Kiplinger Endorses Reverse Mortgages, Warns of New Fees and Regs

In back to back articles on the authoritative Kiplinger financial website, the highly regarded financial source recently came out with a piece strongly endorsing the power of the reverse mortgage to help retirees better afford retirement – then followed up days later with another article warning of big changes to come in reverse mortgage fees and regulations. It’s a vivid example of the changing nature of the market for these powerful financial tools.

First let’s cover the so-called “bad news” about reverse mortgages, also called Home Equity Conversion Mortgages or HECMs. In this article about the new regulations, Kiplinger Editor Rachel Sheedy warns that “The government is changing the loan’s insurance costs and reducing how much applicants can borrow—and the window for borrowing under the old rules is closing fast.” (We also wrote about this change last week on the AgingOptions blog in an article you can access by clicking here.) How fast? The new rules are slated to take effect October 2nd. Kiplinger’s Sheedy calls this “a surprise move” and says that the new regulations, while appearing to hike fees and lower borrowing limits, may actually represent “a mixed bag for borrowers.” That’s because, while some costs are rising, others are not, and it will take a consultation with a reverse mortgage expert to determine how the new rules affect each individual borrower.

We won’t go over the changes in detail here – you should read the Kiplinger article for some of the specifics.  Suffice it to say that, if you qualify for a lump sum payout of up to 60 percent of the loan amount you’re entitled to, your up-front fees are going up significantly. (For those allowed to borrow more than 60 percent, there is actually a slight drop in fees.) Another change affects the cost of on-going insurance – it’s going down, so much so that one expert says the lower premiums could save $750 per year for every $100,000 borrowed. For many borrowers, writes Rachel Sheedy, “The lower ongoing cost (of insurance) may offset much or all of the higher upfront cost.”

However, one of the most significant changes is that, for many borrowers, the total amount of available proceeds is dropping. Kiplinger’s Sheedy says, “The adjustments will hit most new borrowers, cutting potential proceeds by 10 percent to 12 percent.” While older borrowers will still have an advantage over younger ones, “most everyone will now qualify for less than before.” Kiplinger warns that the changes “are raising costs across the board, while simultaneously lowering borrowing power.” And with the extremely tight October 2nd time frame, “it will be tough for anyone just starting the process to beat the deadline.”

What with the just-announced regulatory changes, it’s ironic that this second Kiplinger article about HECMs appeared at just about the same time (actually a few days before) as the first one.  Here, in a piece called “Reverse Mortgages that Work,” Kiplinger Associate Editor Pat Mertz Esswein called the HECM “a versatile solution” and “a path to provide retirees with flexibility and security.”   She quotes statistics from the National Reverse Mortgage Lenders Association that estimate only about 3 percent of those eligible to set up a reverse mortgage have actually done so, and part of the reason may be past bad publicity. “Many financial advisers and consumers continue to think of reverse mortgages as loans of last resort,” Esswein writes. “But some potentially detrimental features have been corrected. And over the past several years, financial researchers have found that a reverse mortgage taken as a credit line early in retirement can grow, providing steady income or buffering financial shocks, even for well-heeled borrowers.”

The article goes on to describe many of the terms and features that have made the reverse mortgage so attractive to hundreds of thousands of homeowners, including the wide variety of payout options and the fact that proceeds from a reverse mortgage are tax free: an HECM doesn’t affect Medicare costs, taxes on Social Security benefits, or eligibility for Medicaid, writes Kiplinger. And while no repayments are required while you remain in the house, you can repay the loan balance any time if you choose, and without penalty.

If you think a reverse mortgage may be right for you – or even if you’re wondering – we urge you not to wait any longer. Contact us at AgingOptions and let us introduce you to a trusted advisor, someone like Laura Kiel, who will help you assess your situation objectively. But you need to hurry if you want to get ahead of the impending changes in government regulations! Laura and her colleagues will do their best to confer with you before the deadline comes.

If you’re facing retirement and are plagued with uncertainty – with more questions than answers – we can help. Our primary mission at AgingOptions is to assist people just like you as you plan for a healthy and secure retirement, free from the worry that you’ll exhaust your assets or end up as a burden to those you love. In order to help you accomplish your retirement dreams, we employ a strategy we call LifePlanning, a comprehensive approach to retirement planning in which all the vital elements of your retirement – finances, legal protection, medical coverage, housing choices and family communication – work interdependently. There’s no better retirement plan than a LifePlan from AgingOptions.

Don’t take our word for it. Plan now to attend one of our free LifePlanning Seminars, where you can bring your questions, get the answers you’re seeking, and see for yourself. There are several seminars coming up soon, so click here for details and online registration, or contact us during the week. It will be our pleasure to meet you soon at a LifePlanning Seminar near you.

(originally reported at www.kiplinger.com)

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Some Big Reasons NOT to Claim Social Security Benefits at Age 62

We recently ran across this article about Social Security on the MSN website. It was reprinted from the financial site Motley Fool, and in the “Fool’s” typically irreverent style the provocative title caught our eye: “When Claiming Social Security at 62 is a Really Bad Idea.”

We share this article with you knowing that many of our readers and radio listeners have already made the decision to start benefits early. But if you haven’t, the Motley Fool article does provide some helpful food for thought on reasons why delay is almost always the preferred strategy. For those of you who pay close attention to planning your Social Security benefits, none of this article’s suggestions will come as a surprise, but others of you who are just beginning to think ahead about retirement may find this information timely indeed.

First, the Motley Fool article shares some Social Security background data we find interesting.  “According to the latest monthly data release from the Social Security Administration (SSA),” the article says, “just over 42 million retired workers were receiving a benefits check from the SSA.”  Out of this sizeable group, “more than 25 million of them are reliant on Social Security for at least half of their monthly income.” This is significant because most financial experts say Social Security was always meant to augment other retirement income, not to be a senior’s primary income source. In explaining this situation the Motley Fool article is blunt:  “A history of poor saving habits and the wrong investment choices has left the current generation of retirees, and likely future generations, particularly reliant on Social Security.” (It’s another strong argument for sound and comprehensive retirement planning.)

