Dreaming of a Happy Retirement? Read These 10 Surprising Secrets

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

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

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

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

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

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

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

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

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

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

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

(originally reported at www.cheatsheet.com)

Reverse Mortgages Can Be Wonderful – but Beware of Scam Artists

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

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

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

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

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

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

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

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

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

(originally reported at www.investopedia.com)

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

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

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

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

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

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

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

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

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

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

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

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



Lots of Good Reasons – and some Bad Ones – for a Reverse Mortgage

Here at AgingOptions we’re always researching the subject of retirement planning. It’s a fascinating and complex field, one that seems to change every day. Sadly, however, one thing that does not change is the prevalence of bad advice, and one area where we seem to see a lot of bad advice is under the heading of reverse mortgages (also called Home Equity Conversion Mortgages).

Recently we came across an example – a one-sheet handout from a retirement planning website, called “25 Ways to Use a Home Equity Conversion Mortgage.” While about half of the suggestions might make sense as legitimate reasons to consider a reverse mortgage, in our view a significant number of their recommendations are completely wrong. These bogus suggestions reflect the kind of erroneous and shallow thinking that can quickly get homeowners into deep financial trouble from which they may never recover.

By now just about everyone knows that a reverse mortgage is a financial instrument by which qualifying homeowners age 62 and older can tap into the equity in their homes without having to move. Fortunately in our practice we have the privilege of knowing and working with some exceptionally experienced, completely ethical reverse mortgage advisors (including frequent radio guest Laura Kiel) whom we can recommend without reservation. But because reverse mortgages are complex financial instruments, manipulation and misinformation are all too common in the industry. “I want to send a message,” says AgingOptions’ Rajiv Nagaich, “that unless you are dealing with a very ethical person, sales people will take full advantage and sell you this product for the wrong reasons.”

First, however, what are some of the right reasons? On the “25 Ways” handout we saw some recommendations we support. For example, a Home Equity Conversion Mortgage (or HECM) can be used to pay off your existing mortgage and eliminate a house payment. It can finance home repairs and renovations that will allow you to age in place, something nearly all seniors say that hope to do. A growing line of credit obtained through your HECM can also safeguard your financial security for the future, and for some investors a reverse mortgage can help protect assets in the event of a future stock market downturn.

As Rajiv Nagaich puts it, while there may be some exceptions, “The purpose of the reverse mortgage should be to help you stay in your own home – nothing more.”  When you are considering whether or not to take out a Home Equity Conversion Mortgage, you should make certain this is your number one goal and motivation.

So if these are the “good” reasons, what are some of the “bad” reasons? A few really stood out on the “25 Ways” list. For example, more than one of the suggested reasons why a reverse mortgage is beneficial involves using the proceeds to cover monthly expenses. We can’t support this notion. “If you are having difficulty paying regular bills,” warns Rajiv Nagaich, “then taking money from the last asset you have left is not a good idea.”

What about using the proceeds to benefit someone else? One recommendation was to use HECM funds to pay for a grandchild’s education. Another was to use the money to help your adult kids with family emergencies. Rajiv Nagaich calls this “bad, bad advice.” He adds, “There are always exceptions to the rule, and if you are sure you will get the money back then you can make that call.  But generally, you should not loan money you know you will need for your own future needs.” Remember, your home is almost certainly your largest asset by far, and if you squander that equity, you may find you have too little left to live on.

Some of the ideas on the “25 Reasons” list were factually wrong, including the suggestion that a reverse mortgage would allow you to “combine proceeds with the sale of your current home to buy a new home without a mortgage.” This is erroneous advice. When we asked reverse mortgage expert Laura Kiel for her assessment of this scheme, she stated emphatically that “There is a mortgage on the home. It’s a reverse mortgage, and it may not require monthly mortgage payments, but it is a mortgage.” So we say, “Borrower beware!” Those things that sound too good to be true usually are.

