If You Die in Debt, Will Your Heirs Have to Pay Up? Probably.

Several months ago we discovered this insightful article on the website US News. It answered a question we have heard frequently in our client meetings, on our call-in radio programs and at our seminars: “If I die with debts, will my heirs have to pay them off?” Because this question (and the worry behind it) is so common, we felt it was timely to re-address this issue.

So here’s the bottom line: If you die leaving debt behind, most of the time – if you have any assets at all – the answer is yes, your heirs will be saddled with that debt. The article explains several possible scenarios where those debts you incur in life will burden those who inherit your estate.

Debt is an especially tough problem for seniors, a group whose debt burden is definitely increasing. “With seniors’ debt burden rising, many are likely to die with debts still unpaid,” says US News. “While not all that debt will pass to their heirs,” the article goes on to say, “much of it will come out of any inheritance they expect to leave behind.”

How bad is the senior debt problem? The article states that in 1989 about 44 percent of senior households in the U.S. were carrying some debt. In 2013 that percentage had risen to just over 61 percent. But the figure that caught our attention was the amount of that debt: for households headed by adults age 60 or older, the average debt burden had skyrocketed from about $9,000 in 1989 to nearly $41,000 in 2013. One particular surprise that we’ve recently written about on our AgingOptions Blog (click here for the story) is that many seniors are loaded down with student debt incurred by their kids and grandkids, because of education loans for which the parent or grandparent co-signed. For seniors already strapped for money after the recent recession, debt can be a crushing burden now and a headache in the future when your children have to deal with it.

US News states that, if you have any assets at all, your creditors will likely get “first dibs” during the probate process. “That means,” the article reports, “that your children or other heirs effectively will pay your debts because they will be subtracted before any inheritance is transferred.” This will force your kids to pay off your debts with the cash you had hoped to pass on to them. It may even mean selling off assets such as a home to pay off your creditors after you’re gone. Depending on the state you live in, some spouses become liable for the debts incurred by their spouse (Washington is one of those states, referred to as a “community property” state). The debt you leave behind may place a severe burden on your surviving spouse. In other words, according to one financial advisor quoted in the US News article, “Debt is the last thing you want to have when you die.”

The article lists six things you need to do if someone you love dies with debt. (Again, click here to link to the US News piece and read all six.) Some of these steps are obvious, such as the immediate notification of creditors, especially credit card companies: you want to make sure no one can open a fraudulent account in your loved one’s name, and you also want to put an immediate halt to any additional fees and surcharges. A few other important things on the checklist involve filing tax returns and filing for those assets that do not go through probate, such as life insurance payouts and retirement accounts.

But the first thing on the US News “to do” list is to consult with an attorney. Here at AgingOptions, where retirement planning and elder law are our specialties, we would welcome the chance to sit down with you and go over the situation in which you find yourself following the death of your loved one. In fact, a call to our office should be one of the first ones you make, so that we can begin advising you of all the necessary steps you’ll need to take to satisfy creditors and protect your own family’s interests.

An even better idea for dealing intelligently with debt and finances is for retirees to start now to put a LifePlan in place – a comprehensive retirement plan that covers all aspects of your retirement and your estate. We can advise you on how to protect your assets and how to avoid burdening your loved ones both while you live and after you’re gone. All your legal and financial plans become part of your LifePlan, as do your housing preferences, family instructions and medical coverage needs. It truly is a “Life Plan.”

The very best way to start the LifePlanning process is by attending one of our free LifePlanning Seminars. You’ll come away with valuable knowledge that will help you face your retirement years with a new sense of confidence, knowing you’re prepared. Don’t leave your heirs with a burden of debt – or even worse, with the burden of caring for you and making decisions against your wishes. You’ll find a complete list of upcoming dates and locations right here on our website, along with simple online registration. We encourage you to register today because many of our LifePlanning Seminars are filled to capacity. And as always, if we can assist you by phone, please call our office during the week. We’ll look forward to seeing you soon.

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

Ten “Forgotten Expenses” That Retirement Plans Frequently Overlook

Here at AgingOptions we always remind our readers and listeners that there’s much more to retirement than finances. However – we’re the first to admit that preserving one’s assets in retirement is extremely important. So how are you doing in planning for your financial future? Do you feel you have all your bases covered?

Before you answer, we strongly suggest you take a look at this recent eye-opening article from the financial website Cheat Sheet. It starts with the question, “Are you financially prepared for retirement? You might be surprised to learn you’re not as prepared as you think you are.” The article lists ten important retirement expenses you must never ignore – expenses which people too often overlook. As the article’s author Sheiresa Ngo puts it, “Although you might know how much money you need to retire comfortably, there are some expenses you might not have thought about. Some aspects of retirement planning can be scary, so your first instinct might be to forget about it or leave things to chance. However, when it comes to life after work, letting the chips fall where they may isn’t the best strategy.” We heartily agree – so let’s consider some of these “forgotten ten.” We can’t cover them all in detail, so we suggest you read the article for the complete list. It just might cause you to adjust your plans.

The first cost you may not have planned for is the expense of helping adult children. In the words of the article, “Depending on when you call it quits, your nest might not be empty during retirement.” That’s because a significant number of 18 to 34 year old adults are living with their parents – more, in fact, than are living on their own or with a spouse or partner. As you plan your own financial future, it might be wise to add in some extra resources to cover some of the expenses this “extra mouth” can generate. A recent Pew research poll showed that about 58 percent of adults surveyed said they had provided financial help to their adult children. Is that potential cost listed among your retirement expenses?

The second extra financial bite for retirees is in the area of housing. In 1998, fewer than one quarter of adults 65 and older had a mortgage, and for those who did the average amount was $44,000. In 2012 that number had risen to 35 percent, and the debt had nearly doubled, a trend that is still continuing. Obviously housing costs will play a big part in your financial plans, and you can’t afford to forget those unexpected repairs that are a big part of home ownership.

