The Hottest Markets for Real Estate IRAs

The most important factor in real estate, they say, is “location, location, location!” And so it goes with real estate IRAs, as well. All real estate ultimately comes down to spotting good locations and trying to work with demographic and economic trends rather than against them. A recent study from the National Association of Realtors has identified ten hot real estate markets where demographic and economic trends are working for real estate IRA investors instead of against them.

Ten Hottest Markets for Real Estate IRAs

Three of the top ten are no surprise: San Jose, San Francisco and Vallejo, California are all high-dollar Bay Area markets long known for high real estate prices. And these markets are very difficult for new buyers to get into, thanks to those same high prices.

Number four on the NAR’s list is Fort Wayne, Indiana. This up-and-coming Midwestern city is the second largest city in the state, and a three-time winner of the All-America City Award. Zillow data has Fort Wayne home values rising at an 8.9 percent clip over the next year. The current median home value is $102,800, or about $88 per square foot. In the metro area, you’ll find median home prices of around $156,000, and about the same price per square foot. Zillow is plotting the median rent prices at $700 both in the metro area and outside of town – so you may be able to get a 30 percent ROI boost just by shifting your sights to the suburbs.

And only 30 minutes away is an affordable sleeper community, Decatur, Indiana, which has an average median home price of $81,900, but a low, low unemployment rate of just 3 percent – earning it a place on the National Real Estate Association’s list of Ten Affordable Housing Markets (Where You’d Actually Want to Live.)

San Diego is number five on the list, but it has a much higher ante, with a median home price of $595,800. The market has appreciate 8.6 percent over the last twelve months, and Zillow is anticipating a healthy but not outrageous gain of another 4.2 percent over the next year.

Median rent prices are around $2,500 both in and out of town, with suburbs showing higher prices than the San Diego Metro area. The market is bouyed by great weather year round, its proximity to Mexico, which makes it a major trading hub, a world-class harbor, and, of course, a substantial military presence, with a major Navy base in San Diego as well as Camp Pendleton in nearby Oceanside, California.

Stockton, California rolls in at number six, with median house price appreciation of 11.1 percent. The median list price is $174 per square foot, translating to a median listing price of $268,500. Stockton does have a slightly higher percentage of homes with negative equity, according to Zillow, with 11.6 percent of homes underwater, compared to 10.4 percent for the U.S. as a whole.

Santa Rosa and the California State capital of Sacramento.

Study Portends Bright Future for Private Equity in Self-Directed IRAs

Private Equity is still proving to be a compelling asset class for self-directed IRA investors – continuing to outstrip the general stock market. According to a recent report from Coller Capital, most investors – 62 percent – earned net investment returns of 11 to 15 percent from inception to this year.

That’s solid performance for this underappreciated asset class, though not quite as good as last year, when fully two-thirds of investors experienced returns in the same range.

Private equity is a popular alternative asset class among self-directed retirement investors – particularly those who don’t want to become landlords through a real estate IRA, or those who have particular expertise in one or more industries which gives them a competitive edge when it comes to investing their self-directed IRAs in private equity.

About 18 percent of investors reported annual private equity returns of 16 percent, measuring from inception to 2017. Again, that’s slightly lower than the 20 percent who reported private equity returns in the 16 percent-plus range last year.

About 19 percent of private equity investors have seen annualized returns from inception to 2017 across their entire private equity portfolios, but there were very few – just 1 percent – who saw returns of five percent or less. In contrast, in the Asia-Pacific region, about 35 percent of private equity firms experienced returns in the 6-10 percent range, and 17 percent of private equity market participants report that they experienced incomes of 5 percent or less.

Other findings

Among the study’s other major findings: Most private equity limited partners are concerned about high asset prices (90 percent). 60 percent see protectionism as a big threat to private equity returns.

Most private equity investment respondents see improving prospects, with the most favorable sentiment in the Asia-Pacific region: 52 percent of respondents see improved prospects in private equity in the region in 5-6 years, while only 7 percent expect things to get worse.

In the United States and Canada private equity market, about one in five private equity investors responding – 22 percent, expect things to get worse for PE investors over the next two or three years, while 24 percent expect things to improve. However, there’s a great deal more optimism when it comes to the longer-term outlook: Extend the time horizon out to 5-6 years, only 9 percent expect things to be worse, while 40 percent expect things to be better over that time period.

Interestingly, half of private equity limited partners believe there is much greater tax uncertainty in North America – roughly evenly divided between those who think the tax situation in the U.S. will get better and those who think it will get worse. Uncertainty is much less in Europe and in the Asia-Pacific region.

