Yes – but for the most part seniors who are eligible for Medicare can find comprehensive and competitively priced health insurance within the Medicare framework. The expansions to the Medicare system in recent decades, most notably Medicare Part C (Medicare Advantage), has eliminated the need for many retirees to venture outside the Medicare system to find good coverage for things like eye care or dental insurance.

Some younger retirees, especially if married to a spouse who is still working, may have employer or union coverage. In those cases, you might be eligible for coverage under both Medicare and that separate policy.

Insurance Concurrent to Original Medicare

Original Medicare, or Medicare Part A and Part B, offers a limited scope of coverage for things like:

Although that coverage may appear generous, retirees do still have to cover deductibles and often steep copays, especially if they require medium to long-term care. You can read more about the 

 on our recent blog detailing the limits of Medicare Part A and Medicare Part B coverage.

The two most popular additional private insurance options are Medigap insurance (Medicare Supplemental Insurance) and Medicare Part C (Medicare Advantage Plans).

Each of these are separate from the Medicare Part A and Medicare Part B insurance that all eligible retirees are automatically entitled to receive.

Medigap coverage comes from private insurance policies specifically designed to offset the high long-term copays for healthcare services like hospital stays and skilled nursing facilities. Some Medigap policies also cover additional health care costs that retirees might incur if they require care while traveling outside the U.S.

Medicare Advantage Plans are private policies that incorporate Medicare Part A, Part B and supplemental healthcare benefits, like vision and dental coverage. Because these plans are designed and sold by private companies, they come with different rules and costs as well as fewer restrictions on many types of care.

Additionally, some Medicare Advantage Plans also include Medicare Part D, or prescription drug coverage. For many retirees, finding the right Medicare Advantage Plan provides all the coverage they need to meet their ongoing healthcare requirements.

Retirees with limited sources or supplemental income in retirement may also be eligible for Medicaid in addition to Medicare Part A and B. In Arizona, these retirees could be able to enroll in 

 as a more comprehensive alternative to Medicare or Medicaid on their own.  

What Should Retirees Consider When Choosing Health Insurance?

No two seniors have identical healthcare needs, but there are a handful of concerns and variables every retiree or person nearing retirement age should consider when making their health insurance decisions:

Modern medicine has granted us significant knowledge about the aging process and the likelihood of certain types of illnesses. People who know they have a family history of diabetes, dementia or cancer should take those risks into account when making insurance decisions.

Evaluating both your current health and anticipated future needs can help guide your coverage decisions and better budget for potential increased costs later in life.

Older Americans considering their Medicare options should also pay close attention to the additional expenses beyond premiums. For many retirees relying on Medicare Part A and B, the highest costs become out-of-pocket maximums, copays and deductibles. Understanding your healthcare coverage options and your unique risks can help you choose the plan that balances current needs and future risks.

Your Decision Today Doesn’t Prevent You From Changing Coverage in the Future

While there are many benefits to planning ahead, it’s important for retirees to recognize the health insurance decisions they make in the leadup to retirement aren’t necessarily permanent. In fact, you should review and update your healthcare plan annually to ensure it continues to meet your needs.

Health insurance is a complex field with many options and considerations. Seeking advice from a trusted 

, like Fullerton Financial Planning in Phoenix, can provide you with personalized guidance tailored to your unique needs.

, including your healthcare options, with an experienced professional, don’t hesitate to consult with one of our advisers by calling (623) 974-0300.

 Am I Allowed to Have Other Insurance While on Medicare? 

Most U.S. citizens become eligible for Medicare when they turn 65. They are typically automatically enrolled in Medicare Part A once they begin receiving Social Security benefits. Enrollment in Medicare Part B requires a more

, as do the private Medicare Advantage plans (Medicare Part C) and Medicare Part D.

Age-based eligibility isn’t the only way to qualify for Medicare. There are also some specific medical conditions which may qualify younger people for Medicare, including: 

What if a Senior Also Qualified for Medicaid?

Having dual eligibility in Medicare and Medicaid does offer some unique benefits for low-income seniors. People who qualify for both may be able to have their Medicare premiums covered by Medicaid and receive price reductions on deductibles and copayments for some health care services.

Medicaid might also fully cover some services not entirely covered by Medicare, or provide discounted copays. Because Medicaid is a hybrid federal/state program, different states offer different Medicare coverage solutions and features.

For example, Medicare in Arizona utilizes the 

 for qualifying residents older than 65 (or those who are younger with eligible disabilities) who require nursing care. 