With that in mind, the article advises, it’s more important than ever that those still working and looking ahead to retirement remain focused on maximizing their monthly Social Security payout. Motley Fool says that there are three factors each beneficiary can control in order to accomplish this goal:

  • Your work history: it’s in your best interests to work at least 35 years because Social Security will use your 35 years of highest earnings when calculating your benefits.
  • Your earnings history: because the government considers your highest-earning years, the longer you work into your 60’s the more likely you are to compensate for your early work history when you probably earned less.
  • Your claiming age – and for many seniors this is the big one, says the Motley Fool article. The age at which you start benefits has a huge, lifelong impact, not just on you but very probably on your spouse if he or she outlives you.

Most of us know that, for those born between 1946 and 1954, full retirement age is 66. However, you can choose to begin taking a reduced benefit at age 62. Some do this because they feel they have to as a result of loss of employment, while others start benefits early because they are in poor health and don’t expect to live through their 70s. But for every year a beneficiary waits beyond 62 to start taking those payments, the annual payout goes up by about 8 percent until benefits max out at age 70. Wait until then and you receive the highest payment possible, and your surviving spouse (assuming you were the higher wage earner) will continue to receive that higher benefit after you pass on.

If the advantages are so clear, writes the Fool, most people wait until 70 to start benefits, right? Hardly. The Center for Retirement Research in Boston reports that only three percent of seniors wait until 70 to enroll. In contrast, a whopping 45 percent begin benefits at age 62. While we would argue that claiming early is a poor strategy for most people, the Motley Fool article calls it “an absolutely terrible idea” if you’re in one of these categories:

  1. Don’t start benefits early if you’re entering retirement with very little savings. These are the people, says the article, who need to keep working as long as possible because they will be relying on Social Security benefits for the rest of their lives – and a permanent reduction in those benefits will prove potentially crippling later on.
  2. Don’t start benefits early if you’re the higher-earning spouse. Because your benefits will grow faster than your spouse’s if you wait, it’s even more important for you to delay as long as you can. Also once you die your spouse’s survivor benefit will be based on yours, so the longer you wait the better it will be for him or her. If you really need an income boost at age 62, your lower-earning spouse can start benefits then, but it will almost always be a better idea to wait as long as you both can.

Are you facing retirement with a host of questions about Social Security, Medicare, Medicaid, VA benefits and the like? Are you in a quandary about your housing options or wondering how to involve your family in your retirement planning? Then we urge you to accept our invitation to attend a free AgingOptions LifePlanning Seminar with Rajiv Nagaich. There you’ll see how financial plans, legal strategies, housing choices and medical coverage can all be arranged so that they work together – and you’ll discover how to ensure that your family understands and will support your wishes. That way you can face retirement with confidence, security and joy. To find out more about upcoming LifePlanning Seminars from AgingOptions, click here for details – then register online for the seminar of your choice, or give us a call.

Don’t enter into your retirement years without a plan. Let AgingOptions show you the power of a LifePlan! We’ll see you at a LifePlanning Seminar soon.

(originally reported at www.msn.com)

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Reverse Mortgage Changes May Mean The Time to Apply is Now!

In a move that caught mortgage experts off guard, the federal government has just come out with proposed changes to the regulations governing reverse mortgages – changes that one lender called “huge” and “very significant.” Since the announcement of the rule changes came to light, there has been a spate of news articles – such as this one from the website NextAvenue – most of which seem to have a common theme: if you had contemplated a Home Equity Conversion Mortgage (HECM), commonly called a reverse mortgage, now may be the time to get moving, or your borrowing options may be about to become less attractive.

In the words of the NextAvenue article, “One way to supplement your income in retirement is about to become tougher. The Trump administration just announced new policies taking effect Oct. 2 that will increase the upfront cost of reverse mortgages for many borrowers and reduce the size of the loans.” The article goes on to suggest that “If you’re 62 or older (the reverse mortgage age requirement) and have been thinking about converting your home equity into cash, you may want to apply for a reverse mortgage before the new rules kick in next month.”

According to analysts, the changes announced by the U.S. Department of Housing and Urban Development (HUD) were triggered by a feeling on the part of the Trump administration that the HECM program is costing the government too much money. As a result, unless the proposed new rules are modified, borrowers taking out reverse mortgages after October 2, 2017 will receive less money than before and, depending on how they draw out the proceeds, they will likely pay higher costs.

Instead of paraphrasing, we’ll quote directly from the NextAvenue article to explain the changes coming for loans made after Oct. 2:

  • “There will be new limits on the total amount you can borrow through a reverse mortgage. Today, the average reverse mortgage borrower can draw 64 percent of home equity, but that will drop to about 58 percent, according to The Wall Street Journal.
  • “The upfront mortgage insurance premium for most reverse mortgage borrowers will soar. Premiums for those taking less than 60 percent of the loan proceeds upfront will go from the current 0.5 percent to 2 percent of the ‘maximum claim amount.’
  • “The upfront mortgage insurance premium will fall slightly for people taking more than 60 percent of the loan proceeds upfront. It will drop from 2.5 percent to 2.0 percent.
  • “Annual mortgage insurance premiums will drop. The annual premium will fall from today’s 1.25 percent of the outstanding balance to 0.5 percent. This change ‘preserves more equity for borrowers over time by slowing the rate at which the loan balance grows,’ the HUD press release said.”