As for industry sectors, financial technology seems to be the leading the way in the private equity space, with 65 percent of private equity investors seeing investment opportunities increase in this industry. Only about four percent of private equity investors expect things to contract in the financial tech sector. However, indications are that private equity investors are becoming much more selective when it comes to Asia-pacific opportunities.

In credit investments, private equity investors are seeing solid opportunity in special situations, distressed debt, direct lending and mezzanine debt – each of which are popular asset classes among self-directed IRA lenders.

Women Falling Behind in IRA, Self Directed IRA and Other Retirement Savings

A recent Transamerica study found a large and pervasive gender gap when it comes to preparing for retirement. On average, Transamerica found, women have only about a third of the retirement savings that men do. This is true even though women tend to live much longer in retirement than men do – and because women tend to marry younger, they are significantly more likely to outlive their spouses. It’s therefore even more critical for women to invest in self-directed IRAs, 401(k)s, IRAs, SEPs and take advantage of every opportunity they can to boost investment and savings.

Some highlights from the Transamerica survey:

  • Men have more than triple the household retirement savings than women. Men report having saved an estimated median of $115,000 compared to just $34,000 among women. Men (33 percent) are also twice as likely as women (16 percent) to say that they have saved $250,000 or more in total household retirement accounts.
  • Working men (62 percent) are more likely than working women (51 percent) to say saving for retirement is a financial priority right now. Working women (53 percent) are more likely than men (36 percent) to say “just getting by – covering basic living expenses” is a current financial priority.
  • Men are nearly twice as likely as women – 19 to 10 percent – to report being ‘very confident’ in their ability to comfortably retire.
  • A large majority of workers are saving for retirement through an employer-sponsored plan and/or outside of work, men are more likely (80 percent) than women (72 percent) to be saving. In terms of the median age they started saving, men started saving at a younger age (age 26) compared to women (age 28).
  • Self-funded savings including retirement accounts (e.g., 401(k)s, 403(b)s, IRAs) and other savings and investments are the most frequently cited source of retirement income expected by workers, including 77 percent of women and 78 percent of men.
  • Many workers are “guessing” their retirement savings needs. Women (56 percent) are more likely than men (40 percent) to say that they “guessed.” Fewer than one in ten women and men say they have used a retirement calculator to estimate their needs.

It’s clear from the data that women are lagging behind men when it comes to long-term financial security. What can women do to close the gap?

Here are some ideas – with which we heartily concur:

  1. Start now. When you can start making compound interest work for you instead of against you, then every day you delay represents a lost opportunity – not just for accruing interest and potential returns, but an opportunity to build positive financial habits, such as paying yourself first and living on less than you make.

2. Open an IRA or self-directed IRA. Both allow you to set aside up to $5,500 per year for your retirement, on a tax-advantaged basis. If you are age 50 or older, you can contribute another $1,000 per year. Self-directed IRAs allow you to pursue non-traditional retirement assets and alternative asset classes while still preserving the tax advantages of an IRA. If you are a real estate enthusiast, you may wish to consider a self-directed IRA.

3. Boost returns. Over time, women tend to earn lower returns on their investments than men. This is because women tend to gravitate toward lower-return investments than men, seeking safety rather than growth. This is a perfectly fine approach as you near your retirement years. But when you have a decade or more before you need to retire, you might consider taking on a bit more risk as you seek a greater return. That is, if you have the time to recover from temporary market downturns, a bumpy 10 percent return is better than a smooth 6 percent.

4. Slash fees. Many investors are vastly overpaying financial services companies, paying excessive fees like asset under management fees (AUM fees), high fund expense ratios, back-end charges, and hidden fees. Consider switching to index funds, or moving self-directed or alternative assets to a menu-based, flat fee system that can save thousands on larger accounts.

Asheville Still Holds Promise for Real Estate IRAs

We’re obviously quite deep into a bull market for real estate IRAs in much of the country. But a number of economic indicators suggest that the market for real estate IRA investors in beautiful Asheville, North Carolina has a lot of room left to run.

The population is growing fast – much faster than most other cities of similar size across the U.S. as people and employers alike are drawn by the natural beauty of the area, by the recreational and lifestyle features, by the low crime rates and thriving economy, which has been steadily growing and diversifying for the last two decades. According to the Economic Development Coalition of Asheville-Buncombe County and the Asheville Chamber of Commerce, Asheville’s area population has grown by 26,645 people in the last six years. Nearly all of them found a job: The economy added more than 23,000 jobs during the same period. So back out retirees, stay-at-home parents, those living on disability and children and students not yet in the workforce and Asheville’s residents are enjoying near full employment.

