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

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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

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* 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

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‘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

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Choosing Your Executor Wisely

When most of us think about whom we would choose to take care of our affairs when we are gone, many will choose a family member to act as executor of their estate.  But is that the wisest decision?

First, let’s review some of the basic elements of what it means to be an executor.

In brief – The executor is the person named/appointed in a will who takes on the legal responsibility to take care of the deceased person’s financial obligations and manage the deceased’s estate under the terms of the will.

The executor, under the terms of the will, distributes the deceased person’s assets and arranges for payment of debts and obligations.

If an estate is a complicated one, the duties of an executor can take longer than a year.

The court can remove a person as an executor if it can be shown that the person is not capable or competent of performing the required duties.

Back to the question of who might be selected as an executor…One might have a family member, a close friend or a professional executor.  There are issues related to any of these choices.

A family member may be too close and suffering from extended grief following the death to handle the affairs that need to be taken care of immediately.  There could also be family conflicts that preclude choosing a particular family member over any other family. If an executor and co-executor are named, the two individuals may have conflicting approaches to financial management issues.

Another concern might be that a family member is not close geographically; might not have the time to spend on executor duties; might travel extensively; or not have the knowledge base or be mature enough to handle some tasks.

If a friend is chosen as an executor there could be issues of whom might ‘gain’ from the will, or whether the friend might be influenced by their spouse; whether they are geographically close enough; or whether they have the appropriate knowledge base.  (Note – an executor may be named in the will to receive assets.)

Having a professional executor might be a possible solution, but there are costs related to such professional services.

There is the possibility of have an executor and a co-executor.  Although this might be a possible solution, consider whether the two individuals ‘get along’ and have the same values and approaches to handling the duties of executor.

In any situation, it is important to assign a ‘backup’ in the event the executor that you have named cannot take on or complete the tasks.

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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Thanks for the “Likes”

Thanks to my readers for all the many recent “Likes” on my Word Press page.

I really appreciate knowing that readers enjoy a certain topic.

The topic that seemed to touch a cord with many was… disabled veterans and student loan debt. (find the article on my website – www.attorneybarbaradalvano.weebly.com archived under military families; student loans

As I often write, part of my practice is in the Colorado Springs, home to many military families. Whenever any topic passes my computer screen that I think can be useful to our military, I pass it on.

Some readers have also inquired why I do not ‘dig deeper’ into a topic.  I often write that “it is beyond the scope of this article…” and I truly mean that.

At time a topic is both deep and broad.  Rather than offering legal advice that might not be appropriate to a given situation, I offer up other sites where the reader can begin to gather and research more information.

Beware – Sometimes, the internet is not always the best source of legal help. In that case, time and money spent with a legal professional can prevent mistakes…mistakes that can haunt you later.

A case in point is taking a legal document from a free website.  Sure, it is free, and I LIKE free! But that free legal document might not be appropriate to a more complex situation; or to a person’s individual circumstances.

On the other hand, that free legal document can be a starting point and a basis for an individual to begin to think about their own unique issues.

I will continue to offer articles that are on current topics and advise my readers to delve further into any issue.

Again, thanks for the LIKES…they spur me on.

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

Student Loan Help for Our Disabled Veterans

As many of you know, part of my practice is in Colorado Springs, where there are a large number of military families.  Whenever an article passes my computer that can help a military family, I like to pass it on.

This is one article that could help disabled veterans (and their families) who are struggling under the burden of debt from student loan obligations.

Here is the Consumer Finance Protection Bureau (CFPB)  link:

https://www.consumerfinance.gov/about-us/blog/help-here-people-severe-disabilities-struggling-student-loans/?eType=EmailBlastContent&eId=df197fc4-5565-4296-ad57-31a7dd41e620 k:

There are several issues about student loan debt:

First, since the beginning of the federal student loan program those individuals who were considered total and permanently disabled could have their federal student loans forgiven.  Note, that this is for federal student loans and not private loans.

Second, there was the possibility of having a loan forgiven due to death or total disability.

Third,  Previously,  if/when the debt was forgiven- the portion of the ‘forgiven’ debt was considered ‘income’ and therefore was taxable.

NOW>>>>Effective, January 1, 2018 due to ‘death or total permanent disability borrowers whose student loans are forgiven NO LONGER HAVE TO PAY FEDERAL INCOME TAXES ON THOSE FORGIVEN LOANS.

Thus, Now when the student loan debt is forgiven, there will be no detrimental tax consequences.

According to some data, more than 800,000 severely disabled veterans are unemployable due to a service-connected disability.

Many of these do not know that their student loan debt could be forgiven.  Also, for those veterans, if/when the debt is forgiven, the ‘forgiven’ portion of the debt is no longer considered as taxable income

Veterans with student loan debt should contact their Department of Veterans Affairs for more information and if their student loan debt is forgiven, consult with a tax advisor.

It is beyond the scope of this article to address each individual circumstances with regard to specific student loan debt.

The data is from the Consumer Financial Protection Bureau…..“There are new student loan protections in place in 2018.  Tens of thousands of disabled veterans and hundreds of thousands of people living with severe disabilities are now eligible for new student loan protections starting this year.”

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

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Colorado In Second Place

According to Wallet Hub (www.wallethub.com) ,Colorado is now in second place in the race for “best state to retire”.

It now ranks one step behind……..(drumroll please)…….Florida!

Also, in the 2018 sweepstakes, according to Wallet Hub’s listing of “2018 Healthiest and Unhealthiest Cities in America”..  Denver Colorado made it into the top ten of healthiest cities (with a ranking of #10).

The ranking data is done according to several factors: availability of healthcare; (healthy) food; fitness; and green space.

Congratulations to Colorado!

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