Obviously, interpreting these changes to determine how they impact your particular situation requires the services of a trained professional in the reverse mortgage arena. One such expert who we at AgingOptions recommend on a regular basis is frequent radio guest Laura Kiel, one of the most experienced and trusted names in the reverse mortgage field. We encourage you to contact her immediately or attend one of her excellent reverse mortgage seminars very soon to get the facts. Call us at AgingOptions during the week and we’ll assist you.

The NextAvenue article also emphasizes that time is of the essence if you want to beat the deadline.  It quotes Peter Bell, CEO of the National Reverse Mortgage Lenders Association, who says that “The industry will try to accommodate as many people as possible before October 2nd.”  Some lenders, says NextAvenue are already “working feverishly” to meet with clients who have yet to complete applications and go through the HUD-required counseling sessions.  “I spent several hours making a ton of calls yesterday with our salesforce to tell people that if they’re on the fence about getting a reverse mortgage, see a HUD-approved reverse mortgage counselor,” said one lender. “As we get to the end of September, those appointments will be full.”

With all of this sense of urgency, potential borrowers need to remember that reverse mortgages aren’t appropriate for all homeowners. “Their costs can be high,” says NextAvenue, “and…the money is not free. The amount borrowed plus interest and fees must be repaid. Other home equity options, such as home equity loans or home equity lines of credit, could be less expensive.” Again, consult a trusted professional for personal advice – but you’ll need to act fast and plan well in order to save before the rates and other details are adjusted.

Housing and financial questions such as those involving reverse mortgages are critically important as you plan for retirement, but they’re only part of a much bigger picture. Here at AgingOptions we counsel our clients and radio listeners that, in order to have a retirement plan that is truly comprehensive, they need something more: they need a LifePlan. An AgingOptions LifePlan, unlike other so-called retirement planning strategies, not only answers vital questions about finances and housing but it also answers your questions about the best choices in medical coverage as you age, the best ways to ensure you are protected legally, and the best tactics to involve your family in your planning. If you want to protect your assets as you age, avoid becoming a burden to your loved ones, and escape the trap of being forced into an institution against your will, you need an AgingOptions LifePlan.

To find out more, without cost or obligation, please accept our invitation and attend a free AgingOptions LifePlanning Seminar near you. We offer many choices of locations, dates and times, so click here for details and online registration, or call us during the week. We’ll look forward to answering your questions soon at an AgingOptions LifePlanning Seminar.

(originally reported at (www.nextavenue.org)

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Who Bears Most of the Costs Associated with Dementia? Families Do.

A great number of articles have been written in recent months about the increasing prevalence of Alzheimer’s disease in the U.S. Today there are more than 5 million Americans, nearly all seniors, suffering with the disease, a group whose care this year will cost the nation almost $260 billion.  These costs, according to experts, could exceed $1 trillion by 2050 as the number of people diagnosed with the disease is projected to triple.

You’ve probably heard numbers like these before. But one fact which startled us, and which should get your attention if you’re caring with a loved one diagnosed with dementia, is that by far the largest share of these staggering costs are borne by families. This is according to a new study published in the Journal of the American Geriatrics Society that looked at the lifetime cost of caring for someone with Alzheimer’s disease or other forms of severe cognitive impairment.  We found some of the basic information about this sobering reality in this article from the website Insurance News.

According to the article, public health experts from Brown University wanted to find out just how costly caring for someone with dementia can be over the course of his or her lifetime. They came up with a mathematical model derived by studying Medicare records and other national studies, a model which allowed them to simulate the progression of dementia in a patient who had just been diagnosed.

The model the team came up with was a real eye-opener. In the U.S. an average individual with dementia will receive almost $322,000 worth of medical care over a five year period.  This compares with an average of less than $140,000 in care over the same five-year period for the person without dementia. And here’s the shocker: of that $322,000, about 86 percent is borne by families, in the form of informal care expenses, co-pays and other out of pocket care costs. That represents a staggering average cost of more than $55,000 per year for five years for the family of the loved one with dementia, either in direct cash outlay or in the value of care services the family is providing.

This figure comes close to the statistics compiled by the Alzheimer’s Association (www.alz.org). According to the group, there were almost 16 million family and friends in 2016 providing care to those with Alzheimer’s disease and other forms of dementia. When the value of these unpaid caregiving services was calculated it came to about $46,000 for each dementia sufferer. That’s in addition to the medical costs associated with dementia, currently approaching $260 billion: Medicare and Medicaid cover two-thirds of that amount, but about $56 billion comes in the form of out of pocket costs paid for by families.

Of course the greatest burden to those caring for loved ones with dementia is emotional, but the financial cost makes the sadness even more acute. The pain of watching a beloved parent or friend slip into the twilight of Alzheimer’s disease is terrible enough, but it’s compounded by the growing realization that caregiving brings with it a potentially catastrophic financial weight. Here at AgingOptions we talk every week with people who find themselves in this devastating situation, and our advice for you is not to try to go it alone. There are excellent resources online, such as the Caregiver Center on the Alzheimer’s Association website (click here for the link.) But one of the best things you can do is to get some professional advice, and that’s where we can assist. For example, a family conference, guided by one of our experienced professional staff, will help ensure that everyone in the family is on the same page when it comes to caring for mom or dad. Another excellent idea is for you and your entire family to attend a free AgingOptions LifePlanning Seminar.

LifePlanning is our descriptive term for a type of comprehensive retirement planning offered only by AgingOptions. Traditional retirement planning, which focuses almost entirely on finances, is literally a recipe for disaster – like trying to make a stool that can stand securely on just one leg. Our conviction, built on decades of experience, is that all the aspects of your retirement planning have to work together: finances, housing choices, medical coverage, legal protection and family communication. That way all five facets of your retirement plan reinforce each other.

