Financial Futures: Business 4.0 by Meadowlands Media

Business 4.0

2020 Issue 1

PREPARING BUSINESS EXECUTIVES, ENTREPRENEURS & ORGANIZATIONS FOR THE NEXT GENERATION ECONOMY

Adapting for Industry 4.0

Reimagining the Future Economy

Staying Ahead of Transformation, Challenges and Innovation. • Health Needs are a Game Changer for Retirement Planning • The Impact of Elder Care on the Employer and the Workforce • The Office Space Revolution: Impact of Technology on the Workforce and Commercial Real Estate • The Future of Work: Attracting, Growing & Retaining Talent • The Changing Face of Retirement Planning • Thinking in the Future Tense: Business Planning • A Roadmap for Estate and Elder Law Planning

Meadowlands 2040 Foundation, Inc.

Brought to you by the Meadowlands 2040 Foundation, Inc. and the Meadowlands Chamber’s Financial Futures Initiative

Produced By:

Meadowlands Chamber’s Financial Futures Initiative

Supported By:

Meadowlands Media/Meadowlands Magazine Meadowlands Chamber

Production Partners:

1099 Wall Street West Lyndhurst NJ 07071 (201) 939-0707 www.meadowlands.org

Director of Publications & Communications:

Joe Garavente, Meadowlands Media (201) 939-0707, JGaravente@meadowlands.org Martha Morley, Greer Enterprises, Inc. (201) 493-7996, greerentps@aol.com

Advertising:

Susan S. Reid, Bloomfield Design

Design:

New Jersey Economic Development Authority, Bergen County Division of Economic Development Hudson County Economic Development Corporation, New Jersey Sports & Exposition Authority

Distribution Partners:

We have entered the digital age and our economy is undergoing rapid transformation as we approach the fourth industrial revolution, with profound changes impending locally, nationally and globally. The Meadowlands Chamber’s Financial Futures Initiative has been formed by our Board of Advisors to address how the Meadowlands region business community responds to these changes and adapts our economy for Industry 4.0.

Financial Futures: Business 4.0 is brought to you by this initiative and it is aimed at empowering high-level professionals and organizations with the tools and intelligence necessary to prepare for the new economy of transformation, challenges and innovation. The topics covered include personal & corporate financial planning, decision-making, workforce issues, long-term care insurance, redesigned workplaces, digital transformation, elder law, estate planning and more. We hope you will find this information useful as you and your organization prepare for the next wave of disruption and innovation. Patti Goldfarb Employee Benefits Advisors Group Board of Advisors, Meadowlands Chamber

If you would like more copies of this guide, please contact Meadowlands Media at (201) 939-0707.

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Health Needs are a Game Changer for Retirement Planning

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Meadowlands Financial Futures: Business 4.0 | meadowlands.org

Health Needs are a Game Changer for Retirement Planning We know about retirement savings but very few of us know how to protect our nest egg

ou’ve worked hard, saved and built a nice nest egg for your retirement. You were careful with your investments and didn’t invest in anything too risky. You think you’re home free and can enjoy a comfortable retirement. But there’s one risk out there that still must be attended to or it can destroy all your work. It could amount to half a million or more in expenses.

What is it? It is the cost of long-term care. Medicare won’t cover it. Nor, will your Medicare Supplement or Medicare Advantage plan. The only way this bill is paid from savings (your retirement plan!), depending on family to be your caregivers, Medicaid (when your savings are gone) or by transferring the risk to a long-term care insurance plan. Genworth found in a survey of 1,200 people that not having enough money to pay for healthcare or long-term care is the greatest fear adults have about aging. Fidelity estimates that the average couple will need $285,000* in today’s dollars for medical expenses in retirement, excluding long-term care. If we add to that four years in an assisted living facility the cost becomes an additional $291,120, according to Genworth, and care in a skilled nursing facility is more than double this cost. These numbers increase on average 3% each year. Genworth also mentioned in their study that 60% of people erroneously believed that the government would pay for their long-term care cost. They did not know the difference between Medicare and Medicaid. It’s no wonder that Medicaid is the largest payor of long-term care costs in the nation. Healthcare will continue to be one of your largest expenses in retirement. Unlike older generations, most of us will not have employer- or union-sponsored retiree health

