Retirement Savings – A Wobbly Stool

In the past, a comfortable retirement was supposed to be supported (mainly) by three factors (the three-legged stool): Social Security; a pension; and individual retirement savings.

Enter the current era…Social Security is under economic pressure; defined pensions (those that a company offered its employees) are headed for extinction; and personal savings for retirement are almost non-existent for many Americans.

This is indeed a wobbly three-legged stool that people contemplating retirement are perched upon.

Add to the mix is that statistics show that our retirement years are likely to span a much longer period than ever before…people are just living longer.

According to some statistics, less than half of Americans who are approaching retirement have any estimate of how many years their assets will last.  Less than 40% have a plan as to how they will generate additional income, so that they will not outlive their money.

The first step might be to face the realities of the three legged stool.

If you have a decade or more before retirement, you will need a financial plan to increase individual IRA contributions and retirement savings accounts.

If you are closer to retirement, putting a plan in place to stretch your retirement dollars:  by downsizing; delaying retirement; delaying Social Security benefits; finding post-retirement part-time employment are all methods to cope with the realities of maintaining a happy retirement.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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Visit my website:  www.attorneybarbaradalvano.weebly.com for over 270 articles in printable infographics

 

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World Elder Abuse Awareness Day – June 15

Our friends at The National Center on Law and Elder Rights (NCLER) * are calling attention to June 15 as World Elder Abuse Awareness Day (WEAAD).

According to the NCLER website:    “Since 2006, the United Nations has sponsored WEAAD, noting that it “represents the one day in the year when the whole world voices its opposition to the abuse and suffering inflicted to some of our older generations.”

Also currently available on the NCLER website for elder advocates: A Free Webinar on June 20: “Assisting Older Homeowners After a Natural Disaster” – (Registration required)

Some of the recent calls to action of the NCLER include:

> Protecting the elderly from “robo calls” – older adults are often targets of scams and fraudulent offers via telephone

> Preventing older adults from becoming victims of payday loans, which often place our most vulnerable population in a “dangerous cycle of debt.”

> New Mortgage Servicing Rules Protect Surviving Spouses and Heirs

Read more about the work of the NCLER on their website.

* The National Center on Law and Elder Rights (NCLER) is a national resource center for the legal services and aging and disability networks, focused on the legal rights of older adults.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

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Protecting Digital Data

There has been recent ‘buzz’ in estate planning about making sure that a person’s digital/electronic data is maintained under an estate plan.

One of the better definitions of digital data that I found  – a digital asset can have value, can be owned, but has no physical presence.

However, there is also electronic data that has no intrinsic value, other than ‘sentimental’ value, for example a family photograph or vacation video.

If you have not read your estate plan recently, then it may be time to review the plan and make sure that your “electronic estate” is managed according to your wishes.

Some planners have even considered the option of having an ‘electronic estate trustee’ (separate from any other trustee) who would have the ability to navigate the complex digital information landscape, including its privacy laws; have the capability of using technology and be trusted with the authority to access all digital data.

If you think that you do not have digital/electronic data to protect, you might want to consider that many people retain various Passwords: to their banking; investments; cryptocurrency; social websites; email accounts; online payment accounts; reward programs; internet purchase sites..the list goes on.

There is accumulation of data on computer hard drives and on smartphones.

There is electronic data stored ‘in the cloud’.

Individuals retain digital photo albums; manuscripts and music.

Some of the data has distinct financial value, other data can have sentimental value to beneficiaries.

If a person is deceased or incapacitated, who among their trusted individuals would have access to the stored information.  Would that trusted person have appropriate authority to utilize the data and the knowledge to access it?

