This “Misunderstood” Financial Tool Could Rescue Your Retirement

There’s a crisis looming in America when it comes to retirement. No doubt you’ve read the articles and heard the news stories about this oncoming tidal wave of challenges for retirees, especially aging boomers. We’ve written about this issue several times on the AgingOptions Blog. As baby boomers retire – now at the rate of about 10,000 every day – they simply don’t have enough money set aside. “Many of them,” say the experts, “are woefully underfunded for their future retirement needs.”

So is it possible that one of the most misunderstood financial tools in America could be the very thing that saves retirement for a growing number of aging boomers? According to this article from Yahoo News, reprinted from US News & World Report, the answer is a definite yes. And what is this mystery tool? It’s none other than the reverse mortgage, which one expert, Jamie Hopkins, professor of finance at the John E. Simon School of Business, calls “one of the most misunderstood financial products in existence.”

The Yahoo News article points out, as most people know, that reverse mortgages (known as Home Equity Conversion Mortgages, or HECM) have gotten a “bad rap” over the past decade or two because of the way these instruments were designed and marketed when they first appeared. Reverse mortgages were associated with late night television ads featuring endorsements by aging celebrities. As a result, many financial planners were skeptical of the HECM at best. But unbeknownst to many uninformed Americans who still view these financial instruments with disdain and suspicion, the reverse mortgage has changed dramatically in recent years, with a host of new regulations and safeguards. As a result, says the article, “Reverse mortgages are now gaining a lot of attention as a viable option for retirement income.” Most of the skeptics have now become enthusiastic advocates. One expert quoted in the Yahoo News article stated flatly, “Reverse mortgages deserve a second look today.”

This fresh new look at the HECM couldn’t come at a better time for retiring boomers, the majority of whom are moving into their “golden years” with far fewer resources than they’ll need. This lack of savings is compounded by an anticipated longer lifespan, which means today’s boomers will probably be facing an increasing number of age-related health issues. According to Professor Hopkins, “This retirement income shortfall is nothing less than a crisis facing the United States.”  But the crisis could be averted for many by the power of a reverse mortgage which will allow homeowners to stay securely in their homes while tapping into the largest single “cash reserve” most of them possess – their home equity.

How might an HECM benefit a retiree? There are several ways. One popular option is to take out a line of credit, which allows the homeowner to supplement his or her income when needed. Not only is this a protected source of ready funds, but the available credit amount grows the longer the HECM is in force. Another option is to use the proceeds from the reverse mortgage to pay off the original loan, leaving a retiree with no house payment – a saving which would make a dramatic difference in retirement lifestyle for most of us.

Some retirees use income from their reverse mortgage to allow them to delay claiming Social Security benefits, a tactic which can boost monthly payments by more than 30% if, for instance, a retiree can hold off until age 70 instead of drawing benefits at 66. Other retirees have found that drawing on their HECM during times when the stock market is down and the value of their stock-based assets is depressed gives those balances time to recover. The HECM provides an excellent cushion, protecting retirees from having to sell when prices are low.

So we encourage you to read the Yahoo News article for yourself. You can also search the AgingOptions Blog for past articles on reverse mortgages. But without a doubt the most important step you can take is to talk with an expert to get all your questions answered and to find out if a reverse mortgage is right for you. We are well acquainted with several highly qualified professionals in the reverse mortgage field, people like Laura Kiel of Kiel Mortgage, and can recommend them with complete confidence. Don’t let your preconceived notions and other people’s opinions keep you from discovering the power of a reverse mortgage! You just may find, as others are discovering, that a Home Equity Conversion Mortgage could save your retirement.

When it comes to all aspects of retirement planning, we at AgingOptions stand ready to assist you with a full range of strategic services designed to help you enjoy a secure and fruitful retirement. Our approach, called LifePlanning, encompasses all aspects of retirement – finances, medical care, housing options, legal protection and family communications – weaving these into a well-crafted plan that protects your assets while helping you avoid becoming a burden to those you love. To learn more about this powerful approach to planning for your future, we invite you to join Rajiv Nagaich – without obligation or cost – at a future LifePlanning Seminar. You’ll find all current dates, times and seminar locations on the Upcoming Events tab by simply clicking on this link. You can register online, or contact us during the week, and we’ll gladly assist you.

It will be our pleasure to help guide you into the retirement you’ve always hoped for! We’ll look forward to meeting you soon.

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

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Deciding When and Why to Retire: it’s Emotional, not just Financial

Retirement planning is our professional focus here at AgingOptions, and that means we read a great number of articles and studies that flood the internet every week. Since the baby boomer generation has begun to retire, the sheer volume of information about retirement planning has exploded. In fact, out of curiosity, we just tried entering the words “retirement planning” into our Internet search engine and immediately came up with almost 2.5 million hits!

It does seem to us that the majority of articles about retirement focus chiefly on finances. When will you know that you have enough money to retire? How can you maximize Social Security? How much income will you need ten or twenty years from now? How should you handle Required Minimum Distribution from your 401(k)? These are all important questions, it’s true, but as we’ve said here a thousand times, money alone is not a guarantee of retirement bliss – in fact, the opposite can often be true.

For that reason we were drawn to a recent pair of articles that seemed to us to raise important questions about retirement, questions that have little to do with money. One deals with the question of when – when do you know that it’s time to retire? The other deals with the question of why – why retire in the first place? What’s the point? Let’s take a look at these and see what light they shed on the non-financial considerations surrounding retirement.

The first article is this one from the Kiplinger financial website.  “How do you know when it’s time to retire?” asks author Janet Bodnar. “The decision to retire is a personal one that’s as much psychological as financial.”  The article describes some conversations the recently-retired author had with a group of her high school classmates celebrating their 50th reunion. One classmate had retired from her job as a school psychologist, while another who had been laid off from a corporate h.r. position had started a new part-time career as an executive consultant.  The third was hoping to ease into retirement by staying on the job while cutting back on her administrative responsibilities.  In other words, these women were representative of many boomers facing the decision of when to retire.