benefits. So, healthcare costs will likely cash-value life insurance that may have served consume a larger portion of your retirement its purpose. This is an opportunity to use the budget—and you need to plan for that. cash in that policy towards paying for your When you think about covering long- long-term care hybrid policy by transferring term care costs, your goal can be to cover the cash via a 1031 exchange of assets. Most the entire cost or if that isn’t feasible (and carriers will help facilitate the transaction. for many people, it isn’t) choosing a percentage you can cover. Something is better Patti Goldfarb is the Founder and Owner than nothing. You’ll be surprised how much of the Employee Benefits Advisors Group. She is also a Certified Senior Advisor and a small amount can grow with interest. One of the best places to start is by licensed insurance agent working in the taking advantage of employer sponsored areas of Medicare, and long-term care inresources such as health savings accounts, surance. She can be reached at pgoldfarb@ voluntary benefits such as hospital ebagroup.net or (201) 255-6239. recovery, critical illness, home care and accident plans. These programs are usually portable, so if you change jobs, you can take them with you. The plans pay cash amount when you are recovering from a stay in the hospital, We Take Care of All Your Health Needs are diagnosed with a critical illness, etc. Then, purchase long-term care insurance for your custodial care needs. There are two types of long-term care policies: 1) traditional, where you pay a premium and Contact Patti Goldfarb: receive a monthly or daily benefit, or 2) pgoldfarb@ebagroup.net hybrid policy, which 201-255-6239 uses a life insurance chassis and adds a long-term care rider ebagroup.net to it. If you have any

Employee Benefits Individual Health Insurance Medicare Plans Long Term Care Insurance

*Disclaimer: Fidelity Benefits Consulting estimate; 2019. Estimate based on a hypothetical couple retiring in 2019, 65 years old, with life expectancies that align with Society of Actuaries’ RP2014 Healthy Annuitant rates with Mortality Improvements Scale MP-2016. Actual expenses may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Costs Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, Original Medicare. The calculation takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term car.

Meadowlands Financial Futures: Business 4.0 | meadowlands.org

The Impact of Elder Care on the Employer and the Workforce

f your sales manager and comptroller came into your office to tell you that sales will be down for 4th quarter and it will impact revenue by 20%, you would want to know why and what was being planned to improve the situation. What you may not realize is that family caregiving issues by several employees is having an impact on your business. In 2012 the Gallup-Healthways WellBeing Survey reported that caregiving costs impact on the US economy was $25 billion in lost productivity. So, what can you do about it? First let’s understand who the caregivers are and what is distracting them. Employees starting families tend to have a support system. They often have their own parents to watch plus a newborn. Family leave, which was just passed in New Jersey, helps with caring for a newborn. Plus, it is an exciting time and everyone at work knows when someone is pregnant so the absence is to be expected. Caring for an adult is not exciting and family caregivers tend to keep it to themselves until there is a crisis event that demands more. A company loses productivity because employees are distracted. They are answering texts, phone calls and searching for help online. They are running to doctor appointments—and even comforting a loved one who is sick or suffering with early onset dementia. The age of caregivers and those needing care is also starting to change. When I started my home care agency business, a majority or our clients were in their 80s and the family caregivers in their 50s and 60s. In the ten years we have been in business we have seen a shift. More of our clients are in their 90s and the family caregivers are in their late 60s and 70s. Plus we are now serving more younger clients in their early 60s. The caregivers are Millennials, late 20s and 30s. They are caring for parents with early onset Alzheimer’s, often single parents who need help with instrumental activities of daily living such as shopping for groceries and joining their parents on doctor visits. The complexity of care is also changing. People are not spending much time 4

Solutions and what can employers do It’s complicated. Employers, regardless of the size company, need to do their best to create an open environment for dialogue so employees can easily discuss their challenges. New Jersey just passed the Family Leave act, which is a great benefit when someone needs a block of time off. However sometimes an employee may need to come in late, leave early or need to work from home to help a loved one. A flexible work schedule that is measured for getting your job done not face time in the office will help take the pressure off stressed caregivers. Employees also need to know where to turn for help when the caregiving responsibilities are simply too much for them. There are several home care agencies in New Jersey that can help. Comfort Keepers, Applause Home Care, Loving Care Agency and Senior Helpers provide services in Northern New Jersey that your employees can depend on to help care for a loved one. Access to local elder care attorneys, long term care insurance specialists and financial advisors to help your employees navigate their loved one’s challenges and set up their own lives early on will be a great service that every employer should try to provide for their workforce. Eydie Shapiro is an owner and the Director of Sales for Comfort Keepers At Home Care of Secaucus. The company is owned and operated by the three women of Women On a Mission, LLC. We know from personal experience the challenges families face in caring for loved ones as they get older and need help with the activities of daily living and we partner with families to address their concerns and help their loved ones maintain independence.

