Planning 2011

Page 1

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Abbeville Meridional •• Planning For Tomorrow Edition

Page 2 •• Friday, February 25, 2011

Things you need to know about a funeral Circumstances will vary, but at some point in our lives, most of us will be called upon to make funeral arrangements. Perhaps you’’ll make your own funeral arrangements while you’’re still healthy enough to do so (see Funeral pre-planning: a practical matter) or maybe you’’ll be called upon to engage in funeral planning for a loved one, either in advance or at the time of death. In any case, understanding the choices you’’ll be asked to make will help you to be prepared. Unless you’’re planning to care for the remains of your loved one at home, the ďƒžrst step in funeral planning is to choose a funeral home. While a small but growing number of people are turning to home funerals, most people still prefer to engage the services of a funeral director to handle the care and ďƒžnal disposition of the body. If you’’re making funeral arrangements in advance of any need, you may want to take the time to visit a number of funeral homes, ask for price lists, and make a decision based on your observations. But if you must make immediate arrangements following the death of a loved one, you probably won’’t feel up to comparison shopping. In such a case, after getting some recommendations for funeral homes, you can obtain prices by telephone. Details and decisions With all the details that must be managed when a person dies, it’’s easy to feel overwhelmed, and tending to them may be too much to handle when you are still reeling from grief. Fortunately, once you’’ve selected a funeral home, the funeral director will be able to assist with many of those details.

But even with the funeral director’’s help, you will still be expected to make a number of decisions, convey the family’’s wishes, and work collaboratively with the funeral director to accomplish all the necessary tasks. You may ďƒžnd the support and assistance of a trusted friend, clergy member, or attorney to be a comfort at this time. Here are some of the decisions you can expect to make when planning a funeral. Keep in mind that each decision will impact the cost of the funeral. For more information, see What determines the funeral cost? Funeral service or memorial service. A funeral service is conducted with the body present, and thus usually occurs within approximately three days of the death. A memorial service, on the other hand, does not include the presence of the body, and therefore may take place at any time, even weeks or months after the burial or cremation (see Funerals - what different

types are available?). Cremation or burial. Depending on your choice here, you’’ll also need to decide a place for burial or how to handle the cremated remains (see How to decide between burial or cremation). Final resting place. Unless the deceased or your family already has a burial plot, you’’ll have to decide on where the body should be interred. If you must locate and purchase a burial place, you may want to consider buying several adjacent plots for future family use. In the case of cremation, your choice will be whether the cremated remains will be buried, scattered, or kept at home (see Choosing a cemetery). In addition to making these decisions, you will need to assist the funeral director by: Supplying obituary information Selecting stationery, i.e. memorial cards and thank

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you cards Selecting funeral ďƒ&#x;ower arrangements Providing the names and telephone numbers of people who will be involved in the funeral service (e.g. clergy, pallbearers, musician, soloist). Funeral planning resourc What determines cost of a funeral?

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Because of our discomfort with the subject of death, making funeral arrangements is difďƒžcult, even when arrangements are made well in advance of any need. And when a funeral must be arranged for someone who has died or is near death, the emotional impact may be even stronger. If you’’re charged with arranging a loved one’’s funeral, either in advance or at the time of death, you’’ll be asked to make decisions about one of the biggest purchases many of us will ever make, third only to buying a home or a car.

Remember to investigate your options According to the National Funeral Directors Association (NFDA), the average cost of a funeral in the United States is $6,500 –– and some funerals cost well over $10,000. Most of us would never consider making such a sizeable purchase in an emotional moment, without investigating our options; yet every day, thousands of people who make funeral arrangements do just that. Before you go to a funeral home to make arrangements, ask someone to accompany you, such as a trusted friend, family member, or pastor. In addition to providing emotional support, this person can help you to make sound, practical decisions during an emotionally difďƒžcult time. Remember that funeral costs are controllable. With just a little forethought and planning, you can reduce costs and avoid paying fees.

Most of us plan ahead in life. Pre-planning provides you with the time needed to make practical, detailed decisions that reflect your standards, your lifestyles, and your budget. The staff at Vincent Funeral Home takes great pride in serving the families of Vermilion Parish. So call to plan ahead or simply ask the questions you want answered.

2011 Planning For Tomorrow Edition • Abbeville Meridional

Friday, February 25, 2011 • Page 3

10 things you need to know about Social Security It is among the most popular and important social programs in America, yet many Americans have only a vague idea about how it works. What nearly every American knows is that it's in trouble. "This program affects hundreds of millions of Americans," said Jason Fichtner, chief economist at the Social Security Administration. "They're paying for a system that they expect to be there for them." Is Social Security going under? How could it be xed? Should everybody worry? This report addresses Social Security, explaining what you need to know and how the system may change in years to come. The good news: Social Security can afford to pay benets for decades. The bad news: After that, without reform, it's up for grabs. How works

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Practically every American has a friend or relative on Social Security. More than 52 million of the nation's 309 million citizens received benets from it last year. That's one in every six. The 75-year-old program is partly retirement plan and partly insurance. About twothirds of annual payouts go to retirees. The other third goes to disabled Americans who cannot work and to the children or spouses of people who are disabled or die prematurely. The agency employs more than 65,000 workers to keep the checks coming. In 2009, the average retired worker got $1,164 a month from Social Security. For about one-third of those age 65 and older, Social Security accounts for practically

all their income. For about two-thirds, it represents at least half their income. Women, especially, depend on the program. For politicians, messing with Social Security is almost as perilous as, well, messing with health care. Reform inevitably creates winners and losers. "This is all about transferring money from one group to another. It's all about whose benet do we cut, and whose taxes do we raise?" explains Jeffrey Brown, a nance professor at the University of Illinois at Urbana-Champaign who advises policymakers on Social Security. "Given their experience with health care, how do politicians win on this?" It's not called the "third rail" of politics for nothing. Where the money comes from Social Security collects most of its funding through the payroll tax, called FICA. If you're working, most likely you're paying, although some teachers and government workers are exempt. The agency gets 6.2 percent of each paycheck. Employers pay a matching 6.2 percent. The self-employed pay the full 12.4 percent. Deductions stop for the year once a worker makes $106,800 in income, and monthly benets max out at $2,413. Funds being collected today pay for the checks being sent today. Each generation provides the money for the one that came before it. Children pay for their parents, and so on. The money is not put into a separate account in the name of the person who is paying. That pay-as-you-go formu-