Like many Medicaid programs, there are a specific set of eligibility requirements for the program, including:

Income and asset eligibility requirements vary depending on your marital status. There are a variety of potential retirement savings, tax planning and estate planning strategies that may help Arizona retirees meet the asset and income eligibility requirements without sacrificing their savings. It may be beneficial to consult with a 

Seniors or retirees evaluating whether Medicare, Medicaid or a combination of both is right for them should take several considerations into account:

 Assess your current financial standing and anticipated medical expenses. If your income is limited, you might qualify for Medicaid or dual eligibility.

 While Medicare provides comprehensive coverage, Medicaid might be better suited for those who anticipate requiring services like long-term care.

 Since Medicaid is administered at the state level, you’ll need to meet the Arizona residency eligibility requirements to make full use of the Arizona Medicaid benefits. The good news is Arizona has no length of residence requirement, meaning you don’t need to have lived in Arizona for any specific length of time prior to eligibility. As long as you’re an official resident of the state and you meet the asset and income requirements, you’re eligible for Arizona Medicaid.

Get Help Choosing the Right Medicare Solution 

While the basic Medicare Part A and Part B programs have their limitations, they’re still an invaluable entitlement earned by seniors and retirees in Arizona who spent decades paying into the system. These programs ensure the financial burden that accompanies any age or health-related challenges you face in retirement won’t derail your plans or force you to drain your retirement savings. 

Medicaid is an equally important benefit, especially for older Arizona workers who might be concerned about their finances and not having enough money to comfortably retire. 

It’s not uncommon for soon-to-be-retirees to feel flummoxed when they first learn how many different “Parts” there are and how much choice there is when it comes to Medicare plans. If you have questions about Medicare plans, copays and how you can structure your retirement finances to minimize the risk of overpaying for long-term care or memory care (should the need arise), talk with Fullerton Financial Planning by calling (623) 974-0300. Our retirement advisors are ready to answer your questions and help you make informed decisions. 

 Who Is Usually Eligible for Medicare? 

Although nationalized health insurance was initially proposed as far back as 1945 (by 

), it wasn’t until 20 years later that Lyndon B. Johnson would sign the Medicare and Medicaid Act into law. It was intended to address a challenge that’s only become more acute in modern times – providing affordable healthcare to a population that was living longer than it had at any point in history.

At the time, senior citizens were the demographic least likely to have health insurance, which was problematic considering they were also the demographic most likely to need medical care. Medicare was thus envisioned to ensure these citizens did not face financial ruin due to health issues in their twilight years, aiming to provide a safety net and guaranteeing access to vital medical care for those aged 65 and above.

A variety of modernization programs and acts have been implemented in the intervening decades. In 1997, the Medicare Plus Choice program allowed Medicare HMOs to offer Medicare Part C programs (later relabeled Medicare Advantage), and in 2003 the Medicare Part D prescription drug benefit was added via the Medicare Prescription Drug, Improvement, and Modernization Act.

 If you or your spouse has worked and paid Medicare taxes for at least 10 years (40 quarters in total), you should be eligible for free Medicare Part A coverage.

 Although there are typically no premiums for Part A, you will still have to pay a deductible and copay for extended stays in the above listed facilities. In 2023, the standard deductible for Medicare Part A is $1,600 per benefit period. 

 can also be steep for long-term hospital stays:

The rates are slightly different for skilled nursing facilities:

Most people will pay a standard monthly premium for Part B. The premium can vary based on income.

 After meeting the deductible, you typically pay 20 percent of the Medicare-approved amount for services.

Medicare Advantage is sold through private insurance companies and offer Medicare Part A and B along with added coverage for things not available through traditional Medicare plans, like:

All Part C plans are still required to cover all the same things as A and B, so seniors and retirees can enroll with peace of mind knowing they’re only getting extras and aren’t losing any of the traditional Medicare protections.

While some Medicare Advantage plans have premiums, there are also “$0 premium plans.” With these plans you still pay your Medicare Part B premium instead of a larger Part C premium.

 Even with a $0 premium plan you will still need to pay all necessary deductibles, copays and coinsurance for services covered under a Medicare Advantage Plan.

 Also varies by plan. Medigap (Medicare Supplement Insurance)

While the “no premiums” model of Medicare Part A may seem like a great deal initially, many retirees experience understandable sticker shock when they realize how quickly the per day copays can add up for virtually any type of long-term care. Medigap is available through private insurers and can help pay for out-of-pocket costs that may be incurred by seniors relying on Medicare plans.

 and think tanks calculate Medicare spending.

The retirement planners and financial advisors at 

 are committed to offering comprehensive and holistic solutions to Arizona retirement savers. Our experts would be happy to explain your options and how your Medicare planning can be incorporated into a broader retirement plan. Call us at (623) 974-0300 to 

 What Exactly Is Medicare? 

