Category Archives: Financial

Is Your Social Security Check as Big As You Expected? Many Say “No!”

For many if not most retirees, Social Security forms the backbone of their retirement income. As savings rates decline and traditional pensions go the way of the Edsel, Social Security plays an increasingly critical role in the lives of more and more seniors.

But an article we just read on the CNBC website reveals the troublesome results of a recent survey conducted by the Nationwide Retirement Institute. It stated that a significant number of retirees, almost 3 in 10, have been surprised to discover that their Social Security benefits turned out to be either “less” or “much less” than they had expected. Among retirees drawing benefits for a decade or longer, the percentage reporting an unpleasant surprise in the size of their benefits was even higher. Even current workers, says the survey, tend to estimate higher benefits than they end up receiving, with a $232 average monthly gap between expectation and reality.

(Click here to read the CNBC article.)

What accounts for this disparity? Why are so many seniors unhappily surprised by the size of their benefits? CNBC lists seven reasons why benefits may be smaller than expected. A few of these are obvious: for example, some people are merely guessing what their payment might be, while many others see lower benefits simply because they start taking those benefits before reaching full retirement age. But here are a few “benefit reducers” that can often come as a surprise.

One of the factors that can trim benefits is what Social Security calls “Work Offset.” This applies if you take benefits before full retirement age (66 for most of us) and also continue working. For 2016, if you’re receiving benefits and are not yet 66, you will see your benefits reduced by one dollar for every two dollars you earn over $15,720. This can come as a shock to some working retirees, and you’ll need to plan for it in your budget. (Fortunately the Work Offset disappears once you reach full retirement age.)

Another benefit-reducing factor is Medicare Premiums. It’s no surprise to most retirees that these premiums are withheld from Social Security – but what can be a surprise is the amount of those premiums. In the case of Medicare Part B, premiums range from $121 per month to almost $390, depending in part on the retiree’s adjusted gross income. If you as a retiree do anything unusual to boost your income – selling real estate, for example – it could affect your Part B premium. (The CNBC article explains this in more detail and tells how you might be able to appeal the rate hike if the income boost was a one-time aberration.)

There are also some types of Pensions that can reduce Social Security benefits once certain provisions kick in. These are generally pensions for government workers, teachers and railroad employees, occupations which don’t generally pay into Social Security. The rules for these pensions can be complicated. For an explanation of these pension provisions, here is a link to an earlier CNBC article that might be helpful (even though some of the points in the article that deal with the now-discontinued “file and suspend” strategy are outdated). The article stresses the need to plan ahead and do your homework, since there are some aspects of public pensions than can dramatically reduce both your own Social Security benefits and those of your spouse.

The need to plan ahead and do your homework is important in all facets of retirement. That’s why we here at Aging Options have created a comprehensive planning process we call LifePlanning. As we work with clients to build an individual LifePlan, we answer questions that are essential to a secure and fruitful retirement. Is your financial plan secure? Are all your legal documents up to date? Have you planned for your housing choices? Are your medical needs covered? Is your family aware of your plans, dreams and wishes in retirement? With a completed LifePlan in place, the answer to each of those questions is a confident “yes.”

To find out more about the LifePlanning process, we invite you to attend a free LifePlanning seminar in your area. You’ll come away from these information-packed sessions armed with new information and a solid perspective to help you plan the future you’ve dreamed of – and remember, there’s no obligation whatsoever. Click on the Upcoming Events tab for dates, times and online registration, or contact us here at our office.

Our goal is that all your “retirement surprises” will be pleasant ones! We’ll look forward to meeting you soon.

(originally reported at www.cnbc.com)

The Future of Social Security – Social Security Board of Trustees Annual Report

The Social Security Board of Trustees released its annual report in June regarding the long-term financial status of the Social Security Trust Funds.  The combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034, the same as projected last year, with 79 percent of benefits payable at that time.  The DI Trust Fund will become depleted in 2023, extended from last year’s estimate of 2016, with 89 percent of benefits still payable.

In the 2016 Annual Report to Congress, the Trustees announced:

The asset reserves of the combined OASDI Trust Funds increased by $23 billion in 2015 to a total of $2.81 trillion.  The combined trust fund reserves are still growing and will continue to do so through 2019.  Beginning in 2020, the total cost of the program is projected to exceed income.  The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2034 – the same as projected last year.  At that time, there will be sufficient income coming in to pay 79 percent of scheduled benefits.  “Now is the time for people to engage in the important national conversation about how to keep Social Security strong.  The public understands the value of their earned benefits and the importance of keeping Social Security strong for the future,” said Carolyn W. Colvin, Acting Commissioner of Social Security.