We invite you to bring your questions about all aspects of retirement and plan now to attend a free LifePlanning Seminar at a location convenient for you. In just a few hours you’ll discover an approach to comprehensive retirement planning that will guide you into the future you’ve always dreamed of. For dates, times and online registration, click on this link, or call us for assistance during the week.

No one wants to become a burden to their loved ones as they age, but dementia can unravel the most carefully-laid plans, robbing families of their assets and often forcing loved ones into institutional care. No matter what your situation, get the facts now so you can prepare for whatever the future may hold. We’ll see you soon at an AgingOptions LifePlanning Seminar.

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Nearing Retirement? Six Financial Moves You Still Need to Make

This week we ran across this article on the Yahoo Finance website, written by Jeff Rose of Credit.com. We have to admit, we were a bit suspicious of the title: “Ignoring These 6 Financial Moves Could Ruin Your Retirement.”  In our experience, articles like this tend to be far too simplistic, focusing on financial planning at the expense of everything else – an approach that we’ve found to be a recipe for disaster. So we were somewhat pleasantly surprised when we read the six recommendations and found them more useful than we had expected. Still, while the Yahoo Finance piece does offer some helpful advice, we think it leaves out some very important components of retirement planning, and that there’s a lot missing from this list.

“You finally have enough money to retire,” writes Jeff Rose. “The excitement is palpable, and you can hardly believe you’ve reached this milestone.” However, he adds, before your retirement dreams can come true “you still have some work to do if you want to actually stay retired.” In other words, if you don’t complete a handful of important tasks now, “you could wind up heading back to work part-time or cutting back on spending just to get by.”

So what are these six financial moves? Let’s take a look and see what Jeff Rose got right and what (in our view) he may have overlooked.

The first must-do task is to “have the money talk with your adult kids.”  Rose cites a Pew study from 2015 that says more than 60 percent of U.S. parents helped their adult kids financially during the past 12 months. In the words of the Yahoo Finance article, “Helping adult kids may not have been a big deal when you were working, but it can make a huge difference to your bottom line once you’re on a fixed income. This is why you need to have the ‘money talk’ right away.” Your adult children need to know that you can’t keep supporting them financially once you’re retired or your own security could be jeopardized. “If you set expectations early, your adult kids will have time to learn how to fend for themselves and break the cycle of living paycheck to paycheck.” It’s hard to argue with that suggestion, although in our experience it’s certainly not a good idea to wait so long to have the family conference Rose is talking about.

Second on the list is to “dial down your investment risk.” Rose writes, “It’s crucial to reconsider your desired level of risk as you start getting close (to retirement).” What too often happens is that people set up their 401(k) portfolio while they’re still employed and then never bother to adjust it again. Shifting your portfolio away from riskier stocks toward a blend of stock and bond funds could be good advice, but in any event don’t overlook the importance of a “portfolio tune-up.”

The third recommendation is also one we subscribe to: “meet with a financial planner.”  Again, though, while meeting with a planner is a good idea, waiting too long to get solid financial advice is a bad one. “There is no one-size-fits-all retirement income portfolio or investment approach retirees should take,” says Jeff Rose, but “a financial planner can find the right mix for your financial goals.” The sooner you sit down with a planner you can trust, the sooner you can get yourself onto the right financial course – but remember our strong advice to select a fee-based financial planner and not one who has a product to sell. Contact AgingOptions and we can recommend a trusted, experienced financial planner who meets these criteria.

Number four on the list sounds a lot like number three. Jeff Rose advises you to “create a long-term financial plan” – because “with a solid plan in place, you won’t have to stress over market fluctuations that would normally leave you stressing out.” Of course this makes sense, but we always remind our clients, radio listeners and seminar guests that a financial plan absolutely must be made in concert with the rest of your planning process! That’s why a LifePlan is the only approach to retirement planning we endorse. We’ll tell you more about LifePlanning in a minute.

The fifth item is to think long and hard about your long-term care options.” “No one ever thinks they’re going to need long-term care or have to move to some kind of facility,” Rose writes, “but more and more individuals are finding out that’s not the case.” For that reason, “even if you don’t think it’s ever going to happen, you still have to prepare.” The article only mentions two types of preparation – buying long term care insurance and what he calls “setting up steps with your children.” We think this simplistic approach is woefully inadequate. It takes careful preparation and solid professional advice to make certain you can avoid becoming a burden to your loved ones as you age – which is all the more reason why a LifePlan is absolutely essential.

Finally, Jeff Rose’s article from Yahoo Finance advises that you “decide how to handle Social Security.” Considering that this article is written for the benefit of those about to retire, we can’t really understand why Rose tacks this advice onto the end as an afterthought. In our experience, the time to talk about and plan for your Social Security strategy is years before you stand on the doorstep of retirement. Most people know that waiting to draw benefits until age 70 not only maximizes those benefits for the recipient but also in many cases for a surviving spouse – so if this is your strategy, then you must plan well ahead to make it happen. The important thing is to weigh your options carefully, and if possible do so years before you have to make a Social Security decision.

As is so often the case, we find the advice from this article to be basically sound but definitely insufficient. The only way for you to plan adequately for the type of retirement you’ve always hoped for is to adopt the type of planning strategy that takes all the critical facets of retirement into account: finances (of course) but also your legal strategy, your housing plan, your medical protection and your communication with your family. The sooner you learn about LifePlanning from AgingOptions, and the sooner you adopt the LifePlanning precepts, the sooner you can begin experiencing the kind of retirement security that only a LifePlan provides.

Ready to find out more? It’s simple to do: come to a free LifePlanning Seminar. Click here for upcoming dates, times and locations, then register online or call our office for assistance. An inadequate retirement plan is almost worse than no plan at all, because it can lull you into a false sense of security. For true peace of mind, you need a LifePlan from AgingOptions!

