Social Security Plans of Clinton and Trump

Although it has not been discussed in detail by the media, one of the major issues for senior citizens in the November, 2016 election is the future of Social Security.  Because we have repeatedly been warned that the trust funds for both Social Security and Medicare will run out of money in the coming decades, this issue is on the minds of both current retirees and those who are approaching retirement.  As a result, AARP recently requested written statements from the presumptive candidates of both major political parties to ask their plans for the future of Social Security.  The results of those statements were in the July-August 2016 issue of the AARP Bulletin.

The statements expressed in the sections below are based on direct quotes that were provided in writing to AARP by the candidates.

The intent of this article is not to sway your vote either way, but to help you make your own informed decision, based on the candidates' expressed views.  Of course, any action by the next president will need the support of Congress in order to become law.

Hillary Clinton's Plan for the Future of Social Security

*  Raise the current income cap on Social Security contributions. Currently, only the first $118,000 in income is taxed for Social Security. This means that higher income Americans will pay more than they have in the past.  Some types of income which are not currently taxed may also be included.

*  Avoid risks to Social Security by resisting efforts to privatize it.

*  Maintain on-going annual cost-of-living adjustments for retirees receiving Social Security benefits.

*  Resist efforts to further raise the retirement age.

*  Avoid adding to the burden on the middle class by resisting efforts to cut benefits or increase the percentage of taxes withheld.

*  Expand Social Security benefits to widows and people who took time out of the workforce to be caregivers for their children, elderly parents or other sick relatives.

*  Reduce the amount that Social Security decreases when a spouse dies.  This is a particularly serious issue for two successful wage-earner couples after they retire.  When one dies, the remaining household Social Security benefits for the surviving spouse can be cut in half.

Donald Trump's Plans for the Future of Social Security

*  Have an economy that is "robust and growing."

*  Lower corporate tax rate to 15 percent and make other business tax changes.

*  Renegotiate trade deals and impose budget discipline to stop increasing our national debt.

*  Repeal both the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Affordable Care Act to increase competition and lower costs to consumers.

*  Reduce fraud, waste and abuse in the government, including reducing the size of the federal government.

*  Immigration reform will enable the government to save money on education, health care and public safety.  It will also increase security and lower the incidence of drug use.

*  In summary, "If we are able to sustain growth rates in GDP ..., we will be able to secure Social Security for the future."

*  After the above have been accomplished, the administration would "examine what changes might be necessary for future generations."  Mr. Trump did not specify what future changes that could include in order to secure Social Security.

Summary of Social Security Plans of Clinton and Trump

This blog has long mentioned that many experts believe minor tweaks to Social Security could make it more secure in future decades and, possibly, indefinitely.  One of these tweaks would be to increase the amount of income that is taxed by lifting the current ceiling on taxable income.  Another possibility is to raise the full retirement age by a year or two.  A final choice would be to slightly increase the Social Security tax on income.  Analysts have suggested that any one of those tweaks, or a wide variety of combinations of them, would be sufficient to secure the Social Security Trust for future generations.

Of the above possibilities, Hillary Clinton is only recommending the first one ... increasing the cap on taxable income so that more income is taxed ... but not at a higher rate.  She also is against raising the full retirement age.  

Donald Trump is recommending an entirely different approach.  He believes that a strong economy will solve the problem, although he does not specify what mechanism he would use to get the additional GDP into the Social Security Trust ... through the use of a higher tax cap or an increase in the Social Security tax rate.  He only wrote that he would, "examine what changes might be necessary for future generations." 

This could be a good choice for a debate question for the candidates, so voters will have more specifics about exactly how the future of Social Security will be secured.


Resource:

"Trump & Clinton - Where They Stand On Social Security" AARP Bulletin/Real Possibilities July-August 2016 (written responses submitted to AARP by the candidates for president.)


If you are interested in learning more about how Social Security and Medicare work, or want to know about where to retire, common medical problems, financial planning and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo credit:  Photos from candidates' Twitter accounts.

Which Senior Housing Option is Best for You?

As Baby Boomers begin to reach retirement age, one thing on their mind is where they should live as they age.  Some Boomers want to make one decision and be done.  They hope to find a single choice that will meet their needs for the rest of their lives.  Other people want to live an active, independent life first and later move to assisted living or a similar facility.

There is no option that is perfect for everyone.  Your financial situation and health will almost certainly affect your decision.  You may also be influenced by where you currently live, as well as where other members of your family live ... aging parents, adult children, grandchildren and, in some cases, your siblings.