The population expansion is widely expected to continue: All told, the population of Asheville is projected to grow by about 21 percent between now and 2046.

The mountainous terrain surrounding Asheville and the nearby communities limits the amount of land that’s easily converted to housing and business use. Furthermore, the community is very environmentally conscious. This may help limit the amount of housing supply growth in the region. All this creates a favorable environment for real estate investors of all stripes, including those who use real estate IRAs. Demand is expected to be very strong in the coming years.

These trends should benefit not just Asheville itself, but bode favorably for all five surrounding counties: Madison, Transylvania, Henderson, Buncombe, and Haywood. Many of the communities in these counties still offer plentiful opportunities to buy properties for real estate IRAs at a reasonable price.

Naturally, real estate investors are constantly seeking sources of financing. This creates more opportunities for self-directed IRA owners. Don’t want to be a landlord or go through the hassles of buying and selling actual properties? You can lend money directly to real estate investors from your IRA or another retirement account, using a self-directed IRA. With rising prices and solid economic fundamentals supporting real estate prices here in the Asheville area, you can lend money secured by quality collateral and potentially enjoy attractive returns in the meantime.

Asheville’s rising population and continuing economic development indicate that the real estate market should be benefiting both landlords and lenders for a long time to come.

Self Directed 401(k)s Versus Self-Directed SEP IRAs

Which is Better for Small Business Owners?

For many owner-operators of small businesses, the Self-Directed Solo 401K may be the way to go, rather than a self-directed SEP IRA plan. Here’s why:

With a Self-Directed Solo 401K plan, you aren’t limited to only one kind of contribution. 401(k) plans allow you to make substantial annual contributions both as an employee and as your own employer, via profit sharing contributions. The business you own and control can make contributions of up to 25 percent of compensation (20 percent for sole proprietorships or single-member LLCs), resulting in a maximum annual combined contribution of up to $53,000 per year.

If you’re age 50 or older, you can potentially defer even more: You can contribute up to $24,000 per year, including an additional $6,000 per year in “catch-up” contributions – and still have the small business you control contribute up to 25 percent of compensation on top of that, for a maximum combined Self-Directed Solo 401K contribution of $59,000.

With a self-directed SEP IRA, on the other hand, you are limited to just the employer contribution of $53,000 and no possibility of additional catch-up contributions under current law.

Furthermore, the total contribution to a self-directed SEP IRA cannot exceed 25 percent of total compensation. That limitation applies to the entire plan. With a self-directed solo IRA, the 25 percent of earnings cap only applies to the employer match portion of the contributions for the year.

Furthermore, a solo 401(k) offers self-directed retirement plan investors the option of establishing a Roth account. This means that contributions will no longer be pre-tax, but the growth in the account will compound tax free for as long as you leave the money in the account. The Roth 401(k) will generally generate tax-free income in retirement for as long as you like, until your Roth funds are exhausted. There is no required minimum distribution requirement that will force you to begin drawing down your account and paying income taxes after you turn age 70½.


The 401(k) allows for much more flexibility if you want to access your money early.

If you start a Self-Directed Solo 401K plan, you have the option to allow plan loans, which can provide you with a tax-free source of liquidity of up to 50 percent of the 401(k)’s total value for any purpose you like. The catch: You must repay yourself, with interest, within five years of taking out the loan, or your outstanding balance will be subject to income taxes and possible penalties for early withdrawal unless you are at least Age 59½ or otherwise qualify for an exception.

This option is not available for SEP IRAs or any other kind of IRA. While you can lend money to certain third parties within your IRA, you cannot lend money to yourself, your spouse, ascendants or descendants and their spouses.

Tax Efficiency

If you are a self-directed real estate real estate investor or you want to use leverage within your retirement account to invest, you would generally be subject to possible unrelated debt-financed income tax within a self-directed SEP IRA. In most cases, your Self-Directed Solo 401K will not trigger that tax – which can approach 40 percent – provided you use a non-recourse loan.

While there is no one-size fits all situation, if you are a self-employed small business owner and you want to maximize both the amount of money you can contribute each year – especially after turning 50 – and your choices, it may make sense to carefully consider a solo 401(k) plan.

American IRA works with small business owners and self-employed individuals who use precisely these strategies to help them get the most out of their available retirement assets. We’d like to help you do the same.