la sets Social Security apart from other pension plans. Since a sweeping reform in 1983, Social Security has collected $2.5 trillion more than it has paid out in benets. By law, the surplus is given to the federal government in exchange for Treasury securities — safe investments that earn interest. Those Treasuries, held in what's known as the Social Security trust fund, can be cashed in when the system needs more money to pay benets. How the Treasury will pay off the bonds is anyone's guess, however, and some critics compare the system bitterly to a pyramid or Ponzi scheme. The system really is in trouble It is in trouble, but it's not in danger of failing anytime

soon, and those receiving benets now don't need to worry about their checks. The big problem is the aging of the baby boom generation: 76 million Americans born between 1946 and 1964. During their expected long retirements, the payroll taxes of the remaining workers won't be enough to cover the benets that have been promised. Until recently, Social Security collected billions of dollars more than it spent each year. But in 2010 and 2011, expenses will exceed income for the rst time since 1983, according to Congressional Budget Ofce projections. After that two-year dip, surpluses will be recorded until 2016 or 2017, the projections indicate, after which losses will continue for decades, growing and growing.

Who cares? If you care about America and the economic lives of future generations, then you should care, said Paul Kasriel, chief economist at Chicago's Northern Trust Corp. "The real economic effect is that we will be transferring more and more resources to our retired population," he said. "There will be fewer resources for business to make our work force more productive by investing in technology or education. That, in turn, will have a downward bias on the long-term rate of growth." Though economists gener-

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Abbeville Meridional • Planning For Tomorrow Edition

Page 4 • Friday, February 25, 2011

Lh\bZe ?khf IZ`^ , -ally disagree about the future effects of Social Security obligations, many believe that waiting for a crisis to x it will lead to higher ination, lower living standards and a less-competitive America. The outlook is shifty Changes in the makeup of America's population and the performance of the economy in coming decades make all the difference. Assume, for instance, that Americans were to start having more kids. That would help pay for the baby boom retirement bubble, because those kids would go to work and support the system with their payroll taxes. So for a time, anyway, Social Security would be better off. Assume a lower fertility rate, and Social Security loses out because fewer workers would be paying in. Another source of younger workers is immigration, which has shot up since the 1970s. If immigration were to keep expanding, those new Americans would help pay for the baby boomers. If immigration dried up, Social Security would be relying on fewer young workers to pay the bills. The death rate is an additional swing factor. Americans live much longer on average than they did decades ago (nearly 78 years now compared to less than 71 three decades ago). As a consequence, they collect benets for a much longer time. The strain on Social Security intensies as life spans keep increasing. A cure for cancer would be great news for humanity but costly for Social Security. The economy also affects Social Security's future. Generally speaking, growth is

good, and recession is bad. If wages go up far beyond the level of ination, the payroll tax throws off more cash. (Those higher wages, though, mean the government eventually will owe more in benets). Higher interest rates help, too, since Social Security invests in Treasury securities that would then pay a greater return. Social Security counts opped

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In 2005, President George Bush proposed diverting money from Social Security into new accounts that could be invested in stocks and bonds. Under his plan, part of the payroll tax no longer would have gone to support current retirees, as it does today. It would have gone instead into these new accounts earmarked for the person paying, who would then choose how to invest it. Those opting for investment accounts would be agreeing to accept reduced Social Security payouts, including lower survivor benets. Upon retirement, they would get a smaller government check each month, but also would collect money from the accounts. The plan would have given Americans ownership and control over money they would otherwise pay into Social Security. But it would not have "saved" the system by covering the coming retirement of baby boomers. To accomplish that feat would require boosting revenues, cutting benets or borrowing en masse — the same basic choices the nation faces today. U. of I.'s Brown advised the Bush administration on Social Security, and he said other reforms that would have helped put the program

on a rmer footing were rejected along with the investment-account idea. As a result, politicians have become even more cautious about addressing the long-term problem. "It was so deeply politicized," he said. "It has denitely narrowed the options." Raising the payroll tax This is a simple way to raise more bucks. It's been done more than a dozen times since the program started in 1935 with a mere 2 percent tax on wages. One of the biggest revisions came in 1983. With Social Security just months away from insolvency, a commission headed by Alan Greenspan (later the Federal Reserve chairman) pushed through a big payroll tax increase. In addition, the Greenspan group championed raising the future retirement age from 65 to 67, adding government and nonprot employees to the system, and taxing the Social Security benets of higherincome recipients. Everybody knew the baby boom retirement bubble was coming. Those xes were supposed to take care of it, and they worked to an extent. The higher taxes and other changes helped generate today's $2.5 trillion trust fund. But at current tax levels, that will be gone in 2037, according to projections from the Social Security trustees. Many private forecasters believe the next set of projections, due around April 1, will peg the tipping point at 2036, 2035 or even 2034. Raising the 12.4 percent payroll-tax rate by another 1 percentage point, to 13.4 percent, would x almost half of the system's projected short-

fall over the next 75 years, according to the agency's actuaries. With unemployment at close to 10 percent and wages under pressure, however, that's unlikely to happen. Billing the wealthy This is a tempting option for politicians, because a seemingly small x affecting relatively few people could make all the difference. Reducing benets for those with retirement income exceeding $50,000 a year, an idea that some tax hawks have pushed for years, would eliminate much of the system's projected shortfall, according to actuarial estimates. Raising the current $106,800 wage tax limit by about one-fourth would

eliminate the rest of the shortfall. Alternatively, axing the cap altogether to sweep in the CEO crowd would come close to eliminating the entire shortfall. Such steps are alluring because they would directly affect just a fraction of the population — those with the highest earnings. They also would address the regressive nature of today's payroll tax, where lower-income workers pay a relatively high share. Such options preserve benets for those most in need. Trouble is, Social Security has maintained widespread support, in part, because it is universal. It is generally not !L^^ SOCIAL% IZ`^ ."