(originally reported at https://finance.yahoo.com)

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Harvard Study: U.S. Unprepared for Looming Crisis in Senior Housing

Nearly three-quarters of senior Americans want to live in their own homes as they age – but less than one percent of American housing stock is properly equipped to accommodate them. That’s just one finding that grabbed our attention from a comprehensive study by Harvard University called “Housing America’s Older Adults.” It’s a long report – more than 40 pages – and it was issued a few years ago. But the message couldn’t be clearer: we as a nation are simply not ready to meet the housing needs of seniors in America.

(The study was prepared by the Joint Center for Housing Studies at Harvard University, and if you want to read the report for yourself you can click on this link.)

According to the Harvard report, America’s senior population is booming. By 2030 one American in five will be 65 years old or older, and by 2040 there will be 28 million Americans over the age of 80, more than triple the number in the year 2000.  “Ensuring that these older adults have the housing they need to enjoy high-quality, independent, and financially secure lives has thus taken on new urgency,” says the Harvard report, “not only for individuals and their families, but also for the nation.” However, says the report, there’s a housing crisis brewing. “The existing housing stock is unprepared to meet the escalating need for affordability, accessibility, social connectivity, and supportive services,” the report warns. It calls the public policy challenges involved in properly housing America’s seniors “immense.”

It is “vital to our standard of living,” says the report, that communities, families and institutions recognize the implications of this “profound demographic shift” toward an older population. The rest of the report goes into great detail to explain the root of the senior housing crisis and what might be done to prepare for the tsunami that’s already brewing as baby boomers age.

Here at AgingOptions this confirms what we tell our clients, radio listeners and seminar guests repeatedly and emphatically. Unless you plan ahead to consider your housing options and to prepare yourself and your home and family well, you are going to join the large and growing number of seniors who end up being forced into institutional care against their will because they can no longer stay at home. But that doesn’t have to happen! In just a moment we’ll explain how you can beat that trend and enjoy the kind of retirement living you prefer.

The Harvard study points out that, because housing is the single biggest item in most household budgets, housing-related expenses disproportionately affect a senior’s financial security and their ability to save for the future. Seniors need housing that is accessible to the services they require, especially when they can no longer drive, and seniors with disabilities or other physical frailties need housing with an environment that will keep them safe and healthy. But, says the report, several major factors are working against seniors today as they seek solutions to their housing needs.

  • High housing costs are forcing millions of low-income older seniors to “sacrifice spending on other necessities including food, undermining their health and well-being.”
  • Much of the nation’s housing inventory lacks basic accessibility features – single floor living, a stairless entry, switches and handles that are accessible and easy for seniors to operate, and extra wide doorways and halls – that make it possible to age in place. As we pointed out above, housing surveys have shown that a tiny fraction of American homes have all these features, while about 20 percent of homes have none or one.
  • We are still a “car culture” in the U.S. with a transportation system that in many places is ill-suited to meet the needs of those who cannot or choose not to drive – leaving carless seniors increasingly isolated from friends and family.
  • Poor communication and coordination between American housing programs and the health care system “puts many older adults with disabilities or long-term care needs at risk of premature institutionalization” – just as we’ve warned about time and time again.

As we said, this is a voluminous and highly revealing report, with a great deal of data. But there are several things that you as a senior – or as someone determined to plan ahead for your retirement years – can and must do. In fact, this conclusion echoes the advice we give to our AgingOptions clients and seminar guests.  “At the individual level,” the Harvard study urges, “older adults and their families must plan for the time when they have to confront the vulnerabilities of aging.” This type of planning is comprehensive and multi-faceted: “Financial preparations, including building savings, managing debt, and obtaining long-term care insurance, are all important steps toward continued self-sufficiency. Thoughtful choices about where to live, the type of housing to occupy, or the type of home modifications to make—in advance of disabilities or chronic conditions—make it more possible to age in place without compromising safety or social connections.”

Because many seniors can’t afford these steps, the Harvard study concludes, larger institutions need to step in. “It is critical that the public and private sectors take steps to ensure that housing and health care systems support appropriate and cost-effective options for low-income older adults, and that communities provide housing, transportation, and service options for their older populations regardless of income,” the study asserts. But as utopian as that might sound, we have to say that in this day and age of political division and skepticism we’re a bit dubious that this “public-private” partnership will ever be able to mobilize sufficiently to solve the looming housing crisis among seniors.

Still, when it comes to the needs of the average retiree, what the Harvard study appears to be advocating is what we at AgingOptions prefer to call LifePlanning. We take the approach reflected in the Harvard article, that every facet of retirement works in close harmony with every other facet. You can’t make a financial plan for retirement without considering housing. You can’t plan for your housing needs without making certain your medical insurance is adequate. You can’t avoid becoming a burden to those you love unless you involve them in these decisions. And you need a legal strategy that binds them all together and protects the interests of you and your family. LifePlanning is a truly thorough and comprehensive approach to the challenges of building a retirement plan that truly stands the test of time.

Why not accept our invitation to learn more? Come to a free LifePlanning Seminar at a location near you, where you’ll see why so many are so enthusiastic about this breakthrough in retirement planning. Clkick here for dates, times, locations and online registration, or call us during the week. Don’t let a failure to plan doom your retirement hopes to disappointment! Come discover the power of an AgingOptions LifePlan.

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Retirees: Beware of “Financially Enabling” Your Kids and Grandkids

From our earliest days most of us were taught to be generous, especially with those closest to us. But ironically, as we enter retirement and confront the need to be more cautious with our own money, our adult kids and grandkids are just coming into the phase of their lives when financial crises seem to pop up on a regular basis. During times of financial need, those we love may turn to Mom and Dad, Grandma and Grandpa for a loan or a handout, and when they do we may want to say yes – but should we?

We found this recent article from USA Today very intriguing in providing an answer to that perplexing question. Written by financial planner Liz Weston, the article makes her view clear from the outset. It’s titled “How to stop being the family ATM and learn to say ‘no.’”

