Building Legacies that Last Estate Planning and Elder Law

So, You Think You Can Retire?

Group of people clapping and smiling with one another


“The most common need of those preparing to step into retirement isn’t what you think: it’s confirmation that all the hard work, discipline and saving was enough.”

People getting ready to retire really want to be reassured that they did a good job and were good stewards of their money, according to Investopedia’s article “Determining If You’re Prepared for Retirement.” They also want confirmation that the retirement assets they’ve built over a lifetime will last for the rest of their lives and that they’ll be able to live in comfort.

Commonly asked questions are:

  • Am I saving enough, or did I save enough?
  • Can I retire, or did I make a mistake and retire too early?
  • Were my investment decisions the right ones?
  • How am I doing, compared to my peers?

The answers to these questions are important, but like so many things in life, there is no “one-size-fits-all” answer. Just because you’ve accumulated six, seven or even eight figure retirement savings, doesn’t mean you’ve “won” the retirement game. In this case, size doesn’t always matter.

One of the key factors to a successful retirement is your income to expense ratio. Can you generate enough income from all sources, without drawing down too much from your portfolio?

If you have a small to non-existent portfolio, but you have a good-sized pension, maybe you don’t need such a big portfolio. If you live very simply, it’s possible that Social Security benefits and modest withdrawals from your investments might take care of your needs.

Remember that just because you have a large portfolio, does not mean you don’t risk running out of money during retirement. If you spend lavishly on first-class vacations, drive luxury cars and live in a house that costs a fortune to run, you can easily get yourself into a tight spot.

Take a long hard look at all sources of income to determine how long your portfolio will last. You should include Social Security, pensions, retirement accounts and any other sources of income. It is important to figure out how much income you’ll need on annual and monthly basis. You’ll then have a better sense of whether you are prepared for retirement.

Don’t forget to prepare an estate plan, unless you have already done so. A will, power of attorney, healthcare directive and other documents will help protect you and your loved ones. You need an estate plan, regardless of the size of your portfolio. A qualified estate planning attorney can help you prepare this part of your retirement.

Resource: Investopedia (July 19, 2018) Determining If You’re Prepared for Retirement”

 

Think 61 is Your Golden Retirement Number? Think Again

Elderly couple enjoying retirement

“There's nothing wrong with looking forward to retirement and even planning an early exit from the workforce.  However, Americans may be a bit misguided, when it comes to this particular milestone.”

If you work for a living, chances are good you like to daydream about what your life will be like during retirement. We all do it and so do younger workers who have yet to pay their dues.  However, according to a survey from Bankrate, as reported in The Motley Fool’s article titled “Americans’ Ideal Retirement Age–and Why It’s Not Realistic,” adults across the board think that 61 is the ideal age to retire.  Is that realistic?

Unless you can live without Social Security during retirement, 61 is not your magic number. Most American retirees can’t live on Social Security alone and those benefits have a major impact on the ability of most retirees to keep up with their bills.  However, eligibility doesn’t start until age 62. The people in the survey either didn’t know they can’t collect Social Security until they turn 62 or they are assuming they can get by without it.

The average Social Security benefit check is just more than $1,400, which adds up to about $17,000 a year. If you are among those who have little or no money set aside for retirement, that’s a lifeline.

A large number of working Americans are way behind in their retirement savings. It’s estimated that around 42% have fewer than $10,000 set aside for the future. How will they retire at all, much less retire at age 61?

Even if you can manage to keep working until age 62, filing at that age has its own issues. Today’s workers need to wait until their Full Retirement Age, or FRA, in Social Security’s terms, to receive their full monthly benefit. The difference is large enough to make it worth the wait.

Assume that your full retirement age is 67, but you retire at age 62. Instead of $1,400, your monthly benefit would be $980.

However, what if you are among those who really want to retire at 61? You’ll need to have started with saving and investing for retirement at a relatively young age and have been willing to take a very aggressive position in your investments. If you started at age 26, with a goal of retiring at age 61, and you are employed by a company with an employee sponsored 401(k), you’d have had to contribute $1,500 a month for thirty-five years to amass enough money—if your investments were earning a steady 7%.

If retirement is around the corner, one thing you can do is make sure your estate plan is in place. Therefore, whatever assets you have, will be distributed according to your wishes. Make sure you have also taken care of having a power of attorney and healthcare directive in place. Speak with an estate planning attorney to make sure these documents are prepared correctly.

Reference: The Motley Fool (July 18, 2018) Americans’ Ideal Retirement Age–and Why It’s Not Realistic”

 

Social Security Can Be Fixed

MP900390083 (1) People who are opposed to the Social Security system claim that it is about to go broke and disappear soon. That is not true.