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2011 Planning For Tomorrow Edition • Abbeville Meridional

Friday, February 25, 2011 • Page 5

Lh\bZe ?khf IZ`^ perceived as a welfare plan that soaks the rich to support the poor. Higher taxes also tend to undermine economic growth and productivity, tax opponents say. Means testing in any expanded form would be controversial on Capitol Hill. Cutting benets In Beltway lore, touching those benets is a little like latching onto a live wire. For those so inclined, the simplest x would be an across-the-board benet cut. Pay future retirees 5 percent less per month than what is scheduled would cut the projected shortfall by almost one-third. Reducing the system ’s annual cost-of-living increases would have a similar effect. Yet those solutions make plenty of enemies, no friends and tend to hit low-income recipients the hardest. In 1983, benets were trimmed by raising the re-

tirement age to 67 over time. Jacking it up to 70 by 2035 would relieve about half of the shortfall. It also would address one of the biggest pressure points on the system: ever-rising life expectancies. That change would put a special burden on those with physically demanding jobs, however. If Americans worked longer, employers would pay higher health costs. And if Americans continued enrolling in Social Security at the earliest possible age, as roughly half do today at 62, then their monthly benets would be particularly meager. A more subtle cut would involve indexing initial benet levels to consumer prices instead of average wages, so they accrue at a slower pace than in the past. Since ination typically grows more slowly than wages, benets would be gradually reduced. Congress hasn ’t moved on

that idea, though, and over a long period the change would result in greatly reduced payouts and a likely backlash. Doing nothing Throughout its history, Social Security has been subject to periodic tinkering. Bringing about revisions has been treacherous. The last major revamp in 1983 almost failed to materialize because of the political restorm it started. Some question the urgency of making any changes. After all, the money will keep owing to Social Security recipients for years to come under any reasonable forecast. It ’s possible that exceptional economic growth could head off the shortfall. The Social Security Administration uses relatively conservative estimates. In the late 1990s, with real wages soaring and productivity booming, America enjoyed a rate of expansion far beyond any forecasts. That reversed in

the 2000s, leaving America ’s leaders with the usual three options: cut benets, raise taxes or borrow the necessary funding. Relatively small adjustments now could bring about dramatic results in the future. Waiting to make changes would require more drastic steps that take effect in less time. “Many of us have been out there ringing the alarm bell, ” Brown said. “The longer the delay, the bigger the benet cuts and tax increases. Does it end gently or does it end with a boom? ” Women rst?

and

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young. Women rely more on Social Security income in their senior years, especially those eligible for spousal and survivor benets. Because women live years longer than men, they are more apt to collect benets for a longer time. Similarly, the young have a lot riding on Social Security because they will be most exposed to the benets of a restructuring or the consequences if nothing changes. Although the stakes are high, no American should forget that another giant social program faces graver troubles and more painful xes.

The stakes are probably highest for women and the

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Abbeville Meridional • Planning For Tomorrow Edition

Page 6 • Friday, February 25, 2011

Getting real life insurance from a real agent By: Joshua I. Duhon, LUTCF With our fast pace lifestyles and living for the moment attitudes, we often do not take the time to make sure that our future is properly planned. In the event of an unexpected tragedy, will your family will be able to continue their same standard of living? As you know there are numerous companies that offer an array of life insurance products that can protect your family against that unexpected tragedy. Planning for your family ’s future should include a sound life insurance plan from a reputable company with an agent that will bring value to your family ’s nancial future. There are several tips that you can follow to help you select a Life Insurance Agent that can help you achieve your goals for the future. First, make sure that the agent represents a rated company that has strong nancial backing. The agent should be able to provide you with a nancial report of the company they represent. Secondly, make sure that the agent is knowledgeable about the life insurance products that they recommend to you. Do not be afraid to ask questions if you do not understand what the agent is explaining; remember they are there to

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2011 Planning For Tomorrow Edition • Abbeville Meridional

Friday, February 25, 2011 • Page 7

The best day to purchase a new house When is the best time of the year to buy a home? There are at least two days of the year that give buyers the edge. Would you like to guess which two days are best for buying a home? Every spring, as tulips struggle to poke through melting snow in the North and rosebuds cautiously open in Southern climes, sure as tootin ’ real estate signs begin multiplying like bunnies across the country. Soon as the For Sale signs are mounted on the posts, swarms of activity buzz in the streets as sellers, buyers and real estate agents crawl out from wherever they hibernated for the winter to welcome the spring sales season. There is nothing like a spring real estate market. Offers y over FAX machines and cell phones ring constantly. Everybody wants a deal, and everybody wants to sell. Typically the marketplace is ooded with inventory. There is more on the market in the spring than any other time of the year.

It ’s also the worst time to buy a home. Except for one day. There is one day in the spring that a buyer will have the edge against all the other buyers. The second best day of the year to buy a home is Easter Sunday. A buyer looking for a xer on the outskirts of downtown Sacramento lucked out last Easter. A home came on the market at an attractive price. The buyer immediately inspected the home and wrote an offer. Fortunately, the listing agent was also the seller, so it was very easy to present an offer. The offer was signed and accepted on Easter Sunday because there was no competition. Come Monday, offers started rolling in, but it was too late. Easter falls sometime between March 22 and April 25. It is the rst Sunday after the ecclesiastical moon after the vernal equinox. The vernal equinox falls on March 20th or 21st, depending on the year.

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Abbeville Meridional •• Planning For Tomorrow Edition

Page 8 •• Friday, February 25, 2011

Study shows few planning for long-term care Wake up, America! A ďƒžnancial crisis could be looming for which you are not prepared. This is the loud and clear conclusion of a recent Roper study about long-term care which shows that most Americans have done little to prepare for what could be one of the largest expenses they’’ll ever face - their long-term care. The American Society on Aging (ASA) released the study. This study is a real wakeup call for people to start thinking about long-term care,”â€? said ASA’’s Jim Emerman. ““People need to take the ďƒžrst step of getting some guidance about their longterm care needs. Careful planning can help preserve your options and protect your assets if you ever need longterm care in a nursing home, an assisted living facility or even in your own home.”â€?