The last reason on the list of 25 may sound innocent enough but we’ve seen this kind of thinking get too many retirees into trouble. One reason to get an HECM, say these self-styled experts, is to “Have fun! Buy a new car, take a dream vacation, and enjoy your retirement.” We have nothing against retirees having a good time, but financing an indulgent lifestyle you can’t afford with the proceeds of a reverse mortgage is a bad idea. Come talk to us and we’ll help you find other ways to indulge yourself – to a reasonable extent – in your retirement years. Don’t use your home equity to do it!

So-called advice like this “25 Ways” sheet should serve as a warning that the only way to make certain you are getting the complete picture when it comes to a Home Equity Conversion Mortgage is to consult with a trusted professional like Laura Kiel. “Laura stands above the rest,” says Rajiv Nagaich. “She really helps people understand their true needs. She knows the advice she gives today will impact this person’s life in future. That’s why I recommend her with such confidence.”

Expecting to Spend Less in Retirement? You Might be Surprised

Most seniors are convinced that, once they retire, their spending will almost certainly go down, not up. But what if that assumption is wrong?

This article recently published on the website Motley Fool is important for just about anyone who is beginning to get serious about retirement finances. Written by Motley Fool contributor Maurie Backman, its title shouts a loud and clear warning. “Attention, Seniors: You Might Spend More in Retirement, Not Less.” Backman opens his article by stating, “Most people count on lowering their expenses in retirement, but this doesn’t always happen.  And if you’re not prepared, you could run into trouble down the line.”

There was a time in previous generations when retirement came with a pension, one that in many case (especially when combined with Social Security) was sufficient to meet a retiree’s financial needs. But for most workers those days are gone forever. For many years, says the Motley Fool article, we’ve been admonished to save as much as possible for retirement in order to augment Social Security, which only replaces an average of 40 percent of a retirees’ working income. Typical retirees, experts say, will need 70-80 percent of their pre-retirement income in order to sustain their lifestyle. “It’s up to us, as individuals, to fill that gap,” warns author Backman.

As if that weren’t daunting enough, here’s the sobering news: your level of retirement spending may surprise you. Newly reported data from the Employee Benefit Research Institute (EBRI) “found that about 46 percent of households spent more money, not less, during their first two years of retirement.” For more than one-quarter of retiree households, spending was actually 20 percent higher after retirement than before.

This boost in spending didn’t just disappear after the first few years of retirement. Six full years into retirement, about one-third of households were still spending more than they did before they retired. This pattern seemed consistent across all income levels, not just among wealthy households.  Motley Fool’s Backman says, “While a fair amount of this extra spending no doubt relates to entertainment and leisure (after all, retirees have far more free time on their hands and need to occupy it), certain expenses in retirement are far less negotiable. And if we don’t save enough to cover those costs, a lot of us will be headed for trouble.”

The Motley Fool article is quick to point out that this pattern of higher spending in retirement is hardly inevitable. About half the households in the EBRI database do spend less than they did before retiring, for several reasons: they’re no longer contributing to a 401(k), for example, and they’re no longer paying costs associated with commuting. Still, some costs are very likely to climb in retirement, and seniors need to be prepared. Healthcare, for example, consumes about $500 of household income every month for the average adult aged 65-74 (this according to the Bureau of Labor Statistics).  But those costs can skyrocket if you face a health crisis later in life, and they don’t include long term care expenses.

What about housing? Backman writes, “Many people assume their housing costs will go down in retirement because they’ll have paid off their mortgages by then, but more and more seniors are entering retirement with mortgage debt hanging over their heads.”  In 2011 more than 30% of homeowners 65 and older were still carrying a mortgage. Beyond the mortgage, rising taxes and increasing maintenance costs can often be overlooked when creating a financial plan for retirement, and these and other expenses can easily sneak up and bite the unprepared retiree.