To help readers know their range of options, below is an overview of the types of housing that are available.  Most of these choices are available in every region of the United States.  Some of these may be senior housing options that you might not have previously considered.  However, before making a final decision about where to retire, it is important that we know what choices are available. You can find links to more articles about most of these options by clicking on the tab above labeled: "Retire in the U.S."  There are dozens of helpful articles that will give you more detailed information.

Senior Housing Options

Age in Place:  One of the most popular choices is to remain exactly where you are.  The Age in Place movement has become more popular and there are now a wide variety of resources to make it easier for people to continue to live in their own homes as they get older.  Contact senior centers and home heath care facilities in your area to see what types of assistance are available.  Many communities can help with low cost meals at near-by senior centers or Meals on Wheels delivered to your home; free or low-cost transportation; exercise programs; social programs and other activities that can make it easier for you to remain in your home.  Many communities also offer a PACE program.  This is short for Program for All Inclusive Care for the Elderly and offers the equivalent of high quality nursing home care in your own home.

Over-55 Communities:  Del Webb, Lenair, Trilogy and several other builders have created over-55 communities in a wide variety of locations across the United States ... especially across the Sunbelt, although there are also options in northern states.  These communities are more than subdivisions for senior citizens.  They often pride themselves in the resort-style facilities they provide their residents ... golf courses, swimming pools, tennis courts, clubhouses, exercise facilities, theaters and more.  They are sometimes also called Active Adult Communities.  My husband and I currently live in an over-55 community near Laguna Beach, California.  It has been a very relaxing and pleasant option, since so much is done for us ... including lawn care and building maintenance.

Senior Apartments:  Many seniors choose to move into senior apartments, especially if they wish to get away from maintaining a home.  There are luxury apartments for middle class and affluent retirees, as well as subsidized apartments for moderate and low-income retirees.  In subsidized apartments, the rent is usually based on a percentage of your income (on a sliding scale).  Whether luxury or subsidized, most of these senior apartments provide special services for seniors ... social events, transportation, assistance with housekeeping, exercise facilities, swimming pools, etc.  Sometimes the services are provided by outside agencies in the communities ... such as transportation to medical visits.

Accessory Dwelling Units or Granny Pods:  Another option some Baby Boomers are choosing is to move in with their children.  Instead of boomerang kids, many Baby Boomers are becoming boomerang parents.  There are several valid reasons for this choice:  you may be in poor health and need assistance with meals or dressing; your children may want you there to provide care for your grandchildren; it could be the best choice financially for either you or your children.  One way to facilitate this when the parents have their own, separate living space. An accessory dwelling unit is the term used to describe a second living space in the home or on the property that will allow you some privacy while living with your children.  This second living space can be an addition to the home, a remodeled basement or a separate apartment.  Granny Pods, another possibility, are pre-fab senior homes that are set up on the property.

Board and Care Homes:  These are group homes for people who don't need a nursing home, but cannot live independently, either.  Many people like them because of their comfortable, homey atmosphere.  Residents usually have a private room and bathroom, but share meals and common areas. I have known a variety of people who have chosen this option ... for reasons such as severe arthritis or mild mental impairment which make independent living difficult.

Continuing Care Retirement Communities (CCRCs):  One new wave in senior housing is the CCRC.  These are communities which you usually buy into by paying a large upfront fee, as well as a monthly fee.  When you first move into the community, you live independently in your own home or apartment.  The community guarantees that they will then take care of your needs for the rest of your life, whether that means you need some assistance in your own home or you need to move into an assisted living facility, a skilled nursing facility or a memory care home ... facilities which are usually located within the community.  This is an especially popular option for couples who believe that one of them might have to move into a nursing facility, but not the other.  In this way, they can still be close to each other.  CCRCs have also become a popular option for healthy people who know they will not qualify for affordable long-term care insurance.  Once they move into a CCRC, residents do not have to worry about their future care, regardless of what health problems they or their spouse may develop.

Assisted Living, Skilled Nursing and Memory Care Facilities:  Many people who start out living in their own home or senior apartment will eventually need more care than they can easily receive in their personal residence.  Those people may eventually move into one of the other types of senior housing mentioned above, or they may move directly into the type of assisted living, skilled nursing or memory care facility that is appropriate for their needs.  These are usually paid for in one of three ways:  Medicaid, long-term care insurance, or out-of-pocket payments made by the senior citizen or their family members.  Of those, Medicaid (called MediCal in California) is the most common provider of funds for these programs, although there are financial asset and income restrictions on who can qualify for Medicaid.  These facilities can be expensive ... ranging from $6,000 to $12,000 a month, depending on the region of the country and the amount of care the resident needs.  That is why long-term care insurance is a good investment, especially if you believe there is even a possibility that you or your spouse could someday need to move into one of these facilities.