Other highlights of the Trustees Report include:

* Total income, including interest, to the combined OASDI Trust Funds amounted to $920 billion in 2015.  

* Total expenditures from the combined OASDI Trust Funds amounted to $897 billion in 2015.  There were about 60 million beneficiaries at the end of the calendar year.

* Non-interest income fell below program costs in 2010 for the first time since 1983.  Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.

* During 2015, an estimated 169 million people had earnings covered by Social Security and paid payroll taxes.

* The cost of $6.2 billion to administer the Social Security program in 2015 was a very low 0.7 percent of total expenditures.

* The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.4 percent in 2015.

 View the 2016 Trustees Report at www.socialsecurity.gov/OACT/TR/2016/

 By Kirk Larson , Social Security Washington Public Affairs Specialist  

 

 

Main Street Banks Discover Reverse Mortgages, Says New York Times

When a financial product becomes so mainstream even the New York Times gives it a thumbs-up, it’s probably time for the skeptics to take another look. And with the growing chorus of financial experts singing the praises – albeit cautiously, in some cases – of reverse mortgages, there seem to be fewer and fewer skeptics left.

This recent article from the New York Times is a case in point. The article, written by financial columnist Ron Lieber, shows how reverse mortgages (technically called “Home Equity Conversion Mortgages,” or HECM’s) are gaining so much acceptance in the financial marketplace that even once-hesitant Main Street bankers, known for their caution and conservatism, are getting into the act. This is great news for many retirees, who may have considered the advantages of an HECM but would rather do business with someone they know and trust – not with some national firm advertising on television with aging celebrities like Henry Winkler and Pat Boone as pitchmen.

In the New York Times piece, author Ron Lieber points out that this type of mortgage which allows borrowers 62 years old and over to tap into their home equity used to have “a pockmarked history.” Sometimes financial charlatans would persuade vulnerable seniors to tap their equity and then risk the funds in shaky investments. There were other horror stories where one spouse would take out a reverse mortgage, only to leave the other spouse out in the cold when the first spouse passed away. Fees were high and risks were a big unknown, leaving many seniors and financial planners with a bad taste in their mouths whenever the topic of reverse mortgages would come up.

No more. Those days appear to have passed. In the words of Ron Lieber, “it may surprise you to learn that some community bankers are quietly offering [reverse mortgages], bringing a kind of Main Street respectability to a product that has long lacked it.”

If you’ve considered using an HECM as part of your retirement plan, we encourage you to read this helpful article, because it echoes a viewpoint we’ve advocated for years. First, do your homework – and second, whenever possible, work with someone you know and trust. Here at Aging Options we can recommend highly experienced, thoroughly ethical experts (such as frequent guest on our radio program Laura Kiel) whom you can consult with absolute confidence. By working face to face with a knowledgeable professional, exploring your unique circumstances and getting all your questions answered, you can decide if a reverse mortgage is right for you. If it is, you may discover as many have that an HECM could be the ideal solution to your cash flow needs in retirement, augmenting your Social Security and retirement savings with virtually no risk. No wonder those conservative bankers from the New York Times article are looking at reverse mortgages in a fresh new way.

If you’re ready for a fresh look at your retirement plan, we can help. Here at Aging Options we take a comprehensive approach to the process of planning for retirement – a process we call LifePlanning. With a LifePlan in place, every aspect of your future plans – financial, legal, housing, medical, even family – is thoroughly and professionally addressed. The result: you’ll look forward to retirement with confidence, even excitement.

If that sounds like the attitude you long for, why not begin the process by attending one of our free, information-packed LifePlanning Seminars? You can register for the seminar of your choice simply by clicking on the Upcoming Events tab – or by calling our office. And if you have specific questions about reverse mortgages, or any retirement-related topic, we would welcome the chance to be your guide. We’ll look forward to meeting you at a LifePlanning Seminar soon.

(originally reported at www.nytimes.com)

 

 

Many Are Missing Out on Home Health Coverage Through Medicare

If you’re a Medicare-eligible senior who needs home health care, you may be surprised to learn that Medicare may cover the costs. But many qualified seniors never apply, while others find their benefits cut off prematurely, all because Medicare home health benefits are widely misunderstood.