“Retirement is really a lifestyle change triggered by some event,” says Brian Sykes, a financial planner quoted by Bodnar in Kiplinger. Those “triggers” can vary from individual to individual: a layoff, a health crisis, or the demands of family. “Many people simply want to be closer to relatives or spend more time with grandchildren,” Bodnar writes. Some grow restless in their careers, facing “the desire to do something different, make more of an impact or just have more flexibility.”  For some, the desire to retire is spurred on by a reminder of mortality, such as the death of a close friend or family member. “People realize that time is their one fixed resource, and how they spend it becomes more important as time shrinks,” says Sykes. “People make decisions emotionally and then use the numbers to justify those decisions.”

Baby boomers, says Bodnar, “are the first generation to face the challenge of how to plan for a retirement lasting 25 to 30 years.”  That makes the why of retirement just about as important as the when. And that in turn brings us to the second article, this one from USNews called simply “What’s the Point of Retirement?”  Unlike in the past, when retirement represented little more than “a brief period of well-deserved rest after a lifetime of backbreaking work,” the outlook for today’s retirees is completely different.  “Today’s retirement offers a chance for a whole new life,” the USNews article says, “to reinvent yourself for your next couple of decades.”  So how can you find the why in your new life as a retiree? The article lists six suggestions to help you discover the point in retirement:

  • Enjoy your freedom. As you escape the pressures of work, “you can begin to relax and enjoy the feeling of not being exhausted all the time. You will probably find your anxiety slowly slipping away and may start to sleep better. Without so much stress in your life, you might find that your health and energy levels start to improve.”
  • Rediscover yourself. Once the “vacation stage” of retirement begins to pass, it’s time to “think about what you really want to do – rather than what you’ve always felt obligated to do.” Go back to school, start a business, volunteer, travel – dive into some of the things you’ve always dreamed of doing.
  • Make some plans. “Some dreams expand,” says the article, “while others become more realistic. Maybe instead of walking the entire Appalachian Trail, you walk a section of it, or instead of going back to school to earn a law degree, you attend classes at a community college.” By getting started with realistic plans you may find yourself discovering a niche for yourself that you never knew existed before.
  • Develop new routines. “You may miss that [former work] routine at first. So develop a new one.” Begin to rebuild your week around an exercise class, a part-time job, a regular volunteer position or involvement in a church. “These routines,” says the article, “provide structure for retirees who might otherwise feel as though they are drifting along with no purpose.”
  • Make new friends. “You might begin to miss seeing your old work colleagues every day,” says USNews. “Loneliness can creep up on you as you lose old friends, and it’s sometimes hard to make new ones.” So don’t be afraid to reach out at your volunteer job, your college classes, or the local senior center in town. Another great idea is to get a pet: not only will a pet bring companionship, but “you’re likely to meet like-minded friends down at the dog park.”
  • Recalculate. Here’s how the article puts it: “No matter how much you plan ahead, you may find that you’ve made a false start. Some people have trouble adjusting to retirement, and end up taking on a new job for another year or two before they are truly ready for retirement. Or you might move into a retirement community, seduced by its pretty landscaping and built-in activities, only to realize the place isn’t your style. So try things out, and then reassess your needs. You might not find your ideal retirement lifestyle on the first try.”

If these articles provide answers to when and why to retire, let AgingOptions help you understand how to retire. How can you protect your assets and avoid becoming a burden to your loved ones? How can you make certain your finances, legal affairs, housing choices, medical protection and family communications are all woven into a blueprint for your retirement future? An AgingOptions LifePlan is the answer. We invite you to bring all your retirement questions and join Rajiv Nagaich at a free LifePlanning Seminar near you. It could be the most important few hours of your retirement life! For details and online registration, click here – then select the seminar of your choice and register online.

Getting ready to retire? We’re ready to help guide you. Age on!

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Caring for Elders While Holding a Job: the Prescription for Stress

Some months ago we read a report on the blog of the AARP that revealed a problem too often overlooked, but one that will sound familiar to a significant number of Americans. The problem is the growing number of people, estimated at nearly 24 million workers, who are holding down paying jobs while at the same time serving as family caregivers. That’s a sure prescription for stress, fatigue and uncertainty, not only for employees but also for employers. “For employers big and small,” says AARP, “the need to support workers who also provide unpaid care for a family member is a growing reality.”

You can read the AARP article by clicking here. Even though the article first appeared in mid-2016, the information – and the predicament of working caregivers that it describes – are all too relevant today. For a more recent look at this issue, we suggest this more recent article just published in the popular magazine Consumer Reports.

These days, says AARP, serving as a caregiver to an adult relative (especially an aging parent) is growing more and more complex than it may have been in the past. Caregivers today often have to navigate a fiendishly complicated health care delivery system while performing more intense and complex care in the home, all while coping with the demands of work. Research suggests that employed caregivers feel a growing sense of stress and performance anxiety at work, with more and more pressure and less and less job security. Research also reveals that parents who are caring for young children at home often enjoy far more workplace flexibility than workers who are caring for older family members. Some caregivers even suggest they have experienced workplace discrimination, which according to an AARP research report from 2012, is not prohibited by most federal and state employment laws.

In a study entitled Caregiving in the United States 2015, cited by AARP, about 60 percent of family caregivers report they are also employed outside the home, and most of these “working caregivers” (nearly two-thirds) are caring for a relative 65 years old or older. According to the Consumer Reports story, “Providing care for a friend or family member is a labor of love for the 40 million people who are coping with that challenge. But taking on caregiving responsibilities can be costly.” The article quotes a 2016 AARP survey which found that unpaid caregivers spend an average of almost $7,000 a year on out-of-pocket expenses.  But that’s only part of the financial burden on caregivers. “An earlier AARP study estimated that missed wages and Social Security benefits totaled $234,000 for male caregivers and $324,000 for women, who are more likely to drop out of the workforce.” This loss has a lifetime effect on their retirement future.

As if this weren’t enough of a recipe for stress, the caregivers are also aging: half of these employed caregivers are themselves 50 years old or older, which means they are already experiencing the challenges of being an older worker in today’s high-stress, increasingly insecure workplace.