It’s definitely good to be generous with our kids, we would agree – up to a point. But when generosity evolves into what the USA Today article calls “financial enabling,” it has gone too far.  Unfortunately, Weston writes, some older adults are guilty of this distorted brand of generosity when it comes to family members. “Financial enabling” Weston writes “means giving money in ways that keep the recipients from taking responsibility and solving their own problems. It may include providing financial support to an able-bodied person who refuses to work, bailing a chronic debtor out of another financial jam or serving as a de facto emergency fund for someone who refuses to save.”

While it’s true that this financial enabling can take place between friends and even between romantic partners, financial planners agree that it seems most common between parents and their adult children. When it involves retirees, financial enabling is a real double edged sword: not only does it harm the one receiving the handout, but it also undermines the financial health of an older parent who’s trying to do the generous thing.  “(Financial enabling) can be especially problematic for retirees who may run short of money because of their generosity,” says USA Today.

So next time your adult kids or older grandkids come to you for money, you need to stop and recognize whether your so-called generosity has morphed into financial enabling – and if it has, you need a strategy to say no and stick with it, argues the USA Today article. One psychologist quoted in the piece says that saying no and then giving in after persistent pleading is worse than saying yes in the first place, because by caving into persuasion you’re only increasing the odds that you’ll be a target the next time – the “family ATM” indeed!

So is there a helpful strategy if you feel you’re getting hit up too often for money? USA Today’s Liz Weston writes that it does little good to just tell the freeloaders no, since “few are willing to stop the behavior cold turkey, therapists and planners say.” Instead, here are three questions you might be able to ask to help you decide whether or not to agree to financing your family member’s need.

  • First, will this money actually help? Weston writes that “It’s one thing to aid someone who’s been financially responsible but has fallen on hard times. It’s another to give money to people who chronically overspend or under-earn.” You’ll never help them change their bad financial behavior if you keep bailing them out every six months. There are almost certainly larger money management issues at work that will never be solved by your excessive generosity.
  • Second, is there a better way to help? “Instead of handing over cash,” the USA Today article suggests, “the rescuer could offer to pay essential expenses such as rent or medical bills if they can afford to do so.” What’s more, any financial help needs to be accompanied with a firm deadline so the beneficiary knows when the assistance will end. We also like the idea of offering to find or pay for financial planning, therapy or coaching for the loved one who is in chronic financial distress.
  • Third, how can you make this decision stick? You don’t know how your adult child might respond once they realize they’ve been cut off from your bank account. They may throw “adult temper tantrums,” says Weston, or lay a guilt trip on you or threaten to move away. In the worst cases there may be danger of verbal or even physical abuse. The article suggests you call in outside reinforcements for support if you need to, including an attorney, financial planner or therapist. “You can say, ‘Sorry, I want to help, but my financial planner says it just isn’t possible,’” writes one expert in the USA Today Whoever it may be, you need someone who will act as your advocate to let your loved one know you mean business.

Here at AgingOptions we have a strong recommendation for you: no matter what your family circumstances, we urge you to contact us and arrange for a family conference, under the guidance of one of our staff professionals. By having this type of organized, comprehensive family conversation early on, you can nip many problems in the bud, getting everyone on the same page when it comes to your needs and expectations – and their responsibilities – as you age. And if necessary, this gives our staff the chance to spell out for your adult children that your financial needs in retirement are of paramount importance, and you can’t afford to be bankrolling their bad spending habits. Contact us soon and let us discuss the benefits of a family conference. It could be the most important retirement decision you’ll ever make.

And for a broader review of a full range of retirement planning strategies, we invite you to come join us at an AgingOptions LifePlanning Seminar. You’ll discover the benefits of the comprehensive approach to retirement that we call LifePlanning, blending financial, legal, housing, medical and family issues and plans into one seamless blueprint. A LifePlan from AgingOptions is your key to the retirement you’ve dreamed about. Click here for details and online registration, and then register for the free seminar of your choice. Or if you prefer, call us for details and assistance during the week. We’ll look forward to meeting you soon!

(originally reported at www.usatoday.com)

 

 

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From AARP: Protect Yourself and Loved Ones from These Two Scams!

Here at AgingOptions we typically find blog stories to share with you from various reliable online news sources – but this story is taken from a flyer that just landed in our mailbox. As part of their ongoing effort to protect seniors from unscrupulous thieves who are always trying to steal their identities and their cash, AARP has just mailed out a flyer called “The Watchdog,” with the subtitle “Beating Con Artists at Their Own Game.” A few of these articles grabbed our attention, and we felt compelled to share them with you – both to help you protect yourself and to arm you so you can safeguard older loved ones who are depending on you.

(If you want more information about AARP’s fraud prevention programs, click on this link to take you directly to a nine-page guide called “AARP Watchdog Alert.” You can read it online or print a copy for yourself or a loved one.)

The first article in the AARP flyer, one that really got our blood boiling, is a warning to veterans, called “America’s Vets Have a New Enemy: Scammers!” According to a recent AARP study, one in three victims of investment fraud in the U.S. is a military veteran. “The bad guys deliberately call former military,” warns AARP, “pretending to be old friends, offering ‘sure thing’ investments, finding ways to steal their money.” According to AARP the situation is getting worse, with a 65 percent increase in fraud complaints from veterans just in the past five years. Fraud targeting American vets has gotten so bad that AARP is launching a new program called “Operation Protect Veterans,” enlisting anyone and everyone to be on the lookout for suspicious solicitations that seem to target those who have served our country. Here’s a link to a state by state AARP website describing this nationwide effort.

The Watchdog article mentions at least four different types of common scams aimed at veterans – but there are certainly more varieties out there since thieves are notoriously creative. Do any of these sound familiar to you?