What about the effects of inflation on your budget after you retire? We tend to presume that things will always cost about what they do today, but if you stop and think for a moment you know that’s simply not true. Seniors are especially prone to the effects of inflation because they are affected disproportionately by rising medical costs, which are going up at a rate far higher than the “official” inflation rate of two or three percent per year. And here’s a sobering thought: even at a modest three percent inflation rate, if you are 60 years old today, many prices will have doubled by time you’re in your early 80’s. Better sharpen that planning pencil.

Here are a few other “forgotten expenses” from the article. Have you taken these into account in your retirement planning? Some of these expenses are too frequently overlooked.

  • Emergency savings – how much you set aside may be up to you and your financial planner, but if you don’t have sufficient cash on hand for those unanticipated expenses you’ll regret it.
  • Taxes on Required Minimum Distribution (RMD) from retirement accounts – you’ve been setting aside funds all these years in your 401(k) or 403(b) account, and that’s great. But if those were pre-tax dollars, and if you’ve never converted to a Roth IRA, all the money you withdraw will probably be taxable. You must take that into account as you project how far your savings will take you.
  • A whole host of miscellaneous expenses that can really add up, including Personal grooming, Pet care and Memberships and subscriptions. If you’re on a budget that’s tightly planned, a sudden veterinary bill or a renewal notice from the health club can really derail your plans.
  • Health care – even if you’re covered by Medicare or Medicare Advantage, there will almost certainly be out-of-pocket costs, prescription costs and policy premiums. These need to be factored into your planning. If you’ll contact us here at AgingOptions we can put you in touch with qualified experts who will help you navigate the complicated world of medical care and make the choices that are best for you – financially as well as medically.
  • Transportation – getting around will be important in retirement, whether you drive or rely on public transportation (or alternative modes such as Über). You had better plan ahead for the cost of being mobile.

Once again, we encourage you to look at this article from Cheat Sheet and use it as food for thought when you’re planning for your retirement finances. But you must remember that finances are only one facet of planning for retirement. Here at AgingOptions we help you develop what we call a LifePlan that weaves your finances together with other key elements of retirement living – medical protection, legal preparation, housing choices and family communication. Unlike other “one-dimensional” plans, a LifePlan truly covers all the bases when it comes to planning for your future. You can find out more, without cost or obligation, simply by taking a few hours to attend a LifePlanning Seminar at a location near you. For all the details, plus simple online registration, click on this link. Or if you prefer, you can call us during the week and we will gladly assist you.

(originally reported at www.cheatsheet.com)

A Taxing Story: How Much Does the Average American Pay in Taxes?

$1.454 trillion. That’s the total of all taxes owed by American taxpayers to our friends at the IRS in 2016 (for the 2015 tax year). If you divide that hefty sum by the number of taxpayers, it averages out to a tax rate for the typical taxpayer of about 13.5 percent for each tax return.

Not so bad, you say? Well, we all know that’s not the entire story of the taxes you and I pay every year, because there’s much more to our tax burden than the amount we pay to Uncle Sam’s servants at the Internal Revenue Service. So for the rest of the story, as Paul Harvey might say, we call your attention to this insightful article on the financial website Motley Fool.  It was published only a few days ago, and its title asks the question, “What’s the Average American Tax Rate?”  It turns out that the average American is paying almost 30 percent of his or her income in taxes, and depending on where they live and how much they make that amount could be significantly higher.

Let’s look at some overall national averages, just to gain some perspective. Motley Fool reports that the IRS assessed nearly $1.5 trillion in 2015 and received almost 151 million tax returns. Averaging the amount of tax assessed per taxpayer ($9,655) and the gross income of the average American taxpayer ($71,258) translates into the 13.5 percent average rate. But as Motley Fool points out, because about one-third of those returns owed no taxes at all, the average federal tax bite is actually quite a bit higher.

Then there are taxes for Social Security and Medicare. These, as the Motley Fool article explains, can get complicated. If you’re curious, you can read the article to see how the author arrived at the statistic, but when you factor in how much of Social Security tax is paid by employers and how much by employees, the average taxpayer cost turns out to be roughly 4.7 percent. Medicare taxes come out at approximately 1.3 percent, so roughly 6 percent of the average American’s income is helping to fund these entitlement programs.

Let’s look beyond the federal level to see what other taxes Americans are paying, starting with state and local income taxes. It’s true that Washington is currently one of just seven states with no state income tax (the others are Florida, Texas, Alaska, Nevada, Wyoming and South Dakota, in case you were wondering), but most of us who live here suspect that our state makes up for it in other ways. For the Motley Fool article, the authors quoted the U.S. Census Bureau and came up with the national average state and local income tax of 9.9 percent.

Then there’s property tax and sales tax. The news site Thomson Reuters recently calculated that sales tax throughout the nation averaged almost 8.5 percent in 2015, even though some states have little or no sales tax (obviously those of us who live in Washington are used to high sales taxes). Property taxes, however, are virtually impossible to calculate, since the number of variables is so high.

So if we just look at the four biggest categories for most taxpayers – federal, state, Social Security and Medicare – the effective tax rate for the average American taxpayer is just a hair under 30 percent. That does not include sales tax, property tax, or a bunch of other taxes that can sneak up on us all the time.

Before we leave this topic, however, here’s one more twist on the tax tale. Just this week, the Seattle Times published this provocative analysis by reporter Gene Balk revealing that the tax structure here in the City of Seattle is actually among the most inequitable in the U.S. As Balk put it, “Seattle’s taxes are among the nation’s kindest to the rich – and harshest to the poor.” The article cites a recent nationwide study comparing the tax burdens in 51 major American cities, comparing the weight of taxes on the average low, middle and high-income household.  It turns out that Seattle has the fourth-highest tax burden in the nation for families earning $25,000: these families pay more than 15% of their income for local taxes. Only Philadelphia, Honolulu and Birmingham ranked worse. By contrast, if you live in an upper income household, with earnings of $150,000 annually, your tax burden here in the Emerald City is just barely over 5 percent – fourth lowest in the nation. Taxes tabulated included taxes on income, property, sales and automobiles.

