days of an event, and that administrator has to send you written notice within 14 days. And then you have a 60 day window from the time that you receive notice or your separation, whatever is longer, to make your decision. So you have some window here. So if you separate Service, say on July 1st, you receive the notice. On July 31st, there's 31 days in July, right. On July 31st, then you would have 60 days from that date to elect COBRA. Or not. And here's a nuance of that. If you elect COBRA on the 59th day, that'd be July, August, September, say mid end of September. Then it's retroactive from the time that you separated by the time you got the notice. And that's interesting because you essentially are uncovered without paying insurance for 60 days ish or more. But if you elect COBRA on the 59th day, you have to pay the back premium. So that's a quirky thing about it. So COBRA is an option as a bridge to get you to Medicare if you're really close to 65, or as an option so your life is too busy to figure any of this stuff out, or you're dealing with major medical stuff and you don't want to have a disruption in your service, or you've paid a lot into your premiums for the year and you don't, you've already hit your out of, out of pocket maximum. So maybe you do it for the first year just so you can continue on and not have to start at zero or be disrupted. And this gives you time. That's the key thing. This gives you time to think about it in the event that you have other things going on in your life and you don't really want to spend too much time thinking about this.

All right, what's the second option? The second option is the Affordable Care Act. That's the marketplace, aca, Obamacare, whatever you want to call it. Next week we're going to talk about subsidies and how to optimize this. But for now we're just going to observe what you get for health insurance as an option. So each state has the option of establishing their own health care marketplace. And if they decide not to, then you default to the federal marketplace for healthcare insurance. So it's, there is a mandate that this has to happen and enrollment flexibility. well, when can you enroll in an ACA plan? Well, if you lose coverage from an employee, employer, that's a triggering event. So anytime that happens, you can go into the ACA marketplace and shop for insurance loss, ah, of a spouse or loss of coverage due to divorce, loss of non marketplace. Say you had a, private health care plan that you're paying for on your own and that policy ends. That's a triggering event that allows you to go into the marketplace anytime that you want loss of COBRA coverage. So if you select COBRA as a bridge and then you decide that you're going to lose that coverage. Then you can go into the ACA throughout the year and then relocation, which is an interesting one, moving to a new zip code or county where there are different plans available. And that's part of the ACA, marketplace because they do it by zip code in counties. So take Roger or you. And if you decide to move to Colorado or move across state, that is or could be a triggering event to allow you to switch your coverage. Because they can, the coverage can be different county by county or zip code by zip code. Okay, so that's the enrollment. Now why would you consider the ACA now? It gets a lot of flack, and rightly so, because it's clunky and trying to solve for, you know, 100 million people plus. There's a lot of things that we can complain about, but one great thing that it gives you as an option is guaranteed coverage. Prior to the aca, if you were going into the private marketplace, and it's still this way today in the private marketplace and you wanted to get healthcare coverage, I remember doing this, remember actually applying. This is decade plus ago. And I had pre existing conditions and those got excluded for a period of time. I think there were some rules around how long they could exclude pre existing conditions. I don't forget if it was asthma or what it was. But in the private marketplace, and I think it's still this way today, you can be, you can be denied. No, we don't want to cover you, you're too much of a mess. Or we'll cover you, but we're not going to cover this and then follow the rules of how long they can exclude that. And that means you bear 100% of all medical costs related to the thing that is not covered. Well, in the aca, that all went away. You have guaranteed coverage that cannot be denied due to preexisting conditions and they cannot exclude those preexisting conditions. Maybe exceptions. I'm not an expert in this area. That's a huge thing. As much as the cost is annoying and it's big and that all has to be figured out and at least be rationalized. You have guaranteed coverage and they can't exclude you just because you're sick and you've had life happen, cannot be changed or, charged more due to your health status. So that's the other thing that it helped rationalize a little bit. If you're really unhealthy, they can't just simply charge you more and really price it out of your marketplace. This is part of the socialized aspect of it. We're all helping each other by the healthy people are paying the same amount as the people that need more help. Essential health benefits must be covered. That means hospitalizations, prescriptions, preventive care, mental health, et cetera, and annual lifetime coverage limits are prohibited. So there's a lot of great things that the ACA offers us that we didn't have before. Another aspect of the ACA is standardization. We have bronze, silver, gold, and sometimes platinum. And generally they're structured that bronze you as the insured payment. A bigger portion, silver, you're going to pay a little bit less than the insurance will pay more. And gold, the same thing. And so you can tier it. So if you're super heaCOBRAlthy, you can choose a brawn plan and choose to pay more of the cost to save on premium because the premiums go up based on the coverage. And so that is essentially the ACA option. And their healthcare.gov is the main website for the ACA where you can shop plans and you can pair bronze plan A versus bronze plan B that are available in your zip code and you can even enter here are my doctors. Is my doctor covered by a plan? We just did this with my wife where she has a doctor that she really loves and she has a condition that we don't really want to change that provider. So we, we had to select a plan. We could, we could verify that doctor is under that plan so we could have continuation of care. Now, we had to pay more because there was a cheaper plan, but at least we can customize it from that perspective. Now I'm going to admit my observation in shopping for health care in the marketplace as a professional retirement planner, it's as confusing as all get out now. my specialty isn't healthcare planning, so I'm not. I wouldn't call myself an expert here, but I'm smarter than the average bear in navigating financial things. And I get confused and I get very tired. Even though they have comparative things, etc. You know where you can put one plan next to the the other plan and we'll talk in the last episode of how to navigate some of this complexity. Because it is confusing. If I were to say one of the bigger defects with healthcare is that there isn't an incentive as there is with Medicare, to have guides like with Medicare, you have firms like Boomer Benefits and other firms that can help navigate this. And the cost is prepaid in Medicare whether you use them or not. So there's a profit motive to have a company like that, there's still, you know, conflict of interest with Advantage plans and that's a whole other discussion. And there are people that will help guide you on ACA plans, Affordable Care act plans, but they're much harder to find and there's a lot less money, there's a lot less profit motive. So it's just a rare commodity. We've not used one. so that's the ACA option.

