Peak Asset Management, LLC, Colorado

Choosing a Medicare plan can be daunting, which is why we send a guide to all of our clients as they are approaching age 65. Instead of the full guide and a wall of text, here are a few of the most important excerpts: Combining Part A, B, and D with a Medigap policy usually results in a higher premium of approximately $400/month, but can offer greater flexibility when choosing providers. Note that dental coverage is not covered by Part A or B. Combining Part A and B with a Medicare Advantage plan is less expensive if you are healthy, and many Advantage plans include Part D (drug coverage). Some even provide dental, vision, and/or hearing aid coverage. However, Medicare Advantage plans operate similar to private insurance plans with higher deductibles and out-of-pocket costs, should you need greater care or require surgery. If you select an Advantage plan for the lower monthly premiums and later want to switch to Original Medicare + Medigap due to health complications, you can only do so during Open Enrollment, and you MUST meet the medical underwriting requirements of the Medigap insurer. You may no longer be able to qualify for a Medigap plan! More Medicare tips coming down the pike soon!

Many investors recognize the importance of asset diversification, but fewer recognize that asset location can be just as crucial to your investment strategy. Asset location isn’t about WHAT you invest in, but WHERE you hold those investments. This means considering whether your assets are in pre-tax accounts like a 401(k), post-tax accounts such as a Roth IRA, or taxable accounts like a brokerage account. While letting your investments grow tax-deferred in a Traditional 401(k) or IRA has its advantages, concentrating all of your money in one type of account—whether it's pre-tax, Roth, or taxable—can limit your flexibility down the road. The key is to have a mix of funds in all three types of accounts, which will help you better manage taxes when you start withdrawals in retirement. With the Tax Cuts and Jobs Act set to expire after 2025, tax rates could be on the move. Having your assets spread across different account types gives you the flexibility to adjust and optimize your tax situation no matter what changes may come.

Far too often I see people taking too much risk in their portfolio for their situation or having unrealistic expectations around what returns are consistently achievable. Yes, investment performance is important, but it is only a very small part of building wealth successfully. Rather than focusing exclusively on your rate of return, focus on your rate of SAVINGS. Creating wealth is not always exciting—it mostly involves a lot of patience, a high savings rate, and the intestinal fortitude to stay the course when markets get choppy. If you want to build sustainable wealth, start with what you can control: your savings rate. Automate your savings, live below your means, and invest wisely. Over time, these habits add up, and they're more likely to lead to financial security than chasing after elusive, high-risk returns. Remember, slow and steady often wins the financial race.

ABLE Accounts The Achieving a Better Life Experience (ABLE) Act is federal legislation that was passed in 2014 with the goal of providing a way for people with disabilities to create financial independence by allowing them to save and invest money without losing eligibility for certain assistance programs like Supplemental Security Income (SSI) and Medicaid. Both of these programs maintain threshold eligibility limits when it comes to both income and asset levels. Prior to the act, this type of savings would be counted against the applicant qualifying for these benefits, which perversely might encourage an abled body person with a disability to not work. The law allows earnings on investments within the account to be federally tax-deferred and tax free if used for qualified disability expenses. Qualified expenses can include medical, education, employment training, personal support services, housing, and transportation expenditures. Withdrawals that are not considered qualified would be subject to regular income tax on the earnings portion and a 10% penalty. Balances of $100K or less are excluded from the SSI resource limit. If the account exceeds the SSI limit, then SSI benefits will be suspended until the balance no longer exceeds this $100K threshold. There is an $18K contribution limit per year.  Account owners who earn income may contribute additional funds beyond the annual $18K contribution limit up to the federal poverty level for a one-person household in CO ($14,580 for 2024, based on 2023), or the account owner’s gross wages, whichever is less. Anyone can contribute directly to the account. No matter who contributes, the account owner or authorized individual retains control over the account. The working account owner is not eligible to contribute additional funds if they are contributing to a defined contribution plan, annuity contract, or a deferred compensation plan. To be eligible for an account, one must have a qualifying disability that started prior to age 26. For CO residents, contributions to a Colorado ABLE account get a dollar-for-dollar tax deduction as well. If you have specific questions regarding how the account works, how to set one up, or want further detail on the management of this type of account, feel free to reach out to Peak, or go to https://lnkd.in/dYdU7-2M for more information. JRF