There were plenty of assumptions that went into these tabulations, and the Seattle Times article does a good job of explaining them. One take-away for us is that taxes, whether federal, state or local, do affect people disproportionately, and we should all learn to have compassion for those people, especially retirees on fixed income, whose tax burden is getting harder to bear with each passing year. But the other realization these articles brought home is that taxes have to become part of your financial planning strategy. All too often we encounter people facing retirement who think they’re adequately prepared because they have a financial plan in place – but as we examine their so-called plan we find it to be woefully incomplete, with critical elements like tax planning completely overlooked.

Approaching your retirement years with nothing but a slapdash financial plan is like trying to drive your car down the road with one tire. It just won’t get you very far! Instead, you need the type of comprehensive retirement planning we practice at AgingOptions, where all the facets of your life work together interdependently and in harmony: your financial plans, your legal protection, your housing options, your medical coverage and your family communication. We call this type of plan a LifePlan, and it will become your blueprint to allow you to create the retirement you’ve always hoped for. Why not invest just a few hours and find out more?  Come to one of our free LifePlanning Seminars – and bring all your questions. It will be time well spent, we assure you.

Click here for information and registration, or contact us. It will be a pleasure to talk with you at a LifePlanning Seminar soon.

(originally reported at https://www.fool.com and www.seattletimes.com)

Don’t Let These 7 Common Myths Keep You from a Reverse Mortgage

Everyone knows that a reverse mortgage can be a powerful financial planning tool for seniors when used under the appropriate circumstances – right? Well, apparently not.  Even with all the publicity over the past few years about how much better today’s reverse mortgages are, and even with a growing chorus of once-skeptical financial planners singing the praises of reverse mortgages, common misconceptions still linger.

That’s why we were drawn to this recently-published article on a website called RIS Media. The article, reprinted from the popular financial website Bankrate.com, is called “Reverse Mortgages:  7 Common Misconceptions.” Whether you’re in the market for a reverse mortgage or not, we suggest you take a look at this article, because it may come in handy next time a friend repeats one of these myths about reverse mortgages.

First, however, let’s consider a brief bit of background. Reverse mortgages, also known as home equity conversion mortgages, or HECMs, allow homeowners 62 and older to tap into a portion of their equity to help supplement retirement income. Borrowers don’t have to make monthly mortgage payments, but they must keep current on all property taxes, homeowners insurance, and home maintenance. Homeowners can borrow a lump sum, take regular monthly payments, or establish a line of credit which grows over time. In the past, these loans earned a sketchy reputation, partly because of some of the lending practices of unscrupulous mortgage officers and partly because early regulations lacked adequate protection for borrowers. Even though changes in federal law in the past few years eliminated much of the gray area that once made reverse mortgages riskier, some of that negative perception persists. But as you’ll find if you explore the power of an HECM, those perceptions are often groundless.

For example, says the RIS Media article, there are some people to this day who call reverse mortgages “a scam,” implying that they are unregulated and risky. What these skeptics don’t realize, however, is that today’s reverse mortgage market is highly regulated. “Today’s reverse mortgage loans are quite viable instruments and the FHA-insured HECM loans are safer than ever,” the article asserts.  When properly managed the risks to the borrower are generally minimal, which is why many former nay-sayers have become reverse mortgage cheerleaders.

The second misconception in the article is that these loans are “loans of last resort.” While it’s true that we at AgingOptions generally advise against unnecessary borrowing that could put your largest asset – your home – at risk, there are many ways that an HECM can help you in retirement, including allowing you to pay uncovered health care costs, making it possible for you to upgrade your home so you can age in place, and helping you delay taking Social Security benefits too early. Because of their versatility, reverse mortgages represent a powerful planning tool that many retirees continue to overlook.

Here are the rest of the seven misconceptions. You’ll find more details in the RIS Media article, but the best way to truly explore this topic is to sit down with a responsible reverse mortgage expert and get all your questions answered.

“Can your spouse be ‘thrown out of the house’ when one of you dies?” The answer is no. This is a major change to earlier laws governing reverse mortgages, and it basically says your eligible non-borrowing spouse can stay in the home after you pass away.

“Are the fees and origination costs prohibitively high?”  It’s true that, like any loan, an HECM costs money to originate, but the amount depends on a number of factors including the borrower’s age, the location and value of the home, and any existing mortgages on the house. Loan costs have generally come down since the early days of reverse mortgages, and you’ll probably be pleasantly surprised at how reasonable HECM fees turn out to be.

“Does your home have to be fully paid off before you take out an HECM?” The answer is no. In fact, one of the great benefits of a reverse mortgage is that it can enable you to eliminate your house payment by paying off the first mortgage balance. This can be a huge boon to retirees on limited income.

“If your home declines in value, are your heirs on the hook for the difference between the loan amount and the selling price of your house?” Fortunately your heirs are protected, says the RIS Media article. While they will be required to pay back your loan when you and your spouse both die, either by selling the house or taking out a mortgage and purchasing it themselves, if the sale of your home doesn’t cover the reverse mortgage balance the FHA pays the difference. Even in a “down market” their risk is minimized.

Finally, people ask, “Does the bank own your home when you have a reverse mortgage?”  Actually, you retain ownership, not the bank. The lender has a lien on your property, but if you keep taxes and insurance current and abide by any other loan provisions, the home remains yours.

