Wednesday, May 29, 2013

Age Deadlines for Retirement Planning

Even if you are only in your 40's or younger, there are certain deadlines everyone needs to know in order to get the most from their retirement planning.  You do not want to miss any of these deadlines if you can possibly avoid it.  For your convenience, U.S. News and World Report recently compiled some dates, and I have added a few additional ones.  I suggest that everyone should print and save these dates in order to make sure they do not miss the opportunity to take advantage of them.  Nothing is more frustrating than being forced to pay a penalty because you missed a deadline.

Age Deadlines You Should Know:

50 - You can begin to put more tax deferred income into your 401(k) or your IRA than younger adults.  Currently, at age 50 you can begin putting $23,000 into 401(k) plans or the federal government's Thrift Savings Plan, and you can put $6,500 into your IRA.  The government tweaks the exact amount from time to time so, if you are younger than 50, keep an eye open to see what the amount is when you turn 50.  You want to be sure you are saving the maximum allowable amount in your tax deferred retirement savings accounts.

In addition, if you work as a public-safety employee and retire or leave your job, at age 50 you can withdraw money from your retirement plans without paying a 10 percent penalty.  You will still have to pay income taxes on the withdrawal.

55 - At this age, the rest of us can remove money from a 401 (k) that is associated with a job from which we have been laid off and not have to pay the 10 percent penalty.  This also applies if we quit or retire from a job.  You will still have to pay income taxes on the withdrawal.

59 1/2 -  You can receive distributions from any of your traditional IRA's and 401(k)s without a 10 percent penalty but, you guessed it, you will have to pay the income taxes.

60 - Widows and widowers can begin to collect their Social Security benefits based on the earnings of a deceased spouse.  However, their benefits will be substantially reduced, so this is not a wise idea if there is any way they can postpone claiming their benefits for at least several more years.

62 - Anyone who is eligible can begin to collect their Social Security benefits, although this is not a wise decision for most people.  First of all, your benefits will be permanently reduced by about 30 percent.  Second, if you are still working and you earn more than about $15,000 a year, you will lose part or all of your benefits. Of course, if you have lost your job and run out of unemployment benefits, or you find yourself in a similar difficult situation, you may need to take your benefits early.  Just remember that it is almost always better to postpone taking Social Security as long as possible, if you can.

65 - You become eligible for Medicare.  DON'T MISS THIS DEADLINE. Be sure to contact the Social Security Administration to sign up even if you are still covered by a policy on your job.  You can start this process as early as three months before you turn 65 and this is particularly important if you want the coverage to start as soon as you are 65.  If you wait longer than four months after you turn 65, your premiums could be permanently increased by 10 percent for every year that you delayed completing the proper paperwork.  Your best bet is to get in touch with Medicare before you turn 65 so that you do not have to pay a penalty later in life, when you may be living on a limited fixed income.  

66 - If you were born between 1943 and 1954, this is your full retirement age.  This means you can collect your full Social Security benefits.  In addition, you can still work without losing any of your benefits, if you choose to.  Ideally, this is the youngest age for anyone to collect their benefits although, as I mentioned earlier, there are times when people simply cannot wait this long.

66 to 67 - The full retirement age for people who were born between 1955 and 1959 will occur sometime between their 66th and 67th birthday.

67 - If you were born in 1960 or later, your full retirement age is 67.

70 - If you wait to collect your Social Security benefits until you are 70, you will increase your benefits by about 8 percent for every year you delayed after your full retirement age.  Don't wait any longer than age 70, however, because you will not get any increase in your benefits.

70 1/2 - If you have a traditional IRA or 401(k), you will need to begin making withdrawals and paying income tax on the withdrawals.  There are a lot of rules involving this and, if you mess up, you can pay as much as a 50 percent penalty!  Be sure to discuss this with your financial adviser and the company that manages your retirement account so that you handle everything correctly.  On the other hand, if your retirement savings are in a Roth IRA, you do not need to begin making withdrawals and you will not need to pay income taxes on your withdrawals.  You may want to read my recent blog post, "Traditional IRA vs Roth IRA" for more details about these two types of retirement accounts.

If you are researching ideas about how to retire someday, check out my index articles, below.  Each one contains an introduction plus links to other articles that pertain to that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement


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Saturday, May 25, 2013

Save Money on Taxes After Retirement

Are you planning your dream retirement, but worried about how to afford the best lifestyle for your money? One way to make your pension and Social Security benefits go further is to live in a state that does not take a big bite out of them.  Fortunately, there are several states that do not require you to pay income taxes on these benefits and they are scattered throughout the United States.  The magazine, U.S. News and World Report, recently published a list of these states so that retirees can decide which one will work best for them.  They also included information about 2008 property tax rates and sales tax rates in each of these states.  As always, I have added my own comments,  since there are other factors that retirees will need to consider.

States with Low Taxes

Alabama - This state does not tax your Social Security benefits or pensions, and it only has a 4 percent sales tax. In addition, many people pay less than $400 a year in property taxes.  The low tax rates are especially appealing when you also consider the fact that, like most other southern states, Alabama has a low cost of living, making it very appealing to many retirees.  In addition, the weather in Alabama can be quite mild in the winter, although it gets hot in the summer.  You may want to look along the coast of the Gulf of Mexico for an relaxing, low cost retirement community.