There are two chief take-aways from these articles. The first, in the words of the AARP blog: “As the U.S. population rapidly ages, the need to support workers with family caregiving responsibilities will grow.” In other words, AARP favors more generous family leave and paid sick day policies, along with greater work flexibility for caregivers. The organization advocates legislation to give caregivers increased measures of employment security and, when necessary, paid time off. Above all, we need a “culture of understanding about eldercare needs” especially as they affect those in the workplace.

The second point is more concerning: as the population ages, “we’re facing a caregiving cliff,” said Dr. Susan Reinhard, AARP Public Policy expert. “By mid-century, there will only be three caregivers available for each person requiring care.” As today’s baby boomers age, there may not be enough people able to care for them. “That means,” says AARP’s Reinhard, “we need to provide support for existing caregivers who are underserved” by current services. In other words, we had better be planning now for the caregiving needs of the not-too-distant future.

Planning for the future is the centerpiece of our activities here at AgingOptions, and that includes planning for your future care needs. This will most probably involve your family members, because aging is a family affair. Have you sat down and talked with your adult children about your expectations and wishes for the future? Have you and your family members had an honest conversation about the fears and concerns each of you is experiencing as you contemplate your aging years? Far too many families leave these issues unaddressed and unresolved until it’s too late. Here at AgingOptions, we frequently conduct family conferences in which all these issues are laid out on the table for open, constructive discussion. We would be glad to do that for you. Through planning and preparation, you can successfully avoid becoming a burden to your loved ones as you age, and also avoid being forced into unplanned institutional care.

The key is to have your own personalized AgingOptions LifePlan – our name for a fully-developed, individualized retirement plan that takes all your needs into account: financial plans, legal protection, medical coverage, housing options and family communication. If you’re ready to start creating your own LifePlan, we can help. The best way to start is to join Rajiv Nagaich at one of our free LifePlanning Seminars – popular, information-packed sessions held in various locations throughout the area. These seminars fill up fast, however, so we encourage you not to wait. Instead you can click here for dates, and free online registration. It will be a pleasure working with you as together we plan your ideal future.

(originally reported at http://blog.aarp.org)

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Bloomberg: Future of Retirement is Bright, Despite Negative Press

No doubt you’ve read articles in recent years lamenting the demise of the traditional pension system and claiming that the economic outlook for today’s retirees is grim. But at least one expert says, “Not so fast!” The future of retirement, he writes in this Bloomberg article, is actually brighter than ever. We thought we would share his views with you to see how you react: are we or are we not in a “retirement crisis”?

The author is Ramesh Ponnuru, who not only writes for Bloomberg but is also seni0r editor of National Review. It’s long past time, says Ponnuru, for Americans to “stop mourning the loss of traditional pensions” as evidence for retirement pessimism.  In the Bloomberg piece he cites one recent article in the Washington Post that tracked a group of retirees in Oklahoma whose pensions had disappeared in 1994. For this group of nearly 1,000 retirees, the outcome turned out to be grim.  The Washington Post story, according to Ponnuru, “features bankruptcies, lost homes and long-deferred retirements. It’s compelling [and] it’s sad.”  But is it “a useful guide to the future of American retirement?” Definitely not: instead, says Ponnuru, articles like this one – and there have been many – are part of a chorus of negative journalism “that laments the decline of the traditional defined-benefit pension and the rise of defined-contribution plans such as 401(k)s.”

The reason Ponnuru takes issue with this notion that the “good old days” of retirement pensions were so rosy, and the newer model of 401(k)-style plans so dangerous for retirees, is that he believes journalists who makes these claims overlook the facts – and in some ways he may have a valid point. Writing in Bloomberg, Ponnuru cites four specific areas in which negative stories about loss of pensions miss the mark.

First, he writes, these articles “gloss over how rare defined-benefit pensions really were.” We tend to think that a generation or so ago every worker enjoyed pension benefits, but that’s far from the truth. “Even at the mid-1970s peak of defined-benefit plans,” writes Ponnuru, “fewer than 40 percent of private-sector workers had them.” By contrast, he says, more than 60 percent of private-sector workers are now participating in a retirement plan, and among all workers the percentage vested in any retirement plan has risen by 80 percent since 1979.

Second, the articles that lament the loss of pensions tend to misrepresent the advantages of 401(k)-style plans. Under the old system, says Ponnuru, benefits were dependent on total years worked and the worker’s final salary. If a worker lost his or her job in their 40s, they were actually at a permanent disadvantage.  Ponnuru speculates that some of the Oklahoma workers written about in the Washington Post article “might well have been better off if the shift toward 401(k)s had happened decades earlier” because those savings would have lasted longer and continued to grow over time.

Third, Ponnuru’s Bloomberg article says many of the doomsayers are guilty of using misleading statistics to prove that America is in a “retirement crisis” because so many families have lost their pension benefits. In fact, he says, this pessimism is unwarranted because more workers participate in retirement savings today than in the past. “Count all retirement plans” – pension and 401(k) – “and nearly three-quarters of near-retirees have them,” Ponnuru writes.

Fourth, he criticizes the retirement nay-sayers who fail to look at how much the lifestyle for today’s retirees has actually improved.  If the loss of pensions were really driving retirees to the brink of poverty, statistics would show it, but the opposite seems to be happening, suggests Ponnuru. One telling fact: if you compare the median income of senior households between 1989 and 2013 – even after adjusting for inflation – you would find today’s seniors enjoying an income that is one-third higher than their predecessors.

Is Ponnuru suggesting that everything is rosy in Retirement Land? No, he does acknowledge some major issues: people aren’t saving enough, and, despite improvements, not all workers have access to retirement saving plans. He also has a few other suggestions to make things better for retirees such as adjusting payroll taxes on older workers and making changes to Social Security. But on balance, the tone of the Bloomberg article is positive, maybe a bit too positive, we think. While it may be true that old-style pensions were never the panacea some claim they were, here at AgingOptions we are dismayed to read of the paltry rate of retirement savings that continues to plague many workers, even older ones.  For example, this Time magazine article from a few years ago reported that more than one-fourth of financial survey respondents over 55 had no retirement savings at all, and another 26 percent had balances of $50,000 or less. This may not represent what Ponnuru calls a “retirement crisis” but it sounds like one to us.