So what’s the next step if a reverse mortgage intrigues you? We suggest you contact us at AgingOptions and allow us to put you in touch with a trusted, reputable reverse mortgage expert, such as Laura Kiel of Kiel Mortgage. A professional adviser like Laura can answer all your questions without any sales pressure, and help you make the decision that’s right for you. We also stand ready to help you with all the rest of your retirement planning questions, using a unique and comprehensive approach we call LifePlanning. Is it possible to have your medical, financial, housing, legal and family strategies all linked together like pieces of a puzzle? With a LifePlan the answer is yes. You can find out how by attending one of our upcoming LifePlanning Seminars – offered without cost or obligation. Simply click here for information and registration, or call us at AgingOptions. It will be our pleasure to guide and assist you as you plan for a fruitful and secure retirement.

(originally reported at www.rismedia.com)

You’re in Charge: Six Ways to Take More Control of Your Retirement

Recently we ran across an article on the “Money” website of US News that we felt might encourage some of our readers and listeners who are uneasy about retirement – especially if, like many, you’re worried giving up a lot of control over your life after you retire. The fact is, as this reassuring article asserts, you probably have far more control over both your retirement finances and your lifestyle than you may think.

We encourage you to click here to read this timely article, titled “6 Ways to Take Control of Your Retirement” and written by retirement author Tom Sightings. Some of the pre-retirement apprehension he writes about matches the worries many have shared with us at our LifePlanning Seminars. “One of the most unsettling aspects of retirement is that you give up a lot of control in life,” says Sightings. “You no longer have a job with a paycheck and occasional raises and promotions, and you also lose the social network at work and maybe the responsibility for a department, project or a group of employees.” Add to this the challenges of your aging and increasingly independent adult kids, plus friends who you may suddenly find slipping out of your life due to illness or relocation to a retirement home of their own, and you may start feeling overwhelmed by fear of change. “Suddenly you are cast out into the world alone, and you don’t know what the future holds,” says Sightings.

But, he asserts, here’s the good news: “you have more control over how your retirement will develop than many people think.” We’ll review the six key steps he says you can take to improve your retirement outlook. See if some of these resonate with you and help you lay aside your fears and regain a sense of control.

For starters, the author writes, you can control when you leave work. “Only you can strike the right balance between the rewards and the costs of your career,” Sightings says. You (and probably your spouse) are the only ones qualified to decide whether you enjoy your job enough to keep at it or whether the grind is really starting to get you down. The message here seems to be that you don’t necessarily have to feel stuck working full time longer than you think you can. “Of course, the longer you work, the better off your finances will be,” Sightings writes, “but that’s beside the point if your job is killing you.”

The second point is obvious, and one we’ve reviewed here before: you can control when you start receiving Social Security benefits. There’s not much to add here, since most people know the arguments. Yes, most retirees can start benefits early, at age 62, and some may have to for financial reasons – but if you can wait until full retirement at age 66 (for most baby boomers), or better still until age 70, not only will your benefit be dramatically larger for the rest of your life, but so too will your spouse’s benefit, in many cases, if you have been the primary wage earner. Contact us at AgingOptions: we’ll review your situation and help you make the best choice.

The third area of control will probably also require expert advice. You can control when to tap into your savings. This can be complicated depending on the amount of your savings and your other sources of income, and withdrawals from most non-Roth IRA’s will impact your taxes, so we do suggest getting professional advice, especially if you’re approaching the age when savings withdrawals are required by the IRS (currently 70 ½). We can help you here as well.

There’s more to retirement than money, of course, so we appreciate the fact that the US News article includes a few “lifestyle worries” on the list. Retirement expert Tom Sightings wants you to remember that you can control both where you live and also how you live. Those are the fourth and fifth areas over which you have more control than you may think. When it comes to deciding where to live in retirement, he says don’t feel pressured to move to Arizona or Florida, or to buy the condo, or to upsize or downsize just because other people you know may be doing it. Only you know what’s right for you. And as for how you spend your time and money, forget the peer pressure, especially when it comes to expensive pastimes like travel, which many associate with retirement years. As Sightings writes, “Some people dream of traveling the world and have a bucket list that comprises dozens of exciting adventures and exotic destinations. That’s fine, if that’s what you want and can afford. But you don’t have to travel when you retire.” He adds, “Many retirees find satisfaction in helping to raise their grandchildren, volunteering in their hometown, spending time with a social group or playing their favorite sport. There are also much lower costs and perhaps less stress if you stay put. Now it’s finally time to lead the life you love, which might mean seeing the world or staying at home.”

Finally, Sightings suggests, remember that you can control what to do with your money – or as he puts it, “whether to give back or hand down.” His advice, if you want to leave a legacy to your kids, is to consider sharing your resources with them while they’re younger and may need the funds more urgently. Similarly, if you have a charity or church in mind as the recipient of a charitable gift from your estate, there may be good tax reasons (and personal satisfaction) to make some of those gifts sooner, not later. Here’s one concluding piece of advice we wholeheartedly endorse: “Either way, it’s advisable to include your children in your planning process so they are aware of your desires and can plan their own futures.”

Communicating your wishes to your loved ones is a vital part of a well-rounded retirement plan, and it’s part of what we here at AgingOptions call a LifePlan. The LifePlanning strategy of retirement also includes your finances, your legal protection, your housing choices and your medical coverage requirements, all interconnected into a seamless retirement strategy. Can you begin to see how having a LifePlan can help banish the fear you may be experiencing as you face your retirement future? Why not take the next step and attend one of our free LifePlanning Seminars? We offer these highly popular workshops at locations throughout the area. Click here to select your seminar and register online, or call us during the week so we can assist you by phone.

It’s time to put away “retirement fears” once and for all – with the power of LifePlanning from AgingOptions.

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


Some UK Seniors Wait a Year for Home Care – Could That Happen Here?

