More Seniors Working into Retirement
June 12, 2013
When most younger Americans picture their retirement, they see themselves relaxing and enjoying warm weather on a golf course or perhaps behind the wheel of an RV. Unfortunately, the reality for most Americans of retirement age is just the opposite, as they are forced to work past age 65.
A survey of 3,600 workers published in a recent article revealed that, in May of 2012, 56% of workers stated that they plan to work after age 65. Additionally, 54% of workers responded that they will continue to work after they retire. Working into retirement does not have to be a reality for all seniors. The article suggests several things workers can do in order to provide themselves with the best possible chance at a long retirement.
First, it can be beneficial to put a higher percentage of your life savings into risky investments. Risky investments are typically a good way to compensate for low interest rates on “safe” accounts. For some retirees, reverse mortgages and annuities may also constitute a partial solution for a difficult financial situation.
Additionally, many senior citizens should consider scaling back on unnecessary expenses now. Scaling back may include reducing living expenses and re-evaluating retirement expectations and goals. Although it may be difficult to scale back on expenses, reducing unnecessary expenses now often means that seniors don’t have to forgo the things that are truly important later, like traveling to visit their grandchildren.
Does Medicare Cover Nursing Home Stays?
June 5, 2013
Many Americans believe that, once they reach age 65, Medicare will provide financially for all of their health care needs. Accordingly, a recent article explains that most elderly Americans are surprised to discover that, in general, Medicare will not cover the vast majority of expenses stemming from long term care in a skilled nursing facility.
Medicare will only provide coverage for long-term care provided in a skilled nursing facility under certain circumstances. First, the beneficiary must have been admitted to the skilled nursing facility within 30 days of a hospital stay. Additionally, the preceding hospital stay must have been for at least three consecutive days.
Further, the beneficiary’s physician must certify that the care he or she requires can only be provided on an inpatient basis at a skilled nursing facility. Finally, the patient must choose a facility that is approved by the Centers for Medicare and Medicaid Services.
Even if a patient meets the above requirements, Medicare will only cover care for the first 100 days that the patient is in the skilled nursing facility. After the first 100 days, the patient must pay for their care out-of-pocket as long as they are able. Once their financial resources have been significantly depleted they can apply for Medicaid coverage.
Wealthy Widow Forced to Give Portion of Estate to Adopted Child She Gave Up
May 29, 2013
Many years ago, a wealthy New York Widow adopted a young Chinese girl. Ten years later, however, she gave the girl up for re-adoption. Now, recent reports indicate that a judge has ordered Christine Svenningsen to give her former daughter a portion of her $250 million estate.
In May of 1996, the Svenningsens signed adoption paperwork stating that the girl, Emily, would be treated as their biological child. The paperwork further stated that they would not abandon Emily or put her up for re-adoption, and that Emily would have a right to inherit the estate of her adopted parents.
The Svenningsens gave Emily up for re-adoption in December of 2004. They stated that Emily was a difficult child that did not bond with their five biological children. She was surrendered to the Spence-Chapin Services to Families and Children.
Luckily, another family adopted Emily. Emily’s second family has stated that they believe the Svenningsens gave up Emily for the sole purpose of keeping her out of their estate plan. Based on this belief, Emily’s new adoptive parents sued the Svenningsens to recover a portion of the $250 estate on Emily’s behalf. The lawsuit was successful, and Emily will receive a portion of the estate.
Retirement Planning for Single Women
May 22, 2013
Planning for retirement is important, especially for the many Americans who will retire unmarried. As a recent article points out, the segment who faces the greatest challenge in retirement is unmarried women. These women are anticipated to face challenges whether they retire divorced, widowed, or had never married.
Women experience the most hardship in retirement because they still tend to make less money than their male counterparts in the workplace. Moreover, women typically have shorter working careers than men because many take time off of work to raise children or care for their aging parents. Because women generally earn less money over their lifetime, they have less money and lower social security benefits when they retire.
Women also have an average life expectancy of five years longer than their male counterpart. A longer life expectancy means that they have more retirement years for which they will need to be provided for.
Unfortunately, the article notes that studies have shown women to be “less knowledgeable and more intimidated about financial issues than men.” It is therefore vital for women to learn about retirement planning early, and work with an expert to put a plan in place. One good resource for woman looking to learn about their finances is the Women’s Institute for a Secure Retirement.
Estate Planning is About More Than Just Taxes
May 15, 2013
With the new $5.125 million cap on lifetime and after-death transfers of wealth, many Americans who have not yet created an estate plan are breathing easy. However, as a recent article points out, there is much more to estate planning than death and taxes.
Many estate planners see estate planning as not only a way of creating a plan for death, but also as a way of creating a plan for life. Estate planning serves many functions during a person’s life, including assisting living persons to:
- Own and control their property as they see fit during life
- Plan how they would like to provide for their loved ones should they become physically or mentally disabled
- Ensure that, upon their death, their property goes to the people they have selected, and is distributed according to their preferences
The new wealth transfer cap, therefore, should have only a small impact on the way that people view estate planning. Every person over 18 who is mentally able should have an estate plan in place, regardless of their wealth or situation. Minimally, a good estate plan should include a financial and health care power of attorney, and a will. Those with significant assets should also consider incorporating a trust into their estate plan.