However, the real retirement crisis is not merely the failure to save, but the failure to plan. In our experience at AgingOptions, even setting aside plenty of savings is no guarantee of a secure retirement, because few financial plans can survive a true retirement emergency. Instead you need a truly comprehensive plan in which finances, legal protection, medical coverage, housing choices and family communication are all working together interdependently. We call that an AgingOptions LifePlan.

If you’re intrigued and ready to find out more, there’s a simple way to do just that: accept our invitation to attend a free LifePlanning Seminar with Rajiv Nagaich, at a location that’s convenient for you. This could well be the most important few hours you’ll ever spend when it comes to securing your retirement future. Click here for our Upcoming Events page where you can register for the seminar of your choice, or call us for assistance.  It will be our pleasure to help guide you into a secure and fruitful retirement – and there’s no time like the present to get started. Age on!

(originally reported at www.bloomberg.com)

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Alarming Report: More and More Seniors Burdened by Student Loans

The start of a new year means that it won’t be long before today’s high school seniors start receiving acceptance letters from the colleges and universities to which they’ve applied. And along with those welcome letters will come a less welcome decision: how is the family going to afford the soaring costs of higher education? Because this question may involve grandparents helping with college expenses, possibly even by co-signing a student loan, we felt it was timely to present this article once again as a cautionary tale for our AgingOptions readers.

Last year we reported on an alarming statistic from the Consumer Financial Protection Bureau stating that the number of older Americans burdened by student loans they assumed on behalf of their children and grandchildren has increased four-fold over the past ten years. Student loan debt owed by people 60 and older now amounts to nearly $67 billion – and climbing. This sobering article published in the Washington Post details this growing concern, describing a debt load on well-intentioned seniors that the article calls “staggering.”  There are now more than 2.8 million borrowers aged 60 and older affected by student loans, up from about 700,000 in 2005. “The skyrocketing cost of college has placed a particular burden on older Americans,” says the Post article. Many of these seniors are already “struggling to pay back growing debts in their retirement years, according to the (government) report. Nearly 40 percent of federal student loan borrowers over age 65 are in default, the highest rate for any age group.”  Borrowers over 65 represented more than one-third of all student loan defaults in 2015.

In other words, the crushing problem of student loan debt, which now totals nearly $1.4 trillion in the U.S., is not just a problem for younger workers and recent graduates. It is, says the Consumer Financial Protection Bureau, “an intergenerational problem.”  The Washington Post article explains that “a slow job market recovery, growing income inequality and stagnant wages have made it difficult for younger Americans to be economically independent, and now there are signs that those financial struggles are dragging down their parents and grandparents as well.”

A growing number of seniors tell researchers that they have had to forego medical treatments and cut back on other essentials because of the pressures of student loan debt. Even more ominously, more and more seniors are reporting that their Social Security payments – the only source of retirement income for more than a third of older Americans – have been partially seized in order to satisfy demands for student loan repayments.

On top of the mortgages and other loans still carried by many seniors, student loans add a heavy load. The average borrower 60 and older with a student loan owes $23,500, about twice the average amount from a decade ago. Besides the slow economy, experts blame the debt hike on rapidly rising costs of college and the pressure to get an education.  The College Board estimates that a four-year degree from a public college or university now costs more than $80,000 – and for a private school the total is more than twice that amount. “Increasingly,” writes the Post, “older borrowers are being taken by surprise by student loan debt, according to financial advisers. Often parents and grandparents co-sign loans — the majority of student loans are co-signed by people age 55 and up — assuming they’ll be off the hook once the borrower graduates from school and lands a job. But increasingly, that’s not the case.”

If you’re facing pressure from your child or grandchild to co-sign a student loan, we strongly urge you to put the brakes on the conversation until you’ve met with a qualified retirement planner like those of us here at AgingOptions. If you’ll call our office we will be glad to suggest some strategies to help you make the right decision. It’s essential that you understand the huge problem represented by these burdensome debts! Instead of feeling obligated to co-sign, you may be able to suggest other options for your loved one to finance their education, including attending a less expensive school or working while they matriculate. No matter what, we urge you not to agree to take on the costs of someone else’s education until you’ve talked with an expert – because only then can you decide what to do, and make the decision with your eyes wide open.

Retirement planning is filled with important decisions. How can I protect my assets so I don’t outlive my funds? Where’s the best place for me to live as I age? What are the appropriate choices for my medical care needs? Are there certain legal preparations and processes I should pay attention to as I age? How can I make sure my family is knowledgeable and supportive of my wishes? In the past you may have had to consult several different professional services to get the right answers to these and other retirement-related questions, but no more. All these now are part of a breakthrough planning process we call LifePlanning. Your LifePlan, prepared with the supportive guidance of the AgingOptions team of experts, becomes your blueprint as you build the secure and fruitful retirement you’ve always hoped for.

Find out more about LifePlanning by attending a free LifePlanning Seminar soon. These seminars take just a few hours and are packed with valuable information – and they’re absolutely free. Find out for yourself! Click here to see a listing of upcoming LifePlanning Seminars and register online for the seminar of your choice. Or if you prefer, call us for information and registration during the week. No matter what your retirement questions, it will be our privilege to provide you with solid, no-nonsense answers. We’ll see you soon!

(originally reported at www.washingtonpost.com)

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It’s Not About the Money: Top Tips for a Happy Retirement Lifestyle

Ken Fisher of Fisher Investments is a nationally known financial expert, author of almost a dozen books about money, and one of the top 200 wealthiest people in America. So when Fisher comes out with what he calls his favorite tips for retirees, you might expect them to be all about finances, right? Well, you might be surprised.

“Is retirement near?” Fisher asks in this article that appeared recently on the pages of USAToday. “Are you among the 10,000 Baby Boomers turning 65 daily? It’s exciting, yet daunting — freedom tainted with dreaded aging. Here are my four favorite lifestyle tips for happy retirement, culled from decades of working with retired folk.”

