3 Things 9-29-25

 Thing One

What Would You Do?

Here's a question for you:

If your best friend told you he was making lots of easy money trading options, what would you do?

The answer is, you should do what you want.  But, if you do decide to start trading options, you should get some understanding of what that really means.  And, hopefully, as a part of gaining that understanding, you’d come to the same conclusion that many people, including the ones at clarkfinancial.com, have:

“The number one reason why most options traders fail is they rely solely on market timing for success. If you’re using options simply as a leveraging tool to make more money on the predicted movement in a stock or index, you’ll have many trades go in your favor, and from time to time you’ll experience fantastic gains. However, if you’re simply buying calls or puts based on what you expect the underlying stock to do, your odds of long-term success as an options trader are very limited.”

If you still want in knowing that, go ahead.  But know there are other “options”.

Thing Two  

Medical Costs In Retirement

A few years ago, we wrote on this topic and noted that the “average” household could expect to spend around $250,000 in medical costs out-of-pocket in retirement.  Given the things we know now that we didn’t know then, we figured it was time for a follow-up to that post.

First, some basic facts about Medicare, the health insurance for the elderly (and some non-elderly with specific medical conditions).  Assuming you don’t have an employer policy that covers you after you retire, there are three ways to insure yourself medically as a senior citizen, Original Medicare (Part A and Part B) only, Original Medicare plus a supplemental policy (Medigap), or Medicare Advantage.

1.     If you choose Original Medicare only, you generally won’t have co-pays and coinsurance for doctor visits, but if you’re admitted to the hospital, you will have to pay a $1632 Part A (hospital) deductible and your copays will gradually increase from $0/day at first to $400/day, to $800/day, to full cost/day for the remainder of your hospital stay. With this option, your annual out of pocket costs are essentially unlimited.

2.     If you choose a Medigap plan, you will not have any co-pays or coinsurance – for doctor visits or hospital stays.  With this option, your maximum annual out-of-pocket costs, not including your plan premiums and Part B premiums which average $150/monthly (for the best plan) and $174.70 respectively, equal your Part B deductible, which is $240 for the 2024 plan year

3.     If you choose a Medicare Advantage plan, you’ll likely not pay a monthly premium, but you will have co-pays and coinsurance when you see a doctor or go to the hospital.  Unlike the Original-Medicare-only option though, your official out-of-pocket costs (which include deductibles, copayments, and coinsurance, but not premiums) are limited by statute.  For 2024, the maximum any Medicare Advantage plan can hold you responsible for is $8,850.

So which option should you choose?  As always, it depends, but we do believe there is an option that you shouldn’t choose and that’s number one.  There is no reason to leave yourself exposed to unlimited medical costs when there is a zero-dollar-premium option that dramatically reduces your maximum annual out of pocket costs. 

And how about that $250,000 average we referenced at the beginning of this post, what is it today?  Well, if we use the extreme, but possible scenario of a very sick person that spent 5 months in the hospital under each of the three options we get:

1.     Original Medicare only – Not counting prescription drug costs and premiums, over $60,000 would be paid to the hospital in deductibles and co-pays and 20% in coinsurance would be paid for doctor’s services for the 150 days.  The estimated $250,000 over the retiree’s lifetime could be a dramatic underestimate in this case – and this doesn’t even consider the spouse. 

2.     Original Medicare with a supplement – The only out-of-pocket costs for the 150-day period (not including prescription drugs and premiums) would be the $240 Part B deductible.  Yes, you read that right, the total medical costs borne by the patient for a 150-day hospital stay would be $240.  If this person stayed in the hospital for 150 days/year for 20 years, it would cost them $4,800 (not accounting for premiums, drug costs, or the annual inflation in the deductible).

3.     Medicare Advantage – The out-of-pocket costs (not including prescription drugs and premiums) would be $8,850.  Over 20 years, the maximum they would have paid is $177,000.

The details suggest a clear answer to the question posed earlier about which plan to choose.  In a future post, we’ll discuss reasons many people do not pick what appears to be the “obvious” choice.

Thing Three

Just A Thought  

“Lack of direction, not lack of time, is the problem. We all have twenty-four hour days.”― Zig Ziglar