Alaska - In this state, you will pay no income taxes and no sales taxes at all.  However, median property taxes are almost $2,400 a year.  There are other financial benefits to living in Alaska, as well.  One very popular financial windfall is the fact that, instead of paying income taxes, residents actually get an annual rebate from the state because of the large amount of revenue the state collects from the oil industry.  When my husband and I took a tour of Alaska, many of the tour bus drivers and gift shop employees were retirees who only worked during the three months of summer.  They were often very enthusiastic about sharing their stories of how much they loved living in this magnificent state for people who enjoy the great outdoors.  However, winters are very long and dark and not everyone will be happy living there during retirement.  In addition, if the rest of your family lives in the lower states, it will not be cheap or easy to visit them. Relocating here is not a decision to be made quickly based on one summer visit.

Florida - One reason so many people have traditionally retired here is because there is no state income taxes for anyone and only a 6 percent sales tax rate.  The median property taxes are a little under $1,900 a year.  Home prices are very low in Florida, too, with many homes in over-55 communities available for under $150,000, and it is not uncommon to find homes for under $100,000.  Florida also has the advantage of pleasant year around weather, which makes it appealing to many people who move there from states that are further north. This state will certainly continue to be popular with retirees in the coming decades.  Many beach communities have become quite expensive, although it is possible to find desirable communities that are less than a 30 minute drive to the beach.

Mississippi - This is another state with no taxes on either your Social Security benefits or pensions, and the average property taxes are under $500 a year.  However, there is a 7 percent state sales tax.  Mississippi is next door to Alabama, and there is a lot of similarity between those two states in climate and the low cost of living.  Again, you may be able to find an affordable and desirable retirement community within a short drive of the Gulf of Mexico, which could be very appealing to people who have always dreamed of a beach town retirement.

Nevada - Because of the money they raise from gambling, this state has no state income taxes for anyone.  The median property taxes are under $1,800 a year and the state sales tax is 6.85 percent.  While the property taxes and sales taxes are higher than the southern states, many people enjoy the fun Nevada lifestyle.  Nevada also has several quite diverse climates, including the desert climate around Las Vegas and the mountainous regions surrounding Reno and Lake Tahoe.  Many Californias who are looking for a less expensive place to live after they retire have been attracted to Nevada.  During the recent recession, Nevada was one of the states that was particularly hard hit.  As a result, property values in many areas are quite affordable.

New Hampshire - In this state, you will pay no income taxes on most forms of retirement income, although residents do pay taxes on their interest and dividend income.  This could be a significant cost for someone who is living primarily off of their investments, so watch out!  In addition, New Hampshire has exceptionally high property taxes, but no sales tax.  Whether or not living in this state will work for you may depend on your sources of retirement income and whether or not you can afford to pay the higher than average living expenses.  To be honest, although this state is included on the U.S. News and World Report list because of the lack of income taxes, other expenses may offset this savings, making it a much less affordable place to live than some of the other states on this list.

Pennsylvania - This state charges no income taxes on either Social Security benefits or your pension.  However, the median property taxes are over $2,200 and the sales tax rate is 6 percent.  One of our daughters lives in the Poconos, in a charming community where a lot of New Yorkers have retired.  While Pennsylvania may not be the cheapest place in the US to retire, it is considered a bargain by many New Yorkers who want to stay close to Manhattan, but in a more affordable location.  If the state of Pennsylvania interests you, check out my blog post from a couple of months ago called, "Retire to Friendly Lancaster County, Pennsylvania."  This particular county has several affordable retirement communities, and has become very popular with people who want to retire in the Northeast.

South Dakota - No state income taxes are paid by anyone who lives in South Dakota.  In addition, the median property tax is under $1,600 and the sales tax rate is only 4 percent.  However, like Alaska, the winter weather in South Dakota can be quite severe, so this state is not for everyone.  If you are already living in one of the northern states, though, South Dakota may be an affordable alternative if you want to stay in the area but keep your expenses low during retirement.  If you are not familiar with the area, I suggest that you rent for a while before you decide if you want to live there permanently.

Tennessee - Like New Hampshire, there are no income taxes on most forms of income, with the exception of dividends and interest.  In addition, median property taxes are under $1000 a year.  The sales tax rate, at 7 percent, is slightly higher than some other states.  In addition, Tennessee is further south than several of the other states on this list, particularly New Hampshire, South Dakota, Pennsylvania and Alaska, so the weather will be a bit more temperate ... although you may still get a little snow in the winter.  Property values in many parts of Tennessee are quite affordable, too.  This is a great location for people who wish to stay within driving distance of many of the lower mid-west and southern states.

Texas - This state has been mentioned many times in this blog as a popular retirement location.  There is no income tax for anyone in Texas, and the state sales tax rate is 6.25 percent (although many towns and cities do have additional sales taxes of their own.)  However, property taxes are a little high and cost the median family over $2,300 a year.  Housing prices in many parts of Texas, especially the small towns, are quite affordable.  Some of the areas of Texas that are quite popular with retirees are near Austin (Sun City Texas is only 30 miles from there), as well as along the Gulf of Mexico.   The Texas Gulf Coast is a very affordable region for people who want to retire in a beach community.