There’s no question that, when Fisher talks, people listen. His company, Fisher Investments, boasts more than 35,000 high net-worth clients plus about 175 large institutional clients. His firm (at last report) manages nearly $90 billion in client funds. So it’s a bit refreshing for us at AgingOptions that none of his four top retirement tips involve money – at least, not directly. We have read too many articles and heard too many so-called experts claiming that the key to happy retirement is having plenty of cash and investments, but we’ve also heard a similar number of stories of retirees who had plenty of money but lived unhappy and unfulfilling lives. The key to fulfillment in retirement, in our opinion, is careful and comprehensive planning. We’ll say more about that in a moment.

But first, what are Ken Fisher’s four top retirement tips from USAToday? Let’s look briefly at each one.

Fisher’s first tip for a happy retirement is to manage your health. This, he says, means at the very least that you follow your doctor’s advice and get screened for possible health risks, including some that may be less well known. But it also means taking special precautions against such age-related conditions as falling down. Don’t be embarrassed about feeling more vulnerable as you age, Fisher advises his readers, and don’t be afraid to talk about it.  “The Centers for Disease Control estimates one-third of retirement age adults fall annually, often incurring injury,” Fisher writes. Among those over 80, as many as half will suffer a hip fracture, and of those half will die from pneumonia. In spite of these sobering statistics, “few speak up, fearing they’ll lose independence,” Fisher says. “Without help they get more sedentary and weak, and that could mean even more falling. Don’t let that be you.”

Fisher’s second tip is to choose your best place to live. But, he warns, watch out for those “best retirement cities” lists: “They’re mostly focused on weather and cost of living — important, but not everything. What fun is a warm, cheap retirement if it’s lonely?”  The important thing is to consider carefully what truly matters to you and then choose accordingly. “Ponder the lifestyle you covet,” Fisher says, “then find out where it’s abundant.” But you should definitely try out any new community first by renting before you buy. There’s too much money and aggravation at stake to risk a premature home purchase. And before you relocate, remember that about 7 of 8 retirees stay put in their familiar communities, deciding that, as Fisher says it, “A lifetime of social connections is irreplaceable.”

Fisher’s third retirement tip is to pick the right home – something we agree with since housing is a critical part of retirement planning. This is about much more than deciding whether or not to downsize. “Some folks buy their retirement dream home in the town they treasure, but in some isolated neighborhood they soon hate,” says Fisher. “That’s [even] more annoying once you stop driving.”  As you decide what type of housing is best for you, you need to think ahead and anticipate what your needs will be a decade or two from now. Assuming you’ll be able to age in place where you live today without planning for needed modifications and upgrades for tomorrow is a potentially foolish and costly oversight.

Finally, Fisher shares what he calls “the most important of these four”: Fill your time with fun. This may sound painfully obvious but it’s something too many people, consumed with watching their investments and monitoring their affairs, can easily overlook. When we quit working and enter retirement we often lose something – our occupation – that gave us purpose.  It’s vital that retirees fight back against depression by volunteering, working part-time or taking up a hobby. “Check out community college course catalogues,” Fisher suggests, or “find groups for biking, hiking, jogging, tennis or dancing.”  If you’re close to a loved one who seems to be depressed or discouraged about entering retirement, they may need a healthy dose of encouragement from you to help them embrace their new lifestyle with a fresh sense of engagement.

Fisher’s list is fine as a basic starting place but it’s certainly not enough. At AgingOptions, we help clients achieve their retirement dreams with a comprehensive planning strategy we call LifePlanning, an approach that combines all the critical facets of retirement into one over-arching plan. These elements – finances, housing, medical, legal and family – all have to work together in order to ensure that you can protect your assets in the future, avoid becoming a burden to your loved ones, and escape the trap of being institutionalized against your wishes. Why not take an important first step in 2018 and find out more? Join Rajiv Nagaich early in the New Year for an AgingOptions LifePlanning Seminar. You’ll find all the details plus convenient online registration here, and if you need assistance or have questions please call our office during the week.

So go ahead and follow Ken Fisher’s advice: watch your health, choose your town, pick your home and have some fun – but don’t forget the best advice of all: build your retirement on the foundation of an AgingOptions LifePlan. Age on!

(originally reported at www.usatoday.com)

 

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These Five Social Security Misconceptions Could Cost You Plenty

Here at AgingOptions we work every day with clients who are in varying stages of retirement (or “pre-retirement”). We teach seminars about retirement planning and we stay up to date about programs, policies and trends that affect aging Americans. As a result, at times it’s easy for us to assume that everyone has a good solid base knowledge about important government programs such as Social Security which are vital to the majority of retirees.

So we were a bit surprised to read this very recent article from the financial website Motley Fool that talks about the five common misconceptions about Social Security that many U.S. adults still hold. Yet as we considered these five points we came to realize that, until one comes face to face with this somewhat complex yet essential program, it’s easy to hold onto erroneous ideas. In the words of the Motley Fool article, “Social Security is a massive retirement plan, as most American senior citizens are receiving, or will eventually receive, Social Security benefits. However, there is much about the Social Security program that’s often misunderstood.”

So what are these misconceptions? Let’s take a look – and as we do, bear in mind that even if you already know the facts about Social Security, many in your circle of friends do not. You might consider referring them to this article (and encouraging them to attend an AgingOptions LifePlanning Seminar. We’ll describe more about that in a moment). Which of these five statements about Social Security is false? Spoiler alert: they all are.