If you are interested in learning more about where to retire, common medical issues, long-term care, financial planning, Social Security, Medicare or more, use the tabs or pull down menu at the top of the page to find links to hundreds of helpful articles.

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo credit:  Photo of clubhouse at the Laguna Woods Village over-55 community was taken by author, Deborah Dian; all rights reserved.

Common Problems with Inherited Homes

According to an article called "Inheriting Trouble" in the March, 2016 issue of the ARRP Bulletin, the Baby Boomer generation is expected to inherit $8.4 trillion.  Much of that will be in the form of real estate, often the parents' primary or vacation homes.

Whenever property is left to two or more adult children, it often brings grudges and resentments between the siblings out into the open. Long simmering jealousies can surface and cause conflict after you die.  According to John Pankauski, author of Pankauski's Probate Litigation Guide: Top 10 Probate Mistakes Revealed, "You never really know someone until you share an inheritance with them."

Other experts point out that the family dynamics change after Mom and Dad pass away.  While the family may have gotten along while the parents were around, old jealousies may re-emerge, according to David Fry, the co-author of Saving the Family Cottage.  This can cause estrangements and lawsuits that present difficulties for years.

The two books mentioned above will help you avoid some of the problems that can arise when passing on a family home.

Guidelines to Avoid Probate Problems When Inheriting a House

*  Ideally, there should be a family discussion about the property before the parents pass away.  Everyone needs to discuss their expectations.  There needs to be clear, direct communication between members of the family.

*  Mom and Dad need to accept that their children may not want to hold onto the family home.

*  Once the parents are deceased, the siblings who inherit the property together need to meet and decide if they want to sell or keep the property.

*  If some of the heirs want to keep the home and one or more of the others do not, decide how the value of the property will be determined.  Will there be an independent appraisal? Will the other siblings buy out the ones who decide to opt out by paying them a full, prorated share of the entire property's value, or will there be a discount put on the value?  How will the payoff be made ... in a one-time cash payment or spread out over several years?

*  For those siblings who decide to keep the property, the heirs should draw up a legal agreement with an attorney.  It can be a joint ownership agreement, a trust or a limited liability company.

*  In the case of family vacation homes, management decisions need to be put in writing, including how the property can be used and how expenses will be paid.  For example, will it be rented out part of the year, or be available only to members of the family?  How many weeks of the year will each heir and their family be allowed to use the home?  Will there be special times of year when the entire family gets together at the property ... such as the Christmas holidays?  Who will take care of regular upkeep and lawn maintenance?  Will there be a fund set up that everyone pays into to handle regular maintenance?  Will there be periodic special "assessments" to handle expensive repairs such as painting or replacing a roof or air conditioning system?  Can everyone afford to pay their fair share?

*  The family needs to agree on basic rules about how the vacation house will be used, including how clean the home should be left when each family leaves, should sheets be changed and beds remade, whether smoking is allowed, if non-family will be allowed to use the property and who will pay for damages.

*  The ownership agreement should also set forth how the property can be passed on to future generations.  For example, if one sibling dies, will their share be divided between their adult children?  What happens if they cannot afford to cover their share of expenses? Or, will the original heirs buy out their nieces and nephews, should one of the siblings die?

What If One of the Children is Already Living with Mom or Dad?

When one of the heirs has been living in the home with the parents at the time of their death, this can create special problems.  Their siblings may not want to kick them out of the house, but the person who is now living alone in the house may not be able to afford to pay their fair share of the expenses involved in maintaining the home.

On the other hand, the heir who is living in the home may be perfectly happy and capable of staying there, but the other siblings may feel disinherited.  They may want to be able to either use the house themselves, or sell it and get the cash.  Either way, the parents should make it clear what is to happen with the home after they die.

Should You Put One Child's Name on the Deed?

According to experts, the worst decision you could make may be to put the name of one of your children on the deed.  That is because the house will automatically become the property of that child.  You may hope that your child will be fair with their siblings, but that does not always happen.  This can cause tremendous conflict between your children.

The exception to this would be if the house then becomes the inheritance of that child and the other children are left a substantially equal share of other assets ... such as stocks or retirement accounts.

If you are leaving real estate property to your heirs when you die, it may be a good idea to read one of the books below.



Want to learn more about retirement planning, where to retire in the U.S. and abroad, medical issues, family relationships and more? Use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo credit:  morguefile.com