All right. Are there any other options? I have a couple more. I want to talk about the third option. I was just talking about this the other day with a client. The third option is part time employers. What I thought, I want to be retired. Hear me out. We're just observing. These are options you may not be aware of. There are a lot of employers or more employers than there ever has been to my knowledge, that offer some level of health insurance for part time work. If you're open to part time work, this might be a really good option to help you subsidize the cost by earning some income as well as getting a, more of a group plan via the health insurance of the part time employer. And it has a lot of non financial benefits as well, which I want to talk about. So what are some of the side benefits of working at a part time employer? Well, you get income so that could serve as a mental bridge from going from high paying professional to zero money coming in. This could serve as a bridge to mentally if not financially help you get over the fact that you're not high paying worker anymore. And that's a big benefit. I have clients that use this where they work part time and that funds that, that funds their fun and they're extra things that they want to do. So they, you know, we all grew up, I earn it and then I reward myself with the trip or the thing or the gift or the experience, etc. So it can continue that dynamic and keeps you on your toes and feeling like you have more agency or some agency and bringing in some money, bringing home to bacon, that's number one. So that helps us. The second on the non financial pillars. There's some really sweet things that can happen with part time work earlier throughout retirement. From a mindset standpoint, it gives you more hope, it gives you more agency, it keeps you active and engaged. From an energy standpoint, you're moving around more, you have a re, you have a reason to get out of bed. With mindset, you can be active and engaged physically and it gives you from a passion Standpoint, it can give you a purpose, it can give you camaraderie and the team, etc. From a relationship standpoint, it puts you out in the wild of the world to bump into people and co workers and customers, etc. And those can lead. Now those may not be your end all, be all relationships or passion, but they can lead to other things. It's about activity and moving forward. They get you out into traffic. So the relationship you build, say with a co worker could lead to a different relationship. That could be a lifelong friend or the passion, the activity. When I say passions, I'm thinking, what are you gonna get up and do every day? What, what hobbies do you have? One good example is we had a client that he assembled grills and furniture and everything for a big home department store like a, you know, Costco or like a Home Depot or a Lowe's. He just hung out in the back and put things together and that fit him because he always loved to put things together. He had a little bit of an engineering mind. Other people, Ace Hardware is a great example. I don't know about their healthcare coverage, but they got to be helpful and talk about hardware and home improvement and help people and interact about talking about things they like. Same thing if you love cars. Working at an auto parts, store, I don't know what their health coverage is, but these are things we can go observe and they get to talk about cars every day and maybe they meet somebody as a customer that they become a friend with because of their common interest. So you can see a lot of the positives on, the non financial pillar. But from a practical standpoint, as an option it could be a great bridge because you're going to earn income and you're going to get healthcare. Now some of the companies that offer this, and again, you would want to go observe what companies might offer this because this list changes all the time. I'm just going to mention a few Starbucks, at 20 hours a week, they provide healthcare coverage. My daughter was on Starbucks healthcare coverage for a number of years. Costco, 24 hours a week you get healthcare coverage. That was the conversation I was having with the client. She was like, I'm going to Costco, they'll hire me. I'm awesome. I love hanging out with people. I'm gonna do that for two years. That was her option for being out and hanging out with people in Costco. I would not choose Costco. That's too many people, too much stuff going on. Starbucks, I probably wouldn't choose either. But ikea I believe is one of them. If you're into furniture and decoration and putting things together and maybe IKEA is your jam. And they may offer health care coverage. REI, that's a cool. And that one I might do for 20 hours a week was the last I looked. They offer some form of health care coverage. If you're an outdoors person and love to talk outdoors and cycling and hiking and all that, maybe REI is a great place to go, you can meet some adventure buddies. You get the idea. So that's one that we could consider and not make an assumption about because it could serve as a bridge. You could have COBRA as a bridge and then you do a little part time work as a bridge and then maybe that gets you to Medicare.