is hospitals after a health event and are released home with more complicated medical tasks and medication needs. This burden is falling on all caregivers. AARP’s Public Policy Institute reported that Millennial caregivers are burdened with more of these issues than previous generations of caregivers. Ten years ago, the long-term care insurance company Genworth surveyed 800 people and found that the average age of caregivers was 53 years old. Two years ago, they updated the survey. The average age of a caregiver dropped to 47. They also found that people needing care dropped. More than half surveyed were over 75. Almost 10 years later, the age dropped to 66. Not only are your employees having to care for their parents, they are starting families, bringing up teenagers, trying to succeed at work, saving for college educations for their kids and hopefully saving for their own retirement.

Meadowlands Financial Futures: Business 4.0 | meadowlands.org

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For solo business owners when you’re the one growing your business—serving your customers and trying to take care of your own life—family caregiving responsibilities can be crushing. There are several issues. Here are a few: • Early diagnosis of Alzheimer’s and dementia • Parents divorced and the Mom or Dad is increasingly dependent on their adult kids. • Parents who are boomers have not saved enough for retirement and need financial help. • Catastrophic illness of a widowed parent who is in their 60s and early 70s.

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The Office Space Revolution Impact of technology on the workforce and commercial real estate

ith your cell phone having more computing power than all of NASA back in 1969 when it sent two astronauts to the moon, technology has emerged as a significant wonder of the 21st Century. Technology is integrated within our lives in both apparent and transparent ways. It’s made actions and processes easier while connecting us to people anywhere and at any time. Therefore, it should come as no surprise that technology has also changed how and where we work in ways that were unimaginable just a few years ago. Among the goals of technology is to make actions and processes easier to complete, while also fostering communication and collaboration. As a result, new technologies have been integrated into the workplace. It flows through all business sectors and has freed employees from being attached to their desks every day. Technology has given birth to the mobile workforce that can work from home or the local coffee shop. Here are some emerging trends impacting workspace and commercial real estate in the Meadowlands. Shifting demographics Against the backdrop of technological advancements, one of the largest demographics shifts ever witnessed in the U.S. has been gaining momentum. By 2030, the Millennial generation is expected to make up three-quarters of the U.S. workforce. Meanwhile, Generation Z, the largest generation ever, is also beginning to enter the workforce. So why is this wave of new generations in the workforce significant, you may ask? Millennials and Generation Z have been raised on technology. These are generations that have grown up in the digital world and is making its presence felt in the workplace. They are accustomed to on-demand technology and collaborative workspaces. Furthermore, the quality of technology in the workplace will influence where they work. With the national and New Jersey unemployment rates at historically low levels, employers are challenged to fill open positions with qualified candidates. With competition for talent intense, companies spanning a variety of sectors are looking for ways to tap this generation for their workforce. Employers are looking to differentiate based on location, amenities and environment. This includes creating a technology driven workspace that meets the needs and expectations of Millennials and Generation Z.

“Today’s workspaces need to engage a workforce that is demanding a different environment than traditional office spaces. A collaborative workspace needs to support different ways of working and offer a variety of spaces to support both working alone and in collaboration with others. Our clients are creating environments that are destinations their people want to work in and that help them be more productive. From quiet rooms to technology rich huddle spaces, we’re helping to create environments that are dynamic and inspiring spaces.” Kevin Klier | Senior EVP and General Manager | dancker | dancker.com 6

Meadowlands Financial Futures: Business 4.0 | meadowlands.org

“These new work environments can also be used to attract new employees who see the benefit of working in collaborative spaces over the conventional work environments. Younger employees are already learning and living in these types of settings, so this approach is consistent and familiar with how they interact.” Anthony Guzzo | President | Guzzo + Guzzo | gg-architect.com Collaboration is key Advancements in smart phones, tablets, social networking sites and chat apps have brought communication to a new level. Mobile and cloud technologies now allow instant and remote access to the workplace from anywhere in the world. Technology nurtures collaboration, offering the ability to connect to colleagues anywhere and at any time. Collaboration has become the cultural goal of many companies today for good reason: a collaborative work environment leads to more productivity, creativity and innovation.