One of the most valuable gifts you can give to your children costs you nothing but your time and guidance – financial literacy. Explaining things like debt, borrowing and interest rates to your children at an early age won’t necessarily equip them with the knowledge to make a lot of money. What it will do is instill in them a cautious respect for both the pitfalls and potential benefits of borrowing, helping them avoid ending up on the wrong side of crippling debt and compounding interest. 

Far too many people fall victim to high-interest loans and credit card debt early in life. This is largely due to aggressive, arguably predatory advertising by credit card companies and lenders who intentionally push easy credit access on young adults who were never taught about the dangers of debt by their parents or in school. 

Your children or grandchildren don’t need to learn about debt and interest the hard way. Use opportunities in everyday life during their formative years to introduce the concepts and instill in them an appreciation and understanding of credit and loans. 

Debt isn’t an inherently difficult concept to grasp. One party owes a sum of money, the borrower, to another party, the lender. It arises when the borrower receives money from the lender and promises to repay it, typically with some form of interest.

Explaining the Appropriate Reasons to Borrow Money

One of the most common mistakes made by young adults with their first credit card is high interest borrowing to finance the purchase of unnecessary luxury goods. Fancy clothes, car modifications, the latest and greatest smartphone or vacations with friends may provide temporary happiness and fulfillment, but the fleeting dopamine rush is inevitably outweighed by the years of poor credit and the burden of trying to pay back ever-compounding interest. 

Explaining to your children in their early years the more appropriate reasons for assuming debt can be particularly valuable. 

You may find spontaneous situations in which these topics will come up in conversation, like if they ask what you’re doing when you’re reviewing your credit card statement or making your monthly mortgage payment. Some safely appropriate borrowing causes to teach include: 

Demonstrating Interest Rates with a Simple Activity

The next time your child asks for a toy, consider lending them the money instead of saying no. 

Whether you actually keep charging 25 percent interest to your kid if they fail to pay you back for several months is up to you, but it is a straightforward way to demonstrate borrowing and interest. Incorporating penalties or fees for late payments into your real-world example, especially when the consequences are very low risk, may be a good idea. 

While it’s good for young people to approach debt with caution, it’s not necessarily beneficial to instill a sense of abject terror. Be sure to explain that not all debts are bad. Borrowing money for education or a home can be considered good debt because they can lead to positive outcomes in the future. However, borrowing for frivolous reasons, or without a plan to repay, should be discouraged.

Before delving into borrowing, introduce kids to the importance of saving. Having savings can reduce the need to borrow, providing a financial safety cushion.

Unsurprisingly, hundreds of thousands of parents and grandparents have sought engaging and creative ways to instill these important financial lessons in their children at an early age. This has led to a small but active cottage industry of financial literacy tools for children.

There are a handful of financial podcasts aimed at a young audience, including 

 that encourage wealth generation via saving and delayed gratification. Many banks and credit unions also offer financial education resources aimed at children, like 

, a public service funded by Wells Fargo.  

There are even some unexpected entrants into the financial learning game, like the 

 published by the Federal Reserve of New York.

Providing Advanced Guidance to Retirement Savers in Phoenix

Introducing kids to the concepts of debt, borrowing and interest rates is not just a financial lesson, but a life skill. The retirement savers and investors we work with come to us with a diverse array of financial literacy levels, ranging from expert day traders to people with only a basic understanding of retirement savings. 

Our retirement planners and financial advisors can provide exceptional advice and guidance to people of all levels of financial literacy and understanding. Call us today at 

 to learn more about how we can help you. 

 Teaching Kids About Debt: Understanding Borrowing and Interest Rates 

There are many Phoenix-area workers and soon-to-be-retirees who understand the often precarious nature of generational wealth. If you’re experiencing restless nights worrying about both foreseen and unpredictable threats to the wealth you’ve spent a lifetime accruing, you’re not alone. 

Many people fail to make full and proper use of all the estate planning and wealth protection tools available to them, often because an unexpected accident or health emergency cuts short the time they thought they had. The inescapable reality is none of us knows exactly what the future holds, and it’s always preferable to be prepared today. 

Estate planning tools like trusts are intended to insulate you and your hard-earned wealth from those unexpected events and the long, greedy arm of the government. 

Trusts are essentially agreements where an individual, the settlor, transfers assets to a separate entity, the trust, to be managed by trustees for the benefit of beneficiaries. They can be versatile, offering control, tax efficiency and protection against potential future creditors.

For families with disabled members, a special needs trust ensures that the beneficiaries can still qualify for government aid while having access to assets in the trust for additional needs.