  • The “Update Your Military File” Scam: A caller claiming to be from the VA contacts the veteran pretending to be seeking information to update a personnel file. In reality this is nothing more than thinly-disguised identity theft.
  • The “Cash for Benefits” Scam: Scam artists offer a cash-starved veteran an immediate payment in exchange for their future disability benefits, but the supposed payouts are worth only a fraction of the value of the benefits the vet would otherwise receive.
  • Charity Scams: Callers claim to represent charities serving disabled veterans or other vets in need, but in most cases these “charities” are either fraudulent or disreputable. (Suggestion: always check out charities on a website such as Charity Navigator before you make a donation.)
  • VA Loan Modification Scams: Callers contact military families offering to refinance their VA loans, for an upfront fee. Once the fee is paid, the scam artists vanish.

There’s a second scam you need to be on guard against, this one triggered by the recent decision by Medicare officials – finally – to stop using Social Security numbers on Medicare identification cards. This change is the result of a 2015 law, but it is taking until April 2018 for the change to start kicking in. In the meantime, says AARP, “Medicare beneficiaries are getting calls claiming to be from Medicare asking for payment to receive a new Medicare card, or asking them to verify their Medicare number.” AARP warns that these calls are completely illegitimate. “Medicare will never call to verify your number because they already have it,” says the organization. “Also there’s no cost to get your new card.” What do you or a loved one do if you get a call like this? “Hang up immediately.”

No senior wants to be a burden to those they love, and many seniors tend to be proud and stubborn, so your loved one may not tell you they’ve been approached or even victimized by scammers. Our advice is to be on the alert. Watch the mail (or, if you have access, the email) for suspicious correspondence, and talk to the manager of the bank where your loved one does business. You can also call us at AgingOptions and let us provide some sound advice on avoiding scams. And we also strongly recommend that you and your loved one attend one of our free LifePlanning Seminars. At these popular events you’ll discover an approach to retirement planning that is truly comprehensive, weaving together all the vital aspects of life as you age: finances, legal affairs, medical insurance, housing options and family communication.

We offer these seminars at locations throughout the region, but they do fill up rapidly, so please accept our invitation and register now for the seminar of your choice. Click here for details and online registration, or call us and we’ll gladly assist you.

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Surprise! Experts Say “Retirement” May Not Be What You Expect

When you look into your future, what do you think “retirement” will be like? As we’ve discovered in our interaction with thousands of retirees, the answers vary widely. But the reality can be filled with surprises, both happy ones and not so happy ones, which is why we decided to revisit a story we originally reported in the spring of 2016. It was based on a research report done by the financial firm Merrill Edge, a study which revealed that retirement can definitely hold some unanticipated twists and turns.

We discovered this interesting article , called “7 things that surprise retirees about retirement,” on the financial website Market Watch (www.marketwatch.com). According to the author, the Merrill Edge study revealed that “what retirement is really like may surprise you – and not always in a good way.” The study essentially asked retirees the question, “What have you done in retirement that surprised you?” For nearly one retiree in three, the top answer was clear: they spent more money in retirement than they had planned or expected.

A few years earlier a similar study by the financial firm Mass Mutual showed the same thing, although not quite so dramatically. This survey revealed that one retiree in six was surprised by their financial problems in retirement. That’s a significant number, and it tells us that, in spite of a wide range of resources and planning tools available to retirees, some people still enter this important phase of life without a guide or a roadmap. Here at AgingOptions we have the solution to that predicament – an AgingOptions LifePlan – which we’ll say more about in a moment.

In the Merrill Edge study, 30 percent of respondents said they were surprised by their spending level, and not necessarily in a good way. For these folks, the costs of retirement living were higher than what they had anticipated, which is unsettling for most retirees who must adjust to living on a fixed income. But cash flow wasn’t the only big surprise in the Merrill study.  Almost 20 percent of respondents ended up making an unexpected move to a new location, even though they had planned to stay put. For some these unexpected moves could be due to financial pressures while others likely needed to move for health-related reasons. Here at AgingOptions we spend quite a bit of time counseling our clients on how to plan for their housing needs as they age, but a big part of that planning process involves thinking very realistically about one’s health and one’s finances, the two biggest drivers of an unanticipated relocation.

Returning to the question of finances, we wondered why so many retirees find themselves surprised by their spending levels. According to the Market Watch piece, the chief answer is simple: the higher than expected cost of health care. “A couple, both 65, that retired in 2015 will end up shelling out roughly $245,000 — that’s up nearly 30 percent over the past decade – on health care throughout retirement,” says Market Watch, even though they have Medicare health coverage. But even with that level of  “sticker shock,” it’s sad to realize, as Market Watch reports, that less than one person in four has factored health care costs into their retirement planning! In today’s environment of skyrocketing out-of-pocket medical costs, that number may indicate that traditional financial planners simply aren’t doing an adequate job of preparing their clients for the true cost of growing older. Bottom line: your retirement plan needs to be comprehensive in scope, covering all aspects of your future life.

There is good news in the “retirement surprises” category. Merrill Edge says that almost one fifth of retirees say they are able to relax in retirement more than they had expected. But the number of respondents who report other positive surprises – unexpected travel, the chance to return to school or start a business – is relatively tiny.

Earlier we mentioned an AgingOptions LifePlan. When you have such a plan in place, you’ll be prepared for just about any surprise that retirement can toss your way! Your LifePlan helps you plan for your medical coverage and it incorporates a sound financial plan. LifePlanning also ensures that your legal affairs are in order and that the right housing choices will guide you to the style of living that best suits your needs and desires. And finally, one element many plans overlook is your family: you need to make certain they’re aware of your desires. No one wants to burden their family unnecessarily as they grow older! A LifePlan includes this entire range of considerations, allowing to you approach retirement with confidence.