In case you hadn’t noticed, there’s a new administration in Washington, D.C., and the Republican Party is now in firm control not only of the Oval Office but also of both branches of Congress. Because some of the policies now being advocated by the new political leadership – particularly concerning Medicaid – are of special interest to seniors, we want to share two articles that fill us with a sense of foreboding. Here at AgingOptions, we fear that proposed changes to Medicaid could pose a serious risk to vulnerable retirees, and we want you to be informed.

The first “red flag” that caught our attention appeared in this article that was recently published in Great Britain, in the Daily Mail. This article revealed the shocking news that vulnerable seniors in the United Kingdom, already deemed to be eligible for home care, were being forced to wait for up to one year before receiving the help they urgently needed. One survey cited in the Daily Mail article “revealed many vulnerable people routinely face delays of more than six months before they get the help they need with tasks such as washing, dressing, cleaning and cooking.” For some the wait stretched for twice that long.

Along with this disturbing delay in providing treatment, separate figures from Great Britain also revealed a parallel problem: an unconscionable delay in releasing patients from hospitals to nursing homes. “Almost three quarters of hospitals in England have had patients wait for more than 100 days to be discharged (to a nursing home), even though they are medically fit to leave,” the article reports.

The Daily Mail suggests that a big part of the crisis stems from government budget cuts. Social care spending in the UK has fallen 6 percent, having been cut by more than $20 billion (16.4 billion pounds) in the past year alone. These reductions have forced Britain’s National Health Service to make drastic service cuts including keeping patients hospitalized far longer than necessary to avoid the higher cost of government-subsidized nursing home care. In some cases there aren’t enough nursing home beds to meet the need, and not enough home health care workers for those awaiting care in their own homes. One expert quoted by the Daily Mail asserted that “Only genuinely new additional government funding will give any chance of protecting… our elderly and disabled (to) ensure they can enjoy dignified, healthy and independent lives.”


So what does this have to do with Medicaid and the policies of the new administration? For that answer we discovered this very timely and revealing article on the website of the authoritative Kaiser Health News.  It’s called “Everything You Need to Know about Block Grants – the Heart of GOP’s Medicaid Plans.”  According to this analysis, which first appeared in late January of this year, the administration of incoming President Donald Trump has expressed agreement with what Kaiser calls “an old GOP strategy for managing Medicaid: turning control of the program to states and capping what the federal government spends on it each year.” This strategy is called “block granting.”

Today, following a significant expansion in 2010, the Medicaid program covers almost 75 million adults and children. “Because it is an entitlement,” says Kaiser Health News, “everyone who qualifies is guaranteed coverage, and the states and the federal government combine funds to cover the costs.” (Kaiser explains that poorer states receive a larger federal subsidy while wealthier states receive proportionately less.) Under block grants, supported by most conservatives, states would receive a lump sum from the federal government and then manage the program as they saw fit. On the surface, that may sound good. However, advocates for Medicaid recipients warn of unintended consequences. Block grants, these advocates argue, “would mean less funding for the program —eventually translating into greater challenges in getting care for low-income people.” Under a scenario like that, the situation now being experienced in Great Britain could certainly happen here.

The stakes in this debate are extraordinarily high. In 2015 Medicaid expenditures, according to Kaiser Health News, accounted for 17 percent of the nation’s health care expenditures. The 75 million people covered under Medicaid make up nearly one-quarter of the U.S. population. By far the majority of Medicaid expenditures go to benefit lower income elderly and disabled Americans, which makes it hard to see how program cuts could avoid harming those most vulnerable.

Rajiv Nagaich of AgingOptions has this sobering assessment. “This story from England gives a glimpse of what could hit us if the Trump administration passes the block grant bill,” he says. Today the amount of federal subsidy, based on a match from each state, is essentially unlimited. “If the block grant model is adopted, there will be long waits for care,” Nagaich warns – “and without money, the wait could easily be one the client may not be able to outlive.  It is even more important NOW for people to get this issue addressed and not rely on the government when instead they can do something about it themselves.”

This is clearly a critical issue, one most of our clients and radio listeners – essentially anyone with a combined estate worth $500,000 or less – will have to face. As an excellent next step, and to learn more about your options in retirement, we strongly suggest you attend one of our free LifePlanning Seminars, held in locations throughout the area. Here you’ll learn how every piece of the retirement puzzle – finances, medical care, housing, family communications and legal protection – fit together into a seamless LifePlan. You’ll also learn how to protect yourself and your assets, regardless of how the political winds may blow. For information and online registration, click on this link, or contact us during the week.

We urge you to become informed about some of these critical retirement-related issues facing us today. It has never been more important!

(originally reported at http://www.khn.org and http://www.dailymail.co.uk

How Should Retirees Cope with Changes Under Trump? Stay the Course

Trying to second-guess what our political leaders are going to do or say has always been a challenge – but seldom have we seen anything like the fireworks of the past 30 days. The change of administration from President Obama to President Trump has brought a new style of communication and a freewheeling flow of news, half-news and so-called “fake news” that’s enough to leave us all – Republicans, Democrats and Independents – a little breathless. If you’re a retiree, or someone about to retire, how should you adjust your retirement plans to cope with what a new administration may or may not do? Or should you?

We found this recent article on the website Real Deal Retirement that seems to do a good job answering that question. The article, written by website editor Walter Updegrave, has a catchy title and a down-to-earth message. “Don’t Let ‘Trump-o-Mania’ Divert You from Your Retirement Strategy,” Updegrave writes. Instead of spending too much time and effort “hypothesizing about ways a Trump administration may affect your retirement prospects,” this article contains tips on how to keep all the hype and speculation in perspective so you can “keep your focus on preparing sensibly for retirement.”

