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These Retirement Errors Could Cost You and Your Kids

Planning ahead for retirement is something you’ve probably been doing for a long time. However, many people are plodding along with their retirement plans without realizing that some mistakes could be costing them and their children in a big way.

Here are the ten biggest mistakes you might be making with your retirement plan that could force your children to have to step in and take care of you:

No clear investment plan, or a plan that’s based on a “buy and hope” strategy
Too much of your own company or employer’s stock
Aiming for an “average” amount in your accounts
Still paying the bills for an adult child’s regular needs or lifestyle
No established plan for your healthcare expenses in retirement
Excessive debt and no plans to pay it down
No spending plan for your current expenses or your future budget
You’re taking too much out of your retirement plan early
Your only retirement plan is a dedication to continue working to fund your needs
No plan or insurance in place to deal with long-term care needs

As you can see from this list, most mistakes have to do with not having a contingency plan. Just one long-term care event or accident could leave you unable to work and also coping with costly medical expenses. For someone who planned to be working and very healthy throughout all their retirement, this plan exposes you to a lot of risks if even just one accident occurs. Developing a disability or cognitive problem could present even more serious issues.

Along with comprehensive retirement planning, it’s important to think about your legacy and your estate plan. Consulting with an experienced Massachusetts estate planning lawyer is critical.

How Will You Spend Your Time in Retirement: Tips for Planning

The answer to when is the appropriate age to retire is not easy for anyone to answer, but one of the most important things to consider as you evaluate this question is how you intend to spend your days. This will have a significant impact on how much money you will need and can help you target an age most appropriate for you.

As you attempt to figure out an ideal retirement age, think about how you’ll be spending your days not working. Will you be keeping busy at home? Or will you grow frustrated and restless without entertainment and travel? If you are concerned that you will not be able to fill your days successfully, you may wish to wait a couple of extra years to save enough money to sustain that lifestyle. If you are the type of person who finds themselves bored easily, you may even wish to postpone your retirement age even if you already have a substantial nest egg.

Too many retirees fall victim to depression, so working longer helps to serve as a social outlet and gives you additional motivation to wake up every single morning. It might make sense to delay your retirement age even if you don’t necessarily need the money.

This can give you additional assets to include in your estate plan and leave behind a greater legacy for your loved ones. If you intend to leave behind retirement assets that you do not expect to leave to your family members, it is an ideal situation to discuss with an experienced estate planning lawyer as soon as possible.

New Study Shares that Baby Boomers Do Not Feel the Economy has Recovered From Financial Crisis

Baby boomers are one of the biggest sections of society considering the estate planning and retirement planning process. According to a new study published by Bankers Life Center for a Secure Retirement, baby boomers have a lack of trust in institutions that has led to a permanent financial problem for many of them.

Ten years after the financial crisis started in 2007, only 2% of baby boomers with median incomes felt that the economy had completely recovered. This has required many boomers to adjust their retirement expectations. Although the middle-income boomers who participated in the study still indicated that they plan to retire, the crisis has forced them to reconsider their expectations for what their retirement will actually look like.

One important consideration in this is adjusting your estate planning documents and considering long term care insurance to help with any additional health costs that may emerge suddenly after an accident or diagnosis. The assets you may have set aside for your loved ones may need to evaluated carefully if you need help with nursing home care, for example. How your retirement assets affect your ability to qualify for Medicaid is another crucial conversation you will want to have with your estate planning attorney.

The latest report conducted in the study indicated that up to 84% of boomers in the median income range took a minimum of one step to adjust their spending behavior after the recent financial crisis. To learn more about the estate planning process and how it can work hand in hand with retirement planning, consult an experienced estate planning lawyer today.

Nursing Homes Replacing Hospitals for Primary Senior Care

We always hear about the rising number of Americans who turn to hospitals (particularly Emergency Rooms) as their primary source of healthcare. Likewise, we hear a lot about the constantly rising costs of nursing homes in America — especially here in Massachusetts and throughout New England.

I was struck, then, by a recent New York Times article that makes a surprising report: senior citizens are increasingly less reliant on hospitals for healthcare, as nursing homes are able to step up to the plate in their place.

