Archive for the ‘Retirement’ Category

A recent study reveals some interesting insights into how baby boomers and centenarians differ with regards to their attitudes, opinions and lifestyle choices.

As the lifespan of the average American continues to increase (it currently ranges from 76 years for men, to 81 years for women, according to the Centers for Disease Control and Prevention) more and more people will live to be old enough to have their 100th birthdays announced by Willard Scott on the Today Show.

Experts from the U.S. Census Bureau estimate that, in the year 2050, there will be over 600,000 centenarians living in America alone.

What makes 100-year-olds different from the rest of us?

For the past eight years the 100@100 organization has selected 100 people who’ve celebrated their 100th birthday, and asks them a series of questions about their daily lives, as well as their opinions on issues ranging from the state of the nation, to what to look for in a life partner.

This year, the survey was expanded to include a group of baby boomers ranging in age from 60 to 65-years-old. The purpose of adding this younger generation was to see where the thoughts and ideas of the two groups diverged.

Here are 12 interesting comparisons of baby boomers and centenarians, uncovered in the 100@100 survey:

1. Did you (or do you) expect to live to be 100 years old? Staying alive for more than a century caught most centenarians by surprise (29 percent believed that they would see their 100th birthday) and would also come a shock to the majority of baby boomers (only 1 in 5 feel they will live to be 100-years-old).
2. Do you regularly use the Internet? Unsurprisingly, only 18 percent of those older than 100 regularly access the Internet, compared with a whopping 82 percent of boomers. In both groups, those who did use the web were most likely to engage in either online search activities or email communication.
3. What is your favorite physical activity? Both boomers and their 100-year-old counterparts were most likely to get their blood pumping with a good walk or hike (73 percent and 55 percent, respectively).
4. Should you look for a life partner with similar interests? Many centenarians believe that having a life partner who shares your hobbies, interests and political views is a key to maintaining a good relationship, while boomers appear to place little value on sharing similar attitudes with a significant other. Forty percent on 100-year-olds emphasized the importance of having the same hobbies and interests, and 31 percent said sharing political opinions was ideal, compared to 22 and 19 percent of boomers, respectively.
5. Do you wish you had taken more risks in life? Neither group seemed to feel that they should’ve lived their lives on the edge a little more. Only 12 percent of boomers and 5 percent of centenarians said they wished they had taken more risks.

You can read more by clicking here.

These days, IRA’s often  make up  a substantial part of your  estate.  Yet one of the common mistakes I see is that  people assume that their will or trust automatically dictates who will receive their retirement accounts.

In fact, who will receive your  IRA (or other type of retirement account) depends entirely on who is  named as beneficiaries. Often people name beneficiaries when they open an account and then forget all about it. Another common mistake is not naming a contingent beneficiary who will inherit the IRA if  all of the primary beneficiaries are deceased.

Life insurance death benefits also go to the people you name as your beneficiaries on the application or change of beneficiary form.

Not long along I met with a new client, who told me her sad story about how she and her brother hadn’t spoken to each other in years. The reason? Her father had  purchased a life insurance policy many years ago while she was still a minor and because of that  named her brother as the sole beneficiary. He had a will but never updated his beneficiary designations.

Clearly naming primary beneficiaries and contingent beneficiaries is a very important decision. Your decision can also have important tax implications. IRA’s are wonderful savings vehicles but require careful planning if you want your beneficiaries to be able to utilize the tax benefits of their inherited accounts.

It is also important to consult an estate planning attorney for assistance if you have young children, if you are in a second (or third) marriage, or if there are any other family issues that you have questions about. An IRA Retirement Trust is a good option for some beneficiaries.

Another common mistake I see is not having any contingent beneficiaries – or naming your estate as the beneficiary. This can create a large income tax bill.

You should always list both primary and contingent beneficiaries and you should  review those beneficiary designations on an annual basis.

I’ve seen situations where a young adult opens an IRA in his 20′s and lists his  parents as the primary beneficiaries. Years and possibly a decade passes and he forgets to re-visit the designation. As a  result, the IRA went to his parents instead of  his wife and children.

The easy way to address this situation is to stay on top of your current beneficiary designations. If you have IRA’s scattered at multiple companies, you need to take the time to contact the custodians of each  those accounts and check the current beneficiary status. You could decide to use this as an opportunity to  consolidate your accounts in one place. Then it’ll be easier to review and check them to make sure they are in line with your estate plan wishes.

Here’s a follow up to our blog post from two weeks ago where Tobe Gerard shared her experience to help you understand if long term care insurance is right for you. You can read our earlier blog post here.

In this post Tobe gives us guidance on how much boomers can expect to pay for long term care.

Q. Regarding your rule of thumb “that you should be able to comfortably fit this item into your budget,” can you elaborate why? I know several people who are making budgetary sacrifices to pay for a robust long-term care insurance policy that will enable them to receive high quality care that they can select when the time comes.

Tobe: The main concern for anyone who purchases a policy that takes up an inappropriate portion of his/her budget is that if financial challenges are encountered down the road, he/she might be forced to let the policy lapse; as a result, the advantage of having purchased the coverage in the first place would be lost.

