Robert Brokamp

making the most of Medicare, and happy three-year anniversary to the bull market.

That and much more on this Saturday personal finance edition of Motley Fool Money.

I'm Robert Brokamp, and this week I speak with Richard Chan of CoverWrite about Medicare basics, as well as how to choose the right options for you during the current open enrollment period.

But first, let's cover what happened last week in money, and we have a birthday to celebrate.

The current bull market turned three years old on Monday.

The S&P 500 reached a low of 3,577 on October 12, 2022, and then the current bull market began.

Over the past three years, the S&P 500 has posted a total return of 90%, while the Nasdaq has soared 118%, according to YCharts, as of October 15th.

But not all stocks have done quite as well.

The Dow Jones Industrial Average posted a total return of 68%, international stocks, 79%, and the Russell 2000, 52%.

This partially explains why value stocks, international stocks, and small cap stocks are historically cheap, at least relative to U.S.

large cap growth stocks.

And when, of course, we have to mention gold, silver, and Bitcoin, they are up 150%, 178%, and 478%, respectively, over the past three years.

For our next item, let's check in on what's going on in the auto industry.

After all, transportation is the second biggest item in the average American budget behind housing.

A report published this past Monday by Kelley Blue Book tells us that the average price of a new automobile in the U.S.

is above $50,000 for the first time ever.

Also, it's no longer possible to buy a new car for under $20,000.

Earlier this month, admins reported that despite the higher prices, the average down payment for a new car dropped to $6,020, the lowest level since 2021, which of course means that people are taking on larger loans than ever before.

The percentage of buyers with monthly payments of $1,000 or more accounted for 19.1% of all financed new car purchases near the record set last quarter, and more than one in five car loans are for seven years or longer.

Higher prices and interest rates are two of the factors that are likely contributing to an uptick in delinquency rates in subprime auto loans.

According to Fitch, more than 6% of such loans were at least 60 days past due, near an all-time high.

And now for the number of the week, and it's more than $1 billion.

That's the amount that has been stolen via toll scam texts over the past three years, according to a recent article in the Wall Street Journal.

And you may have received one of these texts yourself.

They often claim to be from EasyPass and they say, hey, you owe us some money.

Americans reported 330,000 toll scam messages in a single day last month, an all-time high.

And the average monthly volume of toll scam messages has increased 350% since January of 2024.

The texts usually come from foreign gangs remotely operating so-called SIM farms in the US.

Included in the text is a link to a site where the victims are instructed to enter a credit card or banking info.

Criminals then use the info to buy all kinds of stuff, including gift cards, clothes, cosmetics, and iPhones.

The lesson, of course, is to never click on a link in a text or email asking for money.

And make sure you tell your parents and kids not to do it as well.

Up next, what you need to know about Medicare when Motley Fool Money continues.

Retirement will be an opportunity to do many things you always wanted to do.

But it may also be a time when you have to do something you've never had to do.

Namely, get your own health insurance.

Most retirees will get their health insurance through Medicare, which in many ways is far more complicated than the health insurance they were getting from their employers.

Here to explain the basics and where to get help with your Medicare decisions is Richard Chan, founder and CEO of CoverRite.

And full disclosure, Motley Fool Ventures is an investor in CoverRite.

Richard, welcome to the show.

So many of our listeners are years, if not decades, from retirement and likely have just sort of maybe a general awareness of Medicare, but probably haven't given it much thought.

So let's start with the basics.

What is Medicare?

And that mandatory part is important, right?

Because if you don't sign up as soon as you're supposed to, you could pay a higher premium for the rest of your life.

There are sort of versions of Medicare, really two basic types.

There's the original Medicare and then a more expanded version.

But just very basically speaking, what does Medicare cover and what are some things that it doesn't cover?

Right.

So obviously key is deciding what you need and making sure you're getting all the coverage for the services you need.

And another thing that is generally not covered by Medicare is long-term care, correct?

All right, so let's say someone is getting close to 65, right?

They're within shouting distance of applying for Medicare.

What do they need to know?

And when you talk about having to pay higher premiums, that is based on your income from two years prior.

So if you're going to apply for Medicare at age 65, you have to start thinking about really at 63, that'll be the income that determines your premiums.

All right, so we're now in the open enrollment period.

It started on October 15th, goes for the basic version at least to December 7th.

And that's when beneficiaries can change their choices.

So what's happening in the 2026 Medicare market?

Starting with whether any part of this process is going to be affected by the federal government shutdown.

And I should say we're taping this on Tuesday the 14th.

When you're listening to this on Saturday the 18th, things might have changed, but I wouldn't bet on it.

So beyond that, what's changing for next year?

And I think the bottom line really is prices are going up.

What do you recommend consumers do during this period to make the best choices for the following year?

Because some people have as much as 100 options when it comes to choosing Medicare, which, again, when we're working for somebody, you just have the plan that's offered by your employer.

You might have a choice between the PPO and the high deductible plan, but that's it.

This is a completely different story.

There are some online resources, right?