Before we go on with this glimpse at the Updegrave article, let us offer this caveat. Here at AgingOptions we definitely want our clients, seminar guests and radio listeners to be well informed about the political issues facing today’s retirees, and tomorrow’s as well. If we feel that our political leaders are contemplating actions we think may be harmful – such as the discussion of converting Medicaid to a block grant program, something we’ve written about this week in another Blog post – we’ll do our best to inform you and urge you to speak up. In the case of the Real Deal Retirement article, author Walter Updegrave seems to be talking not about specific policy but about foolish speculation. The article deals mostly with finances, but we think it’s a helpful approach anyway. Let’s see what he has to say.

First, what kind of impact will the new administration’s fiscal and social policies have on your retirement plans? Americans are evenly divided on that topic. Just a few weeks ago in late January, the Edward D. Jones Company surveyed over 1,000 people and found that about 30 percent expected a positive impact under President Trump, while a slightly smaller number were more pessimistic. Most, 43 percent, had no opinion or did not respond. That’s the collective equivalent of a big shoulder shrug. Even though the Dow Jones has been healthy in the past month, most of the fiscal policies of President Trump are still being formulated and debated, so it’s impossible to accurately gauge their future impact.

“And that’s the point,” Walter Updegrave writes. “While there’s a lot of speculation about how the new administration’s policies might affect everything from the economy and the financial markets to specific retirement programs like Social Security and Medicare, no one really knows how things are going to play out.”

So should you be altering your retirement plans? How should you prepare for retirement given such a high degree uncertainty? Well, to begin with, the article says it might help to “remind yourself that planning in the face of uncertainty is hardly new. Investors have long had to deal with the possibility of unexpected economic setbacks, shifts in tax rates, disruptions in stock prices, fluctuations in interest rates, not to mention other disruptions” including the Great Recession, Obamacare, and Brexit. Trying to plan for a secure future, one in which you protect your assets while avoiding becoming a burden to the ones you love, has never been “placid and predictable.” So the basic, traditional financial strategy suitable for most retirees remains the same: save as much as you can, avoid debt, and if you’re already retired manage your withdrawals so your nest egg remains undepleted. These are all strategies a professional fee-based financial planner can help you with, and we have some excellent recommendations for you if you need to speak with someone you can trust.

Walter Updegrave warns that trying to predict how certain stocks will do under President Trump is pointless. “If you want to invest based on what the new administration’s policies may or may not mean for stocks overall or specific market sectors, feel free. But why engage in what amounts to a fruitless guessing game?” We urge you to avoid any so-called stock-picking expert who claims to have the inside track on Trump-era investment strategy. All these sharks want is the money they’ll earn from your transactions. The bottom line is to create a good, solid plan, guided by the right professional advice, and once it’s set in motion, stay the course.

Remember, though, that a true retirement plan has to deal with much, much more than finances, as important as they are. You also need to plan for the type of housing that fits your retirement needs, choices and lifestyle preferences. A retirement plan is incomplete without protecting you legally. What about your medical needs, both short-term and long-term? And have you taken your family into account, ensuring that they are aware of – and supportive of – your plans and desires? The only plan that weaves these elements – the financial, legal, housing, medical and family components – into one seamless whole is an AgingOptions LifePlan. We invite you to learn more about this truly comprehensive approach to retirement planning by taking just a few hours to attend a free LifePlanning Seminar near you. There’s no obligation – and we assure you, you’ll come away both better informed and reassured that security and fruitfulness in retirement can be yours.

Simply click here for dates, times and online registration, or contact us by phone. It will be our pleasure to assist and guide you.

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

Dreaming of a Happy Retirement? Read These 10 Surprising Secrets

Here at AgingOptions we’re always searching for good, solid, practical information about retirement, the kind our clients, readers and radio listeners can use. Unfortunately, we run across a lot of bad retirement advice – which makes it so refreshing when we discover the good kind. The article described below is a case in point.

On a website called Money and Career Cheat Sheet (www.cheatsheet.com) we found this article called “Retire with a Smile: 10 Surprising Secrets to a Happy Retirement.”  As we read this list we were pleased and surprised to find ourselves nodding in agreement. The author, Megan Elliott, really captured some common sense tips that we think can make a lot of difference as you plan ahead for your retirement years. The philosophy Elliott proposes mirrors much of the advice we give our clients.

There’s a lot to love about retirement, but sometimes it can bring disappointment.  “Some people who dreamed they’d leave all their worries behind once they quit working are finding retirement isn’t quite as blissful as they dreamed it would be,” Elliott begins. She cites research from the Employee Benefits Research Institute (EBRI) that reports that only about half of current retirees describe their retirement as “very satisfying.”  That’s a significant drop of 11 percentage points over the past 18 years. What’s more, “retirement satisfaction is falling across the board” among both wealthy and not-so-wealthy retirees.  “Money, it seems, isn’t the only thing that matters when it comes to enjoying a happy retirement. Even the rich can find themselves with a frown on their faces if they make planning mistakes.”

Researchers say the exact reasons for this drop in retirement satisfaction are unclear, but several factors could be involved. Retirement tends to last longer than it used to, for one thing. At the same time, rising health care costs are triggering retirement anxiety among many seniors, which can make retirement less satisfying. Also, more and more people of retirement age are continuing to work, some by choice and some out of necessity, so the dream of a restful retirement is proving elusive for many. The point is, just as society at large is experiencing all sorts of change, retirees are hardly immune. So with that in mind, are there things you can do, or not do, to help boost retirement satisfaction? The answer is yes.

We won’t try to cover all ten “surprising secrets” here, but we’ll do our best to summarize – and we do suggest you click on the link above and read the piece for yourself. The first secret, Megan Elliott writes, is that it’s not all about the money.  “You shouldn’t assume money alone will make the other problems in your life disappear,” the article says. “Retirement planning involves running the numbers. But it also requires looking inward to think about what’s going to make you happy in the next phase of your life.” But at the same time, secret #2 is don’t ignore your finances. We found this statement interesting: “People with consistent sources of retirement income, such as a pension, were more financially confident and less likely to feel pressure to cut spending than those who relied on money from their investments.” If you’ll contact us here at AgingOptions we can refer you to a qualified financial planner who will show you ways to maximize the money you have for greater peace of mind.