Insurance companies suggest that you don’t spend more than 6-7% of your net income on long-term care insurance. Additionally, I believe that not only should you not spend more than 6-7% of your income on long-term care insurance while you are working, but, more importantly, long-term care insurance shouldn’t be projected to be more than 6-7% of your overall expenses in retirement. Obviously, because of unique situations, this rule of thumb may not apply. In most of these unique situations, a policyholder’s long-term care insurance policy is being paid for by someone else (e.g., a trust fund, employer, etc.).

As far as the purchase of a “robust policy,” it’s important to say that all of us have very different financial profiles when it comes to our assets and income. Some people prefer to self-insure more of the cost of long-term care because they have significant assets and income, and they wouldn’t mind using some of these if/when the time comes. These are the people who usually have high deductibles on their other insurance policies (e.g., automobile and homeowner). Because some people don’t have significant assets and income, they may feel that even a rudimentary policy will provide a buffer before they would need to tap into their retirement portfolio. Additionally, some people are quite affluent and just want the best policy that money can buy, and they don’t worry about the cost whatsoever.

Oftentimes, we find that people who put other things aside to purchase a “robust policy” have particular reasons for doing so. Perhaps they have witnessed firsthand a long-term care claim where there was no long-term care insurance in place and they have seen how it has devastated their family, both emotionally and financially. Furthermore, some may choose to put other things aside to purchase a “robust policy” if they fear they may potentially have some kind of cognitive impairment in the future.

You can read the full article here.

About 32 million Americans live by themselves, a number that has increased for more than six decades.  The largest jump is happening now among seniors — another sign that the influence of Baby Boomers (the oldest turned 66 this year) is far from fading.

Almost 28% of the nation’s 115 million households were living solo in 2011 compared with 26% in 2000, according to Census data. About 10% of all households were people 65 and over living alone, a segment that grew 7% since 2005.

“Over time, a greater number of singletons will be elderly,” says Eric Klinenberg, sociology professor at New York University and author of Going Solo: The Extraordinary Rise and Surprising Appeal of Living Alone.

The 7.9 million older women who live alone now make up almost half of all women living solo. The share of men 65 and over who live alone is smaller (3.3 million) but grew faster than women since 2005.

People are paying attention to these numbers and looking at the fact that loneliness is all too common these days. I recently saw an article that listed some practical steps to take if:

1. Don’t confuse loneliness with solitude. Loneliness feels draining, distracting, and upsetting; desired solitude feels peaceful, creative, restorative.
2. Getting involved with groups or community organization that help others is a good cure for loneliness. Nurturing activities like tutoring, teaching, caring for animals also help to alleviate loneliness.
3. Keep in mind that to avoid loneliness, many people need a social circle and also a more intimate connection.
4. Work hard to get your sleep. One of the most common indicators of loneliness is broken sleep — taking a long time to fall asleep, waking frequently, and feeling sleepy during the day. Sleep deprivation, under any circumstances, brings down people’s moods, makes them more likely to get sick, and dampens their energy, so it’s important to tackle this issue.
5. Make connections with old friends and be proactive and initiate plans to attend a move, schedule a dinner date or go to a new museum.
6. Take some time to get in touch with what’s missing in your life. Is it travel to a special, a new skill you think you’d enjoy learning or even writing your memoirs. The more clearly you see what’s lacking, the more clearly you’ll see possible solutions.
7. Avoid getting too steeped in negative emotions like loneliness, envy and guilt. Just use them as signs that something needs to change. The pain of loneliness can prod you to connect with other people.

Most financial advisors focus on helping clients build up a nest egg for a comfortable retirement, but is that what people really want? Yes, but not primarily.

According to a report from UBS Wealth Management Americas, long-term care is respondents’ greatest personal financial concern.

That is, investors were asked, “How worried are you about each of the following regarding your personal finances?” The most common response was “being able to afford healthcare and the support I need in my old age,” which had 26% of respondents “highly worried.” Down the line, in fifth place, was “having enough money set aside for retirement,” with 14% of investors highly worried about their retirement funds.

According to UBS, the financial services industry has traditionally emphasized helping clients plan for retirement: accumulating enough assets so that they could have a steady income stream in retirement, to provide a comfortable lifestyle without outliving their money. Now, many clients may have other priorities.

In recent years, the UBS report states, “the big unknown impacting those later years in life has become healthcare and long-term care costs.” Steep expenses stemming from a major health problem could cause a retiree to run.

In answer to the same “how worried are you” question, related fears ranked third and fourth. “Major family health problem occurring,” had 17% of respondents highly worried while “having someone to care for me in my old age,” was a key concern for 16%. (“The financial situation of children/grandchildren” was the second-most cited financial fear, at 18%.)

For financial advisors, understanding these concerns may help to retain clients and attract new ones. Investing for retirement remains crucial for clients, but many of them increasingly look at their retirement funds as necessary for possible medical bills and long-term care. Moreover, UBS noted that younger investors (age 25–49) are more worried about these issues than age 60 respondents, perhaps because the former are beginning to see the financial impact as their parents and other loved ones grow older.

To read more click here.