New farragutpress business columnist Yvonne Marsh is a certified financial planner and certified public accountant specializing in personal financial planning focusing on life transitions — including retirement, widowhood and divorce — at Marsh Wealth Management in West Knox County. She is a member of Financial Planning Association for CFP® professionals. Her columns will appear monthly.
Question: My aunt recently passed away and she left everything to my sister and me equally, but on her IRA beneficiary form she named only my sister. Which document wins? Aren’t I entitled to have half of her IRA, too, since the will says we split everything equally?
Answer: The beneficiary form trumps the will. Beneficiary forms allow assets to be passed outside of the will or probate process. Your sister inherits the IRA, and then you’ll both share in the other assets that don’t have specific beneficiaries named.
Question: I’ve always gotten a tax deduction for contributing to an IRA, but this year I’m going
to make too much money to get the deduction. Should I still make a contribution to save for my retirement?
Answer: In an IRA, the IRS gives you a tax deduction on the contribution and, in exchange, you pay tax on the withdrawals, which you must begin by age 70 ½. Once the contribution is no longer deductible, why be constrained by the IRA rules of taxation? You’re generally better off to fund a Roth IRA if your income allows, or look to other tax-deferred investments that don’t have the onerous tax rules that IRAs do.
Question: I keep hearing about healthcare costs being so expensive in retirement, but I’ll be on Medicare. I thought it covered everything?
Answer: Medicare does cover quite a bit of costs, at a reasonable monthly premium and low annual deductible. Most retirees in traditional Medicare also will purchase a supplemental insurance policy to cover deductibles and co-pays, plus a prescription plan to cover medications. The type of costs that Medicare doesn’t cover include dental, vision and hearing costs, as well as international medical costs for those who travel. Importantly, Medicare doesn’t cover home health care, assisted living or skilled care, except for the first 100 days of skilled care – and only if it’s followed by three days of an inpatient hospital stay. A recent Fidelity study found that the average age 65 couple will spend more than $260,000 on health care costs in their retirement years.
Have Questions? Send your financial questions to Yvonne Marsh, CFP®, CPA at firstname.lastname@example.org, and she will review your question for possible inclusion in a future column.