Under the topic of finances, we should also highlight retirement secret #5: don’t try to keep up with the Joneses. We totally agree. “Pressure to keep up with your friends and neighbors when it comes to vacations, home improvements, and hobbies can derail your retirement finances — and your happiness,” Megan Elliott writes. We’ve seen this all too often. Our advice: if your friends are leading you down the wrong financial path, you may need to find new friends!

Many of the retirement secrets aren’t “secrets” at all, just good common sense. For example, #3 is stay healthy. As the article points out, 80 percent of those who described their health as excellent said they were very satisfied with their retirement. Among those who said their health was poor, the “very satisfied” segment plummets to 26 percent, according to EBRI. Secret #4 is to find your purpose, which means you start before you retire to consider what brings you joy and satisfaction. “Retirement frees up your schedule,” says Elliott, “and for some people all that unstructured time is a little overwhelming. If you’re not careful, an absence of purpose can lead to boredom, depression, and relationship stress.” If you are one of those whose identity has been closely tied to your career, this can pose a particular danger.

Secret #9 asks an important question: “Should you relocate when you retire?” Maybe not. “Picking the wrong place to move is one of the biggest sources of retirement unhappiness,” says author and retirement expert Andrew Rafal.  Be particularly careful about picking a retirement location simply because it has a low cost of living or because it’s one of your favorite vacation spots. Will you enjoy the community? Do you have friends or family nearby?  Moving too soon “can be a mistake that’s expensive to undo,” Megan Elliott writes. “In fact, pulling up stakes without considering all the consequences is one of people’s biggest retirement regrets.”

Finally, at a time when true contentment seems so elusive, retirement secret #10 is our favorite: be satisfied with what you have. “Your retirement nest egg might not be quite as large as you hoped it would be,” Elliott writes, “but that doesn’t have to mean spending your golden years in misery. Assuming you have enough to live comfortably, there are plenty of ways to enjoy your retirement, even if you can’t afford all the luxuries you might have dreamed of.” Author Andrew Rafal adds, “I think it’s coming to terms with really what makes you happy. For a lot of individuals, they don’t need a ton of money. They live well within their means (while understanding that they) can’t go on three cruises a year.”

If we were to add one more secret for achieving a joyful retirement, it would be plan ahead. No matter what your circumstances, we’re confident you will benefit immeasurably by working with AgingOptions to create a comprehensive retirement blueprint called a LifePlan, weaving together all the different strands of your retirement into one strong cord: your financial plan, your legal affairs, your housing options, your medical needs, and your family dynamics. We invite you to find out more about building a safe and secure retirement by attending one of our free LifePlanning Seminars in a location near you. Registration is quick and easy: simply click here, select the seminar that works best for you, and register online. You are also welcome to call us at our office during the week so we can assist you.

Creating a happy retirement doesn’t have to be a secret, if you have the AgingOptions team on your side!

(originally reported at www.cheatsheet.com)

Reverse Mortgages Can Be Wonderful – but Beware of Scam Artists

It should come as no surprise to friends of AgingOptions that we’re big fans of reverse mortgages – in the right circumstances. Over the past year or more we’ve noted with interest how a growing number of financial experts have begun singing the praises of this once-maligned financial instrument. For some seniors in some situations, using the services of a reputable mortgage professional, a reverse mortgage can be the perfect solution to help them remain securely in their homes.

Sadly, however, wherever there’s a chance to make a dishonest dollar, you’ll find scam artists poised to take advantage of the uneducated and unprepared. With that in mind, we strongly recommend you take a look at this very recent article on the website Investopedia. If you’re interested in a reverse mortgage, or if you have a parent or other loved one looking into the pros and cons of a reverse mortgage, this article can give you some danger signs to watch out for. (Let us add one more suggestion: if a reverse mortgage is something you’re interested in, contact us here at AgingOptions and let us refer you to one of our trusted professional partners.)

“Of all financial con artists,” writes Investopedia, “reverse mortgage scammers are arguably the worst. They abuse their standing as trusted advisors or lenders – or supposedly professional contractors – to take advantage of elderly folks who need funds. They convince them to sign up for a financial product that’s complicated even for well-educated, fully cognizant people to wrap their heads around, much less someone whose mental capability may have diminished with age. Then they steal the proceeds, leaving the borrower with little but new debt on his home, and even – worst-case scenario – the loss of it.”

These are powerful words, but we concur 100 percent. Because you have to be 62 or older in order to qualify for a reverse mortgage, the prime prospects are seniors with plenty of home equity who dream of remaining in their own homes. Tragically, these seniors can often be the most vulnerable and easily manipulated. Investopedia describes a few ways in which these scams take place.

According to the article, sometimes unscrupulous home repair contractors will approach an elderly homeowner trying to sell remodeling or repair services. When the homeowner says the work is too expensive, the shady contractor persuades the victim to take out a reverse mortgage, which may definitely not be in the homeowner’s best interests. Once the client has paid the contractor, there’s little or no guarantee that the work will ever be satisfactorily completed.  “Any home-improvement vendor or contractor who suggests that you pay for the work with reverse mortgage proceeds probably isn’t someone you want working on your house,” advises Investopedia, adding, “Who knows: Their work could be as shoddy as their advice.” Home repairs might be a good reason for a reverse mortgage, but it needs to be something you as the homeowner decide to do – not something you’re persuaded to do.

