AgingOptions Life Plan: Finance

“Will I have enough assets in order to not run out of money before I run out of life?” is top of mind for all of us in the final third of our lives. In answering this, preservation, positioning and passing of accumulated wealth goes beyond traditional estate planning. It calls for all affected family members to be participants in a model that integrates health, housing and elder law considerations.


Some Experts Ask, “Should You Really Wait to Claim Social Security?”

On the CNN financial website this week (money.cnn.com), we found an interesting article that asks a provocative question: “Is 70 Too Late to Claim Social Security?” This question sounds almost heretical, since most experts advise people to wait as long as they can (ideally until 70) before starting their benefits, but as the article points out that actually might not be the best strategy for every retiree.

You can click here to read the CNN article. It was written for CNN by the financial experts at the popular website Motley Fool. We present it here merely as food for thought. As with any financial advice of this magnitude, we urge you not to take action until you’ve carefully reviewed your options with a professional planner. You can contact us here at AgingOptions any time to discuss Social Security strategies along with any other retirement-related questions.

The CNN article acknowledges that choosing when to take Social Security is “one of the most important decisions you make about your retirement.” As most of our readers and radio listeners know, people born in 1954 or earlier can claim benefits as early as age 62 (assuming no disability payment is involved). Full retirement age is considered to be 66. Benefits increase at about 8 percent per year between 66 and 70, so waiting to take benefits is generally considered a sound idea (even though only a small percentage of retirees actually do so – estimated at well below 10 percent of beneficiaries).

But according to CNN, the “time value of money” may dictate that having smaller checks over a longer period of time might be better than receiving larger checks over fewer years. The argument, in simple terms, goes like this: if you wait until age 70 to start Social Security benefits, it will take you about a decade, or until about age 80, to have collected as much as you would have had you started benefits earlier. So in essence, by waiting for maximum benefits, a retiree is gambling on how long he or she will live. CNN suggests some might be better off taking those Social Security payments early, investing them, and enjoying a larger nest egg for the remainder of their lives.

However, there’s a big “if.” The CNN article says this “start early and invest” strategy works well “if other sources of retirement income allow you to invest your Social Security income.” In other words, if you don’t need Social Security to live on, putting it all into investments is a good plan. The reality in our experience, though, is that this idea is a luxury most retirees can’t afford and probably should not do. Studies estimate that, for single retirees, nearly half count on Social Security for 90% of their income. And because many adults still are not preparing adequately for the financial demands of retirement, the situation seems unlikely to change. (This was covered in a recent article on our blog, and you can click here to read it.)

When it comes to investing, there’s also the problem of self-discipline. The experts at CNN suggest you might benefit from investing those early Social Security benefits, but too many people in our experience end up spending those dollars instead, either out of necessity or by choice. In other words, in spite of the best of intentions, those so-called investment dollars get spent elsewhere, and the retiree is left with lower Social Security benefits for life (not to mention lower spousal benefits as well).

Before you take a risk with something as vital as Social Security, we urge you to get professional and unbiased advice. That’s what we’re here for. At AgingOptions we will walk alongside you through the many complex questions about retirement planning and help you make the choices that are right for you. This applies not only to your finances but also to important facets of retirement planning such as housing options, legal affairs, health care coverage and family communication. For everything from choosing a geriatric physician to deciding if a reverse mortgage is right for you, the professional team at AgingOptions stands firmly on your side.

A great way to get a no-obligation overview to the AgingOptions approach to retirement planning is by attending a free LifePlanning Seminar. We offer these popular, information-packed sessions at locations throughout the area. Register online on the Upcoming Events tab, or call our office for questions and assistance. We will welcome the opportunity to be your guide and advocate through the exciting journey of planning for your retirement years.

(originally reported at http://money.cnn.com)

 

 

Reverse Mortgage Can Help Seniors Afford to Age in Place

We just discovered a pair of related articles on an industry website called Reverse Mortgage Daily that help shed light on what many believe will be an upcoming explosion in Home Equity Conversion Loans, or HECM’s – the technical term for reverse mortgages. These articles could provide you with food for thought if you’re a qualified homeowner considering how a reverse mortgage could help make it possible for you to stay in your home in your future years, a choice called “aging in place.”

