Cost of supplemental insurance becomes a concern
DEAR BRUCE: I am an 89-year-old male with an 85-year-old spouse. We have a Medicare supplemental that costs us $3,984 a year in premiums to pay for the 20 percent that Medicare doesn’t cover. This cost is getting a little high for our income. We are considering canceling the policy, putting the money into our savings and paying the 20 percent ourselves.
Would we be making a mistake doing this? We don’t have serious health problems, and we have about $100,000 in savings. We own our home free and clear and have no debts. — R.R.
DEAR R.R.: You haven’t given me enough information. I don’t know what your income is, and that is certainly an important number. Unless it’s a lot less than I would ordinarily guess, I wouldn’t cancel the insurance.
You mentioned you’re in good health. That’s great, but that can change momentarily for either of you. If that happens, the expense of carrying that might put a serious dent into your capital. As the expenses go up, I suppose the cost should be revisited, but in my opinion, you should continue with the insurance due mostly to your ages. Now is not the time to be gambling.
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DEAR BRUCE: What is the best way to invest $50,000 and get a decent return without losing any money? — F.F.
DEAR F.F.: I wish there was an easy answer to your question. I would invest in the market. I would find three or four companies that have been around for a long time and that will be around in the future. I am referring to companies like Johnson & Johnson, Walmart, J.C. Penney, etc.
The company should pay at least a 2 percent to 3 percent dividend, and over a period of time, it should give you a 4 percent or more increase in value.
Those companies are out there. It will take a little effort on your part to find them, but it’s certainly worth it.
Send questions to firstname.lastname@example.org. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.
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