But the Roper study of people 45 and older shows how few are actually taking that important ďƒžrst step. More than four in ďƒžve (86 percent) of the people surveyed said it was important they have enough money to be able to choose a long-term care setting if they or a loved one needs it. But only 37 percent have actually started saving money to cover those costs.l At the same time, while the overwhelming majority (89 percent) believes it’’s important or very important to have some type of private or government coverage for long-term care, only 17 percent have bought insurance that speciďƒžcally provides it.2 Long-term care is for people who need help taking care of themselves after an injury, illness, stroke or disease. While most people think of it simply as moving into a nurs-

ing home, it can also include having a healthcare aide come to your home or staying in an assisted living facility. Surprisingly, 40% of the people who need long-term care are actually quite young, working adults under the age of 65 who need help after an accident or an injury.3 Why aren’’t people planning for this vital need? After all, we plan for retirement, for college and other important things. The survey, which was funded by State Farm4, found considerable confusion about long-term care. For example, almost half the people surveyed mistakenly believe their health insurance or disability insurance will pay for long-term we. Others are not aware that Medicaid will only cover long-term care if you’’ve used up almost all your ďƒžnancial resources. And, in

the most telling comments of all, half said since they won’’t need long-term care until they’’re older, so there’’s no need to think about it now.5 It’’s time to wake up and change that way of thinking. Given the fact that 71.8% of people over the age of 65 will need some form of longterm care, families need to consider long-term care insurance as part of their ďƒžnancial plan. Long-term care insurance can help protect assets, preserve choices and provide independence. Families should at least be discussing their individual needs with someone they trust. 1 The Roper survey ďƒžndings will he posted on statefan.corr ) at www.statefaim. com. 2 Study conducted by Roper ASW, August M. Released by State Farm Mutual Auto-

mobile Insurance Company and the American Sudety on Agency (ASA), April 2003. 3 GAO analysis of information from the Department of Health and Human Services and the Institute for Heaďƒ&#x;h Policy studies at the University of California, San Francisco. As cited in, ‘‘Long-term Care: Current Issues and Future Directions, General Accounting Ofďƒžce Report to the Chairman, Special Committee on Aging, U.S. Senate.’’ (GAOIHEHS-95-109). April 13, 1995: pg. 7. The level of coverage provided by longterm care insurance depends on the type of policy you purdoase. Some types of care received may not be covered by long-term care insurance. (Written by local State Farm Agents)

Study shows many not prepared for likely home-health need A 48-year-old father of two is left with permanent injuries after an auto accident. A 66-year-old recent retiree suffers a serious stroke. An otherwise healthy 75-year-0Id grandfather falls and breaks his hip. These people have one thing in common. Quite unexpectedly they’’re each likely to need some form of long-term care, through nursing care at home, in a nursing home or at an assisted living facility. The odds are good that many Americans will ďƒžnd themselves in a similar situation, as estimates by the Health Insurance Association of America indicate that over 70 percent of people over age 65 will need some form of long-term care) But a Roper survey recently released by the American Society on Aging (ASA) and funded by State Farm shows that most Americans are willing to try to beat those odds because so few have done anything

to prepare for the high cost of long-term care. ““Long-term care may not be a subject people like to talk about, but it’’s something every family should discuss and plan for,”â€? said ASA’’s Jim Emerman. °The need for long-term care can arise so suddenly that unless we’’re ďƒžnancially prepared, it can rob a family of its assets and its ďƒžnancial future.”â€? With government data placing the average cost of nursing home care at $56,000 a year 2, failing to plan can be a costly gamble. According to the Roper study, two-thirds of Americans 45 years of age and over say it’’s very important they have enough money to be able to choose the setting in which they’’ll get longterm care if they need it. But only 37 percent say they’’ve been able to put aside money for this purpose and only 17 percent have pur !L^^ NEED% IZ`^ 2"

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2011 Planning For Tomorrow Edition • Abbeville Meridional

Friday, February 25, 2011 • Page 9

G^^] ?khf IZ`^ 1 purchased long-term care insurance specically designed to cover it. By comparison, nearly nine in ten of the adults surveyed have health insurance and three out of four own a life insurance policy.3 Why don ’t people plan better`? Many tend to procrastinate, the Roper study shows. Half of all adults over the age of 45 believe they won ’t need long-term care until they ’re older and don ’t want to think about it now. Others take the long-term

care gamble because they mistakenly believe they ’re already covered or that the government will pay for it . Americans need to protect themselves and their nancial assets by making sure they insulate themselves from the high costs of longterm care. That ’s why I urge people to visit a nancial services professional to talk about long-term care insurance. It can help protect assets, preserve long-term care choices and help control inde-

pendence. Long-term care insurance is one of the most important components of a family ’s nancial plan. I Lewin Group estimates based an the Brookings-lCF Long-Term Care Financing Model, 1992. As cited in, “Long-Term Care Insu once: know tug the Risk, Paying the Price.- Health Insurance Association of America (HIAA) 1997: Pg. 12. The level of coverage provided by long-term care insurance de-

pends on the type of policy you purchase. Same types of care received may not be covered by long-term care insurance. 2 Estimates from: Health Care Financing Administration, Ofce of the Actuary, National Health Statistics Group. As presented n “Nursing Homes. ” AARP Public Policy Institute Fact Sheet. February 2001: pg. 3. 3 Study conducted by Roper ASW, August 2002. Released by State Farm Mu-

tual Automobile Insurance Company and the American Society on Agency (ASA), Apri12003. 4 State Farm Mutual Automobile Insurance Company Home Ofce: Bloomington, Illinois - statefarm.com®. The American Society on Aging is not an afliate of State F. The Long-Term Care Insurance policy 97058 is underwritten by State Farm Mutual Automobile Iasrrance Company. (Written by local State Farm Agents)