These allow you to contribute assets to the trust and receive an income stream in return. At the end of the trust term, the remaining assets go to a charitable organization.

Ideal for those who wish to leave assets to their grandchildren, skipping their children. This type of trust can help avoid estate taxes that could otherwise apply multiple times.

Estate planning documents are not mutually exclusive. Trusts are not one-for-one replacement for a will. Different estate planning tools accomplish unique goals or offer specialized protections your family won’t enjoy by relying solely on one document. 

There are also time considerations to factor into your estate planning decisions. Certain life milestones or events may spur you to add to or modify your existing plan. For example, a young family may want to establish a trust after buying a home or welcoming their first child. It’s also important to update your trust, will, power of attorney and other documents as your life changes, such as after the birth of a child, divorce or remarriage. 

There’s no one-size-fits-all estate or retirement planning solution. Consulting with retirement planning professionals, especially those who work closely with estate planning attorneys, is often beneficial for Phoenix retirement planners who want to learn about all their options and how these various estate planning tools work synergistically to safeguard assets and minimize tax liability. 

A foundational estate planning tool, a will determines how your assets will be distributed upon death. It's an essential document for everyone, regardless of their wealth level. Things like power of attorney and healthcare directives are important at any age. Simply put, everyone should have a will, even if you have a trust. 

This legal document allows you to designate someone to act on your behalf, typically in financial or medical decisions, should you become incapacitated.

FLPs let families pool their assets into a single entity. This can provide asset protection, centralized management and potential tax benefits.

A well-structured life insurance policy ensures that your loved ones receive a tax-free payout upon your demise, providing them with financial stability.

For business owners, planning for the transfer of your business upon your retirement, incapacity or death is crucial. It helps ensure that the business continues smoothly and can provide for your family.

To reduce the size of your taxable estate and help your heirs now, consider annual gifting. It allows you to give a certain amount to as many individuals as you like each year, tax-free.

People shouldn’t feel as if they must follow a pre-determined rubric of estate planning. Every person and family is different and it’s important to develop and implement a plan that’s right for your goals and where you’re currently at in life. 

While some retirement planners have dedicated decades to growing their wealth with the express goal of passing it on to their children or grandchildren, others prefer to pass their savings on to charities or organizations that align with their worldview or causes relevant to them. There’s no right or wrong answer, especially when it comes to wealth you’ve earned through your own efforts. 

Finding a team of retirement planners, investment managers, tax professionals and estate planning lawyers who can work together to develop a comprehensive plan customized to your needs is often the best way to ensure your goals and desires are faithfully executed. 

Our Phoenix Financial Planners and Estate Planning Partners Are Here for You 

Protecting your family’s wealth requires a proactive approach, strategy and the right tools. Trusts stand out as a powerful instrument, but they're just a part of the picture. Combining them with other wealth protection and transfer tools can ensure your assets are preserved, managed efficiently and passed down in line with your wishes. 

 Trusts and Other Tools You Can Use to Protect Your Family’s Wealth 

One of the few nearly universal desires held by a vast majority of Americans is to enjoy a worry-free retirement. Annuities are a unique long-term investment product tailor-made by insurance companies for the specific purpose of providing guaranteed income in retirement. 

Incorporating annuities into your plan may add a measure of financial security to your future and allow you to look forward to retirement with a little less anxiety. 

Understanding Annuities and How They May Fit Into Your Retirement Plan 

In simple terms, annuities are investment products in which you make a large upfront lump payment or a series of payments to fund it. The insurance company then guarantees you’ll receive payments starting either right away or on some specified future date. 

The two primary types are immediate and deferred annuities. An immediate annuity starts paying out soon after you make your investment, making it suitable for those nearing retirement. A deferred annuity begins payments at a future date. Deferred annuities provide a period for your investment to grow tax-deferred, making it ideal for younger investors.

The Role Annuities Play in Retirement Planning 

Nearly every retirement savings investment option comes with some degree of risk. Annuities are somewhat unique in that respect because some offer a nearly risk-free, guaranteed income stream. While many retirees don’t rely entirely on annuities for retirement income, this level of reliability makes them a key component in many retirement plans, especially as a safety net. 

Having some type of guaranteed income for the remainder of your life is an essential aspect of retirement planning. Annuities may not boast the highest potential nest egg growth, but it does offer unbeatable dependability, which many retirees value more than portfolio growth. 

You can worry less about outliving your savings if you know you have annuities to fall back on. There are many different types of annuities with varying terms. It’s a good idea to discuss your options with a retirement planner. They can help you identify the best annuity product to help you establish steady income in perpetuity.