Washington State -   There is no income tax in the state of Washington, although the median property taxes amount to over $2,600 a year.  This is one of the highest rates for any of the states mentioned in this article.  The sales tax rate is 6.5 percent.  Many people love to live in the northwestern United States, and a number of retirees have been attracted to the San Juan Islands. We have friends who retired twenty years ago from Texas to Friday's Harbor in the San Juan Islands, and they never regretted the decision.

Wyoming -  This is one more state that does not have an income tax.  Other taxes are quite low, as well.  The median property taxes are not much over $1,000 a year and the state sales tax is a very modest 4 percent.  However, like some of the other states in the Northern U.S., this location may not appeal to everyone.  I worked in Wyoming one summer while I was in college, and we were having snow flurries when I left on the last day of August!  I grew up in Missouri, so I was used to cold winter weather, but this seemed like an early start to winter to me.  In addition, while I was not there during the winter, I heard many stories about blizzards and harsh winter weather.  Many of the people I met owned property in Wyoming but only lived there in the summer.  This is another location where you may want to rent for a year or two first, especially if you are moving there from someplace with a moderate climate.

If one of your biggest financial concerns after retirement is the amount of money that you will lose to income taxes, then the above list should be helpful.  Obviously, which state will be best for you depends on your personal source of retirement income, since a few of these states will take a bite out of your dividends and interest.  In addition, there is a wide range in the amount you might pay in property taxes from state to state, and that could easily more than offset the amount of state income taxes your might pay.  If you plan to purchase a home when you relocate, you will definitely want to take these taxes into consideration.  Choosing the right state for your retirement is dependent on a number of other factors, as well.  For example, if you will be living a long way from your children and grandchildren, you have to factor in the cost of traveling to visit them. 

Wherever you decide to live when you retire, take the time to work up a budget for several different locations.  In this way you will see the big picture and not base your decision solely on one factor, such as state income taxes.

If you would like more information to help with your retirement planning, check out the index articles listed below.  Each one contains an introduction and links to a number of articles on that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

Resource for tax rates:

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Wednesday, May 22, 2013

Lennar, Pulte and Centerline Multigenerational Homes

When I sold real estate in Texas in the 1990's, I occasionally had buyers who were looking for homes with mother-in-law suites or separate living quarters for their retired parents.  In those days, multi-generational homes were more difficult to find.  Often they were simple houses with traditional floorplans that with a small addition added on or a section of the home that had been partitioned off.  Frequently, these additions felt like an afterthought. Sometimes they were poorly adapted to the needs of aging seniors. However, in the years since that time, the demand for these homes has increased significantly and home builders are taking the lead in satisfying the need.

When people looked for mother-in-law suites in the past, their reason was obvious.  They needed a place where their elderly parents could live with them comfortably, while everyone maintained their own privacy.  Today, in addition to needing separate living accommodations for an older generation, a small apartment off the main house may be a blessing if you have adult children who return home frequently to visit. In addition, some people may want separate living quarters if they get a lot of out-of-town visitors.  No matter why you want a multigenerational home, several builders are now offering new designs to meet the demand.

New Home Designs by the PulteGroup

PulteGroup builds a variety of new home communities, not only under the name of Pulte but also as Centex and Del Webb.  They have come up with several designs that will comfortably accommodate an older relative, young adult or visiting guest.  According to an article entitled "New Models for Retirement Living: Sharing a Home With Friends or Family" in the May/June 2013 edition of Where to Retire Magazine, the author indicates that Pulte has even done their own research on this topic.  As a result, this company has learned that about 15 percent of potential buyers who have living parents already have that parent living with them.  About 30 percent of buyers with a living parent eventually expect to share their house with that parent.

Because of this research, Pulte has created a variety of floorplan choices that range from homes with dual master bedrooms to houses with two entirely separate entrances and kitchens.  In other cases, they simply took one of their traditional floorplans, and made the homes a bit larger, especially in the main living areas such as the kitchen and family room, so these houses can comfortably accommodate extra people.

My husband and I have visited one of the Del Webb Sun City models and we were particularly impressed by the Socialite floor plan which contains a small, separate apartment.  The plan is simple. At the front of the house a small wing juts forward toward the street.  It is just large enough for a large room with a private bath and walk-in closet.  This space has both a private entrance from the outside as well as an optional door that leads directly into the bedroom wing of the main house.  The space is large enough that one of our adult daughters, who was single at the time, immediately told us we should move there because she would love to stay in this private apartment off the main house.  (Honestly, I wasn't sure whether or not it would be an advantage to have a place that was so attractive to our adult children!)  However, if one of my elderly parents moved in with us, the place would be ideal. 

Next Gen Models by Lennar Homes

Lennar also has a special line of multigenerational homes that they call their Next Gen models.  These homes have two separate living areas, including a small kitchenette, bedroom, bathroom and living room in the secondary space.  Lennar has built models in Arizona, California and Florida.  This small "home within a home," as they refer to it, provides ideal living space for a family member who will be living with you permanently, as well as guest space for occasional visitors.

Depending on the location, some of these Lennar homes can be surprisingly affordable.  For example, some of their Next Gen homes in Bakersfield, California can be purchased for under $300,000, a reasonable price, especially if two or more generations are sharing the cost.