Planning Around Your Child’s Spouse
May 8, 2013
Sometimes, parents of married children feel uneasy about the prospect of their child’s spouse inheriting a portion of that estate. A recent article addresses this common concern.
Parents should not be concerned about the spouses of their siblings inheriting their assets outright. As spouses are not related by blood, they have no legal right to inherit anything. Spouses may only inherit from their in-laws if the in-laws have specifically named them as a beneficiary in their estate plan.
Therefore, if parents have drafted an estate plan, they can simply not include the spouses. If the parents die intestate (without a will), state intestacy statutes leave out non-blood relatives. If a person’s married child predeceases him, the share of assets that would have gone to the child will pass to the next blood relation as though the child never existed.
If your child inherits your assets, then predeceases his spouse, it is likely that the spouse would inherit his or her estate – your assets included. If this is unacceptable, consider setting up a trust to transfer your assets to that child. By setting up a trust, you can provide for distributions to your child during his or her lifetime, then you can direct that the remainder will go to whomever you choose.
Retirement Planning: Start Early
May 1, 2013
According to a recent article, there are two keys to retiring comfortably, planning and getting an early start. As the article explains, planning for retirement should be a lifelong process, rather than a one-time event. The article further offered several tips to aid Americans in creating or adjusting their retirement plans.
The first step is to establish a realistic timeline from now until your anticipated retirement. Those who begin retirement plans in their 20s and 30s should consider that they will likely have a longer time frame than others, and that their funding and variables are apt to change many times during this time frame. According to president of Golden Retirement Advisors, LLC, Jerome Golden, “The first plan you create, whenever that is, is going to be based on a bunch of variables and estimates that as you move closer to retirement, then the estimates get closer to the truth, your savings are real numbers and so on.”
It is also important to estimate what kind of income will be necessary to maintain the style of life you expect upon retirement. Consider whether you will travel the world, or take a more relaxing approach to your retirement. Whatever your dreams are, you will need to be sure that you have enough retirement income to finance them. If you are not sure how much income you will need, a good base number is 70% of your current income.
Finally, you must define a level of risk tolerance in your financial plans for retirement. Consider that investments will fluctuate, purchasing power may decrease, and interest rates may change.
Tax Tips For Soon-To-Be Retirees
April 24, 2013
Tax planning is perhaps one of the most important parts of retirement planning. Failing to plan for taxes in retirement can quickly become a costly mistake. A recent article in USA Today offers several tax planning tips for future retires.
It is vital to consider taxes when considering the size of your retirement savings. According to Robert Fishbein of Prudential Financial, “We look at our assets on a gross basis, which creates a wealth illusion.” Many people overestimate the amount of money they will have for retirement because they forget to calculate the taxes that will be taken out of it when they begin taking withdrawals.
Even for those who are close to retirement, it is important to diversify retirement assets by adding a Roth IRA. According to Fishbein, diversification is smart because it gives retirees tax-planning options and allows them to prepare for future tax increases.
Finally, it may not be wise for retirees to withdraw from social security during their first year of eligibility. If a person works for part of a year, then retires, the earnings may cause their social security to be taxed. People often retire during the middle of the year, potentially sparking this problem, because they choose to retire immediately when they turn 66.
Controlling Assets After Death: The Perpetual Trust
April 17, 2013
In the 17th century, the Duke of Norfolk attempted to maintain power long after his death by drafting an estate plan that passed his titles down to his heirs for countless generations. Not long after his death, however, the House of Lords tore up his will. In doing so, they created the notion that it would be too difficult to allow a person to control property beyond the lives of those who are currently living.
Regardless of this notion, people are still attempting to create estate plans that allow them to maintain control from the grave. One popular tool through which people attempt to achieve this result is the perpetual trust. Perpetual trusts are legal in 29 states; New York may soon become the 30th. As their name suggests, it is unclear how long a perpetual trust may actually last.
According to estate lawyer Kathleen Scallan, “It’s all the rage right now . . . Clients are attracted to the idea of leaving a lasting family legacy.” Scallan notes that clients like perpetuity trusts not only because they can exist for long periods, but also because they allow clients to shield trust assets from creditors and taxation, potentially forever.
Be Sure Your Loved Ones Are Being Cared For
April 10, 2013
Naturally, after putting a parent or loved one in a nursing home, family members and loved ones will want to ensure that their loved one is getting the care that they were promised. A recent article discusses how to make sure that the needs of your loved one are being met.
The first thing you can do to check in on your loved one is to talk with them. As social worker Cornelia Poer explains, “Ask the questions you would want to be asked if the roles were reversed.” These questions may include asking if your loved one is comfortable, feels safe, feels respected, and is worried for any reason. If they have ever utilized the call button, ask them how long it takes for a staff member to respond.
The next place to go for information is the staff members. As your loved one transitions into nursing home living, ask the nurses whether he or she has displayed any signs that he or she is not transitioning smoothly, such as depression. It is also important to ask about your loved one’s daily routine, including when he or she eats and takes medicine.
When transitioning your loved one into a nursing home, be sure that you have given the staff a phone number where they can receive a quick response. Open communication is key, but also remember to be respectful of the staff and their time.