“We are currently working with several clients that are realizing the need to break down the barriers of the traditional office space. They want to remove the old high walled cubicles and the closed off offices and replace them with new open collaborative workspaces with lots of natural light. Companies are finding that traditional work environment is not conducive to the way people actually work. These new workspace breaks down the barriers between the traditional office hierarchy and helps to promote a more team-oriented approach which can also increase productivity.” Anthony Guzzo | President | Guzzo + Guzzo | gg-architect.com

Furniture is keeping pace With the arrival of the collaborative workplace trend, it is not surprising that we are seeing an uptick in collaborative furniture items to choose from.

“The furniture world has grown to great lengths to provide employees with a dynamic office environment catered to their needs. Modular privacy booths keep conversations private when necessary while working in an open office setting. Sit to stand desks give you the flexibility to stretch your legs and move around while still staying focused on your work. Some offices don’t have the real estate for standard seating so adding a little color and a soft, comfortable stool-like seat can make any area in the office a collaborative one.” Anthony Battaglia | Business Development | KAD Associates | kad-associates.com

“There are some great new products emerging that really embrace the collaborative and team approach. The furniture industry has really responded with a variety of creative options such as prefabricated office pods, writable glass wall surfaces, group seating pods with privacy backs and canopies, multi-functional seating with power outlets and fold away work tops and small phone booth rooms for cell phone privacy.” Anthony Guzzo | President | Guzzo + Guzzo | gg-architect.com

Building brand awareness and experience Ideally an office space reflects an organization’s branding and delivers a cohesive message to everyone who walks into the space, whether they are employees, partners or clients. Through the use of design elements, signage, finishes and artwork, organizations can set an ideal visual experience that raises brand awareness and gives meaning to the space.

Bringing your vision to life.

“Generally speaking, in response to today’s team oriented/flexible office design and shared workspaces, architectural signage needs to be inherently flexible and changeable. To that end we are also seeing more digital/interactive signage used in applications where static signage has traditionally been used.” Danijel K. Farkas | Partner | Designer Sign Systems, LLC | dss-nj.com

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Impact on commercial real estate This brings us to the commercial real estate arena, where office buildings and the workspaces within them are being influenced by new technology and working habits. The office property sector is undergoing a significant transformation, driven by corporate demands for new and varying types of amenities. Food trucks, roof decks, on-site IT genius bars, game rooms and subsidized ride sharing programs to and from buildings are just some of the amenities being rolled out by building owners. Smart-building technologies including HVAC systems and lighting systems are learning their tenants’ patterns and preferences to maintain comfortable working environments. Meanwhile, the outdated office buildings unable to attract today’s tenants will be demolished or converted to alternative uses. More than 1.7 million square feet of buildings were removed from the New Jersey office market during the first half of 2018, with this trend expected to continue in the coming years. The removal of these outdated buildings will also help to exert downward pressures on the state’s overall vacancy rate, which had stubbornly persisted near the 25% level for the past few years.

New Furniture Specification & Sales Space Planning & Design Private Offices Movable walls Modular Open Plan Workstations Relocation & Asset Management Reconfiguration, Delivery & Installation Seating-Executive, Conference, Reception, Task Custom Mill Work and Furniture Warehousing & Storage

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Guzzo + Guzzo A

“Long gone are the grandiose lobbies and outdated gyms crammed into un-leasable basement spaces. With employee health and wellness emerging as a major focus for today’s companies, landlords are touting high-end fitness centers and other wellness amenities to attract tenants and their employees. The push for high-end office spaces has encouraged landlords to upgrade their buildings and pack them with the amenities to stand above the competition.” Frank Recine | Executive Managing Director | Jones Lang LaSalle Brokerage, Inc. (JLL) | us.jll.com

“We are noticing a growing trend in the area where landlords are pursuing major renovations to facilities when clients are willing to enter into longer term leases. Some clients, particularly those in the healthcare industry, are looking for substantial landlord improvement packages and in turn are prepared to enter into long term commitments. This trend will undoubtedly improve the inventory of office space in the Meadowlands and lend to further stability of the region’s office market.” Jamie Weiss | President | Weiss Realty | jweissrealty.com continues on the next page