The first article refers to a recently released survey of seniors by Freddie Mac (the Federal Home Loan Mortgage Corporation). In their 55+ survey, they discovered that those in that age group (including almost all the baby boomers) control an astonishing $8 trillion in America’s home equity. What’s more, these seniors seem to have a strong desire to stay put. The Freddie Mac study states that around 60% of 55+ adults are “very satisfied” with the communities where they live and nearly two-thirds feel the same about the home they’re living in. A similar number definitely want to age in place if they have anything to say about it. (You can read an article about the Freddie Mac study by clicking here.)

The second article echoes something we’ve talked about on the radio and reported on our blog before. It points out that one of the most practical ways for a senior to be able to age in place is to use a reverse mortgage to fund the kind of home upgrades that will make that choice possible. Sadly, however, whether it’s through denial or uncertainty, some people wait too long before deciding to modify their residences. “When aging, many people don’t consider making the necessary changes to ensure their future needs until it’s too late, and upgrading their home for aging in place often falls into this category,” says Reverse Mortgage Daily.

Click here for the second Reverse Mortgage Daily article, describing some of the home renovations that will help seniors age in place – renovations an HECM can help pay for.

No doubt the reasons people keep putting off home renovations vary. Upgrading and remodeling a home is not only costly, it’s disruptive – just ask anyone who has tried to live in a house while going through a major remodel. (We have one acquaintance whose family spent an entire summer a few years ago with the kitchen temporarily relocated to the carport.) The problem is, the longer you wait, the harder it will be to cope with that disruption. “People don’t want to take the time and have renovations done until they are already in a less than ideal situation” caused by age and health issues, says Reverse Mortgage Daily. In this case, you may find that waiting too long to upgrade your home will make it impossible for you to keep living there as you age.

The great news is that there may be less and less reason to put off home upgrades. As reverse mortgages become more secure and more widely recommended, these financial tools are proving to be a highly popular way for seniors to be able to afford the renovations they need to stay in their home for the long haul. If aging in place is your dream, as it is for almost two-thirds of seniors, but your present home will need better lighting, redesigned bathrooms, wider hallways and more accommodating kitchens – just a few of the many upgrades seniors tend to require – a reverse mortgage could very likely be the perfect solution.

As with every aspect of retirement planning, you need the services of an expert – not a random website or a well-meaning but ill-informed friend. Here at AgingOptions, providing those objective services is our job. We want to serve as your planning partner and information resource as you consider all aspects of retirement, including housing, health care, legal affairs, finances and communication with your family. If a reverse mortgage interests you, we can refer you to trusted local experts (such as Laura Kiel of Kiel Mortgage) who will analyze your individual circumstances and give you an objective recommendation and personalized service.

If you are interested in the full range of retirement planning services, we’re ready to assist you.

Why not start by attending one of our upcoming LifePlanning Seminars? These free, information-packed events are held at locations throughout the area, and they are offered without obligation. A LifePlan is a fully-developed, comprehensive retirement blueprint that will help you build the retirement of your dreams. Click on the Upcoming Events tab and register online for the seminar of your choice. We’ll look forward to meeting you soon and helping you create a LifePlan of your own!

(originally reported at http://reversemortgagedaily.com)

Long-Running Retirement Study Finds Confidence Up, Readiness Down

Because we’re in the profession of preparing clients for retirement, we’re always interested in research that sheds light on how Americans are thinking about (and planning for) their senior years. The longest-running survey of its kind in this field, called the Retirement Confidence Survey, is put out by the Employee Benefit Research Institute (EBRI). We just finished scanning the most recent results and while there is some improvement in the attitudes American workers have toward retirement, there continues to be (in our view) a serious lack of preparation.

If you’d like to read some of the basic findings, click here to read an overview of the EBRI study. The headline on the article summarizes the study by saying that American workers are feeling increasingly confident that they will be able to afford a comfortable retirement. But we think they may be whistling in the dark. According to EBRI, “in the aggregate, only a minority of all workers appear to be taking basic steps needed to prepare for retirement.”

During the recent recession, the percentage of American workers expressing strong confidence that they would be able to afford a comfortable retirement plummeted to a record low. Since 2013, that figure has climbed from 13 percent of respondents to 21 percent this year, a reasonable bounce. On the other end of the spectrum, those workers saying they are not at all confident of being able to afford a comfortable retirement dropped from one in four to one in five. That’s an improvement, certainly, but the sobering fact remains that 20 percent of workers face retirement with serious fear and trepidation.