Generation Y and B Models by Centerline 

Centerline Homes has also developed their own designs for multigenerational homes.  Their Generation Y homes have a separate casita or cottage for adult children who move back home.  The Generation B model is for aging Baby Boomers.  This design contains a private apartment with a kitchenette. This private apartment is connected to the main house in order to make it comfortable and convenient for elderly relatives.  Of course, some aging parents might prefer the separate cottage rather than the apartment in the main house.  Either plan gives you some workable options for multigenerational living.

If you are interested in looking at more options for retirement planning, you may want to read the articles mentioned in the index articles below.  Click on any of these titles and you will find a short introduction to that topic as well as the links to a number of related articles:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

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Sunday, May 19, 2013

How to Fix the Primary Care Doctor Shortage

Many of the people who object to the January, 2014 implementation of the new Affordable Healthcare Act are concerned about possible doctor shortages.  This is a reasonable concern, especially for senior citizens, because a growing number of primary care physicians have already stopped accepting Medicare patients because Medicare doctor reimbursements are lower than the amount that doctors are paid by private insurance companies.  To make matters worse, according to an article entitled "How to Beat the Doctor Shortage" in the March, 2013 AARP Bulletin, more doctors than ever will be retiring in the coming decade.  Half of our country's physicians are over the age of 50. By some estimates, we already have a shortage of about 16,000 primary care doctors, especially pediatricians, internists and family doctors.  One reason for the shortage is because huge student loans force many young medical students to choose more lucrative specialties than family practice.  In other words, they feel that they simply cannot afford to practice general medicine.  When analysts look at these numbers, the situation seems dire, especially now that millions more Americans will soon become insured.

Solutions to the Primary Care Doctor Shortage

One of the lesser known provisions of our new healthcare system is that it will provide for an increase in the number of nurse practitioners and physician's assistants who are already being trained to handle routine health problems treating such as the flu, giving physicals, and supervising diets.  As a result, fewer doctors will be necessary for basic patient care.  The nurse practitioners and physician's assistants are also being trained to recognize when a patient may have a serious problem and should see a family doctor or specialist.

Another approach that is being tried in some medical schools is to shorten the length of time necessary to finish medical school.  In addition to turning out more doctors in less time, these new graduates will also have less student loan debt. 

Other ideas are also being implemented to encourage more medical students to enter general medicine.  For example, the National Health Service Corps will pay off up to $120,000  in student loans if young physicians will go to work in a community clinic, which is where many new patients will be treated in coming years.  Consequently, young medical students will no longer need to become surgeons or specialists just so they can afford to pay off their student debt.

This is an important issue, because a research study by the Institute of Medicine and the National Research Council discovered that U.S. citizens are in poorer health and die younger than people who live in sixteen other nations, including those in Western Europe, Canada and Japan.  If we want to change this trend, our country will need to provide people with easier access to medical care.

Are You Having Trouble Finding a Doctor to Accept Medicare?

Meanwhile, if you are waiting for these new programs to increase your access to medical care, what can you do if you are on Medicare and having difficulty finding a doctor who will accept you?  Go to the website and look for the "Help and Resources" page.  Click on "Find doctors, hospitals and facilities."  You will need to enter your ZIP code.  Once you do, you will see a menu of different medical specialties, including primary care.  A list of general practitioners in your area will be shown, including their contact information.  Jot down the information on two or three and call their offices to make sure they still have openings.  There are still many, many doctors who will accept Medicare payments, so don't get discouraged.

Even if you are not on Medicare, this same list is a great way for anyone to find a list of doctors in their area who may be taking new patients.  You can also call or look up your state medical association online to see if they have a directory of new doctors who are just setting up their practice. Many of these new physicians are eager to find new patients. Your insurance company is also a great resource, as well as urgent care centers, hospitals and community clinics in your area.

If you are interested in learning more about aging and retirement, check out the index articles listed below.   Each one contains additional information as well as links to more articles on that topic.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers

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Wednesday, May 15, 2013

Alternatives to Long Term Care Insurance

As mentioned in my last post, "Will You Qualify for Long Term Care Insurance?" more than half of Baby Boomers and older retirees will not qualify for Long Term Care Insurance.  What will happen to them when they become old and frail?

When my husband and I purchased our LTC insurance, our broker told us that I needed more insurance than my husband because I was likely to out-live him.  He said that in the case of a couple, one spouse will often care for the other right up until the time of death.  Many debilitating diseases can be treated at home, as long as there is a willing caregiver who is able to handle this.  Because of this, the first spouse to become ill may not even need LTC insurance, or may only need it for a relatively short time.  We purchased a policy that would provide care for my husband for four years, while we purchased life-time care for me, beginning 90 days from the time I go into a nursing home or need at-home assistance.  (Medicare pays for the first 90 days of care.)

However, what if you are single or widowed and you do not have long-term care insurance?  What if you are married, but you become too old or frail yourself to physically care for an ill spouse?  What if your ill spouse needs more care than you are able to give?  In these situations, you need to know about your options.