  • “Social Security retirement age is 65.” The article calls this “a common, but understandable misconception.”   Because many employers use 65 for their full retirement age, and because that’s also the age of eligibility for Medicare, people often assume Social Security has the same threshold age.  As the Motley Fool reminds readers, “the last people who had a full Social Security retirement age of 65 were born in 1937. Everyone who hasn’t yet reached the maximum age to claim Social Security has a full retirement age of 66, 67, or somewhere in between. This is important to know, as claiming benefits at age 65 will result in a permanent reduction” in benefit amounts.
  • “Social Security is going broke, so I’d better claim early.” This commonly-repeated statement doesn’t present an accurate and complete picture, according to Motley Fool. “Here’s the short version of the true story,” says the article. “Social Security is currently sitting on reserves of nearly $3 trillion and is expected to run a surplus for the next several years.” It’s true that these reserves are expected to run out in 2034, but “Even if that happens, the incoming payroll taxes will still be enough to cover more than three-fourths of benefits.” What’s more, “there are several ways Social Security can be fixed, and this isn’t the first time Social Security’s financial state was in jeopardy. History tells us something will be done.” Needless to say, we hope so!
  • “Social Security will be enough to live on in retirement.” It may be good to know that Social Security will probably be around, but the Motley Fool article warns against living with a false sense of financial security.  “It’s important to have a realistic idea of how much you need to save for a comfortable retirement, and not just rely on Social Security,” the article states. Social Security was designed to replace about 40 percent of an average worker’s income, but “experts generally suggest that you’ll need 70-80 percent of your pre-retirement income to maintain the same standard of living after you retire.”  In other words, plan ahead – don’t be naïve about your future financial needs.
  • “I’ll never get back as much as I put in to Social Security.” “Many people think of Social Security as some type of scheme where you’ll never get as much in benefits as you put in. This simply isn’t true,” according to the Motley Fool article, which quotes a 2013 study by the Urban Institute analyzing the Social Security picture for the average two-earner couple with each spouse earning about $45,000 in 2013 dollars. This mythical couple, says the study, “would pay $816,000 in payroll taxes over their lifetimes but would end up getting more than $1 million in Social Security and Medicare benefits.” In almost every retirement scenario this analysis remains true: most retirees get out more from Social Security than they put in.
  • “Stay-at-home parents and other non-working spouses aren’t eligible.” As long as one spouse earned benefits, even if the other spouse didn’t work at all, he or she is still entitled to a retirement benefit. “In a nutshell, the program gives a retirement benefit at full retirement age equal to half of the higher-earning spouse’s,” the article says. “This can be a major income boost for retired couples.”

So you probably guessed correctly that all five of these “common knowledge” statements are in fact false. As with everything that has to do with retirement, the more effectively you plan, the better equipped you’ll be to make smart decisions for you and your family. That’s where the professionals at AgingOptions can help. We have guided thousands of retirees into a future where they know their assets will be protected, they can avoid becoming a burden to their families, and they can prevent the sad fate of so many seniors who end up living in an institution against their will. The answer to achieving the retirement of your dreams is a LifePlan from AgingOptions, a comprehensive plan in which financial, legal, medical, housing and family strategies all blend together into a mutually supportive, interdependent whole.

Why not start 2018 with a fresh new perspective on these critically important questions about the future? Plan now to join Rajiv Nagaich at an AgingOptions LifePlanning Seminar – a free, information-packed session that will transform the way you think about the years ahead. It could be the most important few hours of the rest of your life! For dates, times and locations, click here to visit our Upcoming Events page where you can register online. Feel free to call us during the week for personal assistance.

Don’t labor any longer under misconceptions and misinformation about retirement. Join us soon, and start the LifePlanning process. Age on!

(originally reported at www.fool.com)

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Planning on Working During Retirement? Time for a Reality Check

A growing percentage of men and women approaching retirement say they plan to continue working part time once they cross that “retirement threshold.”  But as this recent article on the website NextAvenue reveals, a significant number of boomers are doing little or nothing to keep themselves employable – and as a result they may be in for an unpleasant surprise.

The article, written by Richard Eisenberg, provides a sobering reality check for the 56 percent of workers who say they plan to keep working part time after they retire. (That figure, which has been growing steadily in recent years, comes from the just-released 18th annual Transamerica Retirement Survey of Workers.)   “But,” says Eisenberg, “working in retirement may be wishful thinking, the survey revealed, given how few people are taking steps so they’ll be able to do it. And quite a few workers seem to be betting their employers will let them stay on part-time, which is anything but a certainty given current employment practices.”

The key for future retirees who have their hearts set on continuing in the workplace is preparation, something that the NextAvenue article suggests too few workers are taking seriously enough.  One Transamerica official put it this way: “If workers aren’t proactive about making sure they have their skills up to date, understanding the employment marketplace and safeguarding their health, it becomes wishful thinking.”  This lack of proactive preparation is going to be made even more problematic because technology is causing many jobs to disappear – especially repetitive jobs that some seniors might be counting on for part-time work. Generally speaking, the more creative and relationship-driven the job, the less prone it will be to automation, making it all the more important that future seniors take a long, hard, objective look at their skill set. The time to learn new ways of working is now, not tomorrow.

As Eisenberg points out in his article, the job market is already pretty unkind to older workers. “Finding work in your 50s and 60s is much harder than when you’re in your 20s or 30s,” he writes. For job seekers between 55 and 64 years of age, the average duration of unemployment is now about 44 weeks, according to AARP. More than one-third of the long-term unemployed (defined as those who have been job-seeking for 27 weeks or longer) are 55 years old and older.

To illustrate the disconnect between the perceptions held by many workers and reality in the minds of employers, NextAvenue’s Eisenberg includes several “reality checks” that capture the reader’s attention. A few examples:

  • Nearly three-fourths of workers believe their employers support employees staying on the job after 65. The Reality Check: the steep decline in workplace participation among those over 65 suggests that many workers are engaging in wishful thinking.
  • Almost half of all workers, according to the Transamerica retirement survey, anticipate being allowed to phase into retirement by staying in their job while gradually reducing hours and responsibilities. The Reality Check: the Society for Human Resource Management reports that only 5 percent of employers offer a formal “phased retirement” program. The idea of a retirement “glide slope” is still pretty uncommon.
  • Roughly 50-60 percent of workers in the survey report that they are trying to make themselves more employable in the future by staying healthy, working hard, and keeping job skills up to date. The Reality Check: those percentages should be closer to 100 percent, says NextAvenue. “Opportunities for people with out-of-date skills are far fewer compared to people with current job skills. That’s a reality,” says Catherine Collinson of Transamerica. But paradoxically, the survey showed that only 4 percent of boomers said they are going back to school and learning new skills.  Those unprepared for tomorrow’s job demands will be in for an unpleasant surprise as they age.