One reason for this fear is found on one of the fact sheets accompanying the report summary, called Preparing for Retirement in America. It shows the savings rates for workers responding to the Retirement Confidence Survey. Taking into account all household savings (excluding the value of their primary residence), more than half say they have less than $25,000 accumulated, and about one-quarter have $1,000 or less saved. Ironically, fewer than half of respondents report that they have made any real effort to determine how much money they are going to need when they retire. With this head-in-the-sand approach, it seems to us that many of these workers are heading for a rude awakening.

We found this statement in the full EBRI report: “Many workers acknowledge their savings shortfalls for retirement, stating they need to save a sizable, perhaps unmanageable, share of their total household income in order to live comfortably in retirement.” (Emphasis added.) Almost 40% of workers believe they’ll have to save 20% or more of their income, and 22% don’t know how much they should be saving. Not a reassuring picture.

There’s a third fact sheet here titled “Expectations About Retirement.” About one-fifth of workers responding to the Retirement Confidence Survey say they have changed their retirement plans over the past year, with the vast majority reporting they plan to delay retirement. Most have made this change because of the economy, or lack of savings, or need for health insurance. But again the expectation of workers seems to collide with reality, according to the survey: when researchers asked retirees, nearly half had left the workforce earlier than they planned – some by choice, but most due to health problems or loss of employment. About one-quarter of workers say they plan to keep working until age 70 – but the actual number of retirees who did so is dramatically lower, about one in twelve.

The reason we share this information with you here at AgingOptions is simple: retirement requires planning, not wishful thinking. This need to plan is certainly true in the area of finances – but a good plan is also required to ensure that your legal affairs are in order, your housing options have been reviewed, your health care needs are covered and your family is completely informed of your plans and desires. That’s the approach we take here at AgingOptions, with a comprehensive and thorough methodology we call LifePlanning. We would love to show you how LifePlanning can revolutionize your attitude toward retirement and give substance to your hopes and dreams.

Why not take some time to attend a free LifePlanning Seminar? These information-packed sessions are held throughout the Puget Sound region. You’ll find a complete listing plus an online registration form on the Upcoming Events tab on our website – or you can call us for information. Of course, there’s no obligation whatsoever. It will be our pleasure to work with you.

(originally reported at www.ebri.org)

Senior Perspective: What Seniors Wish Youngsters Knew about Money

Have you ever played the mental game that starts out, “If only I knew then what I know now”? We suspect most if not all of us have looked back on various stages of our lives and said, “If only.” Whether it’s the jobs we took, the places we lived or the money we failed to save, as we get older, there are probably many things we wish we had known back then.

That’s why this article on the US News website caught our eye. It contains ten specific pieces of advice seniors would like to be able to tell younger people about finances. The subtitle says it all: “Here’s what seniors think younger generations should know about retirement.” We share this with you for two reasons: first, if you’re several years away from retirement, this information will prove helpful; and second, for those closer to (or already in) retirement, this article may encourage you to pass along some of your hard-earned wisdom to your children, grandchildren or younger acquaintances (if you can get them to listen, that is.)

We won’t list all of these ten financial tips here – you can read the article for the complete list – but here are several. See if you can relate to these words of Senior Wisdom.

The first piece of advice concerns education: learn finance and business early on. The US News article suggests that having some education in basic financial and business principles will help give you greater confidence as you save and invest. Too many of us go through our entire adulthood flying blind and making poor decisions as a result. This advice might be particularly helpful if a child or grandchild is heading for college and deciding on a major. But there are other good resources out there to teach you about money, and taking advantage of them early in life could be a wise idea. (Contact us here at AgingOptions if you would like some recommendations along this line.)

Two more of the things seniors would like to impart to the younger generations involve debt. Pay off your mortgage early, says US News, because being mortgage-free gives you much greater flexibility and less pressure as you age, especially if (as is common) you find yourself retiring earlier than planned. The second warning is to control credit card debt and car loans. Debt can be a huge impediment to your retirement dreams. We wrote an article about this debt burden very recently on our Blog, and you can click here to read it.

Here’s one more tip from the US News piece: when it comes to your work, follow your heart even if your paycheck suffers for it. (This idea goes hand in hand with the advice to control unnecessary spending and start saving early.) If you’re not cut out for a high-paying, high-pressure career, you shouldn’t feel compelled to pursue one. Instead, you may find great personal reward working for a non-profit, or owning your own small business. Indeed, we have many clients enjoying a comfortable (if not lavish) retirement who earned modest incomes doing work they loved. Many of these men and women are much happier and healthier than some who earned fatter paychecks doing work they really never enjoyed.