Alternatives to LTC Insurance

According to InsuranceNewsNet, people who have liquid assets that exceed $1.5 million could self-insure themselves.  People with adequate assets should be able to personally cover the cost of either a home healthcare aide or a nursing home, should one become necessary.

At the other extreme, people who have very few assets may also want to self-insure.  Currently, a person who collects less than $30,000 a year in individual Social Security benefits is eligible for Medi-Cal, as long as they do not have very many assets.  In this situation, Medi-Cal will cover the cost of a semi-private room in certain nursing homes, or homecare with community based services.  Medi-Cal also protects a spouse from becoming completely impoverished if the other spouse needs to go into a nursing facility or similar medical institution.  However, there are limits on income, assets and home equity and the numbers are changed from time to time.  You can get more information about current eligibility requirement and benefits in this overview of the Medi-Cal program.

For those who cannot afford to self-insure and do not think they will qualify for Medi-Cal, there are a few other alternatives to traditional long-term care insurance.  The particular option that will work for you depends on whether the reason you cannot obtain a policy is because you cannot afford one or because you cannot get the approval of medical underwriters.

What If You Cannot Afford LTC Insurance?

If your income falls in the middle between being wealthy or low-income, you may wish to try one of these other solutions to help cover the expense if you or your spouse needs long term care.

One approach that may be more affordable than traditional LTC insurance is to purchase a special combo policy that combines both life insurance and LTCI.  With these combo policies, you will get a lower return on the cash value of your life insurance and your death benefit may be cut if you use too much of the LTC benefits.  In addition, you still need medical approval.  Therefore, you can be denied this policy, just like you can be denied a traditional LTC policy.  However, for those who do qualify medically but may be concerned about the cost, this may be a less expensive alternative.  Basically, it gives you the opportunity to take an advance on your life insurance in order to pay for your long-term care.

Your insurance broker may also be able to help you with similar options such as a long-term care rider on your current life insurance policy.   Discuss both of these options with your insurance broker to see if this is an affordable, practical option for you.

What If You Cannot Pass the LTCI Medical Exam?

As mentioned in my previous article, more than half of Americans age 50 and older will not be able to qualify to buy this insurance because they cannot pass the strict medical standards.  This is especially worrisome for these people because those who have a serious medical problem are also the same people who are likely to eventually need care, either in their personal residence or in a nursing home.

One option they have is to purchase an annuity with a long-term care rider.  These riders do not require a medical underwriting, but you need to wait five to seven years until the LTC benefit is available.  In addition, you have to have enough assets to pay for them in advance.  Many annuities can require an upfront premium of $50,000.  You should also know that the benefits are only for a limited time.  However, if you believe this would be helpful to you, contact an investment professional who specializes in annuities. 

Another similar choice is to purchase a medically underwritten immediate annuity which can provide you with a lifetime income stream.  With this type of annuity, your income stream may actually increase if you show that you have coronary artery disease or some other serious illness that is likely to shorten your life.  The reason for this is because the insurance underwriters are betting that your disease will reduce the number of annuity payments they will need to make, therefore each payment can be a bit larger.  This may sound grim, but the truth is that there are actuaries who work for the annuity companies and they base the estimated return on your investment on how long they expect you to live. For people who need to dramatically increase their retirement income in order to cover long-term care, this type of policy can be a helpful solution.  Again, talk to your investment professional and find out what types of annuities they offer.  Discuss with them whether you should put your money in this type of annuity now or wait until you are seriously ill and need the extra income.  If they recommend that you wait until you need this annuity, make sure you put aside the money in a safe account, so that you have it when you need it.

Whether you decide to self-insure your long-term care, rely on Medi-Cal,  purchase a LTC insurance rider on a life insurance policy, or buy an annuity that will cover your future medical expenses, will depend on your personal situation.  You should not make a decision on this without consulting your financial planner, investment professional and insurance broker.  Whatever option you decide is best for you, the purpose of this post is to let you know that you do have options.  Even if you do not qualify for traditional Long Term Care Insurance, you are not helpless.  You can still make a plan regarding the way you will pay for your personal care during the last few years of your life.  It provides peace of mind just knowing what you will do when the time comes, so you do not have to make decisions when you are already in need of help.

Don't Forget About Your Veterans Benefits

Approximately one in three Americans are also eligible to receive some aid from the Veteran's Administration.  There are some specific guidelines to qualify so you may want to read my article:  "Are You Eligible for VA Long Term Care Benefits?"  You may be surprised to find that you qualify, especially if you or your spouse served in the military and a war was going on during that period of time ... even for just ONE day.  The veteran did not have to serve in the war zone, just be in the military at that time.  The application process is complicated and they initially deny benefits to most applicants.  Don't give up!  Get help from an organization like the American Legion or Veterans of Foreign Wars.  You may also be able to hire a consultant to help you.  The effort is well worth it!

Find additional information about your options at:

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Sunday, May 12, 2013

Will You Qualify for Long Term Care Insurance?

A few years ago, when I was in my late 50's and my husband was in his early 60's, we were fortunate enough to be able to purchase Long Term Care Insurance for both of us.  Even though we were healthy at the time, it was still not easy to obtain.  The first company where we applied accepted me, but not my husband.  Disappointed, we consulted with an insurance broker and, on our second attempt, we were both accepted.