Long Term Care - Failure to plan is a plan for failure If you ever have a long term illness, a serious injury, a cognitive impairment such as Alzheimer ’s disease or just through the natural aging process, you are unable to take care of your basic needs, how will you pay for your care? Do you really want to be dependent on the government or family members? Many Americans think that health insurance, Medicare or Medicare Supplements were designed to pay for their long term care needs. They were not! Long term care is a subject that is often not talked about and not planned for. Some people think they will never need it. Statistics tell us that 40% of the people who currently need long term care are under the age of 65. It has been estimated that people age 65 and older have a 70% chance of needing some form of long term care. Instead of asking themselves “what if ? ”, many put themselves and their families into a situation where they have to ask themselves, “what now ? ”. Louisiana joined other

states last year in adopting a Long Term Care Partnership Program. What that means is that you no longer have to “spend down ” your assets (impoverish yourself) in order to be eligible for Medicaid. The Program provides dollar for dollar asset protection to people who purchase long term care insurance. Each dollar that the Long Term Care Partnership Policy pays out in benets entitles you to keep a dollar of your assets to either enjoy yourself or pass on to your children and grandchildren. The baby boomers (those people born between the years 1946 and 1964) will double the elderly population in America. Today, there are 13 million people using long term care services such as custodial care at home , respite and adult day care, nursing home and assisted living care. That number will explode due to the number of baby boomers who will need long term care. Currently Medicaid spends 1/3 of its entire budget to pay for nearly half of all nursing home care.

Where will the additional monies come from to care for the increasing number of people who will need long term care? How will these num-

bers affect the quality of care we get? Will there be enough facilities to accommodate the number of people who will need long term care services?

Many people want to stay at home as long as possible. Afterall, home is the ultimate

(See PLAN, Page 16)

The Golden Years

• Are you concerned about the possibility of outliving your money due to the low rates of return you are currently earning? • Have you decided that you are no longer willing to take any risks with your investments? • Do you worry that the cost of your long term care will wipe out your “nest egg”? • Is leaving your money to your children or grandchildren something that is important to you?

If you answered yes to any of these questions, give me a call. We can set up an appointment to discuss how the products that I offer and their tax advantages can help you overcome these issues.

Charlene LeBlanc Dennis Independent Insurance and Annuity Representative

2701 Johnston Street, Suite 205 Lafayette, LA 70503

(Corner of Johnston and South College)

337-280-3028 charden5656@cox.net

Page 10 • Friday, February 25, 2011

Abbeville Meridional • Planning For Tomorrow Edition

2011 Planning For Tomorrow Edition • Abbeville Meridional

Friday, February 25, 2011 • Page 11

Reasons to rent versus purchasing a new home Words you will hear few real estate agents mutter: Not everybody should own a home! Some people aren ’t cut out for home ownership, for a variety of reasons. Are you one of those who should rent and not buy? Here are some ways to tell. Bad Credit Report Does your credit report tank? If your FICO score is below 620, you ’re not going to receive a good interest rate for a loan and, in fact, that kind of score could dump you into the hands of a predatory lender. Not a good sign. If you want to buy with bad credit, you should work on xing it before applying for a loan. Four late payments is enough to disqualify you from obtaining a loan. You can order your credit report free online.

High Debt Ratios Lenders consider two ratios: front-end and back-end. The front-end is your mortgage payment, plus taxes and insurance divided by your monthly salary. The backend adds your monthly debt payments to your PITI payment before dividing that total gure by your salary. A 50% debt ratio is a high ratio. A high debt ratio means you may not qualify for the loan. If you should nd an unscrupulous lender that is willing to fund such a loan, you may not be able to afford to feed yourself, even if you eat dirt. Job Instability or Relocation How secure is your job? A high-rolling Sacramento buyer purchased a home in

There are good times to rent a home.

Midtown. His mortgage payments were $3,500 a month, which was a lot for a 25-yearold. However, that payment was affordable while this guy was earning an annual $120,000 salary. But when he lost his job, he also lost his home to foreclosure. Is Your Job in Jeopardy? Is your company laying off? Could you be red and, if so, how hard would it be to get another job right away? Unemployment compensation is rarely enough to cover mortgage payments. Relocation. Are you likely to be transferred to another city within the next two to three years? If you had to sell due to a job transfer, your property would need to appreciate at least

10% to cover the cost of selling; otherwise, you would lose money on the sale. When you buy a home, you should plan to stay put for a while. Maintenance Issues All homes require upkeep and maintenance. Not everybody has the where-with-all, much less the desire, to tackle home repair projects. In addition, many rst-time home buyers can not afford to hire a professional to x things that break. Experts suggest you set aside 5% of the purchase price to cover maintenance and repairs when you buy a home. When Renting Costs Considerably Less

If your mortgage payment would be triple the amount (or more) you would pay for rent, it might not make nancial sense for you to buy. For example, if it would cost you $2,000 a month to rent what would cost you $6,000 per month to own, does it make sense to pay $48,000 a year more to own a home? If you are in a 30% tax bracket, you might not come close to recouping the difference you paid. Say your deductible expenses are $5,000 a month; 30% of that is only $1,500, which would be your true tax savings per month. Would you spend $6,000 to save $1,500? For more information, please consult a tax accountant or CPA.