Call American IRA today at 866-7500-IRA(472), or contact us via the Web at


Real Estate IRA Trends for 2018

It looks like most of the easy money in real estate IRAs has been made. The National Association of Realtors is looking for slower rates of home appreciation in 2018, as the supply of homes for sale finally catches up with demand later in the year.

Inventory will remain tight, however, at least through the first quarter, but aggressive construction will make itself felt in the marketplace in the fall.  

There are still pockets of intense demand and shortage, and price trends are very positive for certain markets experiencing high job growth. The NAR expects a lot of new supply to come up for sale in the fall of 2018, so we may see some price weakness as we head into the 4th quarter of the year, says NAR chief economist Danielle Hall.

Sell to Millennials.

Millennials – those born between about 1980 and 1998, are now major players in the real estate market. Obviously, lots of these younger Americans will be renting. But they’re already major players in the homebuying market as well. More of them are qualifying for mortgages that are beginning to place them well beyond the “starter home” category.

Two-thirds of starter home buyers are Millennials. Though many of these young Americans currently rent, a substantial percentage are becoming major players in the homebuying market as well. Real estate IRA investors looking to gain the attention of Millennials and the younger family demographic should structure their investments accordingly.

Mortgage Rates Will Increase

Real estate IRA investors should lock in their rates early – and encourage anyone they are selling to to do the same. A combination of strong economic growth and tighter monetary policy and fear of inflation will create upward pressure on mortgage rates. Conventional 30-year rates could tick up to 5 percent by the end of 2018, projects the NAR.

Southern Markets Will Lead

We are happy to report potential real estate IRA prospects are strongest here in the South. The National Association of Realtors projects that southern markets will experience 6 percent growth, on average, compared to just 2.5 percent for the overall U.S. market. The South continues to generate substantial economic growth as employers flock to our warmer, milder climate. Both job growth and household growth are combining to make the southern and southeastern United States particularly attractive for real estate IRA investors.

Choosing Non-Traded and Private REITs For Your Self-Directed IRA

Real estate is a popular investment within self-directed IRAs. Investors love the tangible nature of land and property, the current income, potential for growth in rental income, and the potential for capital appreciation. There are also a number of tax advantages that apply to real estate that don’t accrue to other asset classes.

But not everyone wants to be a landlord. For those people, owning shares in a real estate investment trust (REIT) may be an option.

Often, people attracted to self-directed IRAs are also attracted to non-traded REITs… that is, real estate investment trusts that are not traded on the stock market and are not rated by investment analysts or widely followed.

About Non-traded REITs

Like exchange-traded REITs, non-traded REITs invest in real estate. They are also subject to the same IRS requirements that an exchange-traded REIT must meet, including distributing at least 90 percent of taxable income to shareholders. Like exchange-traded REITS, non-traded REITs are registered with the Securities and Exchange Commission and are required to make regular SEC disclosures, including filing a prospectus and quarterly (10-Q) and annual reports (10-K), all of which are publicly available through the SEC’s EDGAR database.

Private REITs

Not all REITs are subject to the SEC requirements above. There’s another category called ‘private REITs,’ which are exempt from the requirements listed above. These REITs may carry a higher yield, but they are also higher risk to investors. Generally, these are only available to accredited investors. They call for extra-thorough due diligence. But you can still own them with  a self-directed IRA.

The Liquidity Premium

Yes, shares in these companies can be difficult to sell, and you may have to pay a broker’s commission to unload shares for you. That’s true for direct real estate ownership in a self-directed IRA, as well.  But in the meantime, investors can enjoy a much greater income yield on the dollar. Why? Because liquidity and convenience come at a price. Investors tend to bid up prices on highly liquid publicly-traded REITs – which in turn forces down dividend yields.

If you’re really sharp about real estate, and you know how to do your own due diligence, and you want to maximize your income yield on the dollar, you might consider a privately-held, non-traded REIT for your self-directed IRA.