That’s the conclusion in this recent article on the financial website www.kiplinger.com, which describes the challenge some seniors find in taking advantage of this important benefit. For seniors recovering at home after a hospital stay, or those who can’t easily leave home, home health care is a critical – and expensive – need. Medicare benefits can make all the difference, according to Kiplinger.

As the article explains, “Medicare covers in-home services, including skilled nursing and physical therapy.” It goes on to say that “for eligible patients, there’s generally no charge and no limit on how long they can receive the benefit.” That’s the good news. The problem, patient advocates say, is that both patients and providers fail to understand the rules for eligibility. “Confusion over the rules means that some patients never seek care because they mistakenly believe they won’t qualify – while others are wrongfully denied care or see their services terminated prematurely,” says Kiplinger.

There are quite a few seniors who do take advantage of the home health care benefit through Medicare – about 3.5 million in 2014, according to the Centers for Medicare and Medicaid Services. Covered services include part-time skilled nursing, physical or occupational therapy, or speech-language pathology, any of which must be provided by a Medicare-certified home health agency. The care plan has to be established and approved by the senior’s personal physician. (The Kiplinger article contains a link to a Medicare website that lists approved home health service providers.)

One of the biggest areas of misunderstanding, says the Kiplinger piece, comes with the definition of “homebound.” Many patients and even some providers assume “homebound” means bed-ridden, but that’s not true. Quoting the Kiplinger article: “To be homebound under Medicare’s rules, your illness or injury must cause you to have trouble leaving your home without help.” This kind of help could include using a walker, for example, or needing special transportation. That means you may be able to leave your house from time to time (with assistance) and still meet the Medicare requirements. (According to Kiplinger, just to make things more confusing, some Medicare Advantage plans waive the homebound requirement altogether.)

Finally, what happens if you feel your Medicare-provided home health benefits are denied, or terminated prematurely? We encourage you to read the Kiplinger article because it includes some important links and instructions that can help you appeal the decision. Free help is also available through most State Health Insurance Assistance Programs. There have been class action lawsuits brought by patients who felt Medicare was treating them unfairly. In other words, if you feel you’re entitled to benefits, don’t give up.

Here at Aging Options we would be pleased to help you navigate some of these complex retirement-related questions. This is what we have been successfully doing for many years, helping clients from all walks of life plan for a secure and fruitful retirement. Your need for medical coverage, such as that provided by Medicare, is just one aspect of what we call a LifePlan. We also help you make sure you’ve planned for your housing choices, made the right legal decisions, established a sound financial plan and kept your family fully informed of your hopes and desires. A LifePlan becomes your blueprint as you build the retirement future you’ve always dreamed about.

You can start the process quickly and easily by attending a free LifePlanning Seminar at a location near you. For dates, times and simple on-line registration, visit our Upcoming Events page. There’s no obligation whatsoever – and we guarantee you’ll come away armed with helpful information. We welcome the opportunity to answer your questions and to work with you on your LifePlan.

(originally reported at www.kiplinger.com)

 

Considering Buying a Second Home? Prepare for Some Surprises

Ever since the end of the great recession in 2010, sales of vacation homes have been on the rise. Not only is the economy improving, but it’s also because boomers are starting to retire, and they’re beginning to plan ahead. About one buyer in six say they expect to live in their vacation home full time once they retire, so it’s about more than just recreation.

But before you decide to take the plunge and buy the beach house, mountain chalet or cottage on the lake, you may want to read this recent article from the AARP. It’s called “The Perils of Owning a Second Home,” with a subtitle that cuts right to the chase: “A second home sounds luxurious, but there are hidden costs.”

According to the National Association of Realtors, sales of vacation homes have been booming since 2010, with more than 1.1 million sold in 2014. The figure actually declined slightly in 2015, partly because of shrinking inventory of homes on the market. Naturally the decline in supply triggered a boost in prices, with the average vacation home cost rising sharply from $150,000 in 2014 to $192,000 in 2015. Apart from the upfront purchase expense, buying a vacation home can burden a retiree with a host of unexpected expenses and headaches that might make that little bit of paradise seem a lot less pleasant.

First, though, there is one bit of financial good news. In most cases qualifying taxpayers can write off the mortgage interest on both a first and second home loan provided that total debt on the properties is less than $1.1 million. Property taxes may also be deductible for both your homes. So for some vacation home buyers there may be some tax advantages.