Tax-advantaged retirement savings plans are an essential aspect of retirement savings for every household. Annuities boast tax-deferred growth potential, meaning the annuity holder doesn’t have to pay interest, dividend or capital gains taxes until the funds are withdrawn and taken as income. The lack of taxation allows the funds in the annuity to grow at an accelerated rate.

Young and old investors alike share the same misgivings about economic uncertainty and market volatility. Those concerns hit harder when you’re nearing retirement or are in retirement and relying on the value of your investment savings to fund your lifestyle. Like any low-risk investment, annuities are not renowned for their high returns, but they do offer a safe haven from the risks inherent in the market. This makes annuities particularly attractive during market downturns.  

How Annuities Can Be Incorporated Into Your Retirement Plan 

Minimizing risk is an absolute must in any retirement plan. There are a variety of ways to balance risk with all types of retirement savings strategies, but annuities are one of the most straightforward and reliable tools for accomplishing the goal. Investing a portion of your nest egg into annuities offers a guaranteed stable income base, enabling more risk flexibility in your other investments. 

No one disputes that living longer and healthier lives is a great part of modern life – but it does present some complications in terms of retirement planning. Annuities can help ensure you don’t outlive your savings. 

Certain types of annuities, like joint and survivor annuities, offer features that provide income for a surviving spouse after the passing of their husband or wife. This can be an invaluable tool for couples nearing retirement. 

Are Annuities Right for Your Retirement Plan? 

Annuities are an invaluable tool for many retirement savers, but they’re far from the only retirement savings option. For many savers, they’re just one part of a cohesive plan that balances asset growth with risk management for long-term financial stability and reliable retirement income generation. 

If you would like to learn more about annuities and what types of annuities would be best for your retirement savings plan, schedule a consultation with the retirement planning professionals at Fullerton Financial Planning. Call us at (623) 974-0300 to speak with an advisor today. 

 How Annuities Fit Into Your Retirement Savings Plan 

Many investors, especially in times of uncertainty, rapid societal and financial change and inflation, seek out new or non-traditional avenues to grow or protect their portfolios. The traditional asset classes – stocks, bonds, real estate, cash equivalents and commodities – aren’t necessarily the only investment options for wealth generation. 

Any investment that falls outside the rubric of the five traditional asset classes may be considered an alternative investment. As with all other asset classes, there are inevitable tradeoffs savers must accept when pursuing alternative investment strategies.

Some of these alternatives may be less regulated, have higher barriers to entry, sacrifice safety for higher returns or lack diversification opportunities.

Investors should also keep in mind that some alternative investments are outside of the mainstream for a reason. While a handful of people may make a lot of money off these investments, there may also be many investors who lose money.

Private equity involves investing in privately held companies not listed on public stock exchanges. Investors can participate in private equity through various structures, including venture capital, growth equity and buyout funds. Private equity investments typically involve a longer holding period and are known for carrying higher risks and the potential to generate substantial returns.

There are some barriers to entry the average retail investor may not be able to clear. In general, a person must be an “accredited investor” – an individual with a minimum net worth of $1 million or have income in excess of at least $200,000 for the past two years. Private equity funds usually have their own rules for buy-in, like large minimum investments (often hundreds of thousands or even millions of dollars). 

Hedge funds share some of the exclusivity characteristics of private equity but with a more traditional collection of assets and fund management. There’s a diverse array of hedge funds focusing on a variety of sectors and asset classes, but a common feature is the practice of leveraging derivatives to amplify gains. 

The assets hedge funds hold can be on the traditional side of the asset spectrum and include things like stocks, bonds, commodities and currencies. There are hedge funds with reputations for deftly working the system to eke out gains even in falling markets – but these tactics (like leveraging futures) can be risky.

Like private equity, hedge funds are not available to all investors. Many require large initial investments that may only be appropriate for high-net-worth individuals.

Real Estate Investment Trusts (REITs) and Delaware Statuary Trusts (DSTs)

REITs and DSTs, if you want to consider them alternative investments, are some of the more accessible options. There are many exclusive and privately operated REITs and DSTs that work with individual investors to grow wealth through commercial, industrial and residential investment properties.

DST investors are all co-owners of the properties and share in the profits. These trusts are eligible for 1031 exchanges, meaning retirees might sell their existing investment real estate and reinvest in a DST (within a specified time frame) to defer capital gains tax since the government considers the DST a like-kind property.

These investment firms often don’t hold properties for very long. Proceeds from the sale of the properties are distributed among investors to either be reinvested in another DST property (to continue deferring capital gains) or to be taken as profit.