The article has other examples of the naiveté of today’s aging workers. Many assume they’ll be able to work part-time while retaining their current benefits, but that’s highly unlikely, since few employers extend benefits to part-time employees. Most of us understand that networking is a critical skill in today’s job market, yet the survey reveals that only one boomer in seven says they’re actively networking in order to broaden their list of professional contacts. And two-thirds of boomers expect to remain with their present employer in retirement, when realistically speaking they may end up changing companies, freelancing, or starting their own business in order to achieve their income goals while cutting their hours.

The key, as with so many aspects of retirement, is planning and preparation. If today’s full-time boomer expects to be tomorrow’s part-time retiree, this article provides a healthy dose of realism. In the same way, here at AgingOptions we frequently talk with people who have dreams of a fruitful and secure retirement but they’re doing little or nothing to prepare themselves for it. That’s why we urge you not to procrastinate any longer: join us early in 2018 at a free AgingOptions LifePlanning Seminar featuring Rajiv Nagaich. You’ll discover that you really can preserve your assets and avoid burdening those you love as you age in a manner that suits your dreams, desires and values. With a LifePlan, your financial, legal, housing, medical and family plans and strategies all blend seamlessly together. You’ll face retirement with optimism and a sense of security that can only come from proper preparation and planning.

For more details, click here for our Upcoming Events page where you’ll find dates, times and locations. You can then register online or contact us for assistance. It will be a pleasure to meet you and to show you how joyful retirement can be, with the power of an AgingOptions LifePlan.

(originally reported at www.nextavenue.org)

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To Enhance Your Retirement Security, Go on a Financial Diet

Developing healthy eating habits means you’ll lose weight, feel better and (generally speaking) live longer. If you adopt better exercise habits, you’ll improve your energy level as you age and hopefully minimize the adverse effects of growing older – at least for a while. Most of us know the benefits of diet and exercise. But too many seniors heading into retirement forget the importance of putting themselves on a financial diet, trimming wasteful spending in order to get themselves better prepared economically for what lies ahead.  That’s why we wanted to share this article that just appeared on the Kiplinger website, titled “Put Yourself on a Financial Diet Now for a Happier Retirement Later.”  As the subtitle states, “Developing some healthy financial habits now can help set you up for a secure retirement. And it may even let you retire sooner than you thought possible.”

The article was written by Pennsylvania-based financial planner David Hickey, and it makes some good points as far as it goes.  The bottom line, Hickey emphasizes, is that while many seniors worry that their nest egg may prove insufficient to last through their retirement years, they often place more emphasis on the money coming in than on the spending going out.  As Hickey writes, “for many people, [excess spending] can be a huge factor in the success or failure of their retirement plan. They’ve built up a lifestyle of consumption, and when they retire, they usually don’t plan to change things much. Indeed, many expect to travel more, renovate the kitchen, move to a warmer climate or take up a new hobby. And those things cost money.”

Here at AgingOptions we’ve seen this scenario played out hundreds if not thousands of times. Inadequate savings coupled with insufficient discipline, all made worse by the lack of a coherent and comprehensive retirement plan, is indeed a recipe for retirement catastrophe.

Of course, Kiplinger columnist David Hickey is just one of many voices warning seniors about the dangers of careless spending and excessive debt. This article we just discovered on a website called New Retirement says much the same thing. “Of all of the strategies that retirees can employ while arranging their finances for retirement,” the article states, “eliminating debt is among the most important. Almost all financial planners agree that carrying debt into retirement is a very dangerous move, one that can imperil your financial future and drain your retirement savings.” It’s foolish and even dangerous for seniors, especially those on fixed incomes dependent largely on Social Security, to waste urgently-needed funds on interest, fees, and other charges tied to debt. Even worse, some types of indebtedness bring the danger of rising interest rates, such as an adjustable rate mortgage, or ARM. If rates go up even slightly, the strain on a retiree’s already-stretched budget could reach the breaking point.  The New Retirement article calls it “very important to consider eliminating, altering, or reducing your debt, whether you are preparing for retirement or already retired.”

In the Kiplinger article, financial planner David Hickey suggests some strategies to pare down your spending. His argument is compelling: you might even be able to retire sooner than planned if you put yourself on a financial diet. Here are some of Hickey’s ideas to cut spending.

  • Dump your debt. We mentioned this above but it bears repeating. Some planners advise that it’s fine to keep a modest mortgage in retirement, although we have our doubts. But as Hickey warns, “just about anything else — especially credit card debt — is going to be financed at a high rate. And the money you take out of your income to service that debt could hinder you from achieving your financial goals.”
  • Ditch your kids’ debts, too. Are you still paying on your kids’ student loans? They may be out of the house and on their own, possibly even financially more stable than mom and dad! It’s probably time for a family conference. “Frequently,” Hickey suggests, “the kids don’t even realize their parents are still shouldering that burden and would be fine with taking over the responsibility for the payments themselves.”
  • Don’t be lazy. This is pretty basic stuff straight from “Budgeting 101.” Don’t go grocery shopping without a list. Cook at home instead of eating out. Control your Starbucks habit. Hickey even suggests getting a library card so you can borrow books instead of buying them online (and, we might add, most libraries have a great selection of DVD’s so you maybe you can cancel Netflix and Hulu). Many times saving cash starts with better planning.
  • Trade today’s luxuries for tomorrow’s contentment. Whether it means buying a cheaper car, taking a local vacation or making the clothes last a bit longer, if you get creative you’ll find it’s possible to save on everyday spending – and it can become a fun challenge, too. You’ll discover plenty of other ideas online at just about any “simple living” website.

Hickey is right about one thing: “You can make some cuts now, on your own terms, or make them later because you have to,” he says. “I can tell you this from experience, though: The folks who are really happy in retirement are the ones who have figured out what it costs to live comfortably, and they know they have those expenses covered.” This is why a solid financial plan is certainly very important for someone preparing for retirement. However – and we can’t over-emphasize this point – a financial plan by itself is completely insufficient.  The only way for you to ensure that you’ll enjoy the retirement you want is by planning comprehensively, and that means you need a LifePlan from AgingOptions.