However, the added costs may quickly erase those advantages. Start with the mortgage: according to the AARP piece, one buyer found that the mortgage companies wanted to charge him 5.5 percent interest on the loan for the second home, compared with 2.9 percent for primary residences. When calculating the costs of ownership, you may need to account for a loan cost that’s nearly twice what you expect. (This won’t be an issue for you if you pay cash or self-finance, as about one-third of vacation home buyers do.)

Then there’s homeowner’s insurance: because the home will not be occupied full time, some insurance companies won’t even offer a policy, while others will charge exorbitant take-it-or-leave-it rates. One couple cited in the AARP article said their agent had to keep shopping until they finally found a policy at an acceptable cost. Another surprise can be property taxes, which typically rise quickly on a vacation home when the assessed value goes up due to the high purchase price – especially if the home you buy hasn’t changed hands for several years.

A few more points to ponder from AARP:

 

  • When you own a second home, you have to worry constantly about preventive maintenance. This can turn every “vacation” into an endless series of fix-it chores.
  • When buying vacation property, you and your spouse or partner need to be in full agreement about how you plan to use it. Will you rent it out? Will family and friends have access to it? Is this house really where you want to live year-around in retirement? Have these conversations before you sign on the bottom line.
  • How much will it cost to make the vacation house ready to occupy? One couple in the AARP piece had vastly different expectations in this regard: the husband expected to spend around $5,000 on fixing up their cottage – but in the end, the tab for a full redecorating and other changes expected by the wife exceeded $30,000!
  • One final point from our personal experience: if you have a vacation home, you had better plan to spend every future vacation there, or you’ll probably end up feeling guilty! And what about your family? You may love spending time at the cabin, but your adult kids don’t. This can lead to frustration and disappointment.

As with everything pertaining to your retirement years, the key is to plan ahead – and to ask the right questions. When we work with clients in the retirement planning process, we cover five key areas of retirement: your housing options, your financial plans, your legal affairs, your family dynamics and your health care requirements. All these elements are combined into a LifePlan, which acts as your blueprint to help you build the retirement you’ve always dreamed of. With a LifePlan in place, you can avoid becoming a burden to your loved ones and protect your hard-earned assets in retirement. We’ll work with you to put all the pieces together!

Why not start by joining us at a free LifePlanning Seminar? Click on the Upcoming Events tab on this website and register for the seminar of your choice. And bring your questions! It will be a pleasure meeting you and helping you plan for a fruitful and secure future.

(originally reported at www.aarp.org/money)

 

High Profile Estate Battle Reveals a Growing Crisis in Estate Planning

Last year the news was filled with stories of the decline and eventual death of music legend Casey Kasem. Sadly, what really attracted the attention of most of us wasn’t the story of Kasem’s influential career in pop music, but the unseemly fight over his care and his estate as the former radio star suffered from deteriorating mental and physical capacity. The battle over Kasem’s custody, and his money, made for a real-life tabloid soap opera.

Now it’s happening again – only this time the stakes are even higher. The key player in this most recent headline-grabbing drama is Sumner Redstone, the billionaire media mogul whose company controls both CBS and Viacom. Redstone has a personal fortune estimated at $5 billion, and his media empire is worth eight times that much. However, the 93-year-old Redstone also suffers from what some claim is advanced dementia, and his diminished capacity has triggered a battle royal between children, grandchildren, business partners, former mistresses – and, of course, armies of attorneys.

There has been a barrage of media coverage of the Redstone Affair. Click here for a recent article we read about this sad saga in the New York Times.

The details of the war over CBS, Viacom and Redstone’s personal fortune would fill several pages, and we won’t attempt to review them here. But what really caught our attention was this statement at the start of the New York Times article: “With a fortune estimated at over $5 billion, Sumner M. Redstone could afford the best estate planning that money could buy,” said the Times. “What he ended up with is a mess.”

The whole saga of the death of the rich and famous can be sad, even pathetic. Pop star Prince died a few months ago without a will. Casey Kasem died in a reduced mental state with those supposedly closest to him fighting it out in court and in the media. Now Sumner Redstone, a wealthy and influential tycoon just a few years ago, has become a humiliated figure while an unseemly war rages around him. Here at Aging Options, we pass these stories along to you, not out of a desire to gloat over the misfortunes of the powerful, but as a warning: you don’t have to be rich and famous to need a carefully designed estate plan.