What does a retiree do about this prospect of rising living costs? The Motley Fool’s advice is pretty basic: “save more.” Even if you haven’t been a retirement saver, start now and set aside what you can. But as important as saving is, we at AgingOptions take a more well-rounded view of planning for retirement, because retirement is not just about finances. Every piece of the retirement puzzle – the financial plan you set in place, the legal framework you need, the housing decisions you make, the medical coverage your health demands, and the open, honest communication your loved ones require – has to fit together into a seamless whole. We call this approach a LifePlan, and with your LifePlan in place you’ll be far better equipped to meet every challenge retirement can throw your way, including the challenge of rising costs.

So if this talk of the high cost of living in the Motley Fool article leaves you feeling uneasy, we urge you to come to one of our LifePlanning Seminars and learn more about the AgingOptions approach to this vital topic. If you’ll invest just a few hours of your time hearing about the power of retirement planning done the right way, we’re confident you’ll gain not only invaluable knowledge but true peace of mind. Interested in taking the next step?  Simply attend a free seminar – no risk or obligation whatsoever. Click here for dates, times, locations and online registration, or contact us during the week and we’ll gladly assist you.

(originally reported at www.fool.com)

Dreaming of a Happy Retirement? Here are 5 Moves You Need to Avoid

Are you looking for ways to wreck your retirement? Of course for any sane person the answer is “no” – and yet many of us persist in certain actions (or inactions) that are almost guaranteed to do just that.

This article published recently on the website Investopedia illustrates the point perfectly. It’s called “5 Retirement-Wrecking Moves,” and it’s quite a list. We suggest you take a look and see if you’re guilty of making any of these moves and sabotaging your retirement future. Just to provide some perspective, we’ll add our own “retirement-wrecking move” at the end of the article, so keep reading and see if you agree with our assessment.

The Investopedia article was written by retirement planner Denise Appleby. She states, “While retirement takes many shapes and forms, for many individuals, it’s a time to relax and enjoy the fruits of a lifetime of labor. But for many people, bad choices can push the retirement horizon out of reach.” We agree with this assessment – it’s something we at AgingOptions see frequently, and it’s frustrating when people refuse to understand the effects of the bad choices they’ve made. Appleby calls these the “worst choices” that can sabotage your retirement.

The first is one we see all the time: procrastination. It’s human nature to put off doing the things we don’t want to do, especially when the “mature choice” involves delayed gratification. For Appleby, writing in the Investopedia article, the number one area for procrastination is in finances, especially when it comes to setting aside funds to augment Social Security. Her emphasis on starting your saving habit at an early age is valid, and for those who still have 25 or more years to save for retirement the advice is sound: stop procrastinating and develop a prudent savings plan now. But what if you’re already in your 50s, 60s or 70s with savings you consider insufficient? That’s where the advice of well-rounded retirement experts such as our staff at AgingOptions will prove absolutely invaluable. If insufficient savings is a concern of yours, we urge you to contact us so we can assist you with appropriate planning tools.

The second “retirement-wrecker” cited in Investopedia is almost the mirror image of the first: it’s the tendency to thinking it’s “too late to get into the game.” In other words, some who failed to start saving early enough reach their later years and feel like giving up on planning and saving altogether. However, it’s never too late to start! We can show you how even modest efforts later in life, combined with sound planning, can pay solid dividends in retirement.

Third, are you wrecking your retirement through missed opportunities? These can include not taking advantage of various tax incentives for qualifying individuals who make IRA contributions. For many an even greater missed opportunity, often under-utilized, is failing to “max out” your employer’s 401(k) or 403(b) program. If you’re not taking maximum advantage of every matching dollar your employer has to offer, you’re squandering an opportunity to build your retirement nest egg.

A fourth retirement-wrecker is the failure to consider your healthcare needs in retirement. One article we read recently cited new data that reported a healthy 65-year-old couple who just retired would spend, on average, some $377,000 in health care costs for the balance of their lives! Failure to look health care costs (and long term care plans) squarely in the face and strategize accordingly is a major oversight for many retirees, who often choose to remain willfully ignorant of the need to plan effectively for medical contingencies.