Before you invest, though, be sire to follow these tips for selecting the best REIT for your portfolio:

  1. Have a healthy appreciation for risk. It wasn’t that long ago that many REITs lost half their value as real estate values collapsed. Some cities like Miami, Las Vegas and Phoenix were particularly hard-hit. Geographic diversification matters – though some investors like making targeted bets on individual markets. If you choose a focused strategy rather than a diversified one, just be sure you have a reason for what you do, and it fits in your overall investment strategy.
  2. Have a long holding period. Because transaction costs with non-traded REITs are high (up to 15 percent), the best way to own a non-traded REIT is to plan on keeping it for many years. Think of it as a marriage, not a fling.
  3. Look closely at the dividend. Is it really from rental income? Or is part of it a return of capital? Return of capital is more tax-efficient, but it’s also kind of like eating your seedcorn. Besides – if you’re holding the REIT in a self-directed IRA, tax-efficiency is not a concern for you.
  4. Does the dividend exceed operating cash flow? If so, the REIT is eating itself alive trying to attract yield-chasing investors. They could be selling good properties or they could be paying dividends with borrowed money. Don’t get so hungry for yield that you don’t care where it comes from.
  5. How’s the balance sheet? High leverage can make a REIT shine for a while – in a good economy. But the more leveraged the balance sheet, the bigger the hit when markets turn on you.
  6. Is the REIT compliant with SEC filing requirements? If it’s behind or if its filings are incomplete, this is a very bad sign.
  7. What are the early redemption policies? Some REITs and private placements place restrictions on your ability to access your money for a number of years. Make sure your time horizon is longer than the lockout period!

The Case for Real Estate In Your Real Estate IRA

It was a nasty crash, but it was eight years ago. Since then, real estate asset prices have been relentlessly marching upward. While nothing is ever certain when it comes to investment, there are indications that the real estate bull market still has room to run – and that’s good news for Real Estate IRA investors.

Yes, the Federal Reserve has been gradually increasing interest rates. But that hasn’t helped bond yields as much as it probably should: Interest rates on CDs, money markets and shorter-term bonds are still much lower than historic averages, while interest rates on mortgages remain quite low compared to rent yields in most markets, combined with the potential price appreciation upside of real estate investing. Again, Real Estate IRA owners know that while there is obviously no certainty that real estate prices will continue to rise, assets are likely to continue to flow into real estate from weak-yielding bond markets as long as yields from traditional income-producing assets common to retirement accounts remains low.

Meanwhile, though the stock market seems very high at current levels, corporate bonds have been very highly correlated to stocks in recent years, giving investors very little reason to accept the meager yields available in them. This, again, tends to drive assets to alternative asset classes, including real estate – boosting prices in the aggregate.

The wealthiest investors and institutions are quite aware of this, and they are increasing their allocation to real estate in their own portfolios. A recent survey by Tiger 21 found that wealthy investors have an all-time record high (since they began tracking it in 2007) of 33 percent of their portfolios committed to real estate, including a Real Estate IRA.

The allocation to real estate and a Real Estate IRA comes at the expense of hedge fund exposure and equities. So the much-followed “smart money” appears already to be cutting back on their exposure to the stock market in favor of alternative assets.

Hedge fund allocation is at a record low of 4 percent, with hedge fund managers in the proverbial dog house as the traditional “two-and-twenty” compensation proves unwieldy in a low interest rate environment: Two percent fees takes up half the yield when interest rates are at 4 percent! And that pushes hedge funds further and further out on the risk curve.

Meanwhile, real estate continues to outperform, with REITs (real estate investment trusts) returning an average of 7.91 percent per year over the long term. Leveraged, those who own real estate directly using a self-directed IRA can potentially do much better – though leverage increases risks as well.

Here in the Southeast, real the real estate market is humming along, with South Carolina real estate experiencing a full-on boom. Vacancy rates have plummeted while new construction is racing to meet demand. Commercial vacancy rates in Lowcountry areas is below 10 percent, thanks to a local unemployment rate of just 3.8 percent in the area. Upstate South Carolina is experiencing a job boom, as well, with BMW leading the way, and attracting more job creation in its wake.

“The commercial real estate market in South Carolina is in exceptionally good shape,” said Mark Vitner, senior economist for Wells Fargo of Charlotte.

But experts are saying that prices here in the southeast have not caught up with the economic reality. Property can still be had at a very reasonable price for Real Estate IRA investors.

“We haven’t seen property values skyrocket because we haven’t seen as much foreign capital come into the state to overheat the market,” he said.

Real Estate IRA – Special Considerations for Vacant Properties

We are seeing more interest among Real Estate IRA enthusiasts in purchasing distressed and vacant properties.

Many times, the Real Estate IRA investor can purchase a promising vacant property at a substantial discount to its intrinsic value, which make these properties attractive value investments – especially for those Real Estate IRA investors who have the capital to upgrade these properties and make them once again attractive to tenants at a reasonable rent.