Most people are somewhere between the ages of 50 and 75 before they realize that owning LTC insurance could be beneficial.  By that time, it may be too late for many of them to be accepted.  According to the American Association for Long-Term Care Insurance, only about 51% of applicants qualify in their 50's, 42% in their 60's, and 24% in their 70's.  This means that far fewer than half of all people over the age of 50 would be accepted if they applied. If you have tried to get LTC insurance in the past and been turned down, you are definitely not alone.

In fact, the website for this organization has a list of conditions that they say will make it nearly impossible for you to qualify for this insurance.  They are pretty blunt on their site.  They tell you not to even bother to fill out an application if you currently use a walker, wheelchair, crutches, a multi-pronged cane, or need oxygen.

That's just the beginning.  They also say that "it generally won't pay to take the time to request a quote" if you already require assistance with dressing, bathing, feeding or other areas of daily care, including help with grocery shopping, the use of a telephone or the use of transportation. (I wonder if getting confused by a "smartphone" would disqualify someone from LTC insurance?  Better not mention it!)

In addition, they also tell you not to fill out the form if you have a history of certain illnesses.

Illnesses That Automatically Disqualify You for LTC Insurance

Alzheimer's or other types of dementia or memory loss
Cystic Fibrosis
Kidney Failure
Cirrhosis of the Liver
Multiple Sclerosis
Muscular Dystrophy
Post-Polio Syndrome
Sickle Cell Anemia
Systemic Lupus Erythematosus

At the end of this list of illnesses they also say on their site, "If you are not insurable, then we are truly sorry."  Of course, this is small consolation for the more than 50 percent of Baby Boomers who do not qualify for this insurance.

If you do not have any of the illnesses or health problems listed above, it is highly recommended by most retirement planners that you purchase the insurance at the earliest possible time, while you are young enough and healthy enough to qualify, and while you can still get the lowest possible premium.

Other Health Conditions That May Disqualify You

On the other hand, just because you do not have one of the health conditions that was listed above, you are not guaranteed to be accepted.  I have also known people who had problems obtaining LTC insurance because they had diabetes, a history of heart problems, or because they had been treated for cancer.  Since these illnesses are not specifically mentioned on the above list, it may be that each carrier of LTC insurance has difference standards regarding these health issues.  In addition, it may also depend on other factors, such as how long ago the cancer was treated, or the severity of the cardiac problems.

Best Time to Buy LTC Insurance   

The ideal time to purchase LTC insurance is when you are young and healthy, before you have been diagnosed with a serious disease.  However, how many healthy young adults in their 20's, 30's and 40's are thinking about how they will pay for their nursing home or personal care when they become old and frail?  Unfortunately, very few think about it.

In my next post, "Alternatives to Long Term Care Insurance," we will discuss some of the options that are available for people who become incapacitated in their later years and do not have LTC Insurance.

If you are interested in reading more about planning for your retirement years, you may want to look through the index articles listed below.  Each one contains some general information plus links to a number of articles on that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers

You are reading from the blog:

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Wednesday, May 8, 2013

Popular Part-time Jobs For Retirees

One way to stretch our retirement income is with a part-time job.  Not only does it help retirees afford a higher quality of life, but it is also a pleasant way to stay connected to other people.  Because part-time work is becoming so common,  AARP recently came out with their list of five great part-time jobs for retirees.

As you may remember, I have written other blog posts about part-time jobs for retirees.  With Social Security benefits so low and retirement savings inadequate for at least half of all people who will be retiring soon, working after retirement is often not simply a matter of enjoyment, but of necessity.

There are many possible occupations for retirees.  Before you even browse through the AARP suggestions below, you should consider continuing to work in the same field where you have earned a living in the past, by asking for a lighter schedule.  You will not need to get more training and you may be able to earn at the top of the pay scale for that occupation.  For example, many retired teachers continue to work periodically as substitute teachers.  Other people may fill in for vacationing employees at their old company, or cover for someone who goes on maternity leave.  However, if you want to consider additional options for part-time retirement jobs, here are the AARP ideas:

Library Assistant or Aide

If you love to work around books, you might apply for a job at your local library.  You could work behind the desk answering questions and checking out books, or you might spend the time re-shelving books and sending out notices.  You could work a wide variety of hours, since many libraries are open late and on weekends.  In fact, if there is a university near you, some libraries stay open 24 hours of day!  Of course, that does not mean you would necessarily be expected to work in the middle of the night.   If you find a library position, you can expect to be paid anywhere from the minimum wage to as much as $17 or $18 an hour, depending on your experience and education.

In order to get a part-time job doing this, you may need to have prior experience working in a library or have a degree in library science.  Even having experience as a library volunteer may be helpful.  In addition, it could help you secure a library job if you worked in an office in the past and you can point out that you are able to do data entry or word processing on a computer, keep good records and you are knowledgeable about how a library works.


If you have a background in bookkeeping, this can be a fabulous part-time occupation after you retire.  Many small businesses hire part-time bookkeepers because they do not need a full-time one. You may only need one or two local clients to keep you busy and help you earn a little extra money.  Clients will expect to pay anywhere from $10 to $25 an hour, and sometimes as much as $50 an hour if you have extensive experience and training. It is possible that you will work at the business establishment that hires you.  However, many bookkeepers also perform this service from their own homes, which is appealing to many Baby Boomers who want to work their own hours. 