Lastly, a couple alternative type of options are the private non marketplace plans which are going to have to go through underwriting. There may be some exclusions of coverage. I don't know anybody in my network or cohort of people that do that. health share plans, which are not insurance, which is important to understand, but health share plans, which are essentially people coming together in an organization, contributing money and supporting each other on healthcare. Pretty much like everybody coming together to do a barn. I know people that are on those and have been on them and they've worked really well even when they had a life event. But I also have had the personal experience of, it not working very well. In my wife's case, we were on a health share plan prior to her diagnosis of, psoriatic arthritis. And then when we needed to get the medicine to treat that, they don't cover that. So the prescription coverage wasn't going to handle it. And it was such an expensive prescription that it just made it not viable. And luckily for us, this all happened around open enrollment, which is in the fourth quarter of each year. So we didn't get stuck with our MetaShare plan and because we wouldn't have been able to go into the marketplace. So those are a couple alternative options, but I would look at those first three with fresh eyes and work that into your plan of record. All right, so next week, now that we've observed some options, we're going to talk about how do we manage or mitigate the cost of these options via ACA subsidies or support from pharmaceutical companies and reimbursement plans and things like that so we can observe where the opportunity set might be there. All right, so exciting. How could is healthcare ever gonna get more exciting than this? Right. All right, let's Go answer some of your questions. now it's time to answer some of your questions. Next month in March. I'm talking about March already. We're going to have some expert interviews right now. We have teed up Wade Pfau, Sonia Lubomirski, and Harry Rees, who wrote how to Feel Loved. So we're going to do some financial geekdom, and we're going to do some non financial and maybe some other cool things in store. But we're going to really focus on your questions, too. So if you have a question for the show, you can go to askroger.me and leave a typed question or record an audio question. Helpful hint. We try to prioritize audio questions, so they're a little bit of a fast pass. I can't guarantee it'll get answered on the show, but we do our best. We get a lot of questions, so be patient there. So you can do that at. Roger, what did I say? AskRoger.me. All right, let's get to some of your questions.

All right, our first question is an audio question which comes from Joni.

Joni: Hi, Roger. My name is Joni. I am calling because I am considering creating a trust will with my son as beneficiary, as opposed to, just, a straight will giving him all of my assets. So if I choose to have a trust created upon my death with my son as beneficiary, would the traditional IRA and the Roth IRA accounts need to be disbursed out within 10 years, the typical time when you have an inherited ira, or would it be considered, because it's in a trust that it needs to be. The assets in the IRAs need to be withdrawn within five years. So I'm getting conflicting information, and I'm hoping you can clear that up. So, again, it would be, upon my death, a trust will, would go into effect and a trust, would be created for the benefit of my son, and it would hold traditional, IRA and Roth IRA assets. Thank you so much for all your help and hoping you can clear this up for me. Thanks.

