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.

Avoid holiday scams by staying in the know

The holidays are a great time for scammers.  We’re all feeling a little more generous and we want to spread some cheer, plus and I hate to say it, but it at least seems like more bad things happen at this time of the year.  Mudslides, earthquakes, floods…all those things that rob people of the joy you expect to experience at the holidays.  So what happens?  We feel bad and we open our pocketbooks.  Here is a list of things you can do to avoid being scammed and feeling like Scrooge.

If someone calls you requesting money for a charity or hits you up at the door to your favorite holiday shop, ask them for information about the charity so you can research the charity before making a decision to give.  Legitimate charities give you the time and space you need to make a good decision about whether or not to donate.

You can research charities by going to or by visiting the Better Business Bureau’s charity rating site, or

You can check a charities tax status by going to the site for Publication 78.

If you are scammed by a charity, please report it so others won’t also be scammed and investigators can put a stop to it.  You can report a scam by calling the FTC at 1-877-FTC-HELP (1-877-382-4357) or by going online at

You can sign up for scam alerts at

Talking to your parents about money

My mom is a math whiz.  Or at least in my family of math-phobic or at least uninterested she seems like a math whiz.  She got her degree in math, worked for a bank for years and, despite three kids and a husband who don’t appreciate the bottom line like we ought to, managed the household accounts.  So I have some obvious reluctance to talk to either of my parents about their financial situation but I’ve been weighing whether or not it might be time to do exactly that.  It’s not that I’m seeing anything indicating that their finances are in trouble it’s that so far so good and I’m worried that one day that won’t be the case.  Unlike my mom, unwrapping where something went financially wrong would take me some time and I might not have the time to take to do so.  My family is long lived and my parents are just about 70 so I’d like to believe they have at least another decade or so before any concern is warranted but still it will probably take me ten years or so to work up to the point of sticking my nose in their financial business.  Which is precisely the point.  Most of us would consider butting in to someone else’s financial life to be ridiculously nosy.  However, if you still have parents, the reality is that at some point you will have to do precisely that.  Here’s some suggestions from the Huffington Post

Will tax-free disability savings accounts become law in December?

Next month the House of Representatives will hold a floor vote on the ABLE Act.  Under ABLE, people with disabilities would be able to establish special accounts at financial institutions to deposit up to $14,000 a year and accrue up to $100,000 in savings without risking losing government benefits such as Social Security and Medicaid.  Those funds could then be used to pay for education, health care, transportation, housing and other expenses.  The Act is modeled after the 529 college savings plans and would allow interest on the account savings to be tax-free.  The bill is expected to win approval.  Read more here and here.

Widowhood and poverty shouldn’t go hand in hand but they often do

If you’re a financial advisor, take heed.  New York Life found that nearly 20 percent of widows who dropped a couple’s financial advisor after their spouse died, did so because they didn’t have a relationship with him or her.  The study didn’t say how many women stayed with the financial advisor despite being unhappy with him or her but it’s a good bet that many do because they are too intimidated to go elsewhere.  What does that mean if you’re a woman?  It definitely means that you should be financially proactive before an event such as widowhood occurs.

Forty percent of widows reported negative lifestyle changes after the loss of a spouse.  About 24 percent of widowers reported the same.  The effect appears to be greater to the widow than to the widower with two-thirds of widows experiencing a significant financial change as compared to half of widowers.  Some of the most financially challenging changes were in the ability to save for retirement or take a vacation.  To some extent both sexes experienced challenges in budgeting for one income, cutting discretionary spending and adjusting to a single income.

Although the rate of poverty associated with widowhood has fallen since the 1990s, for women, the road to poverty generally begins with their husband’s death.  Half of all women who become widowed do so by age 65, making it a concern not of old age but of being female.  Because men continue to be the major breadwinners in most households, widowhood generally means a significant drop in income of between one-third and one-half.  Nearly a third of all single women over the age of 75 live in poverty.   The older you are at the age of widowhood, the more likely that your financial situation will become precarious even though you potentially have far longer to plan for that eventuality.