As people age, many will begin to lose the capacity to make sound decisions about their affairs, leaving them open to undue influence by caregivers and others. The New York Times quotes Chicago estate planning specialist Kerry Peck who says that “the Redstone pattern is happening in epidemic proportions.” He adds that sometimes older men are influenced by younger women who meet them in “places you’d consider safe, like senior centers, churches and synagogues. They start as caregivers and then become romantic suitors. We’re seeing these scenarios with stunning frequency.” When this happens, the wishes of children, grandchildren, and other loved ones can literally be tossed out the window. The Times calls this “a huge issue nationally,” even for people of modest wealth.

There is a long section in the New York Times article detailing possible solutions to this problem including the creation of a trust that determines who can make decisions for you in the event of incapacity. (Ironically Sumner Redstone has such a trust in place, but because it does not adequately define the term “incapacity,” no one can agree if he is of sound mind or not, and the courts are trying to step in to untangle the resulting legal mess.) Another expert quoted in the Times piece said, “In drafting a trust like this, you need very clear standards and protocols for determining [mental] capacity.”  Sadly, the Times concludes in considering Redstone’s short-sightedness, “no amount of legal advice can save people from an unwillingness to face their own mortality and cede control while still in full control of [their] faculties.”

Yes, these are touchy issues. But here at Aging Options we want to offer our services as your guide through the maze of retirement and estate planning. It doesn’t have to be overly complex! When it comes to retirement, our comprehensive approach takes all aspects of your retirement plan, or LifePlan, into account: legal affairs, financial plans, health care requirements, housing choices and family ties. With a LifePlan in place, you can face the future with confidence and peace of mind. To get started, why not join us for a free LifePlanning Seminar? You’ll find all the information including online registration on the Upcoming Events tab. We’re confident you’ll thoroughly enjoy this information-packed session.

Remember, even the wealthy like Sumner Redstone or Casey Kasem can fail to plan adequately. With our help, that won’t happen to you! We’ll look forward to meeting you soon.

(originally reported at www.nytimes.com)

Think Twice Before Co-Signing a Loan for your Child or Grandchild

Frequently in our office or on our call-in radio programs we get questions about co-signing for someone else’s loan. Typically the borrower is a grandchild or adult child, and the person asking the question is full of good intentions. After all, they’ll say, if I don’t co-sign, my loved one won’t get the loan.

That may be the best possible outcome, because co-signing a loan can be a form of financial quicksand, trapping too many well-intentioned parents and grandparents in unplanned and often burdensome debt. If you don’t believe us, we suggest you read this recent article we found on the website of the New York Times. It’s called, “Thinking about Co-Signing a Loan? Proceed with Caution.” We couldn’t agree more.

Co-signing a loan is basically guaranteeing that the loan will be paid. If the borrower fails to make the payments, you as the co-signer are contractually obligated to pay off the loan. Co-signing is a fairly common practice, according to a recent survey cited in the New York Times article, with about one adult in six having co-signed for someone else, typically a child, stepchild or grandchild. No doubt the borrowers always have the best of intentions. However, this same survey reports that nearly 40 percent of co-signers ended up having to pay all or part of the bill because the main borrower failed to make the payments.

The Times piece quotes Mr. Rod Griffin, an official with the credit bureau Experian, who explains that the co-signer is signing the loan because the lender thinks the borrower doesn’t qualify for some reason. If the lender is cautious, you should be, too.  “You’re vouching for the loan,” Griffin said, and “that’s a very high-risk thing to do.”

According to the survey, about half of co-signed loans were car loans, while about one-fifth were student loans. In the case of student loans, the Times explains, some private lenders require a co-signer since they’re making the loan based on a student’s projected future earnings. Sadly, some parents or grandparents, according to the article, may think all they’re doing by co-signing is providing some sort of “character reference,” when in reality their co-signature obligates them to pay if the student defaults. This can come as a particular shock as student loan amounts can add up rapidly, creating a burdensome debt.

The New York Times article goes on to explain that co-signing a loan can definitely affect your credit rating, even if the loan stays current, because it shows up as a debt obligation on your credit report. Sometimes owing more money can cause you to have to pay higher interest rates when you borrow. What’s more, once you co-sign, getting yourself removed from the debt can be extremely difficult if not impossible. The article lists a few circumstances in which you may be able to get out from under the co-signer’s obligation, plus a few pointers that could help safeguard your interests before you co-sign.