Roger Whitney: Hey, Joni, thanks so much for the audio question. First off, I don't think I'm going to clear this up for you. I'm going to share my thoughts on this and my approach to this. But I definitely think you should rely on a tax expert, a, CPA, and your estate planning attorney to navigate this for you because there's a lot of complexities here and you want to rely on their judgment. I have my opinions on it, but I'm not, I don't live in this world every single day. I interact with it when I'm doing planning, but generally that's in concert with an attorney or cpa. So with that disclaimer, I would start with what are you trying to accomplish in considering this? And get very specific in what you're trying to accomplish in having a trust, one for what your son is going to receive. And maybe you have a lot of after tax assets that you want to go into that trust and that makes total sense. But what is it you're trying to accomplish with the trust? And then secondary, we can talk about, you know, whether we make IRAs or Roth IRAs as beneficiaries of that trust, given the Secure act and the new rules on how that money has to come out once he inherits this. So when we think about why are we trying to have a trust is what are you trying to accomplish? Is it that you don't trust him and you want to have some controls over how he uses that money, knowing that he's going to have to take it out at best over 10 years anyway and he's going to get it either way? Is it that you don't trust him fully? Is it that you're worried that he's married and they might separate and you don't want that to become community property with the spouse. A trust might help that in the interim. But every time he takes money out of the trust that receives from the IRA that if he puts that in community property and doesn't keep it separate, that could still get caught up in that. it does offer some creditor protection, having money in a trust to receive money in a trust. But again, with IRA money that's coming out, that's going to have to come out of the trust or the IRA and out of the trust over 10 years, assuming it's a look through trust and quicker if it's not. So what is it you're trying to accomplish? Now some downsides to using a trust is that if it's not structured correctly by the attorney, it would lessen significantly the amount of time that you have to take this out. You might lose that 10 year period to be taking money out of the IRA or he might lose that because it's not a, what's called a see through trust because the trust, if it's named as a beneficiary of an ira, has to be able to see through to the ultimate age and person that is the beneficiary. In order to receive that 10 year period of distributions that are part of the Secure Act. With iras and Roth iras, if it's not a see through trust, then it could accelerate the time that you have to take it out. You could have, you know, up to five years as you mentioned. It could be even quicker than that. Also if it goes into a trust that's not structured correctly, could complicate and increase the tax on the pre tax amount for him anyway that you would have to pay because it will get lumped together a lot quicker. And trusts have different tax rules. You move up the brackets a lot higher. So you get that this is very complicated. That's why in my mind we should look for elegant simplicity and not overcomplicate it. Unless there's a big reason to have the trust named as IRA beneficiary, in the first place. Now I'm actually going to my estate attorney today to redo our entire estate plan. Joni and I have a son and a daughter and they're going to inherit after tax assets if we still have any, or house and investments and blah blah, blah. And then we have IRAs and 401ks and we are going to have this option on the table to observe do we have that go through a trust? And I am 99% sure the answer is no. We may do a trust at our death for the after tax assets for creditor protection and separation of property, et cetera. But it's highly unlikely that we will do it for the beneficiaries of IRAs and Roth IRAs, because with the Secure act it can create all these unintended consequences that we can't foresee. And there's not much of a tax benefit or protection benefit for a long enough period of time to have that complication. So I would be personally very wary of naming trusts as the beneficiary unless there's a really compelling reason to do so.

Our next question comes from Christine. Christine says listening to your episode from 2021 on open end mutual funds. Is there any way, if you are looking at mutual funds say in November to tell if they have had gains or losses up until that point in the year? Not really, Christine. And the reason is they're doing this in the background. And when you buy an open end mutual fund, you're buying a portfolio that's already in existence and depending on, what markets were like before you bought it. There are what are called embedded capital gains. So let's say we're here in February 2026, you buy an open end mutual fund that invest in stocks. Well, part of that mutual fund portfolio might be Apple that they bought 10 years ago or Nvidia that they bought 10 years ago. That's appreciated greatly. If they haven't sold it, you're going to have the liability of part of that loss when they ultimately do sell it. And so when you're in November, you're not going to know what's going on in the portfolio from a realized gain loss perspective. Now you're also going to participate in losses as they realize those. So the only way that you can really navigate this is one look at the history of an open end mutual fund in terms of what's called turnover and their past distributions of dividends, capital gains and interest. So you can get an idea of what they did in years past. Because every mutual fund has a philosophy on trying to manage this. So that way that can give you some sense of what history has done with this fund. The second thing you can do in November is go to their website and get they. Most mutual funds will publish an expected capital gain and distribution number because generally they distribute capital gains and interest and such in November and December of each year. So you can at least get some forecast of what they're expecting. In my experience, the last few years have been a little rough with open end mutual funds related to capital gains distributions higher than normal, at least in my experience. And the clients have felt that for clients that still have them. And sometimes we still have these things, right? Right Christine, because we bought them and that was we didn't have ETFs or that was the strategy. And now we have these new product, but we have all these capital gains that we can't get out of them. It's a mess, which is frustrating. but many times, Christine, and this is really the worst case scenario when it comes to capital gains distrib. A lot of times when we have really bad markets like we did a, year or two ago when the markets were down, a lot of these funds will issue more capital gains because they're managing cash flow. Cause if people are asking for their money back, then they have to sell stocks and then you have to pay your portion of whatever gains, if there are any. So look at the history and then look for those estimated capital gains, in November, December, early November, December. So you can at least get a little bit ahead of the curve on that and hopefully that helps. Or as an alternative, I'll add this on as an addendum if you're in open end mutual funds and you're frustrated with these capital gains distributions and interest distributions. One little thing you can do to help mitigate future ones is to stop reinvesting capital gains, dividends and interest. Let them pay out as cash. At least you're not buying more shares to have more distributions on later on. And then you can start moving that money either to pay some of the tax on those capital gains because you're paying tax along the way. So now you'll have some money so the fund is paying its own taxes in some way and or using that money to redirect to more tax efficient investments as relatively passive exchange traded funds.