The person who would be entrusted with accessing digital/electronic data within your estate plan:

  1. Must know that such accounts exist- This means making and keeping records up-to-date as part of your estate planning process
  2. Know the rules – Some rewards programs are transferable, some are not. Some sites allow for third party access, some do not
  3. Most sites are password protected – this means keeping track of passwords and their changes
  4. Different types of accounts have different rules regarding log-on and ownership. Those rules may change as the legal issues of fiduciary responsibility over digital assets evolve.
  5. Crytocurrency accounts – have different access requirements. A trustee would need to know what is required.
  6. Probate – may not necessarily consider all digital accounts (some probate codes are silent on digital assets)

In addition, there are issues of how to delete digital data and accounts, which is in continuing review.  For example, some social accounts do allow for the ‘memorialization’ of accounts and some do not.

Some government legislation covering digital assets is encompassed in the Stored Communications Act (SCA) and the Electronic Communications Privacy Act (ECPA)

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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Inheriting the Debt of Your Parents

Yet another article from Nerd Wallet was interesting enough to share with my readers.

“When your parents die broke” by Liz Weston. (Nerd Wallet, March 15, 2018)  explains why the debt of your parents may not be your debt. (The article was actually picked up by The Associated Press.)

To put things into perspective – “Nearly half of seniors die owning less than $10,000 in financial assets, according to a 2012 study for the National Bureau of Economic Research… Meanwhile, debt among older Americans is soaring.”

Follow the link to read the entire brief article – https://wtop.com/living/2018/03/when-your-parents-die-broke/

When a person dies owing more than their estate is worth, the term is an ‘insolvent estate” – the opposite of a solvent estate.

An ‘insolvent estate’ in simple terms means that there is not enough money left in a deceased person’s estate to pay all creditors.  Note the emphasis on the word ALL.  Perhaps there are funds to pay SOME of the creditors.  In that situation there is a priority, a hierarchy (or pecking order) for creditors.  Some creditors will be paid before others.

To give an example, in many circumstances the charges of a funeral home have priority over a credit card company’s  claims.  (In Colorado the hierarchy of claims is determined by the Colorado Probate Code)

The executor/personal representative of the estate then determines who gets paid and in what order.

How do estates become insolvent?  One of the common reasons of insolvency is huge medical debt.  To use a very simple example – If a parent had an estate valued at a total of $100,000, but there are medical debts of $50,000; credit card debt of $30,000, and an outstanding loan debt of $25,000 – the estate could be defined as insolvent. There is not enough money in the entire estate to pay all creditors (debts).

But keep in mind that the legal rules for debt of one’s spouse are very different from the legal rules regarding the debt of one’s parents.

It is beyond the scope of this article to define all the issues of dealing with an insolvent estate.

If you are dealing with an insolvent estate, consult an attorney if you think you may have problems with the probate process in your state.  They can advise you about the legal issues of an insolvent estate.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

 Please read my full Disclaimer and How I Can Help You

Visit my website:  www.attorneybarbaradalvano.weebly.com for over 270 articles and printable infographics

 

 

The State of Retiree Finances

Many of my readers know that I often quote from the research of the Center for Retirement Research at Boston College.  One of the reasons that I recommend the articles is that although they are based on research protocols, the articles are easy to read and to apply in certain life situations.

Each research brief is often accompanied with graphics and charts to emphasize key points.

The Center puts their research ‘briefs’ into useful perspective.  It is an institution doing excellent research into the retirement issues of today.

Our friends at the Center for Retirement Research have again come up with an excellent piece of research about how current retirees are coping with their financial obligations.

The research brief is titled: WILL THE FINANCIAL FRAGILITY OF RETIREES INCREASE?  By Steven A. Sass. (February, 2018)

While the picture is not ‘rosy’ for current retirees, the bottom line is that current retirees are coping better than future retirees will be able to cope.  “While most of today’s elderly seem able to withstand shocks, changes in the retirement landscape suggest that future retirees will face more difficulty…”

About 80% of a retiree’s income is spent on basics such as food, healthcare, housing.  The biggest jump in expenditure for those over 75 is in healthcare.  There is an excellent graphic/table in the full pdf. format of the 6 page research brief/article that shows the percentile changes between the over and under 75 age groups of retirees.