But our advice is to be very, very cautious, and avoid becoming a co-signer if at all possible. It may mean having a hard conversation with a loved one – but that’s better than facing your retirement years burdened by someone else’s indebtedness.

Being cautious about finances is important as you plan for retirement. But a good financial plan is only part of the comprehensive approach to retirement that we call a LifePlan. We also help you look ahead to ensure that your medical needs are met, your legal affairs are in order, your housing options have been considered and your family communications are healthy and open. With a LifePlan in place, you can look forward with confidence to a well-planned retirement that is both fruitful and secure.

Why not start the LifePlanning process by attending one of our free LifePlanning Seminars? Bring your questions and come prepared for an enjoyable, information-packed event. Click on the Upcoming Events tab and register for the seminar of your choice – but hurry, because space is limited. We’ll look forward to meeting you at a LifePlanning Seminar soon.

(originally reported at www.nytimes.com)

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

A recent article on the website US News answered a question we hear frequently in our client meetings, on our call-in radio programs and at our seminars: “If I die with debts, will my heirs have to pay them off?” Most of the time, if you have any assets at all, the answer is yes. The article explains several possible scenarios where those debts you incur in life will burden those who inherit your estate.

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

How bad is the senior debt problem? The article states that in 1989 about 44 percent of senior households in the U.S. were carrying some debt. In 2013 that percentage had risen to just over 61 percent. But the figure that caught our attention was the amount of that debt: for households headed by adults age 60 or older, the average debt burden had skyrocketed from about $9,000 in 1989 to nearly $41,000 in 2013. For seniors already strapped for money after the recent recession, debt can be a crushing burden now and a headache in the future when your children have to deal with it.

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

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

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

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

The very best way to start the LifePlanning process is by attending one of our free LifePlanning Seminars. You’ll come away with valuable knowledge that will help you face your retirement years with a new sense of confidence, knowing you’re prepared. Don’t leave your heirs with a burden of debt – or even worse, with the burden of caring for you and making decisions against your wishes. Click on the Upcoming Events tab on this website and register today for a LifePlanning Seminar near you.

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

ABC News Report: One-Third of People Have No Plan for Long Term Care

We just discovered this new article on the website of ABC News. The article’s stark conclusion is sadly borne out by our own experience here at AgingOptions: ABC states that at least one-third of Americans over the age of 40 have done no planning of any kind for their long-term care needs. This suggests that a significant portion of the population is in for a rude awakening as they age.

What’s the reason for this state of denial when it comes to long-term care? According to a national poll cited in the ABC News article, four adults in ten predict that long-term care is something they’ll never need. This is in direct contrast to statistics from the U.S. Administration on Aging which estimates that nearly 70 percent of those 65 or older will need help with activities of daily living at some point as they age.

There are other disturbing facts pointed out in the ABC News piece. Roughly 40 percent of respondents say they expect to turn to Medicare to cover their long-term care needs – in spite of the fact that these costs are explicitly not covered by Medicare. The Medicaid program which does cover long-term care generally has stringent limits on income and assets which can disqualify many of those who apply. (We can advise you on ways to structure your estate so that you will be able to meet Medicaid qualifications.)

While a large portion of the population is convinced they’ll never need long-term care, many older Americans surveyed in the poll (a bit more than one-third) believe they’ll be able to pay for the care they may likely one day need. These people may be in for a shock: Genworth Financial, one of the largest long-term care insurance providers in the industry, says that annual long-term care costs now range from a low of about $18,000 for adult day care to more than $92,000 for nursing home care. Experts doubt that many seniors will be able to shoulder that cost without assistance.

In our conversations with seniors and their families, long-term care is something many would prefer not to discuss. For one thing, talking honestly about the decline most of us will experience as we age can be depressing. At the same time, concern about costs of care can make some people fearful. But when it comes to planning for long-term care – just like planning for other aspects of retirement – avoidance is not a strategy.

The ABC News article puts it well. In the words of Golden Gate University professor Kit Yarrow, a specialist in consumer psychology, “The more in control people feel about the world and their life, the greater the sense of confidence in their ability to plan for the future.” We couldn’t agree more.