If you are looking for clients, it will be helpful to have experience in this field.  If you do not, you could complete a bookkeeping course at at local community college.  You will have to be familiar with accounts payable and receivable, maintaining bank accounts, producing financial reports, overseeing audits and maintaining computer systems.  Of course it is also important for you to be detail oriented.

You also need to be willing to contact local companies to find one that needs your services.  In other words, you have to have the ability to sell yourself and your skills.

Personal or Home-Care Aide

If you are healthy and active, you may be able to work as a home health aide during the first few years after you retire.  In this job you will take care of people who are much older than you.  Your duties would include companionship, grocery shopping, preparing meals, dispensing medications, and helping them with bathing and dressing.  It is common for home-care aides to only work a few hours a day, two or three days a week, so it is a perfect part-time job.  You can expect to be paid anywhere from the minimum wage to about $12 or $13 an hour.

There are training programs required for most jobs as a home care aide, but the programs only take a few weeks to complete.  Agencies often provide the training and then they will help place you in a job. If you have physical limitations, such as the inability to lift someone who has fallen, you need to let the agency know so that you are assigned to jobs that will not cause you harm.

As our population ages, the demand for home-care aides has become greater.  You do not need to have any prior experience in order to work part-time in this field, and it can be a welcome change from those high pressure jobs you may have had in the past.


When I sold real estate, one of the most desirable people to know was the local handyman.  If you are adept at making minor repairs around the house, you will be able to find all the part-time jobs you can handle.  In fact, if you live in an area where there are many retirees, you are sure to get a lot of calls.  The types of jobs you will be asked to do include minor carpentry jobs, plumbing, basic electrical work, painting and similar minor home improvement projects.

You can charge $10 to $20 an hour, and sometimes more for larger or more complicated jobs.  You can work your own hours and decide which jobs you want to take.  In most states you will need to have a license to perform handyman services and you may need to carry liability insurance.  It is also necessary for you to have your own tools, as well as a desire to be helpful to others.

Medical Assistant

If you have experience working in a hospital or medical office, you may be able to find part-time work in this field after you retire.  The types of jobs you could do include working in the front office, billing insurance companies, scheduling appointments, etc.  Depending on your experience, you may also have additional duties.  Your pay can range from $10 to $20, or more, depending on your experience.

The medical field is an area that is growing rapidly.  If you do not have experience, however, it may be impossible to find a job in this area.  If you are inexperienced but have a strong desire to work in the medical field, you may decide to go through a certificate program at a local community college.  Some of these programs only take nine months to complete in order to be qualified to work in a variety of medical assisting occupations.

In addition to these jobs recommended by AARP, you will want to check out my other articles about jobs for retiring Baby Boomers.  You will find links to them in the index article "Money and Financial Planning for Baby Boomers."

If you are planning to retire soon, you may also be interested in checking out the index articles below.  Each one contains an introduction and a links to a variety of articles on those topics.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers

You are reading from the blog:

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Saturday, May 4, 2013

Update on 2014 Affordable Care Act

Now that January, 2014 is only a few months away, it is becoming clearer how the Affordable Care Act will be implemented.  Like millions of other Americans, I recently received a letter from my insurance carrier, Kaiser Permanente, that provided more information about what to expect in the coming months.

These changes will have a major impact on many families and it is important that all of us stay informed so we are prepared to make the best decision for our family.  In addition, you may want to read my earlier blog post, "Help Soon for Boomers Without Health Insurance," to learn a little more information about how the the new health insurance exchanges will work.

Brief Overview of Heathcare Reform Changes

As of January 1, 2014, nearly everyone in the United States will have new health insurance opportunities as the result of the Affordable Care Act.  Here are some facts you will want to know:

Nearly everyone will be required to purchase health insurance or they will pay a penalty on their taxes at the end of the year.  At the end of the first year the penalties will be minimal, allowing people time to become accustomed to the change.  Gradually, the tax penalties will increase.

Every state will operate a Health Insurance Marketplace or Exchange.  Open enrollment begins in October, 2013.  You will be able to purchase insurance either in person, through the mail, by phone or on a website.

You cannot be turned down for health insurance, even if you are currently being treated for a serious illness such as cancer or diabetes.  You will no longer be required to have a medical review prior to approval.  People who have been unable to purchase an individual insurance policy in the past will now become eligible.

You may be able to get financial assistance to pay for your insurance and your out-of-pocket expenses.  The amount of assistance you get will depend on your income.  Kaiser gave the example that a single person earning less than $45,000 a year will be eligible for some financial aid.  This will be a tremendous help to a lot of single people and young families who are currently uninsured.  It could also help Baby Boomer couples when one of them is old enough for Medicare and their spouse is not.  If the older spouse is retired and their family income is low, they will be able to get financial assistance to help with the cost of health insurance for the younger spouse.  Since I have known several Baby Boomer couples who were faced with this situation, this could literally be a life-saver.

