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.


Getting a late start on retirement savings doesn’t mean you can’t win the race

Saving for retirement can be a daunting task.  There are student loans, the cost of raising children, the mortgage on your house, health emergencies…the list can seem to be endless.  Click here to see the long list of reasons we don’t save.  If you’re like most Americans, you don’t have enough retirement savings socked away to last the possible decades of life you’ll live after retirement.  However, even those in their 50s can still manage to overcome at least some of that shortage by taking a multi-prong approach according to the Wall Street Journal.  It can be daunting to think about saving 15 to 20 percent and for many people even considering it is a non starter.  Instead consider increasing your savings rate, postponing your retirement for a few years and holding off on collecting Social Security benefits.  While it may not be able to make up the entire shortfall, you’ll get closer to the goal in smaller, more palatable bites.

Here are some more tips on how to save for retirement even if you start late.  Even if you are in your 50s, you still have time for the magical compounded interest.  No matter whose article you read though, you’re going to have to start sacrificing.  Either by spending less, earning more (and potentially that means a second job) or putting off retirement or some combination of the three.

Start by finding some idea about how much you’ll need to retire, there’s a mountain of calculators available, doing some research about what it will take to get there and putting some action into play rather than sitting on your hands.  Eventually, you’ll get there.  Here’s a great list of steps and tools to get you started.

Finally, don’t do it yourself.  Hire a professional to help you work smarter not harder on achieving your goals.

Most Americans not saving enough, too many aren’t saving anything

A new survey shows that more than a third of all Americans (36 percent) have nothing saved for retirement.  What’s more bothersome is that 14 percent of people ages 65 and older have no retirement savings and a significant portion of those who are saving aren’t saving enough.  Not surprisingly, younger adults have significantly less likelihood of having savings (69 percent of 18 to 29 year olds have no savings).  With fewer businesses offering retirement plans and Social Security still not seeing a fix for the problems it’s expected to see in just 20 years, the burden for retirement falls more often on the individual.  Many people give the cost of living and day-to-day expenses as their primary reason for not saving or not saving enough.  According to Bankrate, the origin of the survey, many people don’t save because they don’t have access to a workplace retirement savings plan.  Another problem though is that many are in denial about what their financial needs will be in retirement.  I’m reminded of the expression, “a journey of a thousand miles begins with a single step.”  If you don’t have access to workplace savings, consider hiring a financial professional to help you get started on the right track to retirement.

Study find savers are healthier

Saving for retirement pays back with your health.  At least that’s what a study out of Washington University found.  Workers who save for retirement evidently feel they have a stake in staying alive to enjoy it.  The result, if you’re saving for retirement, you’re probably taking better care of your health.  Researchers found that if you had a 401(k) plan, you likely paid better attention to lab results and did something to improve them.  Of course, it may not be a causal relationship.  It could be that those people predisposed to saving for retirement are naturally the sort of people who care about their health, and are conscientious in other ways.  Here’s the story.  So, what do you think?  Are you the sort of person who naturally did all the things you were supposed to do including saving for retirement or the type that saved for retirement despite a desire to bungee jump off a bridge in Australia?

Seniors get exploited–a lot–and most often by family members

Five percent or more of seniors in the United States are financially exploited (it’s estimated that only one in 44 victims report the crime), most often at the hands of family members.  Financial exploitation is the most frequent form of elder abuse and yet it mostly escapes the examination it deserves.  That’s the findings from a study in the Journal of General Internal Medicine.

About 60 percent of financial abuse occurs at the hands of immediate family members, usually adult children.  Add in so-called friends and neighbors for almost 20 percent more and you get a picture of vulnerability.  Most often the people at the greatest risk are those with the greatest to lose—the poor.

  • Financial abuse includes:
  • Taking money or property
  • Forging a signature
  • Forcing a signature
  • Using property without permission
  • Scams of all sorts
  • And fraud.

Sometimes the abusers feel they have the right to do so because they’ll “inherit it anyway,” because they have a negative relationship with the abused and feel entitled or want to prevent siblings or other family members from inheriting.

In the United States, over 70 percent of the nation’s wealth is controlled by people over the age of 50.  Many of those people do not recognize the value of their assets (especially their home or other real property).  In addition, many older people have been left behind when it comes to the tech world, leaving them vulnerable to people looking to take advantage of their lack of understanding about computers and other electronics.

If you think a loved one has been financially exploited, look for patterns of unpaid bills, new “friends,” legal documents your loved one doesn’t understand, missing property, unusual financial activity and the absence of documentation.

Financial exploitation hurts everyone regardless of whether you are the initial victim.  About 10 percent of victims will eventually be forced to resort to Medicaid as a result of being exploited.

For more information about this crime, go to http://www.ncea.aoa.gov/.  To report fraud, go to http://www.stopfraud.gov/protect-yourself.html.

 

Three things you should do about Social Security

Most Americans treat Social Security benefits about the same way they treat paying into Social Security.  That is, they pay almost no attention to it at all.  Many are like a friend of mine who is sure that she won’t live particularly long because she has diabetes.  It’s true that her diabetes is likely to rob her of a few years of life, but she’s paying no attention to the fact that she has it under control or to the fact that despite her own nearness to retirement age, her mother remains very much alive.  Therefore, she’s hoping to apply for her benefits as soon as she hits the minimum 62 years of age.  Since her husband is close in age to her and has the same intentions, my friend is likely to feel robbed in the not too distant future.  Since it’s absolutely against the law to force people to make the decision you would make, I thought I’d offer some tips in lieu of beginning my life of crime by hijacking Seniors at the SSA office.

  1. Use a calculator and I don’t mean the one in your kitchen junk drawer. I’m recommending that you take the time to find out when it’s best for you to apply for benefits. About 13 percent of Baby Boomers never married. For those permanently single individuals, your claiming choices are fairly simple. You can take benefits at early retirement age, wait to full retirement age or wait until age 70 and claim you maximum amount then. Everyone else should use a Social Security calculator. Luckily, the price of using one begins at my favorite price—free. The Wall Street Journal recently ran an article on the best five free Social Security calculators. You can read that article here.
  2. Hire a financial advisor. The calculators will provide you with some strategies but those strategies won’t take into account other retirement funds and how to balance the tax benefits and claiming options available. Even the single Baby Boomers have options about timing when to begin claiming other retirement benefits and whether or not being able to postpone claiming Social Security benefits will end up with a larger benefit in the end. Financial planners cost money but they can end up paying for their advice within just a few months if you go to one who really knows Social Security and retirement benefits. Contact our office for a list of advisors that understand Social Security is an annuity with benefits.
  3. Educate yourself on Social Security. There are all sorts of wild hares out there when it comes to Social Security. And they can make it especially confusing. Spend some time learning about how a divorce, a death, a late-life marriage, a dependent child or dependent grandchild can change your Social Security strategy. If you change your mind about retirement and get back into the game, how will that affect your benefits? I often recommend “Ask Larry,” a PBS regular feature that by the sheer number of posts about the topic can awaken an appreciation for just how complicated Social Security really is. One of his most recent articles speaks about how your benefits could change over the years and you could miss money you should have earned. Not surprisingly, Social Security doesn’t keep an eye on everyone’s benefits and notify them when they could be claiming more so it’s your job to know when something might change to your benefit.

Respect your Social Security benefits.  The final combined retirement benefit is likely larger than any other retirement benefit you have.  Understanding basic information about how that benefit can grow or shrink can mean the difference between living comfortably and living in poverty.