Why the shift? Here are a few factors:

Healthcare Mobility — As the Times notes, many complex procedures like blood transfusions used to require several days spent in an outpatient hospital wing. These days, those same procedures can practically be done on the go. Nursing homes can give their residents a quick lift to a nearby medical center for a transfusion in a matter of hours. All of the follow-up care, including IV therapy, can be done back in the resident’s own room.

Risk of Injury and Infection— Despite popular belief, the hospital isn’t the safest place for the elderly. Falls, bedsores, depression, and hospital-acquired infections are all dangerous and increasingly common risks of any hospital stay. While those perils are present in nursing homes too, the rates of occurrence tend to be a little lower there.

Costs — Nursing homes are extremely expensive, but so are hospitals. Regularly relying on hospital clinics or Emergency Rooms can prove even more financially taxing than the monthly nursing home bill. That fact has insurance companies, Medicare, and Medicaid urging nursing homes to ramp up their roster of hospital-like services.

Of course, there’s still a lot of work to be done. Amazingly, many of today’s nursing homes still don’t staff registered nurses 24/7, and not all homes offer the same easy access to nearby outpatient clinics.

It is encouraging to know, though, that alternative approaches to senior care are developing quickly. Within the next few years, we may see seniors spend less and less time in hospitals, and that should hopefully translate to financial savings, fewer infections, and a lower rate of hospital-related injury.

Naturally, though, paying for nursing home care remains a real challenge, regardless of how much additional time gets spent in a hospital. Fortunately, proactive planning can make those costs much more manageable. To that end, my office can be of some help. Give me a call today to talk about setting up a plan that makes sense for you.

How to Talk About Finances and the Future During the Holidays

Turkey, tinsel, and… taxes?

http://gty.im/88749768

Believe it or not, holiday gatherings are widely recommended as ideal times to talk about important, future-focused concerns with your loved ones.

Sound too awkward? You’re not alone. Anxieties run high this time of year as it is, and no one wants to drag spirits down or flare tempers up by flirting with potentially sensitive subject matter.

For those of you who share these concerns, allow me to recommend an article I came across in The Wall Street Journal. “Yes, Virginia,” they write, “it’s possible to talk about family finances over the holidays and not ruin dinner.”

These are, after all, discussions you have to have eventually. Given that inevitability, it really is best to do it with everyone under one roof. And it doesn’t even have to feel like pulling teeth. On the contrary, “the talk” might leave you all feeling like a million bucks.

The Journal provides some great tips on broaching the subject, easing into it, including kids, and keeping the overall tone uplifting and light.

Consider making this holiday one to remember by having an empowering conversation that could benefit your family for decades to come.

Have the happiest of holidays, everyone!

Boomers Should Be Saving

I recently came across an article on AARP.com that I thought would be important for baby boomers to read.

Retirement (Photo credit: Tax Credits)

The message: keep saving for retirement.

The article noted that many people who could be saving are not doing so.

One study cited in the article showed only one-third of people aged 50 and older have not saved for retirement. But it is never too late.

An important method for saving for retirement is taking advantage of employer savings plans such as 401(k) plans, according to the story.

The article also suggested taking advantage of financial seminars such as those run by the AARP Foundation. The study showed those who took the courses were able to cut spending and pay down debt better than those who had not taken such courses.

Another study cited in the article showed more disturbing news: American teens are less financially literate than youths from other nations.

Maybe our children are following in our footsteps. That may not be such a good thing.

Should You Ever Borrow Money From Your 401(k)?

I recently came across an interesting article in USA Today about borrowing money from retirement accounts, and whether it is ever a good idea to do so. The article cited some surprising statistics. For example, a new study by TIAA-CREF showed that one in three Americans with a retirement plan have taken out a loan from the savings in their plan. Among those who did, 43% have taken out two or more loans. Another recent study indicated that one in five 401(k) participants who were eligible for loans had outstanding balances against their 401(k) accounts in 2012.