Abbeville Meridional •• Planning For Tomorrow Edition

Page 12 •• Friday, February 25, 2011

Traditional to Roth IRA conversions Submitted By: Darnall, Sikes, Gardes & Frederick, A Corporation of Certiďƒžed Public Accountants

Six years ago, the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) relaxed some restrictive rules preventing many taxpayers from converting a traditional IRA to a Roth IRA, but this favorable change was not effective until 2010. Well, 2011 is here and the old saying ““good things come to those who wait”â€? is certainly true in this case. This article will explain why the timing for this rule change could not have been better. Roth IRAs offer beneďƒžts not available with a traditional IRA. First, earnings are distributed tax-free if basic Roth requirements are satisďƒžed. Next, owners are never required to take distributions during their lifetime, so earnings can continue to compound for the beneďƒžt of the beneďƒžciary. Finally, contributions can be made after age 70½ for additional taxfree growth. Prior to TIPRA, traditional IRA owners could convert their account to a Roth IRA, pay any taxes due from the conversion, and receive Roth IRA beneďƒžts going forward. There was, however, a major obstacle for many taxpayers. The conversion privilege was only available when the taxpayer making the conversion had modiďƒžed adjusted gross income of $100,000 or less. TIPRA removed this restriction beginning in 2010 and also provided that any taxes due on 2010 conversions could be paid one-half each in

2011 and 2012. Now let’’s discuss the timing aspect of the new rule for you patient investors considering a Roth conversion. If your traditional IRA has dropped in value and you expect to pay higher federal income tax rates in future years, now might be a very good time to consider converting all or part of your traditional IRA balance into a Roth IRA. Here is why. If you convert, it will likely trigger a current tax hit on a taxable portion of the amount of your conversion. But, with your traditional IRA balance at a somewhat lower level than in previous years (and possibly your overall income, too), the tax hit will be less. Then, after the conversion, your new Roth IRA balance can build up federal-incometax-free. Eventually, you can take tax-free withdrawals (not required) when your marginal tax rate may be higher (perhaps much higher) than it is right now. So, that means less taxes now with your conversion and no taxes on your future distributions. Your patience has paid valuable dividends! Reverse an Ill-advised Roth Conversion. Another great thing about Roth conversion strategy is you can always change your mind well after the fact. Believe it or not, you have until October 15 of the year following the conversion year to recharacterize (unwind) your converted account (or accounts). For example, say you convert a traditional IRA into a Roth account in early 2010. Later next year, the value of

the converted account plummets due to poor performance of the investments held in the account. In this bleak scenario, you would pay income tax on value that later disappeared. Bad idea! Thankfully, you have until October 17, 2011 (October 15, 2011 is a Saturday), to recharacterize the converted account back to traditional IRA status. It’’s as though the ill-advised conversion never happened. So, you won’’t owe any income tax on the now-unwound conversion.

provisions.

Conclusion. Low current tax cost for converting plus the change to avoid higher future tax rates on income and gains that will accumulate in your Roth account as the economy recovers (we hope) may add up to the perfect storm for the Roth conversion idea. That said, please contact us prior to pulling the trigger. There are a number of variables to consider, and we could welcome the opportunity to work with you to ensure a well-informed and thoughtful decision. Although every reasonable effort has been made to achieve accuracy in this publication, its editorial content is necessarily general in nature. Always consult your professional advisor before acting on this information. Any tax advice contained in the body of this article was not intended or written to be used, and cannot be used, by the reader for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law

It is important to keep up with changing banking needs.

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2011 Planning For Tomorrow Edition •• Abbeville Meridional

Friday, February 25, 2011 •• Page 13

Reasons to buy a new home If you’’re like most ďƒžrsttime home buyers, you’’ve probably listened to friends’’, family’’s and coworkers’’ advice, many of whom are encouraging you to buy a home. However, you may still wonder if buying a home is the right thing to do. Relax. Having reservations is normal. The more you know about why you should buy a home, the less scary the entire process will appear to you. Here are eight good reasons why you should buy a home. Pride of Ownership Pride of ownership is the number one reason why people yearn to own their home. It means you can paint the walls any color you desire, turn up the volume on your CD player, attach permanent ďƒžxtures and decorate your home according to your own taste. Home ownership gives you and your family a sense of stability and security. It’’s making an investment in your future. Appreciation Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated. The Ofďƒžce of Federal Housing Enterprise Oversight tracks the movements of single family home values across the country. Its House Price Index breaks down the changes by region and metropolitan area. Many people view their home investment as a hedge against inďƒ&#x;ation.

Mortgage Interest Deductions

Preferential Tax Treatment

Home ownership is a superb tax shelter and our tax rates favor homeowners. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is the largest component of your mortgage payment. Property Tax Deductions

If you receive more proďƒžt than the allowable exclusion upon sale of your home, that proďƒžt will be considered a capital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment. Mortgage Reduction Builds Equity

IRS Publication 530 contains tax information for ďƒžrst-time home buyers. Real estate property taxes paid for a ďƒžrst home and a vacation home are fully deductible for income tax purposes. In California, the passage of Proposition 13 in 1978 established the amount of assessed value after property changes hands and limited property tax increases to 2% per year or the rate of inďƒ&#x;ation, whichever is less. Capital Gain Exclusion As long as you have lived in your home for two of the past ďƒžve years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of proďƒžt from capital gains. You do not have to buy a replacement home or move up. There is no age restriction, and the ““over-55”â€? rule does not apply. You can exclude the above thresholds from taxes every 24 months, which means you could sell every two years and pocket your proďƒžt--subject to limitation-free from taxation.

Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation. The way amortization works, the prin-

cipal portion of your principal and interest payment increases slightly every month. It is lowest on your ďƒžrst payment and highest on your last payment. On average, each $100,000 of a mortgage will reduce in balance the ďƒžrst year by about $500 in principal, bringing that balance at the end of your ďƒžrst 12 months to $99,500. Equity Loans Consumers who carry credit card balances cannot deduct the interest paid, which can cost as much as 18% to 22%. Equity loan interest is often much less and it is deductible. For many

home owners, it makes sense to pay off this kind of debt with a home equity loan. Consumers can borrow against a home’’s equity for a variety of reasons such as home improvement, college, medical or starting a new business. Some state laws restrict home equity loans. Home Buying Basics Finding the perfect house to call home doesn’’t have to be hard. Learn how to make your dream home a reality.