Sometimes so-called financial advisers have cajoled seniors into taking out a reverse mortgage to pay for financial products they don’t need, such as stocks, paid-up whole life insurance or an annuity. Tragically, there have also been documented instances where people to whom senior homeowners have entrusted their financial affairs through a Power of Attorney have taken out a reverse mortgage on the elderly person’s house and diverted the funds to their own accounts. There was even a 2009 case in Orlando cited by Investopedia in which a title insurance firm confessed to stealing more than $1 million in reverse mortgage proceeds.  Instead of using the funds to pay off the borrowers’ original mortgages, the company kept the money, and the unsuspecting borrowers soon received notices of foreclosure.

There are more such warnings in the Investopedia article and we encourage you to read it. But in our view, in order to protect yourself from these scams, the most important thing is to work only with a trusted professional reverse mortgage expert who will give you accurate, objective advice. “Taking out a reverse mortgage is a decision that requires careful consideration and a complete understanding of the details and consequences,” Investopedia warns. “If a reverse mortgage lender is making you feel rushed, stressed out or uncomfortable in any way, turn around and find another lender.” We say “Amen” to that. Fortunately, as we said above, we know some highly experienced, trustworthy reverse mortgage experts to whom we will gladly refer you to if you’ll contact us.

Have you given careful thought to the other important aspects of your retirement planning? Too many people approaching retirement focus all their attention on financial issues, but money is only part of the retirement picture. Deciding where and how you wish to live as you age quickly causes retirement to become a housing issue. Protecting your assets and your plans will trigger a legal issue. Planning for every health and long term care contingency raises a medical issue. Informing your loved ones and getting them on board in support of your plans makes retirement a family issue. Is there one retirement plan that wraps the financial, legal, housing, medical and family issues into one comprehensive approach? The answer is an AgingOptions LifePlan.

Why not invest just a few hours and find out more? We invite you to attend a free LifePlanning Seminar where you’ll learn about the dramatic power of a LifePlan. For dates, times and locations of upcoming seminars, and for online registration, click on this link, or contact us during the week. It will be our pleasure to serve you!

(originally reported at www.investopedia.com)

There’s a “Family Disconnect” When It Comes to Discussing the Future

Have you and your adult children had a frank and detailed conversation about your estate and your wishes for the future? Do they know about your will and about your desire for leaving a legacy?

If we were to ask those questions to an average group of parents, according to this insightful article just published on the website Insurance News Net, 70 percent would answer yes – those important conversations with adult children have taken place. But if we posed the same questions to the adult kids, fewer than half would agree. The rest, more than half of adult children, claim they’ve never talked about estate planning or other related future topics with their parents. This is a significant – and potentially costly – disconnect.

This gap in perception between adults and children was revealed in recent findings from the Family and Finance Study produced by Fidelity Investments.  The study showed that, while fully 90 percent of parents and children say that it’s important to have frank conversations about estate plans and wills, in too many cases those conversations aren’t happening. “How prepared are American families when it comes to leaving a legacy and discussing estate plans with their loved ones,” asks the Insurance News article? “Perhaps less than they may think.”

Here at AgingOptions we see evidence of this lack of communication almost every day, and we hear about it from radio listeners and guests at our seminars. Mom and Dad may think they have made their future wishes clear to their adult children, but the kids remain in the dark. Then when one or both of the parents passes away, family friction and sibling fights can quickly erupt. “Even in the simplest of family situations,” says Insurance News Net, “conversations that do not occur frequently and in detail may result in fairly substantial family disagreements and disconnects.”

Another statistic caught our eye from this article: the Fidelity study found that in about 70 percent of cases adult children had major misconceptions about the value of the parent’s estate. “On average, children underestimated that value by $278,000,” the study showed.  It seems to us that a misunderstanding of that magnitude will only increase the chances for conflicts and disagreements when it comes time to divide the estate.

Here’s one more important question raised by the Insurance News Net article: do your adult children know where to find your important documents such as wills, powers of attorney and healthcare proxies? When Fidelity asked parents that question, 80 percent said yes – but among the sample of adult kids the number who agreed was significantly less, closer to 65 percent. That’s not bad, but it still indicates that you and your adult children may not be communicating as well as you think you are.

We do take some issue with the Insurance News Net article, not because the information is incorrect, but because it seems incomplete. We concur with the basic premise of the Insurance News Net article: aging adults often fail to communicate adequately with their kids about their estate plans. But as is all too common, the article focuses almost entirely on finances, emphasizing the importance of passing along your assets to your heirs with minimal impediments and tax consequences. A solid financial plan is definitely essential, but it is only part of your retirement plan, and if all you do with your adult children is tell them how you want your money disbursed when you pass away, you are doing them a serious disservice.

Aging, as we always say, is a family affair, and that means your family needs to know – and support – all of your wishes as you grow older. Beyond finances, this includes housing, deciding how and where you want to live. It includes your legal documents, which means much more than your last will and testament. Your estate plan will be meaningless if it doesn’t take your medical needs into account, because few things will derail your plans like a medical crisis for which you have not prepared. Is there a type of retirement plan that includes all of these facets? Fortunately there is.

At AgingOptions we proudly offer a unique and comprehensive approach to retirement planning called a LifePlan. Once you have prepared your LifePlan, often including a series of family conferences to make certain everyone close to you is on the same page, you’ll be prepared for a fruitful and secure retirement. You’ll be able to protect your assets while ensuring that you won’t become a burden to those you love. It’s easy to find out more – and there’s no obligation whatsoever: simply plan now to attend one of our free LifePlanning Seminars. Invest just a few hours, and bring your questions – and your adult children if they’ll attend with you. It will open your eyes to the power of this unique, powerful planning strategy.

For a list of upcoming seminars, including online registration, click here, or call us during the week and we’ll be happy to assist you.  Additionally, if you feel it’s time for a family conference to review your estate plans with your loved ones, we can definitely guide you. We’ll look forward to meeting you soon.

(originally reported at https://www.insurancenewsnet.com)