But as long as a property is vacant, there are some special considerations that investors need to consider:

  • Vacant properties are susceptible to vandalism
  • They are attractive nuisances to children.
  • They may attract vagrants
  • Vacant properties are sometimes occupied by squatters
  • If a child, vagrant or squatter is injured on the property, you (or your Real Estate IRA) could be held legally liable for the injury.
  • Leaks, mold and other problems can go unobserved for weeks or months – making repairs much more expensive than they would be had a tenant been there to help you nip it in the bud.
  • Vacant properties are more vulnerable to burglary and theft

Naturally, you’ll want to carry insurance on your Real Estate IRA investment – normally the standard landlord insurance policy for a property of similar size, type, value and number of units works fine.

But these standard insurance policies are not designed to cover the additional risks posed by a wholly vacant property. They are generally priced with your locality’s typical vacancy rates in mind. If your property has been vacant for more than a few months, and you have a claim, and your insurer finds out, they have grounds not to pay the claim.

That’s why insurance experts recommend owners of vacant properties purchase specialized vacant property coverage. You can buy this as a stand-alone policy, but it’s more commonly sold as a rider or additional feature or benefit of a standard landlords’ insurance policy.

The premiums are slightly higher than you would normally see on an off-the-shelf landlords’ policy, at any given deductible and coinsurance level. But the coverage is probably worth it, as it helps to plug a hole in your insurance protection plan that could result in devastating liability.

Note that just because your investment property is unoccupied doesn’t mean that it’s a vacant property for insurance purposes. The law expects and anticipates that landlords will have occasional vacancies of a few days or weeks between tenants, and during repairs and upgrades.

Many carriers will let you choose between a 3 month, 6-month or 12-month policy term. The best term for you probably reflects the length of time you may need to complete a repair or upgrade.

Premises liability coverage is usually optional, but is often a good idea because liability may be one of the biggest hazards to your IRA.

If you are doing upgrades or repairs, you may also consider purchasing builders risk insurance, which protects construction material and the value of those repairs and upgrades.

What should Self-Directed IRA owners do right before they retire?

Are you reaching retirement age soon? Already pushing it? Ever thought about a Self-Directed IRA? It’s time to make some important decisions about your financial strategy going forward. Here are several things you should be thinking about as you transition into the retirement stage of your financial life cycle.

  • Roll back risk exposure. Now’s the time to begin reducing exposure to uncertainty and market risk. While most Self-Directed IRA owners are not fully invested in the U.S. stock market (diversification is one of the reasons why many investors choose to self-direct their retirement accounts in the first place!) investors should conduct a sober review of their portfolio and its exposure to various kinds of risks. For example, we know from the sad experience of 2008-2010 that real estate can be subject to every bit as much risk and uncertainty as the stock market, under some circumstances.
  • Reduce leverage. If your real estate IRA or other retirement account is heavily leveraged, you may think about working on toning it down. The more of your portfolio is mortgaged, the bigger the short-term unexpected swings there may be – and you don’t want to be on the wrong side of a bear market right when you retire, because you’ll have a hard time earning your way out of the hole.
  • Enroll in Medicare. If you’re turning 65 this year or next year, don’t get so focused on your Self-Directed IRA investing that you forget your Medicare initial open enrollment period. You have a window of seven months to formally enroll in Medicare. The initial open enrollment period begins three months before the month in which you turn age 65, and closes three months after the end of the month in which you turn sixty-five.

For example: If you turn 65 in July of 2018, your open enrollment period will open April 1st, and go through May and June – then July, your birth month, and then three more months after that: August, September and October.

If you miss your open enrollment period, you will have to pay significant penalties in the form of higher Medicare premiums.

  • Assess life insurance coverage. As people get older, many times they are carrying a lot of life insurance they don’t need anymore. With no dependent children, and a comfortable nest egg for both spouses to retire on, it may make sense to convert a substantial life insurance policy into an annuity using a Section 1035 exchange. The law allows those who bought life insurance early in their lives to convert their life insurance policies into annuities, tax free, to unlock another source of retirement income. Some people choose to use the annuity to pay long term care insurance premiums. Others just convert the annuity to income, either now, or at a higher rate later.
  • Decide whether to take Social Security Benefits. You can begin taking a reduced Social Security Benefit beginning at age 62. However, the longer you wait, the greater your monthly benefit will be, until you reach full retirement age. In most cases, if you’re in poor health, it makes sense to begin taking the benefit early. If you’re in excellent health, and expect to live well past full retirement age, you’re actuarially better off waiting and maximizing your monthly benefit over a long retirement.