Social Security opponents and opponents of government spending in general, like to make the claim that Social Security is going to go broke or bankrupt. They then normally use this piece of information to get people to support cuts to Social Security benefits or increases to the age of retirement.

They are using  recent government reporst as ammunition to suggest that if something is not done, then Social Security will go broke in 2022. The problem is the claim is not true, as Forbes discusses in "Fake News: Why Social Security Isn't Going Broke."

Social Security currently takes in more money every year than it pays out in benefits. That has created a surplus in the Social Security Trust Fund. What will happen in 2022 is that, due to demographic changes, Social Security will start paying out more than it takes in. However, since there is a surplus, current benefits will not have to change. The surplus can be spent down. It will not run out until 2034. When that happens, Social Security will not disappear. Instead benefits will be cut slightly, as the program will only be able to pay out as much money as it takes in.

This means is that politicians have a lot of time to fix Social Security, if they are willing to do so. They do not need to raise the retirement age or cut benefits. They can also fix things by increasing funding for the program.

Reference: Forbes (June 18, 2018) "Fake News: Why Social Security Isn't Going Broke."

 

The Disappearance of Pensions

MP900439295[1]Most American workers are no longer offered a pension by their employers. That leaves many wondering if they will ever have enough money to retire.

Pension plans have a long history in the U.S.  However, they did not become standard until the middle of the 20th century.

Labor unions advocated for pensions and companies agreed to offer them to their employees.

Even non-union employees benefited from this, as employers made pensions a standard part of their benefit packages.

In the 1970s, employers began wondering how they were going to be able to pay for everything they had promised their employees. The life expectancy of Americans was rising and that threw pension plans' actuarial tables off.

 As a result, many companies did away with pension plans for their employees and switched to 401(k) plans as the Washington Post discusses in "'I hope I can quit working in a few years': A preview of the U.S. without pensions."

401(k)s were supposed to make it easier for people to retire.

The idea was that employees could have their own investment account. They could put their money into the accounts and many employers matched the amount put in.

The system was entirely voluntary. That is where the problem came in.

Over the years, most people have not put nearly enough into their accounts. As a result, they do not have enough money to retire.

That leaves many elderly people now working long after they had hoped to leave the workforce, because Social Security does not provide enough money to live on.

Reference: Washington Post (Dec. 23, 2017) "'I hope I can quit working in a few years': A preview of the U.S. without pensions."

 

Entitlement Reform Might Be Next

It is looking increasingly likely that next year Congress will take up reform to entitlement programs. Bigstock-Elder-Couple-With-Bills-3557267[1]

The U.S. has some political junkies who follow everything that goes on in Washington D.C. all the time. However, for the vast majority of Americans, politics is preferably just done every four years.

Presidential elections are held, a winner is declared, and most Americans go on with their lives not thinking too much about politics.

Things are different now. None of us can escape political talk. It is everywhere.

Many people would probably appreciate a break next year, until October before the mid-term election campaigns heat up.

But it appears that Republicans may propose cuts to some of the most popular government programs, according to Financial Advisor in "GOP Laying Groundwork To Cut Future Social Security, Medicare, Welfare Outlays."

Republicans are talking about making cuts to programs for the elderly, such as Social Security and Medicare. It is likely that any proposed cuts would be delayed and not effect current retirees.  However, they will still be controversial for Americans who plan to rely on the programs in the future.

Cutting Social Security and Medicare is considered to be like touching the third rail in American politics. These are not popular proposals. Going through with this plan, guarantees that we will not be getting a relief from politics in 2018.

Reference: Financial Advisor (Dec. 6, 2017) "GOP Laying Groundwork To Cut Future Social Security, Medicare, Welfare Outlays."

 

Getting the Most out of Social Security

Piggy Bank

 

Social Security benefits are of critical importance to most retired Americans. The benefits often account for 50% of the income retired people have, if not more.

It means that getting the most out of those benefits is extremely important.

Everyone knows that the amount of benefits they will receive depends on when they start taking the benefits. Many people choose to figure out for themselves how to maximize their benefits.

Many do so to their own detriment, according to CNBC in "Bungling this retirement decision could cost you $300,000."

It has been estimated that every year, Americans receive $10 billion less in Social Security benefits than if they maximized their benefits. Some people leave as much as $300,000 in lifetime benefits on the table, without even knowing it.

This is the result of people not choosing to retire at the right time and also not thinking about things like spousal benefits that might be a good option for them.

It is not a good idea to make Social Security decisions on your own or to rely on government employees to tell you how to get your maximum benefit.

You need to talk to experts when making these decisions.

An elder law attorney in your area can help you decide how to get the most out of Social Security. Visit with one before you make any decisions that you cannot change later.

Reference: CNBC (Nov. 14, 2017) "Bungling this retirement decision could cost you $300,000."