The final retirement-wrecking oversight in the Investopedia article involves our spending habits. The author says people either spend “Too Much Too Soon” or “Too Much Too Late” – in other words, either they experience the sudden freedom of retirement and spend too quickly on vacations and leisure, or they worry so much about their finances that they hoard every nickel and never enjoy the retirement they’ve earned. Both extremes can wreck your retirement by robbing you of long-term security and depriving you of the sense of joy and freedom that a well-planned retirement can and should bring. The absolute essential when it comes to gauging your retirement spending is planning.

From our perspective here at AgingOptions, all of these “retirement-wreckers” share a common theme: they involve a failure to plan thoroughly and comprehensively for one’s retirement years. Many retirees will set up a financial plan and feel confident they’ve done all they need to do, only to find out too late that their basic “money management” plan is inadequate and will lead them down the road to retirement disaster and disappointment. Money alone is not the answer! Yes, it’s vital to protect your assets in retirement, but what about your housing choices – can you avoid unplanned institutional care? What about your loved ones – can you avoid becoming a burden to those closest to you? With a traditional financial plan the answer is completely uncertain. With an AgingOptions LifePlan, the answer is a confident “yes.”

We invite you to join us for one of our free LifePlanning Seminars where you’ll learn much more about our revolutionary approach to the art and science of planning for retirement. A few hours invested will reap exciting dividends, we assure you! For a complete listing of locations, dates and times, plus online registration, click here, or call us during the week. Remember, there’s no obligation whatsoever.

The number one retirement-wrecker, in our estimation, is failure to plan. Let AgingOptions help you create a LifePlan that will allow you to achieve the secure and fruitful retirement you’ve always hoped for!

(originally reported at www.Investopedia.com)

“Fee-Only” vs. “Fee-Based” Financial Planning – a Crucial Difference

One of the questions we receive frequently here at AgingOptions, in our seminars or on the radio, involves choosing a financial adviser. We’re often asked something like this: “One financial planner is asking me to pay a fee, while another is compensated based on commissions. Which one is better?”

This recent article from the website Investopedia does a good job, we think, of clearing up the confusion – and these days there is plenty of confusion, created in part by pending changes to the financial planning world caused by something referred to as the Fiduciary Rule. This is a new set of rules from the U.S. Department of Labor that will take effect between April 2017 and January 2018, rules that change the relationship between financial advisors and their clients. From now on, once the rules take effect, a financial adviser has to put the interests of his or her client first, and openly disclose any potential conflict of interest, including commissions they earn from selling you a financial product they’re recommending.

Partly as a result of the new Fiduciary Rule, the brokerage community has come up with the label “fee-based” to describe their agents who are still allowed to earn commissions. So what’s the difference between “fee-based” and “fee-only” advisers, and which is best for you?                 As the Investopedia article puts it, if you’re confused about the difference between fee-only and fee-based financial planning, you’re not alone. But the article’s author, financial planner Brad Sherman, says, “Understanding the difference between fee-only and fee-based is important and could be the key to your long-term planning success.”

Let’s start with financial planners who are described as “fee-only.” These investment advisors are legally registered and have a fiduciary responsibility to you to create a plan in your best interest. And here’s the critical point, says Brad Sherman: “Fee-only advisors cannot accept any compensation as a result of product sales. In other words, they can’t make a commission from specific investments they recommend you purchase. They are paid directly by you—and only by you.” This payment can be based on an hourly fee, some form of monthly retainer, or a percentage of your assets that they manage – a figure each of you has agreed to. This is an important distinction, says Sherman, because “Fee-only advisors have fewer conflicts of interest. They are more focused on your needs than on selling you specific investments, since their compensation is not determined by sales volume or choice.” When you receive advice from a fee-only advisor, that advice is “completely free of attachment to financial products. The role of fee-only advisors is to only provide you advice that fits your current financial situation and your goals,” not products and services that may not the best choices for you.

By contrast, financial planners who are “fee-based” are not paid the same way, even though the terms sound similar. Sherman states that the financial services companies created the term “fee-based” almost as a marketing hook. “Because the terms sound so similar, it’s easy to think they are the same,” says Sherman, “but there is a major difference between fee-based planning and fee-only planning.” If you’re not careful, that difference can cost you money!