Our next question comes from Andy related to the retirement plan live subject and the fact that they're very young. Andy says. Hey Roger, just a comment about Monte Carlo and long term scenarios. You use a thousand trials, which is typical in what I use. But for these very long predictions like Henry and Lucy, who are 49, there's so much variability over the timeframe that you might want to bump up the numbers of trials or iterations. When I use 1000 trials I get 88%, then 92 and 78. Sending it to 5000 iterations tightens it up. In other words, you can do a Monte Carlo for a really short retirement with just a few iterations, but for a long one you might want to use more. Now Andy, I am not a statistician, but I don't agree with the assessment. And one is they're not predictions, they're just simulations of randomness of returns. and maybe there's some nuance from a statistical standpoint that a statistician can speak into. just shoot me an email at roger, rogerwitney.com but adding, you know, I, I, the thousand iterations get you a distribution. Basically my understanding is we're just building a distribution of a bell curve and yeah, we could do a thousand. You know, I've seen articles that say 500 is enough. I don't know if adding more because they're younger gets you any more information since the horizon is so far and there are so many rigid assumptions that are going into each iteration to begin with. Right. Because there's only one variable when you do these things and that is market returns. There's a ton of other variables that we have fixed that are going to be all over the place. There's spending and inflation and tax, taxes etc. So I think this is in my, my view, Andy, a case of more, the quest of more precision isn't going to really yield more accuracy or information to help in decision making because it's so far over the horizon that could be wrong. But that's my take on it. I think, I even, and I, I always want to be careful when we think about these things. They're not predictions, they're just a trial within a very controlled way. And when we see these 88% or 92%, there's a, there's a false sense of certainty and security when we use software like this that even if intellectually we know that we, we, we, we quickly disclaim that and still act like there is certainty and clarity when there's not. And that's a real big danger in using these tools because they're pretty, they show us charts and I think as you know, retirement planners and advisors, our industry can be really bad about that because in how we frame it, and I've talked about this before, these things are just long term feasibility tests. Use them very carefully and don't take them too seriously. They're like a compass. You're going to be bouncing around all over the place. You're just trying to keep making better little decisions. That's really the most important thing is that hedgehoggy. Just keep iterating and iterating. I know we wanted to retire that word, but it's a good word for this.

All right, now let's go set a smart sprint. On your marks, get set. And we're off to set a little baby step in the next seven days. Not just rock retirement, but rock life. All right, in the next seven days. Now I could challenge you to review your health care options. And if you're at the precipice of retirement, maybe you go do that, you start to look at things, get a notebook, start to explore some of the options that we talked about. But if you're a few years away from retirement is say four or five years away, or you're on Medicare, probably not as important. But at some point you do want to review your options, even if you're already on Medicare. I talk to my daughter all day long, Emma, who is, works at Boomer Benefits. And it is important to revisit this stuff because things change, things change with plans on what's covered and what's not. There are options. So it's an important exercise generally in the, you know, right around, just before open enrollment. That's why we have Danielle on when it comes to Medicare. But unless you're really close to retirement, you're really grappling with this. Just be aware of this stuff and be careful of your assumptions.

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Hope you're having a great week. We will get into how do we optimize this a little bit on next week's episode.

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