The article notes that: “The two major shocks that hit the elderly today are a spike in medical expenses and a sharp drop in income upon becoming a widow.” And …”The study found that health declines were a clear predictor of (financial) hardship.”

There will be, for future retirees, a growing reliance on savings versus the social security system and retirement plans. – called “the drawdown challenge”.

One conclusion of the research: “Downsizing is the most effective way to reduce fixed expenses and could also increase the household’s financial assets.”

I recommend the 6 pages of the research brief/article to those who are concerned with what the future retiree landscape will look like.

 Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website – www.attorneybarbaradalvano.weebly.com for over 250 articles and printable infographics

From College Tuition to Wind Farms

I have written many previous articles about fraud committed against the elderly.  Some of the archived articles appear in my website (see below) under:  Elder fraud industry, Elder fraud protection, Consumer fraud protection.

The reason that a Squared Away * article caught my eye was because of the matter of “trust.”  The trust that a senior individual (or anyone for that matter) has in their financial (and legal) adviser.

The Squared Away article titled:  Cautionary Tale of Defrauding the Elderly (February 8, 2018)  is a sad saga of broken trust between senior individuals and their financial advisers.

From fraudulent college tuition; to diverted funds; to failed wind farms; to inflated fees, it is a truly disturbing pattern of fraud committed against a vulnerable part of our society.

As the article states:  “Retired people with nest eggs can be an enticing target for scam artists…”

And more worrisome is that financial fraud against the elderly is on the rise.

The warnings should be heeded, not only by retired people and those who take care of the interests of the elderly, but also by all professionals holding fiduciary responsibility.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website – www.attorneybarbaradalvano.weebly.com for over 250 articles and printable infographics

* Squared Away is the blog of the Center for Retirement Research of Boston College http://www.squaredawayblog.bc.edu

Our Tax Freedom Day This Year

I have annually posted about Tax Freedom Day here in the U.S. – which is the approximated day calculated when Americans as a whole have worked enough to pay the nation’s tax burden.

In 2018, Tax Freedom Day fell on April 19, which was exactly 109 days into the 2018 year.

In very general terms (mathematicians and economists out there please do not hold me accountable for the calculation!) – the calculation takes into account all the federal, state, and local taxes that are due and divides that figure by the nation’s income.   Individual as well as payroll, sales and excise, corporate and property taxes are also taken into account.

To put it another way…Every dollar that is officially considered income by the government is counted, and every payment to the government that is officially considered a tax is counted.

For complexity, there are various other tax freedom day calculations available and each state could have their own “freedom” day.

By the way, Colorado’s tax freedom day fell on April 16, 2018.

And different countries have different tax freedom days.  For example, the citizens of the Czech Republic have to wait until June 23, 2018 for their day, thus working for 174 days to pay all of their taxes.

In 2017 the Tax Freedom for Americans fell on April 23 and in 2016 the date was April 24.

According to the site that keeps track of tax freedom day – taxfoundation.org – “In 2018, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of $5.2 trillion, or 30 percent of the nation’s income.”

If you are interested in the methodology of the calculation, visit the website.

As an American, if you felt a slight ‘lift’ to your shoulders on April 19 this year, it may have been the relief from the nation’s tax burden on Tax Freedom Day.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website:  www.attorneybarbaradalvano.weebly.com for over 270 articles and printable infographics

Spring Is In The Air

Spring is in the air and ’tis the time of year when one’s thoughts turn to love… and marriage.

There are probably more weddings planned in the spring than any other season. According to some statistics, the months of May and June have the most weddings.

And if you don’t think that marriage is a ‘big business’- it is estimated that $72 Billion per year is spent on weddings in the United States (the average cost of a wedding being $20,000).

So, before you plan the big date, there is something less romantic you may consider.

Having a frank discussion with your ‘beloved’ about finances might not be on the list of your wedding planner, but should be on yours.

The discussion about money is particularly important if this is your second (or third, or more) marriage.