Sherman writing in Investopedia explains that fee-based planners earn a set percentage of your assets that they manage, instead of a retainer or a flat hourly fee. But on top of that, “fee-based advisors can also accept commissions from the financial products, annuities and insurance products they sell you. Each time you purchase one of those products, their earnings increase.” This, says Brad Sherman, leads to a fundamental conflict of interest. How can a financial advisor who wants to earn as much as possible ever be 100 percent objective in the recommendations he or she makes? Odds are they will always lean toward the investment choices that put a higher commission in their pocket. It’s just human nature.

So according to Investopedia, what’s the best answer to picking a financial planner? Sherman strongly suggests that you first find out how any financial planner you’re considering will be compensated before you hire them to manage your funds.  A responsible planner should be willing to disclose his or her fees in writing and tell you whether or not they accept commissions.  Sherman’s advice: Choose a fee-only planner. “By choosing an advisor who provides fee-only services, you stand a greater chance of avoiding any conflicts of interest,” he writes, because these professionals “have a legal, fiduciary obligation to work for you, and you only” – not for a company that pays their commissions.

Financial planning is one of the keys to an effective retirement plan – but it definitely isn’t the only key. Too many retirees think they’ve planned adequately for retirement simply because they have a financial plan in place, only to find out the hard way that their “retirement boat” has several holes in it. What about your legal protection – have you made sure you’re fully prepared? Have you considered what housing options might be best for you, especially as you age and your health changes? Is your family fully aware and supportive of your retirement plans and desires? And have you considered the important medical insurance choices you need to make? Here at AgingOptions, we work with our clients to blend all these elements together into a comprehensive retirement blueprint called a LifePlan. With a LifePlan in place, you’re assured of entering retirement years with confidence and security.

We invite you to explore the LifePlanning concept by spending a few hours with us at a free LifePlanning Seminar. Click here to find out the dates, times and locations of upcoming seminars – then once you’ve made your selection you can register online or contact us for assistance during the week. Why wait any longer? Take this important next step and join us for a LifePlanning Seminar soon – you’ll be very glad you did! (originally reported at www.investopedia.com)

Want to Stay in Your Home Longer? Consider These 6 Upgrades

Staying in your home as you age, or “aging in place,” is all the rage among retirees and future retirees, and for good reason. We’ve studied this issue for years, and read many articles about aging in place, which is something nine out of ten seniors say they prefer to do. For most seniors we agree that aging in place can be the best idea – that is, if you take steps now to prepare your home for the future. Your needs, your health and your finances will all change in the years ahead, so now may be the time to make certain your home will be ready for you.

This just-published article on the website of US News is a helpful guide as you think about the changes that it might make sense to make to the home you enjoy today, so that it will meet your needs tomorrow. We like this article because it goes beyond some of the tips we’ve read elsewhere. Things that make your home more “senior friendly” such as installing grab bars and upgrading lighting are important steps to take, but there are other things you can do to your home that will not only add resale value but also increase your enjoyment of your home for years to come, and even enhance your financial picture in the process.

In the US News article the first recommended upgrade does involve accessibility. The beauty of most of these suggested improvements is that they will add value to your home even if you yourself never need to use them. This broad category of accessibility improvements includes new door handles (easier on arthritic hands), better lighting (an obvious boon to help with decreasing visual acuity and night vision), as well as more costly amenities including upgrading to a European-style walk-in shower that can accommodate a wheelchair or walker. How much of these modifications you can do yourself and how much will require the services of a contractor will vary greatly, as will the cost.  You may need a professional to come in and make a thorough survey of your home; then he’ll provide you with a list of recommended modifications. If you would like some referrals on who to call for an in-home evaluation, call us here at AgingOptions.

The second suggestion may be a new idea for you as you consider aging in place: when you remodel, add an income-producing suite. “With easy options for renting out space in your home, such as Airbnb, turning your home into an income property has never been easier,” writes US News. Many cities are also actively encouraging so-called mother-in-law living units to cope with rising demands for housing. This extra rental income can make a big difference in helping you afford to stay in your home after retirement.