Estate Planning Attorney

 

 

Getting the Most out of Social Security

Piggy Bank

 

Social Security benefits are of critical importance to most retired Americans. The benefits often account for 50% of the income retired people have, if not more.

It means that getting the most out of those benefits is extremely important.

Everyone knows that the amount of benefits they will receive depends on when they start taking the benefits. Many people choose to figure out for themselves how to maximize their benefits.

Many do so to their own detriment, according to CNBC in "Bungling this retirement decision could cost you $300,000."

It has been estimated that every year, Americans receive $10 billion less in Social Security benefits than if they maximized their benefits. Some people leave as much as $300,000 in lifetime benefits on the table, without even knowing it.

This is the result of people not choosing to retire at the right time and also not thinking about things like spousal benefits that might be a good option for them.

It is not a good idea to make Social Security decisions on your own or to rely on government employees to tell you how to get your maximum benefit.

You need to talk to experts when making these decisions.

An elder law attorney in your area can help you decide how to get the most out of Social Security. Visit with one before you make any decisions that you cannot change later.

Reference: CNBC (Nov. 14, 2017) "Bungling this retirement decision could cost you $300,000."

Estate Planning Attorney

 

 

Getting the Most out of Social Security

Piggy Bank

 

Social Security benefits are of critical importance to most retired Americans. The benefits often account for 50% of the income retired people have, if not more.

It means that getting the most out of those benefits is extremely important.

Everyone knows that the amount of benefits they will receive depends on when they start taking the benefits. Many people choose to figure out for themselves how to maximize their benefits.

Many do so to their own detriment, according to CNBC in "Bungling this retirement decision could cost you $300,000."

It has been estimated that every year, Americans receive $10 billion less in Social Security benefits than if they maximized their benefits. Some people leave as much as $300,000 in lifetime benefits on the table, without even knowing it.

This is the result of people not choosing to retire at the right time and also not thinking about things like spousal benefits that might be a good option for them.

It is not a good idea to make Social Security decisions on your own or to rely on government employees to tell you how to get your maximum benefit.

You need to talk to experts when making these decisions.

An elder law attorney in your area can help you decide how to get the most out of Social Security. Visit with one before you make any decisions that you cannot change later.

Reference: CNBC (Nov. 14, 2017) "Bungling this retirement decision could cost you $300,000."

Estate Planning Attorney

 

 

Prove You are Alive

4fjHtYHdRlSemICxjjBu_IMG_8424There is a master government list that has your name and other identifying information on it. When you pass away, that will be recorded and your death will be noted on another master list.

These lists are maintained so the government and private businesses can know when you are eligible for services and when your eligibility ends. For example, the government uses the lists to know when you can receive Social Security and when to stop sending benefits to you.

Human error sometimes causes problems with the list.

People who are still alive are accidentally put on the master list of the deceased.

That can cause some problems, but usually not as bad as what one Spanish woman is going through as
Fox News reported in "Spanish woman wants to open up grave to prove she's alive."

Juana Escudero has been deceased for seven years. Well, not really, she's actually still alive.

The Spanish government just thinks she's dead, because seven years ago someone with her exact same
name and place of birth was recorded as deceased.

As a result, Escudero has not been eligible to receive government services, including going to a doctor,
for the last seven years. Her efforts to convince the government that she is alive, have so far been
fruitless.

She's asking the government to open the grave of the person they declared dead, so she can prove it is
not her.

In the U.S., it is easier to fix these clerical errors, but it still is not always easy.



If it happens to you, then it is a good idea to get an attorney to help you.

Reference: Fox News (Sep. 27, 2017) "Spanish woman wants to open up grave to prove she's alive."

Estate Attorney

Social Security Representative Payee Program

Social SecurityOne of the many problems which families of the elderly have to face, is that the elderly person can lose the ability to handle his or her own finances.

Through no fault of their own, they forget what bills they need to pay.
They give money to people to whom they should not give it.
They are susceptible to scammers.

Some of these problems can be handled with a general durable power of attorney. However, many families worry that because the Social Security check still comes in the name of an elderly person with dementia, the money might still be lost.

However, that worry is unnecessary, since Social Security has a program that can help in these situations, as Forbes discusses in "The Social Security Program For People With Dementia."
The program is the Social Security Representative Payee Program.

It allows someone else to receive the benefit checks of a Social Security payee as a representative.

It is a little known program that has been around for almost as long as Social Security itself.

For families that know about it and use the program, it can provide a great relief.

Unfortunately, it can be a bit of a challenge if one wants to sign up.

It requires a lot of paperwork to be submitted.

For that reason, people who are interested in using the program, might want to first consult with an elder law attorney.

Reference: Forbes (Sep. 26, 2017) "The Social Security Program For People With Dementia."

 

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