Investing directly in commodities involves buying physical goods such as gold, oil, natural gas and agricultural products or investing in futures contracts tied to these assets. The more traditional way retail investors add commodities to their portfolios is via commodity-focused mutual funds or ETFs, but the alternative is to purchase the commodities themselves or derivatives.

Those types of investments are not without risk, and successfully investing in futures or commodities requires significant knowledge, constant vigilance and the ability to make high-stakes decisions quickly.

Examples of private debt investments include private debt funds, business development companies (BCDs), peer-to-peer (P2P) lending, directed lending and syndicated loans. Private debt can offer regular income in the form of interest and principal payments but is also extremely illiquid and can come with high costs and risks. The average retail investor likely doesn’t have the assets or the know-how to easily invest in private debts, but they are an option with the potential to yield high returns compared to other fixed-income investments. 

Art, Collectibles, Cryptocurrencies, Classic Cars and Other Luxury Assets

There are a variety of niche alternative investments that some retirement savers choose to pursue based on their own personal interests and expertise. Unfortunately, enthusiasm and exuberance can lead to a false sense of security and overconfidence.

Cryptocurrencies gained significant attention as a potential investment vehicle over the past decade – but conventional wisdom and market trends can change rapidly with these asset classes. As of November 2022, investors of all types 

Before investing in these types of alternative asset classes, it might be in your best interest to consult with an 

Should You Try an Alternative Investment?

Many investors become discouraged by anemic portfolio growth or losses due to market trends and volatility. Turning to alternative investments isn’t necessarily the best option for every investor, but each person and financial situation is different. If you’d like dispassionate and honest advice or input on your portfolio or investment options, consider 

 at Fullerton Financial Planning. Call us at (623) 974-0300 for a consultation.

 Alternative Investment Vehicles for Phoenix Retirement Savers 

Nearly all investments fall into one of five broad asset class categories:

True portfolio diversification often necessitates at least some exposure to all these asset classes. The percentage breakdown of your asset classes should be unique to you, your risk tolerance preferences and the asset class investment opportunities currently available. 

For example, a retiree may want to rely on their investments for consistent supplemental income to cover their living expenses. Real estate or high-dividend equities may be the ideal solution for their situation. A worker in their 30s who doesn’t rely on their investments for income might be more interested in portfolio growth. Their investments may be heavily weighted toward riskier equities that hold the potential for significant long-term appreciation rather than consistent dividends. 

Getting the right asset mix in your portfolio isn’t always easy to accomplish on your own. If you have questions or just want a second opinion, don’t hesitate to contact the investment managers and retirement planners at Fullerton Financial Planning. 

Stocks, also known as equities, are ownership shares in a publicly traded company. Purchasing a stock makes you a shareholder and gives you the opportunity to share in the company’s success – or potential failure. Stocks provide wealth generation in two primary ways: capital appreciation (the value increases) and dividend payments. 

Equities are not without risks, including things like market volatility and sector-specific challenges. In addition to asset class diversification, it’s usually in an investor’s best interest to have healthy stock diversification, which means holding equities in a variety of different industries, market caps and even geographic areas. 

Bonds are debt securities issued by governments, municipalities or corporations to raise capital. Investors who purchase bonds are technically lending money to the issuer in exchange for regular interest payments and the eventual return of the principal amount at maturity. 

Conventional wisdom holds that bonds are a low-risk investment opportunity, making them ideal for retirees who are looking for opportunities to reduce their exposure to market volatility. Reality is more nuanced, as not all bonds share the same level of risk protection. The creditworthiness of the issuer and prevailing interest rates both play a role in bond safety, interest payments and valuation. However, the right mix of bonds can offer a stable income stream while providing portfolio diversification.

Real estate is a popular alternative asset investment for retirees, although other investments like private equity or luxury assets could also fall into this category. There is a diverse range of potential real estate investment opportunities for retirees and retirement savers, from owning rental properties to buying into real estate investment trusts (REITs). In addition to generating income via commercial or residential tenant payments, real estate can also appreciate. Like stocks, real estate values are subject to market forces and are not guaranteed. 

You don’t have to be well-versed or involved in mining, agriculture or natural gas to benefit from those industries. 

Commodity trading allows retail investors to participate and potentially profit from the price movements of these physical assets. 

There are a number of reasons why some investors include commodities like precious metals in their portfolio, including as a hedge against inflation. Like all other investments, there are inherent risks present in commodity trading, including geopolitics, demand dynamics and macroeconomic trends. 

The good news is you don’t necessarily have to invest a lot of time and energy into learning about these industries and following these trends in order to invest in commodities. There are a variety of competently managed exchange-traded funds (ETFs) and commodity mutual funds that allow retirement savers to add commodities to their portfolios without a lot of investment micromanaging.  