Here’s a third suggestion we like: whether or not you decide to create a suite that can provide income, you may also want to turn an extra room into a guest space that’s comfortable and well-appointed. An appealing guest room makes it much easier to host the kids or grandkids, not to mention out of town visitors, and if you have a room that’s always ready for guests you’ll be more inclined to extend the invitation. No more air mattresses on the living room floor!

The fourth and fifth home renovation ideas are somewhat more practical: upgrade your bath and/or kitchen, and make sure you boost your home’s energy efficiency. “Of all the home remodeling options,” says US News, “upgrading a bath or kitchen is usually the one that gets you the most bang for your buck.” And it doesn’t have to entail a costly top-to-bottom overhaul. “Simply modernizing your finishes can give your room a whole new look.” As for energy efficiency, it may be important, especially if your house is on the older side, to fix energy-robbing problems now, when you can afford it. By upgrading windows, adding skylights, maybe even adding solar panels if they’re cost-effective where you live, you can reap financial rewards for years to come while making the old home that much more comfortable.

The final suggestion is our favorite on the US News list: consider adding a home office. Why will this improve your ability to age in place? It’s because a very high percentage of retirees plan to keep working as they get older, most likely part time. Turning a spare room into a home office generally requires relatively little expense, and it will be a selling point down the line. Meanwhile, you’ll be better able to earn that freelance or part-time income if you have a space in your house that’s conducive to the work you plan to do. Think of it as an investment in yourself.

These six suggestions are among the many we’ve encountered as we’ve talked with clients and radio listeners about aging in place. In spite of the fact that almost all seniors want to remain at home, aging in place isn’t necessarily the best choice for everyone. To explore the topic further, we encourage you to bring your housing questions when you attend one of AgingOptions’ free LifePlanning Seminars, the retirement planning seminar like no other. We not only dive into issues related to housing, but we also show how your financial plan fits into the picture. We help you understand what legal protection you’ll need, depending on your particular situation. We explain the medical insurance options that will be important as you age. We even help you plan the best way to make sure your family knows and supports your wishes, since aging is a family affair.

Find out more by attending a free LifePlanning Seminar in your area. You’ll come away with a fresh new perspective on the power of a LifePlan to help ensure the retirement you’ve always hoped for.  Click here for a listing of seminar dates, times and locations – then register online, or contact our office during the week. When it comes to retirement planning, there’s simply no better, more comprehensive approach than an AgingOptions LifePlan.

(originally reported at money.usnews.com)

Considering Buying a Second Home? Prepare for Some Surprises

It’s winter in the Pacific Northwest, the time of year when even the most passionate fans of the region start thinking wistfully of a sunny get-away. But if winter makes you long to buy that vacation cabin or beach home you’ve been dreaming about, it may be time for a wake-up call, because owning a second home isn’t as simple or pain-free as most people think.

Ever since the end of the great recession, 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 article that appeared a few months back on the website of 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 really 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 by all means, check with members of your family. You may love spending time at the cabin, but your adult kids might not, and this disconnect 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 comprehensive plan called 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 here for dates and times and to register online for the seminar of your choice, or contact us during the week. 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)

400,000 American Retirees Are Living Happily Overseas. Should You?

According to an article published by the Associated Press just a few weeks ago, more and more Americans are deciding to retire someplace outside the U.S. The AP reports that the number of overseas American retirees, now approaching 400,000, grew 17 percent between 2010 and 2015, and the trajectory is heading upward as the baby boomers begin retiring in greater numbers.

You can click here to read the Associated Press piece. It just might start you dreaming of relaxing beaches and warm sunshine, especially since we’re reading about this trend in the gloom of a January day in the Pacific Northwest!

