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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

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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

 

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

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

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

Tax Season Anxiety

“Tis the season to be anxious…”

Tax season is upon us.  Maybe you are one of the lucky few who filed early and already received their refund.  For the rest of Americans, tax time can be stressful and produce anxiety.  And scammers prey upon our anxieties.

An excellent article came across my desk from Fidelity Viewpoints about protecting personal identity and specific frauds surrounding tax filing.  The link is below:

https://www.fidelity.com/viewpoints/personal-finance/preventing-identity-theft?ccsource=email_weekly

The Fidelity Viewpoints article gives a synopsis of some of the frauds and tricks used by scammers during tax season.  The elderly are particularly vulnerable.

If you believe that you or a loved one has been a victim of theft of identity, file a Form 14019 Identity Theft Affidavit with the IRS.  The form is available on the IRS website.

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

Divorce and Your Personal Finances

Our thanks to Rose Swanger, CFPA, RICP, CDFA for her enlightening article titled:  How to Achieve Financial Goals During a Divorce. 

 The complete text appeared in Investopedia (November 22, 2017) and covered many aspects of how to manage your personal finances and budget prior to, during and after a divorce.

A piece of advice from Ms. Swanger of particular importance is to utilize the services of a Certified Divorce Financial Analyst.

Many reasons are offered to support the use of a professional in that particular area of financial planning if you are considering a divorce.

Another item of note, which I have often expressed in my articles…Do not sign any document without competent legal advice, particularly documents involving divorce proceedings.

There are archived articles about Divorce and Estate Planning on my website – http://www.attorneybarbaradalvano.weebly.com

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 200 articles and printable infographics

Beware The State Estate Tax

An excellent article written by Ashlea Ebeling, Forbes Staff (Dec.21,2017) (Forbes/Personal Finance/#RetireWell) is titled:  “Where Not To Die in 2018”.

There are states that do not ‘follow’ the federal estate tax exclusions amount.

Also, in 2026, the federal estate tax exclusion will revert to the $5 million level (barring future legislation).

And beware individual states with a separate state inheritance tax!

No matter which state you live in – the best advice is to keep your estate plan up-to-date — if taxes matter to you.

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

The Scoop on Health Savings Accounts

As we move into 2018, those who are self-employed (or those with a high deductible health plan) continue to be concerned about their healthcare costs.

Individuals who have health savings accounts (and particularly those who do not) will benefit from the article by our friends at Investopedia.  The article is titled:  “How to Use Your HSA for Retirement” and is an excellent synopsis of the advantages of health savings accounts (HSA’s).

A quote from the article: “Thanks to its unique tax advantages, a Health Savings Account may be the best retirement option you never knew you had.”

One terrific advantage:  Your HSA contributions are tax-deductible before you turn 65 and become eligible for Medicare.

Also, keep in mind that some states have different tax laws regarding taxation of HSA accounts. (Consult your tax advisor)

And don’t forget those ‘catch-up’ contributions.. If you have an HSA and you are 55 or older, you can make an extra “catch-up” contribution of $1,000 per year and a spouse who is 55 or older can do the same… however each of you must have their own HSA account.

If you qualify for an HSA, decide to take advantage of this “best retirement option”.

It is not often that I highly recommend an article to my readers…but this is one time that I do.

Here is the entire link for the Investopedia article:   https://www.investopedia.com/articles/personal-finance/091615/how-use-your-hsa-retirement.asp#ixzz55yDX2eus

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

 

What’s In One Word?

An interesting and cogent article came across the computer that I wanted to share with my readers.  First, I would like to make it clear that I am not a disability claims lawyer. I am an estate planning lawyer.  However, disability insurance does factor into a person’s estate planning.  In previous articles I have noted that a long term disability can ‘trigger’ major changes/adjustments to a person’s estate planning goals.

With that said, I also handle contracts for my clients.  One might suggest that any long term disability (LTD) policy is similar to a ‘business’ contract.  For the most part and simply put; both are written agreements and are binding and both are usually detailed.

In any contract or policy –  the ‘devil can be in the details’ and even one word can make a difference.  An example is the difference between “own” and “any” in a long term disability (LTD) policy.  Yes, that one word can make an enormous difference to a disability claim.

For an excellent synopsis explaining that difference, I refer readers to an article by Gordon Gibb * titled: “LTD Denial: Understanding “Own Occupation” vs “Any Occupation”” (published December 6, 2017. Washington, D.C.)

As Gibbs clarifies – the standard of “any occupation” …Under this standard, total disability is based upon the inability to perform work in any occupation.”

My note – The emphasis is on that single word ANY.

Long term disability insurance is a specialized field of law and for those with a long term disability the best alternative might be to consult with a lawyer in the field of LTD policies when there are questions about continuing long term disability policy coverage.

* “Gordon Gibb is a writer, broadcaster and media specialist who has contributed (to LawyersandSettlements) since 2007. His specialty is getting to the heart of an issue quickly, and complex subjects are more easily understood in his hands. His work has appeared in major international magazines and newspapers, and his two books on Nobel Peace Prize winner Lester B. Pearson were published in 2006 and 2015 respectively…”www.gordongibb.com (The Voice of Versatility) and you can follow him on Facebook.

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

 

 

Endless Disruption

The term endless disruption is most often seen in articles about technology and the changes that occur (sometimes seemingly overnight) in this digital age. Continuous changes in personal life events, external forces and new legislation can also lead to a type of endless disruption for an individual’s plans for the future.

A recent article about how organizations can learn (and adapt to change) caught my attention.  In his article: Learning How To Learn by Willie Pietersen, the author suggests that the most successful companies instill learning as a habit and embrace change.  Those corporations that cannot recognize change; accept change and respond to it are doomed to fail.

Success means dealing with (and embracing) endless disruption.

Estate Planning is a segment of the law that deals with constant change.  The lives of my clients are ever-changing – births, deaths, marriages, divorces; remarriages, formation and dissolution of businesses; fortunes being made, lost or inherited; properties/assets being acquired or disposed of; clients’ changing health situations;  economies that falter; changes in tax laws; job changes and relocations- all are life events in a state of flux.

Changes in legislation and in digital technology are also impacting the estate planning process. (see my articles about digital wills)

Change is scary; information overload is rampant and the rate of change in today’s society is rapid and disruptive.  Taking no action in the face of change and uncertainty is thought to be a ‘safe’ alternative.  But if one stays ‘frozen’ in the face of uncertainty, no decisions are made; change happens around us and we have not adapted to the forces that are affecting our lives.

We also have relinquished the ability to positively respond when the need arises.

Apple co-founder Steve Woznik was quoted (2015):  “…(appoint) someone to look out for what is coming, for what might disrupt you own business…(a Chief Disruption Officer of sorts)”

Interestingly, my tag line – written several years ago – Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World – seems particularly an apt one – to cope with the potential endless disruption of my client’s plans.

Yes, the world is in a state of flux, and Estate Planning is an area of law well-suited to respond to the many and continuous changes happening in a client’s life and in the world around them.

Taking the first step and talking to an estate planning lawyer could help ‘unfreeze’ your decision- making.

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