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People should have two main sources of retirement income--guaranteed income and savings, writes Phil Moeller. Peter Gridle...

Column: How much should I save for retirement?

Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.

Rosanne: I am inundated with articles about how we’re not saving enough for retirement. My question is, how much is enough? How much should one save or have saved at a particular age, let’s say age 62? Financial experts talk about the problem, but no one gives such guidelines. Of course, you cannot know how long you will live and what diseases you will get. But excluding protracted, terminal illnesses, how much should one save?

Phil Moeller: I have long felt that most retirement readiness indicators are not very useful. Even providing a dollar figure is of little value without being related to a detailed profile of a person’s financial, health and family situations.

The purpose of retirement savings is to fund a person’s life style for the rest of their life when they retire and are no longer bringing home a paycheck from work. Rather than toss out a number, I suggest that people build accurate retirement spending budgets. These budgets usually have different spending categories — essentials, discretionary items and legacy expectations.

The ideal retirement plan is to have enough guaranteed money coming in every month — from Social Security, private pensions, annuities, and the like — to pay these fixed expenses. This way, you’ll never have to worry about having enough money to afford housing, food, utilities, healthcare, insurance and other “must-spend” items.

Your retirement savings come next. Ideally, the earnings from these savings would be enough to pay for travel, new cars every several years, restaurant meals, spoiling grandchildren, and other things you want but can live without. If you have enough guaranteed income that you do not have to spend down your savings, you should have extra money to pass on to your heirs (and whatever social causes matter to you).

If you aren’t going to have a lot of guaranteed income in retirement, then you need to sock away more money, and vice versa.

So, thinking ahead to your 70s and beyond, I’d build a budget for the “future you.” I’d then look at the source of funds for that budget and work backwards to how much money I would need to set aside today to satisfy my future needs. It can be deceptively easy to assume you will need less money in the future than you now do. However, many people wind up spending, or at least wanting to spend, more money when they retire.

I know this is not a specific number but hope you understand why.

Nelson: My mother is 76 and my biological father is 78. They were married for 16 years before he abandoned her back in 1976. Now, he’s getting Social Security, a retirement, and disability from the Veterans Administration. My mother doesn’t get a dime. She never remarried, and she is desperate for some income, as she only gets about $800 a month. How can I help her get some of my father’s Social Security or retirement? My father (I hate even referring to him as such) has gotten away with not paying my mother ever since he left us. He didn’t pay child support or help me any way. I did read on the Social Security website that she may receive benefits, but it hasn’t happened. Is it something he has to agree to do? If not, like I said, I want to help her get what she’s owed.

Phil Moeller: I am sorry to hear about your mother and even sorrier that I am hearing this only now, and not years ago. Your mother is eligible for divorced spousal benefits, and in fact has been eligible since she turned 62. Her former husband has no say in the matter. Under Social Security rules, however, it is her responsibility to file for these benefits and not the agency’s responsibility to tell her about them. For this reason, the most “back” benefits she can get would be for six months.
If she is collecting Social Security already, her new additional benefit would equal the amount by which her spousal benefit exceeded her own retirement benefit. I suggest the two of you call Social Security or visit a local office to apply for this benefit. She will need proof of marriage and divorce.

Carol – Maryland: I am scared to death. I have been talking with one Medicare insurer and its spokesperson seems knowledgeable, but then I looked online and found tons of complaints about them not paying or reimbursing clients. I get infusions weekly. They are very expensive and I need them to live, so if my claims are not paid, the infusions might stop and I would die. Is one insurance better at paying claims than another? I think plan F provides the most protection. But who actually pays for what your doctor or hospital say that you owe? Do you need approvals that are continually denied for no reason? Please steer me in the right direction, I am so lost!