Sunshine and warm weather may seem like the big draw for retirees with wanderlust, but cost of living usually plays the biggest role in the decision to leave the USA to retire. When you look at some of the most popular retirement destinations, they include places such as Canada and the United Kingdom that are certainly not known as tropical destinations. But one of the most perennially popular countries on the list of places to find retirement paradise is Mexico, where both sunshine and lower costs are big draws, not to mention a large and growing community of American expatriates to make newcomers feel more welcome.

“I wanted to find a place where I could afford to live off my Social Security,” said one American widow who quit her job and moved to Mexico after her husband died in 2012. “The weather here is so perfect, and it’s a beautiful place.” She lives in a community outside Guadalajara where her rent is half what it was in Texas – and because weather is mild, utility bills are relatively low. It’s also inexpensive to hire domestic help, something many American retirees choose to do, adding to the luster of the lifestyle.

As wonderful as all this may sound, however, there are hurdles. Even with fellow Americans nearby, experts say not everyone adjusts readily to life in a different country. One professor from the University of Texas at San Antonio, Viviana Rojas, interviewed a group of retirees for a book project and found that the biggest obstacle to feeling at home overseas is not speaking the language or knowing the culture. “Many of the people we interviewed said they spoke Spanish, but they actually spoke very little Spanish,” said Rojas. “They didn’t have the capacity of speaking enough Spanish to meet their basic needs like going to the doctor or to the store.” Another potential obstacle to retiring overseas is access to health care, which can also be a challenge. “While retirees still can receive Social Security benefits, Medicare is not available to those living abroad,” says the AP article.  Availability and quality of care can vary widely.

As we looked further into this enticing topic of retirement overseas, we also found this very helpful article in the Washington Post. Written about 18 months ago, it’s called “A Financial Guide to Retiring Abroad,” and while some of the specific data may have changed, the basic info is still sound. And the article definitely gives someone considering foreign living in retirement some reasons to pause. “When you just begin thinking about it at a superficial infatuation level, it’s a very exotic, romantic, sexy idea,” says Kathleen Peddicord, publisher of “Live and Invest Overseas,” which publishes an annual ranking of the best places to retire overseas. “But the truth is that once you get into it, it’s not easy.”

The Washington Post article explains that “not all of the lifestyle changes that come with moving overseas will be ideal. Retirees will want to research how the move could affect their cost of living, tax bill and health. So “before you sell your belongings and buy a one-way plane ticket,” the article lists some big considerations that will require careful planning and attention. For example, some countries welcome American retirees while others have fairly restrictive residency requirements, including requiring expat retirees to keep a certain amount of savings on hand to avoid becoming a burden on the host country. How about that lower cost of living? It may come with a downside, including inconsistent electricity service, occasional plumbing disruptions and appliances you can’t get in your new country of residence. Health care and reliable banking services can be a decidedly mixed bag. Buying and owning property may or may not be an option depending on where you choose to live. And no matter where you move to, odds are the IRS won’t forget about you – especially each year when April 15th rolls around. You’ll no doubt still be liable to Uncle Sam for any income tax liability you’ve incurred.

We think this quote from the Washington Post best sums up the bottom line. “Retiring overseas can be both more enticing and more affordable — depending on the locale — than retiring in the United States. But a smooth transition requires careful planning.”  We would go farther and assert that a smooth transition to any type of retirement requires careful planning, and that is why we’re here. At AgingOptions our goal is to be your guide in the comprehensive process we call LifePlanning, so that your retirement future will be every bit as fruitful and secure as you’ve always hoped it would be, no matter where you choose to live. Can you protect your assets in retirement? Can you live where and how you want without being forced into unplanned institutional care? Can you avoid becoming a burden to your loved ones? With a LifePlan in place, the answer to those critical questions is a confident “yes.”

We invite you find out more about the LifePlanning process by attending a free, information-packed LifePlanning Seminar at a location near you. Just a few hours invested in this exciting event will open your eyes to the power of LifePlanning. New seminars are being scheduled frequently, so plan to attend and bring your spouse, parent or friend. For dates, times, locations and registration, click here, or call us during the week. We’ll be glad to assist you.

(originally reported at www.washingtonpost.com and www.bigstory.ap.org)