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Page 14 • Friday, February 25, 2011

Abbeville Meridional • Planning For Tomorrow Edition

Getting nances straight before entering nursing home Nursing homes are necessary for many aging individuals. While they do provide care that may otherwise prove too difcult for the average family member, the fact remains that nursing homes can be quite expensive and quickly eat away at a resident ’s assets. In order to protect themselves, many seniors prefer to liquidate assets or “hide ” money from nursing homes. There are mixed views on the legality and morality of this issue. The average cost of a private room in a nursing home in the United States ranges from $70,000 to $100,000+ each year. Semi-private rooms aren ’t much lower in cost. In general, the resident of the nursing home pays for his or her stay. This comes through private savings, investments and even other assets, such as their homes. Individuals can see their entire nest egg depleted in

a matter of a few years, leaving no nancial legacy for their successors. In order to avoid depletion of assets, those who think a nursing home might be in their future often go to great lengths to hide their assets. In doing so, it may be up to government resources, like Medicaid, to pay for the care instead. But taxpayers who must foot the cost of government programs may cry foul over these tactics. Others argue that it is in their right to shelter funds that they worked years to accumulate. They may state that the rising costs of nursing homes is disproportionate to the actual care received. With this notion in mind, tactics are taken to protect assets from being acquired by nursing homes. Those of this mind set can take the following steps to protect assets.

* Remember the 5-year rule. For those who are going to transfer assets, it should be done early on. Nursing homes and government agencies funding low-income individuals look back at 5 years of nancial history. Any transfers should be done more than 5 years before nursing home care is needed.

* Donate to charity. Make regular contributions to charity to diminish personal assets.

* Irrevocable trusts. Individuals can transfer funds into a trust which is in the name of a trustee. Nursing homes cannot use this money because it is not in the resident ’s name.

* Transfer the deed. To play it safe, some people prefer to put the deed of their house in another person ’s name, like a child ’s, to protect it from seizure.

* Increase value of exempted items. Some personal items are exempt from Medicaid. In some instances this may be a homestead or a vehicle. Improve the home and buy a new car. Invest in new furnishings and other personal effects.

* Purchase long term care insurance. Having an insurance policy expressly for the purpose of nursing homes or a care attendant will provide funds from the policy instead of personal assets.

* Offer gifts to family. Spend the money on family members, including big-ticket items. Setting up trusts for grandchildren or children are other options.

Eastridge Nursing Center- Where The Fun Begins!

Old-Fashioned Fun for All!

Special Activities During the Holidays! Live Entertainment MonthlyResidents Join In On the Playing and Singing!

NURSING CENTER

2305 Richard Street in Abbeville • 892-9800

2011 Planning For Tomorrow Edition •• Abbeville Meridional

Friday, February 25, 2011 •• Page 15

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Abbeville Meridional • Planning For Tomorrow Edition

Page 16 • Friday, February 25, 2011

Who needs a nursing home? Nursing homes are not just for elderly people to live out their remaining days When you ’re in the prime of your life and enjoying good health, it ’s hard to imagine your self ever needing nursing home placement. The hard truth is that it can happen to anyone at anytime. Nursing homes are not just for elderly people to live out their days in anymore. They provide 24 hour care for anyone needing help with Activities of Daily Living (ADL ’s) on a daily basis, more than what a home health agency can provide. This includes the elderly and young adults with physical or mental disabilities or both. Sometimes a person may need to stay in the skilled nursing facility

unit (SNF) in order to receive wound care, P.T., O.T., or S.T. following illness or injury. Daily wound care is given following surgery, injury, or even breakdown of an area of skin due to a prolonged stay in bed or immobility. Medical Doctor and Psychiatric visits are done on a regular basis for those that cannot get in and out of a vehicle or nd it difcult to go out of the home. Some of the criteria that may indicate nursing home placement for a person include: Cannot take care of self due to physical, emotional, or mental prob-

lems Can no longer tend to self such as bathing, toileting, walking, and taking medicines Requires more help than what the caregiver can provide and cannot live alone May wander if unsupervised Has extensive medical needs requiring daily attention and monitoring by a nurse and supervised by a physician Has been discharged from a hospital and needs skilled nursing (SNF) or rehabilitative therapy before returning home Has been referred to a nursing

IeZg ?khf IZ`^ 2 private room. However, it is also the most expensive type of long term care. Care at home, 24/7, can exceed $130,000 a year in South Louisiana. The cost of long term care is the biggest threat to your retirement savings and one of the nation ’s leading concerns. Long term care insurance needs to be considered in your retirement planning. Procrastinating taking care of your long term care needs can be very costly. You could become uninsurable and not be able to buy it thereby having to assume the entire cost of it yourself or being dependent

on Medicaid. You may lose “good health ” discounts. In addition, every year that you wait, the cost goes up because you are getting older and the amount of benet your dollar can buy is reduced due to ination and the rising costs of healthcare. The emotional and nancial aspect of care givers should also be considered. 18% of caregivers leave their job to take care of a spouse or family member. This has a huge nancial impact on families. Caregivers are often depressed and overwhelmed with caring for a family member while juggling the other responsibili-

ties in their lives. Do you really want to be a burden to anyone? Plan today to consider a long term care insurance policy that will: • ensure you get the quality of care you want and where you want it • protect your hardearned assets • help prevent you from being dependent on either the government or your family members. It will be one of the best decisions you will ever make! By Charlene LeBlanc Dennis Independent Insurance & Annuity Broker

home by their medical doctor Nursing homes provide help with maintaining quality of life for everyone, whether it ’s for a short stay for rehab, or is the alternative to living at home alone in unsafe conditions or even in a family home and requiring more help than the family can give. It can be a happy and healthy choice for everyone! Submitted by Suzanne Piazza, R.N., A.L.N.C. Vermilion Health Care and Rehabilitation Center

2011 Planning For Tomorrow Edition •• Abbeville Meridional

Friday, February 25, 2011 •• Page 17

Retirement May Be Far Off, But the April 18 Deadline for IRA Contributions Isn’t.

You have only so many years to prepare for retirement. That’s why contributing to your Individual Retirement Account (IRA) is so important. Fortunately, you still have time to maximize your 2010 IRA contribution before the April 18 deadline. By contributing now, your retirement savings can have more opportunity to grow. Even if you already have an IRA elsewhere, it’s easy to transfer it to an Edward Jones IRA and begin receiving the face-to-face guidance you deserve.