Cash equivalents is an umbrella term used to describe a number of savings options that sacrifice traditional gains for stability and liquidity. There’s often a direct tradeoff between the two attributes. The more illiquid cash equivalents, like certificates of deposit (CD), have fixed terms and moderate interest rates, but they can usually be converted into cash quickly at the cost of sacrificing earned interest. 

Others, like traditional savings accounts and money market funds, can essentially be turned into cash immediately with no penalty. Other examples of cash equivalents include things like T-bills, which are essentially government bonds that have maturities ranging from days to a year with virtually no default risk. 

How Is Your Portfolio’s Asset Diversification? 

Even experienced and financially savvy Phoenix retirement savers and investors can benefit from receiving a second opinion on their investments from an experienced investment manager. The team at Fullerton Financial Planning is always ready to help you understand your asset options and explain the benefits and risks of all types of investment strategies and asset classes. Call us today at (623) 974-0300 to speak with a financial advisor. 

 The Five Asset Classes of Investment 

There is no one-size-fits-all perfect retirement investment strategy. Although the destination of a stable, comfortable and worry-free retirement is universal, what that retirement ideal dream looks like is unique to each person. The path to reach that goal is equally diverse and will vary based on the size of your household, your expenses and lifestyle and your income.

The inherent diversity in retirement investment strategies does not mean there are no universal best practices. There are a variety of habits you can embrace to ease your journey along the retirement savings path and increase your chance of comfortably funding the retirement you seek. 

One of the most important habits for building long-term wealth is starting early. The power of compound interest – where the returns on your investment start earning their own returns – can be truly magical over the long term. The earlier you start investing, the more time your money has to grow. 

Many people who have just graduated from university and are entering the workforce full time for the first time don’t have the luxury of setting aside a significant portion of their income for retirement savings. This is especially true for people with student debt, a high cost of living and entry-level income. There are several things you can do to catch up on retirement savings if you weren’t able to start saving for retirement as early as you may have wanted. 

Consistency is key to effective retirement savings strategies. Regular contributions, even small ones (especially in your early working years), can add up over time. Workers who have the option should seriously consider using automatic 401(k) contributions if they aren’t doing so already. Even people who don’t have an employer-sponsored retirement savings plan can automate retirement savings by setting up automatic monthly transfers from your bank account to your investment portfolio. 

These types of regular contributions are essentially a form of “dollar-cost averaging” investments. Investors, especially people who don’t do it professionally or don’t want to spend an inordinate amount of their free time studying the market, may be terrified of buying at the “wrong” time. By regularly making investments of a fixed amount of money on a consistent schedule, like each pay period, you smooth the impact of price fluctuations and market volatility. 

Diversifying is important for both managing risk and promoting consistent growth. Valuation of different sectors, regions and asset classes ebbs and flows. Some investment strategies are inherently risky but offer significant growth potential while others are extraordinarily low risk but offer minimal growth. A diversified portfolio may feature both at different concentrations to reflect where you’re at in your career or how close you are to retirement. As a rule of thumb, your risk tolerance decreases as you get closer to retirement, but you might want to pursue higher returns and more risk if you’re playing catchup in your later working years. 

You may also want to ensure your investments align with your worldview. For example, you may or may not want to keep your investments in funds that adhere to ESG (environmental, social and governance) principles. Some investors are willing to sacrifice growth or will tolerate more risk to invest in companies or industries that align with their personal beliefs or preferences. 

Diversification and your risk tolerance are very personal decisions and there’s no fool-proof how-to guide. The assistance of an investment manager or retirement planner who knows your risk tolerances, investment preferences and retirement goals can help you make informed decisions about your portfolio diversification. 

Successful investors create a plan and stick to it, regardless of market conditions. This means resisting the urge to react to short-term market fluctuations. This is a particularly important habit to adhere to when market conditions get rocky, but it can be hard to do when you’re in retirement and seeing your investments losing value at a fast rate. One of the benefits of working with an investment manager or retirement planner is emotional support. They can give you their honest, professional opinion on your situation so you don’t make rash decisions fueled by panic. 

While sticking to a plan is important, so is recognizing when adjustments need to be made. Life events such as marriage, having children or nearing retirement can necessitate changes to your investment strategy. Avoid making knee-jerk decisions based on anxiety, but don’t necessarily be so rigid in your strategy that you refuse to recalibrate on occasion. 