Take the result of one survey that looked at widows 70 and under who had become widowed within the past 5 years.  Those women:

  • Had difficulty filing income taxes (61 percent)
  • Lost 50 percent of their income with their husband’s death
  • Did not have an emergency fund (roughly a third and surprisingly that number climbed to 45 percent for widows with $50,000 to $99,999 in savings)
  • Had trouble determining what Social Security entitlements they were eligible for and then claiming them (37 percent)
  • Had trouble locating bank accounts and investments and obtaining access after their husbands died (26 percent)
  • Had to move to less expensive housing after their spouse’s death (26 percent)

For women, the likelihood that you will become a widow remains far higher than the likelihood that if you were a man that you will become a widower.  However, men should take heed as well because while women continue to suffer a greater burden at the loss of a spouse, men also experience a burden.  In addition, men and women can make changes to their financial futures that will prevent either spouse from experiencing a devastating financial impact at the loss of a spouse.  After all, if you’re married, one or the other of you will likely leave behind a surviving spouse.  Preparing for a future without one spouse should be a planning event for both partners.

A NextAvenue article refers to that planning event as the “Moral Obligation of Husbands.”  However, the article doesn’t leave it as something males fail to follow through with.  Women too must make an effort to be more involved with financial planning.  If only 20 percent of women feel prepared for such an eventuality, then 80 percent are dropping the financial ball.  What’s more, they don’t even appear to be making an effort to hold onto it.  Women have long carried a math deficit and that carries over to our own financial futures.  Despite major strides in women’s ability to create wealth, manage business and own our own share of the business world, we continue to be decades behind the financial eight ball when it comes to understanding finances.  Take for instance a survey in which 20 percent of women stated that the financial services industry doesn’t understand them (by the way, an equal number of men say the same).  Another found that women were convinced that their gender was a key factor in the disrespect and condescension they encountered with the financial services industry.

Women continue to opt out rather than making the effort to find someone in the financial services industry that does understand them.  It isn’t just a man’s moral obligation to make sure his wife is taken care of once he passes, it’s a woman’s obligation to take care of herself.   You are after all, the woman your daughter and granddaughter look up to.  Do you really want to leave a legacy of financial illiteracy?  Or as Kerry Hannon writes “You’re accountable for your own financial future. Take ownership.”

Gray divorce hurts retirement plans of both individuals

The United States has one of the highest divorce rates in the world but it’s been going through a change in the past three decades. According to the U.S. Census Bureau, the rate of divorce for most Americans is falling since its all-time high in the 1980s, except when you look at Baby Boomers. The divorce rate for those over 50 has actually doubled in the last twenty years and now accounts for roughly a quarter of all marriages.  Older marriages, and therefore older divorces bring with them their own challenges.  Couples who have been married for long periods of time have entwined their lives far more than their younger counterparts.  They are also more likely to have gone through a previous divorce.  Those two things complicate the divorce process.

How your assets are divided is dependent upon the individual case but from the standpoint of where your finances were before the divorce when both individuals in the marriage shared 100 percent of the assets, you’re likely to see a drop. Divorce usually means that a couple’s retirement lifestyle has substantially decreased since it costs substantially more as two people to retire than it does for a couple. According to AARP, a man’s income drops 23 percent after a divorce and a woman’s income drops 41 percent.  The result is that many people find that divorce forces them to continue to work past the time they originally planned to retire.

Couples in which one partner has always worked and the other either hasn’t or has very little employment history will see steeper ramifications than those who are on a more equal financial footing. Because that individual was until recently the woman in the relationship, divorce often leaves women in significantly worse shape than their partners.

If your marriage has lasted ten years or longer, be aware of Social Security strategies that can help improve both parties overall benefit.

Divorce at any age is complicated and fraught with opportunities that will impact you for the rest of your life. If you’re thinking about getting a divorce, hire a financial advisor.  All things are not created equal and you’ll need someone with experience to understand that getting an equal dollar amount in a Roth IRA is not the same as a 401(k).

While you are considering the impact of divorce on your retirement income and future retirement plans, consider one other thing. Married folks generally don’t need long-term care for both partners because one spouse generally provides unpaid care for the other.  The majority of people in nursing homes are women, not just because women live longer but because those women no longer have a partner to lean on for their care.  If you get divorced, both sexes are more likely to need to pay for caregiving and should include planning accordingly.

Finally, one of the reasons older couples get divorced is to protect their assets when one of the spouses has a medical problem and spiraling medical costs threatens financial ruin.  One way this can look is to have the well spouse get everything in the divorce decree but with the caveat that the assets must go to a Safe Harbor Trust with the ultimate aim of providing care for the ill spouse.  Any medical divorce should be handled by an Elder Law Attorney to ensure that you have not traded one jeopardy for another.

See also:

Ending a marriage can throw a wrench in your retirement plans