(Photo credit: StockMonkeys.com)

Why are so many people adopting this strategy? According to Vanguard, 46% borrowed to pay debt; 35% to cover emergency expenses; 26% for the purchase of a home or to pay for a home renovation; 24% to pay bills following the loss of a job; 20% to pay for education; and 15% to pay for special events, such as a family vacation or wedding.

So, is borrowing against your retirement plan ever a good idea? According to the article, experts say it might be advisable to borrow to pay down debt or cope with emergency expenses, but you have to be fully aware of what you are doing and make sure that you are taking the money from the right place. “There are certainly situations where it is best to take out a 401(k) loan, for instance, when there is a medical emergency and a large expenditure on medical care cannot be covered using other assets,” says John Beshears, a Harvard University professor and co-author of a study on the subject, The Availability and Utilization of 401(k) Loans.

Others say 401(k) loans can be part of a sound financial plan. “I think loans, when used properly, can be a very important part of a successful plan,” says Mark Davis, a senior vice president with CAPTRUST Financial Advisors in Westlake Village, Calif. He adds that as long as the loans are repaid and participants continue to fully fund the plan while paying back the loan, there may not be a big downside.

Of course, loans such as these are not exactly “free.” Borrowers miss out on the capital gains they would have accrued, and loan repayments are subject to double taxation. And, if you are faced with the prospect of personal bankruptcy, it is advisable to keep the money in the 401(k) since it will be safe from creditors.

To learn more about this topic and read the full article, I invite you to click here.

Eyes Wide Open—What You Need To Know Before Remarrying In Retirement

Several weeks ago, I posted an article about senior dating and some of the resources available to help seniors who are divorced or widowed find a new partner. The article also mentioned that for various reasons, many seniors who do meet that special someone are reluctant to get remarried. But what if you do want to marry your new love? A recent article in USA Today addresses some of the issues couples need to consider before walking down the aisle again.

(Photo credit: Wikipedia)

Discuss each of your finances openly
Does your prospective spouse carry a lot of debt? Have either of you co-signed loans to help children from previous marriages? Questions like these need be asked before the marriage, not after. Many people are embarrassed about their debt and reluctant to discuss it. You should also review one another’s credit reports.

Don’t forget to change your beneficiaries
If you have a life insurance policy, an annuity, an IRA, or any other retirement account, review each of them and make sure beneficiary designations reflect your new relationship.

Think about getting a prenuptial agreement
It’s not the most romantic topic to bring up with your new love, but virtually every senior considering remarriage should have one.

Think twice before adding your new spouse’s name to your home
This is often one of the most contentious issues in second and third marriages. Children from previous marriages can feel particularly threatened by the potential loss of the family home. Instead of adding your new spouse’s name to the home, it is more prudent to give him or her occupancy rights.

If you are a senior considering remarriage, I invite you to contact me to discuss issues like these and any other concerns you might have.

Learn From These 6 Estate Planning Mistakes of NFL Players

In honor of the Big Game, a recent article explains six of the estate planning mistakes that NFL players commonly make. While not everyone will earn as much as an NFL star, the average American can still benefit from avoiding these mistakes in their own lives.

(Photo credit: Wikipedia)

1. Living in the present, instead of planning for the future: NFL players earn most of their lifetime income in their 20s and 30s, and then retire early. As a result, it is especially important for them to plan for retirement early.

2. Choosing the wrong professional adviser: NFL players sometimes make the mistake of choosing a family member to help with financial planning instead of an estate planning professional. This can be a mistake if the family member is not experience in managing large quantities of assets.

3. Spending beyond their means: It is important to spend based on the cash you have available, not the salary total that appears in a contract.

4. Not maintaining liquid funds: Maintaining liquid funds to cover living expenses in case of an emergency is especially important for NFL players, who could experience a career ending injury at any moment.

5. Leaving assets exposed: Assets can be protected from creditors through trusts, incorporating limited liability entities, and under any state laws that protects specific assets, such as a person’s home.

6. Failing to see the bigger picture: Because NFL players retire earlier than most Americans, it is especially important for them to consider how they will live during retirement. Plans for a second career or to starting a business should be reflected in the estate plan.

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