Your site is one of them.

You can go to your site and get some information about different plans.

Medicare.gov also has some information.

And then there's also the State Health Insurance Assistance Program, SHIP.

How does that work?

Are these volunteers?

Are they Medicare employees?

So ship is a good source of information, but not necessarily...

Expert advice, for real expert advice, you probably do want to turn to someone like HoverRide or some other agent who's very familiar with the policies.

Well, this has all been very good advice, Richard.

Thank you for joining us.

Time to get it done, fools.

And this week, I encourage you to give some thought to whether you have enough life insurance.

It's a pretty complicated topic, but a recent Wall Street Journal article by Kimberly Lankford offered some guidance.

First off, you generally only need it if someone is relying on your income.

If that is the case, one rule of thumb is to buy an amount that is equal to 10 times your income.

And that one's been around for a while, and I would amend it to be 10 times your income plus $150,000 to $200,000 for each kid you want to put through college.

Another rule of thumb is 15 times your income.

This one comes from financial planner Tim Maurer, and it's based on the fact that if you invest that amount and earn 5% a year, the earnings would be close to your annual income, which may be enough since household expenses will likely drop after you pass away.

The journal article also points out that there are many online calculators that you can use to help come up with a more customized life insurance amount.

So do a search for a few, crunch the numbers, and get additional coverage if your family would be financially devastated if you passed away.

And that's it for this week.

Thanks so much for listening.

And thanks to Bart Shannon, the engineer for this episode.

As always, people on the program may have interest in the investments they talk about, and The Motley Fool may have formal recommendations for or against.

So don't buy or sell investments based solely on what you hear.

All personal finance content follows Motley Fool editorial standards and is not approved by advertisers.

Advertisements are sponsored content and provided for informational purposes only.

To see our full advertising disclosure, please check out our show notes.

I'm Robert Brokamp.

Fool on, everybody.

How does spending change over the course of your life and why it might mean you could spend more in retirement?

That and much more on this Saturday personal finance edition of Motley Fool Money.

I'm Robert Brokamp, and this week I speak with financial planning expert David Blanchett about his research into how to turn a portfolio into a retirement paycheck and why many retirees could spend more than they do.

But first, let's dig into what happened last week in money, starting with the ongoing federal government shutdown.

One consequence is that many economic numbers won't be released, including the previous week's jobs report and, if the shutdown continues, the inflation figures for September, the cost of living adjusted for Social Security, the retirement account contribution limits for 2026, and the new rate for Series I savings bonds, also known as I-bonds.

Another consequence is that many federal employees are furloughed, including nearly half of the workforce at the IRS.

But no, that doesn't mean you could ignore the October 15th deadline to get your 2024 tax return in if you filed for an extension.

And also, several government websites are down.

So, for example, if you're the victim of identity theft, you'll have to wait until the shutdown is over to report the crime and get helpful resources at identitytheft.gov.

While the past is no guarantee of future results, Jeff Bookbinder of LPL did publish some stats about what happened during the past shutdowns.

So since 1976, there have been 21 shutdowns, and they last on average eight days.

But the longest was the last one, which was during the first Trump presidency and lasted 34 days.

On average, the stock market is essentially flat.

during a shutdown with a little bit of variability, the biggest decline being more than 4% in 1979, and the biggest gain being around 10%, again during the last shutdown, which began in 2018.

The treasury market still operates since it's considered an essential service, so interest will be paid and auctions will continue, which is good because our government pretty much runs on debt.

And speaking of identity theft, for our next item, we turn to a recent article from New York Times columnist Tara Siegel Bernard, who wrote about a reader who logged into his wife's IRA at Vanguard and found that $120,000 worth of investments was missing.

It turns out that scammers opened up an IRA in his wife's name at Merrill Lynch, then requested that the investments be rolled over via the Automated Customer Account Transfer Service, otherwise known as ACATS, which is the system that firms use to move money and investments among one another.

Fortunately, this reader discovered the crime soon enough and the investments were returned in a week.

Unfortunately, this type of ACATS fraud is on the rise.

The truth is, it often doesn't take very much to open a new account online.

It doesn't require a credit check, and freezing your credit won't prevent it.

To request a transfer from another account, the scammer has to know enough information about the person and the account that holds the investments, which can be done, you know, maybe during a security breach or grabbing a statement out of the mailbox or the garbage.

The transferring firm may or may not send a notification that there's been a request for a transfer.

And even if they do, account holders don't always read it, given how much email and snail mail we all get.

So what should you do?

According to Siegel Bernard, "...ask your financial provider what sort of notifications they send if money was transferred out.

Make sure the alerts are turned on and ask the firm if they have a locking feature to prevent this type of activity.

If they don't, demand one."

Also, always use two-factor authentication.

Guard your brokerage account numbers and shred paper statements if you absolutely insist on receiving them that way.

Practice good email hygiene, too.

And if you receive paper mail from a financial institution that you suspect is just a solicitation, open it anyway.

It might be alerting you that an account was opened in your name.