To learn more about the advantages of an Edward Jones IRA, call or visit today. Kimble Sagrera, ChFCÂŽ, CLUÂŽ

Dirk G David

Financial Advisor . 817 E Veterans Memorial Drive Kaplan, LA 70548 337-643-3775 'HERUDK 3DUVRQV $$06 'LUN 'DYLG $$06 .LPEOH 6DJUHUD $$06 &K)& &/8 1RUWK 6WDWH 6WUHHW $EEHYLOOH /$

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Deborah L Parsons Financial Advisor . 201 North State Street Abbeville, LA 70510 337-893-0611

Financial Advisor . 102 Thomas Street Suite A-2 Westgate Shopping Center Abbeville, LA 70510 337-898-2117 -HII :KLWH

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www.edwardjones.com Member SIPC

Page 18 •• Friday, February 25, 2011

Abbeville Meridional •• Planning For Tomorrow Edition

Plan now for unexpected early retirement None of us can see what the future holds for us. But you have to make certain assumptions if you’’re going to create a strategy for building the resources you’’ll need for a comfortable retirement. But what happens when those assumptions prove unrealistic? Unfortunately, many people are wrestling with this very problem. Speciďƒžcally, they plan to work until a certain age —— but they leave the work force earlier. Obviously, this can have a big effect on a variety of other retirement income factors, such as the amount of money they need to put away each year while they’’re still working and the age at which they should start collecting Social Security and begin tapping into their IRA, 401(k) and other retirement accounts. Just how big a problem is this? Consider the following statistics from the Employee Beneďƒžt Research Institute’’s 2009 Retirement Conďƒždence Survey: Forty-seven percent of retirees left the work force earlier than planned. Of that total, 42 percent did so because of health problems or disability, 34 percent left due to their employers’’ downsizing or closure, and 18 percent left to care for a spouse or another family member. So here’’s the bottom line: Even if you think you’’re going to work until, say, 65, and you want to work until 65, you may be forced to quit at 62, 60 —— or even younger. And during those years you won’’t be working, you’’re not just losing out on earned in-

come —— you’’re also not contributing to your 401(k) or other employer-sponsored retirement plan, and you might lose your ability to contribute to your IRA as well. At the same time, your retirement lifestyle expenses have begun earlier than you anticipated —— and many people ďƒžnd that these costs aren’’t much, if any, lower than the expenses they incurred while working. What can you do to help avoid coming up short of the income you’’ll need during your retirement years? For one thing, don’’t spend a lot of time focusing on those things you can’’t control, such as downsizing or an unexpected health crisis or disability. Instead, concentrate on those factors over which you have power. Consider the following: Maximize your contributions to your 401(k) and IRA. Each year, put as much as you can afford into your IRA and your 401(k) or other employer-sponsored retirement plan. Invest for growth. Include growth-oriented investments, such as stocks, in your balanced portfolio if appropriate for your objectives, risk tolerance and time horizon. While it’’s true that growth vehicles will ďƒ&#x;uctuate in value, you can help reduce the effects of volatility by buying quality investments and holding them for the long term. Create alternative plans. While you may want to construct an investment strategy based on retiring at a certain age, you’’ll also want to come up with some alternative scenarios based on different

retirement ages and corresponding differences in other factors, such as amounts invested in each year, rate of return, age at which you begin taking Social Security, and so on. A ďƒžnancial professional can help you develop these ““hypotheticals.”â€? You can’’t predict the future. But you can at least help yourself prepare for those twists of fate that await you as you plan for retirement. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. You should plan early for retirement.

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2011 Planning For Tomorrow Edition •• Abbeville Meridional

When investing, learn all aspects of risk In life, you can’’t avoid all risks —— and you shouldn’’t try, because endeavors that carry risk also bring the prospect of reward. And it’’s certainly the same in the investment world. So instead of trying to invest risk-free, which is impossible, learn to recognize the different types of investment risk while becoming familiar with your own risk tolerance. To start with, let’’s quickly look at some of the most common forms of investment risk: •• Risk of losing principal —— This is the type of risk most commonly associated with investing. You could lose some, or even all, of your principal if you sell an investment, such as a stock, whose value has dropped lower than the purchase price. You can’’t eliminate the risk of losing principal, but you may be able to reduce it by buying quality stocks and holding them long enough to overcome short-term market drops. •• Inďƒ&#x;ation risk —— With an investment that pays a ďƒžxed rate of return, such as a certiďƒžcate of deposit (CD), you run the risk of not keeping up with inďƒ&#x;ation, which means you could lose purchasing power over time. Consequently, it’’s a good idea not to ““overload”â€? on these types of investments. •• Interest-rate risk —— When you own a bond, your investment is somewhat at the mercy of changing market interest rates. For example, if you buy a bond that pays four percent interest, and market rates rise so that newly issued bonds pay ďƒžve percent, the relative value of your bond will go down; no one will pay you face value of your bond when they can get new ones that pay higher rates. Of course, if you hold your bonds until maturity, which is often a good idea, you can avoid being victimized by interest-rate risk. •• Concentration risk —— This type of risk occurs when you have too much of your money concentrated in one area, such as in a particular stock or in one industry. If a downturn strikes that stock or industry, your portfolio could take a big hit. To combat this type of risk, you need to diversify your holdings among stocks, bonds, government securities and other investments. While diversiďƒžcation, by itself, cannot guarantee a proďƒžt or protect against a loss, it can help reduce the effect of volatility. In addition to understanding the above types of risk, you also need to be familiar with your own risk tolerance and how it affects your investment strategy. If you are constantly worried about ““the market,”â€? you’’ve probably got too many investments that are at risk of losing principal. At the other end of the spectrum, if you’’re always concerned that your portfolio won’’t grow enough to generate the income you’’ll eventually need for retirement, you may be investing too conservatively —— and, as a result, you’’re inviting inďƒ&#x;ation risk. Ultimately, you need to match your own risk tolerance with a strategy that allows you to achieve your goals. This will require self-awareness, patience, discipline —— and, at times, a willingness to move outside your own ““comfort zone.”â€? This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Friday, February 25, 2011 •• Page 19

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Page 20 • Friday, February 25, 2011

Abbeville Meridional • Planning For Tomorrow Edition

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