Develop Good Habits with Fullerton Financial Planning

If you’re like many Phoenix retirement savers, you worry about the state of the housing market, interest rates, inflation and your investment portfolio. It’s easy to lose faith and make rash decisions in times of volatility and uncertainty. One of the benefits of having an investment professional in your corner is always having access to a calm, stable and informed opinion. 

 Investing Habits for Success: Strategies for Building Long-Term Wealth 

Even the most financially stable households frequently struggle with debt, often because of life factors that are entirely out of their control or necessity. Things like medical debt are sometimes unavoidable. Other types of debts, like auto loans, home loans or student loans, are necessary to achieve life goals and maintain the lifestyle you want.

Being proactive about debt before it accrues and developing a plan to manage existing debts can help restore your peace of mind and protect your retirement dreams. 

Budgeting is maybe the most powerful tool households have for avoiding debt in the first place or getting it under control once it’s been incurred. Precisely knowing your monthly monetary inflows and outflows allows you to craft a budget and pay down debt at a pace that works for you. 

Conveniences of modern life – like streaming and subscription services – have complicated budgeting. Many households forget about some of their recurring monthly payments or simply have so many it’s difficult to keep track. A variety of tools and trackers have been developed specifically to 

 their paid subscriptions. Going through the past six months of your credit card and checking statements may also help you develop a clear picture of your income and expenses. 

Sit down with your significant other or family members and have an honest conversation about your debt elimination goals and where you can make sacrifices. If you’re like most people, you have some subscriptions you hardly use or can live without. Seemingly small sacrifices (like making your own coffee instead of going to Starbucks every morning) will add up. 

Emergency expenses are one of the most common sources of unavoidable debt. Medical debt is often one of the first things that come to mind for people, especially if you have a high-deductible plan or require care that’s not covered by your health insurance, but health emergencies are far from the only kind that can leave you in debt. Plumbing emergencies, roof failures and car accidents are just a handful of examples of common, unexpected and large expenses that often force people to rely on high-interest financing. 

Emergency funds are great to have if you or your spouse ever lose a job – but they’re also a relief if you ever have a house, health or vehicle emergency that might result in unexpected five-figure expenses. Having the liquid capital to avoid a loan can help you dodge debt. 

Think Carefully About Your Credit Card Strategy 

You might see some debt avoidance or elimination “experts” speak in absolutes about credit cards. How credit cards affect your debt situation is entirely dependent on how you use them and whether you pay them off each month. Responsible credit card use can help bolster your credit and makes it easier to track expenses. Irresponsible credit card use, or simply forgetting to make a payment one month, can cause ripples that turn into tsunamis if you’re not vigilant. Automating payments and making a habit of checking your statements can help you avoid some of the pitfalls and benefit from the convenience of credit cards. 

Not all debts are made equal. There may be compelling reasons to pay down high-interest debts first or smaller debts before moving on to larger, more long-term debts. Your loan repayment strategy may be unique to you and your income or life situation. Discussing your debts with a financial planning or retirement planning professional can be beneficial in this regard. They can explain the advantages and potential disadvantages to certain strategies so you can make an informed decision about how you want to tackle your debts. 

Many people nearing retirement age and those recently retired are living in the same home in which they raised their family. They’re also usually empty nesters. Emotional attachment, community, neighbors and memories are all compelling reasons to stay put – but those factors might not outweigh the benefits of downsizing. You might want the extra rooms so your children and grandchildren will feel incentivized to visit – but in a city like Phoenix there are literally dozens of hotels and resorts in every price point, and a family visit once or twice a year might not justify the added expense (and work) of living in more home than you currently need. 

Homes aren’t the only things that can be downsized. Do you need two vehicles? Are there work-related expenses you’re still paying for? Take a holistic look at your expenses and identify opportunities to downsize – you might find relief by embracing less.

Work With an Estate Planner or Retirement Planner on a Healthcare Plan 

Healthcare debt and ongoing expenses (like at-home care or memory care) often represent the largest expense for older retirees. These types of health-related costs can quickly drain retirement savings or grow debt. There are a variety of potential Medicare or Medicaid strategies and estate planning tools that can help you prepare for these costs and avoid debt without negatively impacting your current quality of life. At Fullerton Financial Planning, we’ve embraced an approach that combines estate planning and retirement planning to help ensure our clients maintain their quality of life regardless of what the future holds. 

Seek Professional Advice on Debt Avoidance and Debt Elimination in Phoenix

Even burdensome debt can be managed and eventually eliminated through financial discipline, but it can’t happen over night. If you want to get out of debt before you begin saving for retirement in earnest or you just want to enter retirement without interest payments eating into your nest egg, the financial planners at Fullerton Financial Planning are here to help. 

Welcome to Our Financial Tips Blog

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