Phil Moeller: Plan F is a Medigap supplement plan. These plans pay expenses that are not fully paid by Parts A and B of basic Medicare. So, if a procedure is covered by basic Medicare, Medigap plans are required to pay uncovered expenses. They don’t really have discretion in that regard. Having said that, payment records do vary among insurers, and your state insurance department should have access to records about problem companies.

If I were you, I would ask the people who provide your infusions if they accept Medicare. This discussion should include whether they accept basic Medicare and also if they work with any private Medicare Advantage (MA) plans. If they work with MA plans, it’s possible you could save money and still get good coverage with an MA plan. Doing so would also remove the need for a Medigap plan because MA plans have out-of-pocket spending protection.

If your infusion provider accepts Medicare, it means it is also willing to accept the payment levels set by Medicare for your infusions. In that case, there should be no issue with the amount of those payments. With a Medigap plan, there also should be no issue regarding its obligation to pay expenses not fully paid by basic Medicare.

There are 10 different Medigap “letter” plans. Letter F plans are the most comprehensive and, for this reason, the most expensive. You can review Medicare’s annual guide to Medigap plans to see if another type of plan makes more sense to you.

This stuff is complicated. If you have the time, you should review my Medicare book. It covers these topics in far more detail than I can present here.

Natasha – New York: I am 43 years old. Do you believe Medicare will be around when I turn 65?

Phil Moeller: I do believe Medicare will be around. The harder question is, what will it look like? If we find a way to include more people in some form of Medicare for All, that would be one possibility. But it’s also possible that rising health care costs would lead Congress to move toward less expensive benefits. In that case, what we may find is a program that looks more like Medicaid for All.

Aziz – Ohio: This person is 67 years old and came off of employer coverage four months ago, went onto COBRA, and has been on that since. She has not signed up for Medicare A or B. Do you suggest she consider signing up for A and B now? Would she be subject to the late enrollment penalty for part B?

Phil Moeller: From your explanation, this person should still be in their penalty-free special enrollment period for Medicare. This begins eight months from the date their employer coverage ended.

While this person will avoid late-enrollment penalties, it’s not clear to me that their COBRA policy will continue providing them primary health coverage once they became eligible for Medicare. You should ask them to check with their COBRA insurer to avoid an unpleasant, and perhaps expensive, surprise. Most likely, they should apply for Medicare to take effect as soon as possible.

Martha – Michigan: I have read your book but am still confused. I am currently teaching, but this may be my last year. I will reach my full retirement age of 66 on my next birthday. My husband died 10 years ago and, due to personal problems, was in and out of work the last 10 years of his life. Even so, he may have earned more money in his lifetime versus me. What advice can you give me about my Social Security options.

Phil Moeller: Your note does not say whether you’ve had Social Security payroll taxes deducted from your pay as a teacher. I’m assuming this is the case, but if not, your right to claim a survivor benefit based on your late husband’s earnings may be impacted by Social Security’s Government Pension Offset rules.

Assuming that you also qualify for your own Social Security benefits, the first thing you should do is find out how much of a survivor benefit you are entitled to at your full retirement age (FRA) and how this compares with your own retirement benefit if you waited until age 70 to claim it.

Survivor benefits reach their maximum amount at your full retirement age; retirement benefits peak at age 70.

If your survivor benefits at 66 will be larger than your own retirement benefits at 70, you should file for a survivor benefit at 66 and just keep receiving it for the rest of your life.

If, however, your retirement benefit at 70 will be larger than your survivor benefit at age 66, you should file for your survivor benefit immediately and then, when you turn 70, file for your own retirement benefit once it’s reached its maximum amount.

You can get an estimate of your retirement benefit by opening an online My Social Security account. It will show you the agency’s formal record of your wage earnings history and includes benefit projections at different claiming ages.

Unless you already have details on your late husband’s benefits, you will need to call Social Security and see if a claims representative will help you compute your survivor benefit. You will need your husband’s Social Security number and, at some point, access to your marriage certificate and his death certificate.

Once you have these details, you can make an informed claiming decision.