How can you make these principles work for you? The key, we suggest, is good advice. As you make choices affecting your retirement, whether you’re old, young or in between, you need a guide who can walk you through your many options and help you achieve the retirement you’ve been hoping for. Our approach goes far beyond financial planning: we also help ensure that your legal affairs are in order, your housing options well thought out, your health care needs provided for and your loved ones well-informed of your wishes. This comprehensive approach to retirement is called LifePlanning, and it’s our professional specialty here at AgingOptions. We would consider it a privilege to help you develop a LifePlan of your own.

To find out how this process works, and how life-transforming it can be, we invite you to attend a free LifePlanning Seminar soon. You’ll find a complete listing of dates and times on our Upcoming Events tab, where you can also register online for the seminar of your choosing. Feel free to call our office if we can assist you.

When you have a fully thought-out LifePlan in place, you’ll face the future with greater confidence than you ever thought possible. And you’ll be ready when the young people in your life start asking you for advice!

(originally reported at http://money.usnews.com)

Today’s Workplace Remains Unkind to Older Workers, says CNBC

“For older workers, getting a new job is a crapshoot.” That’s the sobering title of a recent article on the CNBC website. The article paints a bleak picture of the employment prospects for seniors, stating that the problem of getting fired (or never getting hired) just for being old “is a problem that’s only going to get worse.”

You can access the just-published CNBC article by clicking here. We suggest you consider the implications of this report, since it may have direct impact on your plans for retirement. Surveys show an increasing number of seniors (as many as two-thirds, say some studies) plan to keep working past the age of 65 – but what if the jobs they hope to get or retain simply aren’t available? The financial impact could be severe.

CNBC reports that the American workforce is definitely getting older. In 2002, only about one-quarter of U.S. workers were over 50 – while today that statistic is growing, projected to reach more than one-third by 2022. But because the economic recovery has proved stubbornly sluggish, older workers and younger workers find themselves increasingly competing for a limited number of job openings. What’s more, since older, more senior workers are frequently paid more, there’s “a target on the back of every experienced, higher-salaried employee,” in the words of CNBC.

“Every time there’s a recession, there’s a pattern of age discrimination,” said Patricia Barnes, author of the book Overcoming Age Discrimination in Employment. Nevertheless, legal protection for senior workers facing age discrimination remains plagued with loopholes and weak enforcement. Recent legal findings have held that fired employees now have to prove that age was the main reason for a layoff, whereas it used to be sufficient merely to show that age was a contributing factor. This frees up employers to try “a wide variety of tactics to edge out older, generally more expensive workers,” says CNBC. It also surprised us to learn that the Civil Rights Act, which prohibits employment discrimination based on race, color, religion, sex, or national origin, specifically does not include age.

The hiring process can be geared in subtle ways to create barriers for older workers, especially in our modern digital economy. As CNBC says, “younger and cheaper” is what many employers are looking for in today’s competitive marketplace.

Are you planning to continue working full time or part time in your retirement years? Are you counting on keeping your present job as long as possible, perhaps until Social Security benefits reach their maximum at age 70? That’s a good strategy. But a strong retirement plan must include planning for contingencies. What would you do if you found yourself out of work and unable to replace your current income? That may be a tough question to answer, but considering your options now will pay great dividends later if your employment plans were to change through no fault of your own.

Helping you plan for the contingencies of retirement – especially the tough ones – is what we do here at AgingOptions. We work alongside our clients to help them develop a solid and comprehensive plan called a LifePlan designed to guide them into a secure and fruitful retirement. We would welcome the opportunity to do the same for you. With a LifePlan in place, all aspects of your retirement are taken into account, including legal affairs, financial plans, medical needs, housing options and family relationships. Imagine how much more confident your outlook on the future would be with such a plan in place.

Find out more by attending a free, no-obligation LifePlanning Seminar. These are offered frequently at locations throughout the Puget Sound region. We know you’ll enjoy attending one of these stimulating, information-packed events. Then if you wish we can plan a personal consultation where we can review your individual circumstances. For registration and details call our office, or click on the Upcoming Events tab on our website. We’ll look forward to meeting you at a LifePlanning Seminar soon.

(originally reported at www.cnbc.com)