If planning for the future is something you’re ready to do, we’re eager to help you. Here at AgingOptions we have helped thousands of people develop what we call a LifePlan – a comprehensive blueprint that answers all the important questions your plan should cover. Are my housing choices being considered? Do I have all my legal documents in place? Is my financial plan, including Social Security, sound and secure? Have I provided for my health care needs, including long-term care? And does my family, those closest to me, understand my hopes and wishes? With a LifePlan in place, you’ll be able to protect your assets and avoid becoming a burden to your loved ones. And as you consider your long-term care needs, a strong LifePlan can help you escape the trap of unplanned, unwanted institutionalization.

We invite you to begin the process by registering for an upcoming LifePlanning Seminar. These popular events are offered without cost or obligation, and we assure you the information you glean will prove invaluable as you consider your retirement future. Simply click on the Upcoming Events tab on this website and register for the seminar of your choice. It will be our pleasure to meet you at a LifePlanning Seminar soon.

(originally reported at www.abcnews.go.com)

What’s the “World’s Best Insurance Policy”? Delaying Social Security

We know that many of you who read this, and many of those who listen to us on the radio, will have already started drawing Social Security well before age 70. The average age when benefits begin, say the experts, is 64, and many sign up for benefits as early as they can at 62.

Nevertheless, for those of you who haven’t yet started taking benefits, this article on the PBS Newshour website really caught our attention. It gives a long list of reasons why waiting those extra years until age 70 should be a highly important part of your financial plan. In fact, the author, business correspondent Paul Solman, calls the strategy of waiting until you’re 70 to start Social Security “the best insurance policy on Earth.”

Solman has a strong opinion, and no doubt some might take issue with his thinking, but his logic is tough to refute. As the author points out, the biggest fear most of us should have as we age is not dying too young but living too long and outliving our resources (something we advise our clients about continually). Delaying benefits from age 64 until age 70, for most retirees, increases eventual payments by about 50 percent. Those extra dollars will make an enormous difference in the years ahead. In spite of that fact, a growing number of seniors draw benefits well before age 70, some because they have to but others because they choose to.

The PBS piece says it’s wise to think of Social Security as insurance, not merely as a source of extra income. Once the average adult reaches 64, the average life expectancy for a man is about 82 ½ – for a woman, 85. Do the math and you’ll find that the average Social Security beneficiary will earn more by waiting until 70 to draw payments, even if he or she passes away in their early 80’s – and with life expectancy rising, the rationale for delay looks more and more compelling. When you wait until age 70, says author Solman, Social Security provides “a guaranteed, inflation-protected return for every year you wait that’s better than any alternative investment out there.”

Solman cautions against the notion that a smart amateur investor can draw benefits early, invest those funds and create a better fiscal outcome. He calls that strategy “self-delusion” – the tendency we all have of kidding ourselves into thinking we’re smarter and more disciplined investors than we really are. The reality, he says, is “if you’re still stubbornly tempted to take Social Security benefits at age 64 and invest them on your own, please consider that you’re not liable to beat even the average market rate of return.” In other words, you won’t equal the 8 percent annual increase Social Security guarantees to those who delay. The fact is, says PBS, during the 20 years from 1991-2011 (accounting for costs and inflation) the average American investor actually lost money, and that kind of downturn can always happen again.

The PBS Newshour article concludes that “the worst-case scenario is, to reiterate, living too long — living to your maximum possible age of life and, as a result, outliving your savings and income.” We say a hearty “Amen” to that statement. That’s precisely why, here at AgingOptions, we place so much of our focus on the process we call LifePlanning – helping our clients map out every aspect of their retirement plan, or LifePlan, to make certain their assets are protected and their wishes respected. Your LifePlan will answer key questions for you as you look ahead. Are my housing choices being considered? Do I have all my legal documents in place? Is my financial plan, including Social Security, sound and secure? Have I provided for my health care needs? And does my family, those closest to me, understand my hopes and wishes?

If a LifePlan like that sounds like something you want to explore, we have a no-obligation way to find out more. Register today to attend a free LifePlanning Seminar, held at locations throughout the Puget Sound region. For dates, times and locations, click on the Upcoming Events tab on our website and register online. These seminars fill up fast, so we encourage you to confirm your reservation and join us. It will be a pleasure working with you, no matter where you are on your journey to a secure and fruitful retirement.

(originally reported at www.pbs.org/newshour)

Category Archives: Financial

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