The Affordable Care Act requires four levels of coverage.  These have been called Bronze, Silver, Gold and Platinum.  Bronze plans will have the lowest premiums and the highest co-pays and out-of-pocket expenses.  At the other end of the spectrum, Platinum plans will have the highest premiums and the lowest co-pays and out-of-pocket expenses.  These four options will give everyone the choice that best meets their budget and healthcare needs.  Regardless of cost, all of the policies will have the same basic benefits such as a free annual physicals and certain diagnostic tests.

In addition to the plans mentioned above, there is also a catastrophic plan option.  This is only available for young adults under the age of 30, as well as families and older individuals who can show that they are not covered under an employer provided plan or an affordable individual plan.  The catastrophic plans will have even lower premiums and higher co-pays and out-of-pocket expenses than the Bronze plan mentioned above.  They will also provide the same basic benefits as the other plans, such as a free annual physical and preventative tests.  It's main purpose is to make it possible for everyone to have a comprehensive annual physical so that illnesses are caught early, when they can be treated most economically.  The catastrophic plan will also provide protection against crippling medical bills in the event of an emergency or serious illness.

If you currently have health insurance, over the next few months your carrier will be providing you with information about the changes you can expect to your policy.  Each company will have their own versions of the various plans for their customers to review. For those of you who do not currently have health insurance, you will find additional information in the coming months on this blog, as it becomes available.

Planning for Retirement

If you want more information to help you with your retirement plans, you may be interested in reading some of the articles listed in the index links shown below.  Click on the category that interests you and you will discover an introduction and a links to related articles on each topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers

You are reading from the blog:

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Wednesday, May 1, 2013

Traditional IRA vs Roth IRA

As you save money for retirement, you may be confused about whether you would be better off sticking with a traditional IRA or moving your money to a Roth IRA, instead.  Both are great retirement tools, and there are advantages to each.  Recently, the April, 2013 edition of the AARP Bulletin addressed this very question (pg. 28). While there is no answer that is right for everyone, learning a few important facts about each type of retirement savings plan may help you make the decision that will work best for you. Here is some information that will help you compare the two.

Traditional IRA

The traditional IRA is what most of are are accustomed to using for our retirement savings.  They are a great way to save tax deferred income that you will be able to withdraw when you retire.  Here are some facts you should know about this type of savings:

You can put $5500 a year in an IRA or $6500 if you are age 50 or older.

When you initially invest the money in the IRA, that money is not subject to income taxes.  This reduces the amount of taxes you owe in the current year.  The taxes are deferred until you withdraw the money. This will reduce your tax liability during your working years, which can be a major benefit to families who want to save for retirement and reduce their taxes at the same time.

However, if you make early withdrawals, they may be subject to taxes and penalties (there are some exceptions).  When you die, any remaining money that is passed on to your heirs is also subject to income taxes.

You will not pay income taxes on the money until you begin to withdraw it when, presumably, you will be taxed at a lower tax rate than you currently pay.  On the other hand, once you do begin to withdraw your IRA savings, the additional income could increase the tax rate some people actually do pay on their retirement income.  In other words, if your Social Security income alone is low enough that you would not be required to pay taxes on it, adding annual disbursements from your IRA could mean that more of your income is subject to taxation.  This will not apply to everyone, but it could apply to people who will be withdrawing large amounts from their IRA's.

Mandatory withdrawals are required beginning at age 70 1/2.  You can no longer contribute to a traditional IRA after that time.

Roth IRA

The Roth IRA works quite differently and is an excellent retirement option for people who expect that their tax rate will be about the same after retirement as it is now.  However, the taxes on the money that is invested in a Roth IRA are not deferred.  Savers must be willing to pay income taxes on the money during the year the money is earned.  Here are some additional facts you will want to know about a Roth IRA:

You can invest up to $17,500 this year, and $23,000 if you are age 50 or older.

As mentioned above, when you put the money in your Roth IRA account, you will still include it as part of your earnings on this year's tax return, and you will pay income taxes on it.

The Roth IRA has the advantage that you can make early withdrawals at any time, without penalty, so you can treat your Roth IRA as a savings account.  Since you already paid taxes on the principal, you do not owe taxes or penalties on your initial investment when you withdraw it.  In addition, if you hold the money in your IRA for at least five years and you reach the age of 59 1/2, the dividends and capital gains you earned  on the money over the preceding years will be also be tax free when you withdraw these funds.  

Paying the taxes up front can be a big advantage if you expect to hold the investment for a long time and you believe that your investments could increase substantially in value.  This can potentially give you the income you need in your later years while keeping your tax rate low.  In addition, your heirs can inherit the funds tax free.

You do not have to withdraw your money at age 70 1/2.  In fact, if you are still working at that age, you can continue to contribute to the Roth IRA.  

Can You Change Your IRA Designation?

If you have money in a traditional IRA and you want to put it into a Roth IRA, it is possible to make the change as long as you are willing to pay taxes on the money during the year when you make the transfer. 

If you don't want to pay taxes on all the money you have in your traditional IRA in one year, you can spread the transfer out over several years.  

Which IRA is right for you?  That depends on many factors.  As always, you would be wise to discuss this decision with your CPA and your investment adviser.  No one choice is right for everyone.

If you want to learn more about factors that could affect your retirement planning, you may also be interested in reading the information in the index articles listed below.  Each one contains links to a number of helpful articles on that topic.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

You are reading from the the blog:

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