I wrote an article about “To Do Before I Do” that covered some of the aspects of things to consider prior to marriage.  There is also the article “The good pre-nup” in my website archives. (www.attorneybarbaradalvano.weebly.com)

I will add a few more hints toward getting your marriage off to a good start.  Granted, talking about finances is a difficult topic, particularly with a potential spouse.  But it is important to your future life together.

  1. Have frank discussions with your spouse-to-be about lifestyle expectations, children, children from prior marriage(s), and finances.
  2. Update your will and your estate plan. One idea may be to have an appointment with an estate planning attorney and use that as a ‘platform’ for the questions you both have.
  3. Consider a pre-nup, particularly if this is a second marriage. Often, both partners bring to a marriage different financial issues and assets. For those close to retirement, the pre-nup might be useful.

There is also the possibility of post-nup agreements, but such post-nup agreements (similar to a pre-nup, but agreed upon after a marriage) may not be the best option.

Remember, it is advised that both partners have different legal advisors for the pre-nup.

4. Talk specifically about debt, including co-signatures either of you may have made on loans and other debt instruments, including college loans. Remember, debt includes credit card debt.

5. If there is a family business, the discussions about finances are critical prior to a marriage.

6. Talk taxes – things will change after marriage, your tax status may change. Make sure both partners do not carry over IRS debt issues in the marriage.  If there are liens against property, that should be disclosed.

  1. Clean up your credit rating and credit score. If one partner has an extremely low credit score, it could impact things like getting a good future mortgage rate or any loan application.

8. Review specifically your beneficiary forms and pension documents. Consider the laws of the state where you will be living with regard to inheritance.

None of the above is as much fun as planning your wedding venue, flowers, and honeymoon.

But planning ahead could be critical for your future life together.

Working to Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website – www.attorneybarbaradalvano.weebly.com for over 250 articles and printable infographics

 

‘Tis the Season for Moving

In many areas of the country, the real estate market heats up in the Spring.  People often consider making a home move at this time of year and I came across an article that may help you with estimating moving costs.  (I have also written articles about moving, either locally or internationally, under my website’s Archive section titled ‘Relocation’  on http://www.attorneybarbaradalvano.weebly.com)

The website Zillow.com is known to both home buyers and home sellers for information about what is happening in their real estate market.  But did you know that Zillow also offers 570 pages of articles to inform both buyers and sellers on many topics?

One recent article of particular interest in this “moving” season…

How Much Does It Cost to Move” by Mary Boone, March 23, 2018 on the Zillow site under their newsletter “Porchlight” (located in the drop down menu).

A quick read of the article will give you a good basis of how to assess the potential costs of your move. There is also mention of  moving company agreements.

I remind my readers that a moving company agreement is a legal document, not just a piece of paper.  Read it carefully, particularly the areas that discuss insurance coverage for your valuables.

Other articles that might whet your appetite to visit the Zillow site:

“How To Handle Long Distance House Hunting”

“Should You Renovate Your Home or Sell?”

“4 Surprising Things That May Increase How Much Your Home is Worth?”

Interested?  Then you can receive free updates of articles from the Zillow website. And FREE is good!

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

 Please read my full Disclaimer and How I Can Help You

Visit my website:  www.attorneybarbaradalvano.weebly.com for over 270 articles and printable infographics

 

On The Topic of Banks

You either love your banking experience…or you hate it.  Perhaps you don’t really care about the experience…as long as the ATM works!

For those consumers who want to know how their bank ‘stacks up”….Forbes has created a list of the 20 Best & Worst Banks for 2018.  Want to see if your bank made the list?

You can get the free Forbes report through their media website, but you may need to subscribe to the newsletter. (Forbes.com)

The report may offer a surprise…”America’s 10 Strongest Banks Are NOT Our Nation’s 10 Largest” writes Forbes.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website – www.attorneybarbaradalvano.weebly.com for over 270 articles and printable infographics