End of quote.

And now we move on to the number of the week, which is 60%.

That's the percentage of items in the Consumer Price Index that saw annualized month-over-month growth rates above 3%, according to Torsten Slocke of Apollo.

That figure was just 35% a year ago.

The last time we saw this type of increase in the percentage of items experiencing price jumps above 3% was 2021, as inflation began its climb to above 9% in 2022.

Up next, how spending changes in and throughout retirement, and what that means for how much you have to save for retirement when Motley Fool Money continues.

Your financial well-being depends, first and foremost, on your income, how much of it you spend, and how much is left over to invest.

Here to discuss how income and spending change over time and what it means for your retirement is David Blanchett, Managing Director, Portfolio Manager, and Head of Retirement Research for PGM DC Solutions.

David, welcome back to Motley Fool Money.

So let's start with how income and spending changes over someone's career while they're still working.

Let me hit on one of the things you mentioned previously, because I've recommended that report, More Money, More Problems, many times.

And the point you're making there is if you're saving 10% of your income and you get a raise, you'll obviously be saving more because you're getting 10% of a bigger income, but you need to also be increasing your savings rate

because otherwise you're increasing the cost of your lifestyle.

Everyone wants to maintain their lifestyle in retirement, but if you're just spending most of your raise, you're basically increasing how much you need to save for retirement.

All right, so let's get to the other point you made about retirement.

And I think that the base assumption for many people, whether you're talking to a retirement expert or financial planner, whether you're using a calculator or even yield 4% rule, which we may touch on a little later, is that a retiree will need to increase their spending every year in retirement.

You're saying that that is not true.

Why is that?

Is that by choice or is it by necessity?

Can we look at it another way in that maybe it means someone doesn't have to save as much to retire?

Does that mean some people may be able to retire a little sooner?

Do you have an idea why that is?

I mean, your research is pretty well known about this.

But from what I can tell, it's not incorporated into the broader financial planning industry.

Or am I wrong?

Our financial planner is starting to factor this in.

A few weeks ago, we had Bill Bengen on the show, Bengen being the father of the 4% rule, which he says is now 4.7%.

Actually, in the interview, he said maybe 5.5% nowadays.

And that way of determining how much someone can spend in retirement assumes, first of all, retirement will last 30 years.

Retiree spends the same inflation adjusted about every year in retirement, which if we talked about isn't necessarily what will happen.

It doesn't assume that people change their spending based on what's going on with their portfolio.

So some assumptions there that are perhaps not reflective of real life.

So given the reality of retirement spending and the uncertainty of how long it will last, basically how long we're going to live, what do you think is the best way to determine how much a retiree could spend each year in retirement?

You talked about the ability to cut back when maybe the portfolio is down or something like that.

And you've recently written about segmenting your retiree budget by essential expenses and discretionary expenses.

And I think that helps people think about, okay, I do have this wiggle room in terms of if something happens, this is where I cut back.

And you've also written about the benefit of having a certain amount of guaranteed income to at least cover the essential expenses.

What you found is that many people, even wealthy retirees, are underspending because they're concerned about running out of money or it's just difficult to make that switch from saving to spending.

Whereas if they have a higher level of guaranteed income, they're more likely to spend it, more likely to enjoy their retirement because they know they have another check coming in next month.

You recently took a look at not only retirement spending patterns, but also retiree satisfaction.

What did you find?

Well, thanks for joining us again, David.

This has been so much good information.

It's time to get it done, fools, and this week, give some thought to your 401ks with old employers, including the ones you may have forgotten about.

According to a recent report from Capitalize, a firm that facilitates 401k rollovers, there are now 31.9 million left-behind or forgotten 401k accounts worth approximately $2.1 trillion.

How can you locate a long-lost account?

According to an article on the topic from USA Today's Daniel DeVizier, you can try a few databases, such as the National Registry of Unclaimed Retirement Benefits, the Department of Labor's Retirement Savings Lost and Found Database, or MissingMoney.com, which is the official unclaimed property website of the National Association of State Treasurers.

Private companies such as Capitalize and Beagle can also do a search for you.

But to use any of those sites or services, you have to hand over your personal info, including your social security number in some cases.

And as we discussed in the first segment of today's show, disseminating that info can be risky.

So you may want to just start by just making a list of every employer you've worked for and confirm that you have made the best decision with each of your old 401ks.

You can even call the HR departments of those old employers to see if you still have an account with that employer's plan.

Then, if you find one, move that money to your current employer's plan or, probably better, to an IRA, where you'll likely pay lower fees and have many more investment choices.

And that's it for this week.

Thank you so much for listening and much appreciation to Bart Shannon, the engineer for today's show.

As always, people on the program may have interests in the investments they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell investments based solely on what you hear.

All personal finance content follows Motley Fool editorial standards and is not approved by advertisers.

Advertisements are sponsored content and provided for informational purposes only.

To see our full advertising disclosure, please check out our show notes.

I'm Robert Brokamp.

Fool on, everybody.