Only our LifePlanning approach blends financial planning with legal protection, medical coverage, housing plans and family communication, so that all the “retirement gears” mesh properly. This interdependent approach to retirement helps you protect your assets, avoid becoming a burden to your loved ones, and escape the dismal trap of being forced against your will into institutional care. That’s the power of an AgingOptions LifePlan. To find out more, without cost or obligation, join Rajiv Nagaich at a free LifePlanning Seminar. These popular events are held throughout the region, so register here for the seminar date and time of your choice, or call our office during the week. Let us be your guide toward a fruitful and secure retirement.

(originally reported at www.kiplinger.com and www.newretirement.com)

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MarketWatch: Home Equity Can’t Be Ignored in Retirement Planning

“With 77 percent of a retiree’s net worth locked in home equity it’s astonishing why so many financial planners ignore home equity when creating retirement plans.” So states this recent article we just discovered on the financial website MarketWatch.  Written by Denver-based reverse mortgage planner Peter Rueth, the article makes a compelling case that a home equity conversion mortgage, or HECM – commonly called a reverse mortgage – ought to play a much more significant role in the retirement plans of today’s baby boomers.

The problem, Rueth postulates, is that “home equity is often ignored when it comes to retirement planning.” He calls this oversight “astonishing” at a time when so few baby boomers, the oldest of whom are now past the age of 70, have any sufficient amount of retirement savings set aside.  Let’s look at the case made by MarketWatch’s Rueth and see how an HECM may potentially benefit you as you plan for your retirement future.

Rueth begins by quoting research from the Insured Retirement Institute which shows that one-quarter of baby boomers have no retirement savings at all. That’s the worst performance in this study since its inception in 2011. Even among those with some money set aside, the picture is pretty bleak, Rueth says: more than 40 percent of boomers have retirement savings amounting to less than $100,000. “Even retirees who have been successful in saving have big concerns because of rising medical costs and increased life expectancy,” Rueth says. “Retired baby boomers and those quickly approaching retirement are troubled their nest egg savings will fall short and risk outliving their retirement funds.” For that reason, financial advisers are continually looking for ways to help their clients maintain a healthy and fitting quality of life in retirement.

Writing in MarketWatch, Rueth points out an odd paradox: “a major component of wealth and retirement planning often overlooked or ignored is home equity.”  Data compiled for the U.S. Census Bureau in 2013 shows that the average couple entering retirement has a net worth of about $194,000. “However,” he writes, “when home equity is removed net worth drops to just $43,921. With 77 percent of a retiree’s net worth locked in home equity it’s astonishing why so many financial planners ignore home equity when creating retirement plans.”  Housing experts peg the total amount of equity in senior-owned housing in the U.S. at an eye-popping $6.3 trillion. Could it be that this huge sum represents a big part of the retirement solution for baby boomers? Rueth would answer “yes,” and he’s not alone.

In the MarketWatch article, Rueth quotes American College tax professor Jamie Hopkins. In an article in Investment News, Hopkins urged financial planners to be much more aware of the opportunities represented by careful use of home equity. “Far too many financial advisers overlook home equity as part of a retirement income plan,” said Hopkins. “With heightened regulatory concerns about doing what is in the best interest of the client, it would be prudent to explore and discuss home equity strategies with clients.” He adds this important caveat: “Remember, there’s no magic home equity strategy that always works best. As an adviser, you need to incorporate home equity solutions into the client’s unique situation.”

Here at AgingOptions, while we definitely advocate the reverse mortgage for some uses, we confess a degree of concern that these financial tools can be oversold by zealous reverse mortgage marketers. That’s why we were somewhat reassured to read this cautionary note from the MarketWatch article. “Too often,” Peter Rueth writes, “a reverse mortgage is advised as a quick fix for cash, or worse, as a loan of last resort when all else fails.”  However, he adds, “Working with a well-versed financial adviser a reverse mortgage can be customized to meet or complement a number of retirement financial goals” including long-term care planning, purchasing the right house, remodeling your home to age in place, improving cash flow, or providing peace of mind for unexpected expenditures. This kind of cautious, customized approach is also why we only refer our AgingOptions clients and radio listeners to trusted HECM experts including the highly experienced and thoroughly professional Laura Kiel of Kiel Mortgage, a frequent guest on our radio program.

Rueth makes a strong case for one of the most popular features of a reverse mortgage, the line of credit – but we think he takes the case a bit too far. “Astute pilots will never leave the ground without sufficient fuel in their reserve tank,” he writes. However, “Many go flying into retirement with only their cruising tank full expecting these funds to meet their needs” – needs which can quickly change.  The line of credit represents the reserve tank, providing quick access to an essential cash reserve. There are prudent ways to use these funds, as suggested above. However, we strongly disagree with some of the uses for this credit line that Rueth suggests, such as helping a child or grandchild with a down payment on their first home or seed money for a new business. He even implies using these important funds for items on your wish list – the Corvette or fishing boat.  This strikes us as dangerous thinking, the kind that gets unwary retirees into deep trouble.

But the bottom line is that Rueth makes a point: retirees should at least talk with a trusted pro like Laura Kiel and find out what a reverse mortgage can do for you. At the same time, if retirement planning is on your To Do list for 2018, why not accept our cordial invitation to join Rajiv Nagaich at an upcoming LifePlanning Seminar?  There you’ll discover the power of a LifePlan: a unique and comprehensive approach to retirement planning in which all the facets of retirement that too often work at odds with one another actually mesh together seamlessly. We’re talking about the Big Five of retirement: financial, legal, medical, housing and family planning, woven together like the strands of an unbreakable cable. A LifePlan is the key to fulfilling your lifelong dreams of a safe, secure and fruitful retirement.

Find out more by attending a free LifePlanning Seminar at a location that’s convenient for you. We offer these throughout the region, so for currently scheduled seminars, visit our Upcoming Events page here – then register online or contact us during the week. There’s no cost and no obligation, only the opportunity to see your retirement dreams come true. Age on!

(originally reported at www.marketwatch.com)

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