Here’s how to learn more as you begin the planning process: join us for a free LifePlanning Seminar. These take place frequently at locations throughout the area, and there’s no obligation whatsoever. We assure you that you’ll come away with valuable knowledge and insight that will help you get started on the road toward a happy and fulfilling retirement.  Following a carefully conceived LifePlan is one excellent way to ensure that all your “retirement surprises” will be happy ones.

Click here for details and online registration, or give us a call during the week. We’ll look forward to meeting you at a LifePlanning Seminar soon.

 

(originally reported at www.marketwatch.com)

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Are You Ready to Retire? This Checklist May Provide Some Answers

If you’re like most people over 50, you’ve probably been thinking about retirement for years. When will I retire? Will I be able to afford it? How will I know when the time is right? And what will “retirement” look like and feel like?

At AgingOptions, helping people answer questions like these – and, most of all, helping them see their dreams come true through careful planning – is the cornerstone of our professional work. In our offices, on the radio and in our seminars, one of the questions we get most often is, “How will I know when it’s the right time to retire?” Because we hear questions like that so frequently, we’re always interested in articles from retirement experts attempting to provide some answers. Here’s a good example which we discovered recently on the website Real Deal Retirement. Written by nationally known columnist Walter Updegrave, this one is called “The ‘Are You Ready to Retire’ Checklist.” While we seriously doubt whether any five-question “checklist” can really answer such a profound and important question, we share this article with you because it might help you explore your own situation a bit more fully. But as you’ll discover, we think Updegrave’s checklist, while helpful in some ways, is sadly incomplete.

“If you think you’ve got the means and the inclination to call it a career,” writes Updegrave, “I say go for it. My only caveat is that, before you do, make absolutely sure that you’re not only financially prepared to retire, but that you’re also ready to make the social transition from the work-a-day world to retirement.” It’s hard to argue with that – so let’s see what the Real Deal Retirement article offers on its retirement checklist.

The first question on the checklist is the most obvious: “Do you have the financial resources you’ll need to support you the rest of your life?”  Updegrave adds, “The question is straightforward, but coming up with an accurate answer can be more difficult than you think.” As a solution, the Real Deal Retirement article offers links to some helpful tools including BlackRock’s Retirement Expense Worksheet and the T. Rowe Price Retirement Income Calculator. These are useful if you’re the kind of person who doesn’t mind filling in numbers, but you can also contact us here at AgingOptions and allow us to refer you to a fee-based financial planner, someone who is not trying to sell you a financial product or insurance policy but who you hire for a fee to give you honest, objective advice. Believe us, if you choose the right planner, the expense will be well worth it.

The second question, closely related to the first, from the Real Deal Retirement article is “Have you considered how you’ll generate income for retirement?” This individualized income plan can include Social Security, part-time work, required minimum withdrawals (RMD) from non-Roth retirement plans, and possibly an annuity to generate steady income. Once again, putting together an income plan for your future is another area where we suggest the services of a qualified planner.

The third question is critical: “Do you have health insurance squared away?” The Bureau of Labor Statistics warns that health care costs will consume about 15 percent of the average retiree’s spending, so it’s imperative that you understand just what Medicare does and does not cover and how to fill in the gaps with Medicare Advantage or Medicare Supplement plans.  If you have questions about these vital programs, we invite you to call us at AgingOptions, or – better still – attend a free LifePlanning Seminar soon where many of your questions will be answered. We’ll tell you more about LifePlanning in just a moment.

Walter Updegrave returns to finances for his fourth question on the Pre-Retirement Checklist: “Is your retirement portfolio in shape?” Once again, this goes back to the issue of income in retirement. “There’s no single correct stocks-bonds mix that’s right for all retirees,” Updegrave writes. “The idea is that you want to invest enough of your savings in stocks to provide the returns you’ll need to maintain your purchasing power over the course of a long retirement, but also enough in bonds to provide some ballast during the market’s inevitable periodic setbacks.”  Again, this is another area where unbiased financial advice is in order.

Finally, Updegrave’s concludes with a question that we think is profound. “Do you have a plan for how you’ll actually spend your time after you retire?” he asks. Since retirement can easily last for three decades, a healthy dose of lifestyle planning is essential in order to “make this phase of your life satisfying and meaningful rather than a period of just marking time.”  The author lumps quite a few questions under the “lifestyle planning” category: for example, he asks, “Will you remain in your current home or downsize to something smaller? Stay in the same neighborhood or relocate to an area with lower living costs? Do you have a circle of friends and family that will keep you socially engaged? Have you lined up activities (part-time work, a workout regimen, a hobby or avocation, charitable work) that can help keep you physically fit and mentally alert?”

So what’s our view of this “Are You Ready to Retire” Checklist? We would give Mr. Updegrave a grade of “Incomplete.” He does a good job of covering finances, which most retirement planners do, and he touches (briefly) on Medicare. But what about long-term care? What about your legal protection? Do his housing questions adequately deal with the choices and limitations you’ll face in deciding where you’ll live as you age? And what about your family – will they be fully supportive of your plans? If not, your best-laid plans could fall apart in a battle between your heirs after you’ve gone. The Real Deal Retirement checklist is silent on these vital issues.

The better answer for retirement preparation is to attend a free AgingOptions LifePlanning Seminar, where you’ll discover a truly comprehensive approach  to retirement planning – one in which finances, legal affairs, medical coverage, housing choices and family communication all work together in harmony. With your LifePlan in place, you’ll face retirement with a newfound sense of security and optimism for the future. Please accept our invitation to attend a free LifePlanning Seminar at a location near you. We offer a range of dates and times, so click here for details and online registration, or call us during the week so we can assist you. Bring your retirement questions and join us at an AgingOptions LifePlanning Seminar.

(originally reported at www.realdealretirement.com)

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