Guzzo + Guzzo Architects is an established architectural firm with over 50 years of design experience in: ·Retail ·Office

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Meadowlands Financial Futures: Business 4.0 | meadowlands.org

Loaded & equipped office spaces Office workspaces have also evolved in response to new technologies and the needs of a workforce fueled by Millennials and Generation Z. The growth of cloud computing and digitization of paperwork formerly housed in filing cabinets/storage rooms have reduced the office space footprints of many tenants. One only needs to look at the legal services sector, where vast law libraries are now housed in digital filing systems. Collaborative workspaces and open environments have replaced rows of cubicles and large C-suite offices. The open office concept is also being made possible by the elimination of assigned desks, as more employees work remotely.

“The challenge for office tenants is finding the right balance between privacy and open layouts. All open workspaces have the potential to be distracting and even inhibit the productivity they are supposed to be fostering. Increasingly, today’s office floorplan is likely to include a hybrid layout that includes space for hoteling, amenities, break-out/huddle rooms for collaboration and “focus booths” for concentration.” Frank Recine | Executive Managing Director | Jones Lang LaSalle Brokerage, Inc. (JLL) | us.jll.com Looking ahead In closing, technology has clearly influenced how we work, communicate and interact with one another around the world. Its impact is felt in the workplaces of startup firms and established international companies alike. The adoptin of technology by Millennials and Generation Z will only foster its proliferation. Furthermore, since technology is constantly evolving with no “end-point”, it will continue to reshape our daily lives at an ever rapidly growing pace.

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Frank Recine is an Executive Managing Director at Jones Lang LaSalle Brokerage, Inc. (JLL) and can be reached at (973)829-4738 or frank.recine@am.jll.com. More information about JLL can be found at www.us.jll.com. Recine also serves on the Board of Advisors of the Meadowlands Chamber, offering real estate expertise to the board’s Financial Futures Initiative. The initiative addresses critical issues in retirement & estate planning, insurance, benefits, business secession planning, workforce development, aging workforce/ population, second careers and volunteerism.

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The Future of Work: Attracting, Growing & Retaining Talent

he future looks bright for business and workers in the Meadowlands, at least for the near future. We know a couple things for sure: Diversity of workers will continue to grow, soft skills (employability skills) will be the top skills sought after by most businesses, artificial intelligence (AI) will replace many types of jobs and our core industries aren’t going anywhere. Here are some key industry highlights for the Meadowlands area: • With the opening of America Dream, jobs will be plentiful within the retail, hospitality and tourism industry. Growth in this industry is expected to go up 34%. • Healthcare will remain a strong Industry as well and will grow by 20%. Jobs in this industry will vary widely but most will be mid to low skilled jobs. • Manufacturing is expected to remain stable and may see growth up to 6.9%. • The transportation & logistics industry is expected to grow by 19.8%. 10

Workforce needs are changing While all this growth is great for the economy, we all need to keep our eye on two big challenges: the aging workforce and automation. These two key factors may contribute the most in creating a vacuum of skilled workers On another note, the future workforce will also reflect a very diverse population. We will not only see diversity in race but also a much more comprehensive generational representation. The Silent Generation, sometimes called Traditionalists, (those born before 1945) will make up only 3% of the workforce, followed by Baby Boomers (born 1946 to 1964), then Generation X (born 1965 to 1980), Millennials (born 1981 to 1995) and then Generation Z (born 1996 to 2012). With five distinct generations in the workforce, the questions is: How do they all work together, how do they all get along? The key to helping this diverse workforce thrive will be company cultures that em-

Meadowlands Financial Futures: Business 4.0 | meadowlands.org

brace diversity and inclusion, companies that have training programs that support and encourage diversity as well as job alignment that matches individual worker skills and abilities. Here’s what’s important to know to stay competitive: • Treat your workforce well and make good investments in the right people. • Embrace and support diversity. Help all employees understand the value of different points of view, background and perspective. Support team building, but train teams how to work together. • Have company leaders model good “people skills.” Have them show employees “how to win and influence people.” • Invest in your current workforce by identifying employees who would benefit from skill enhancement. With so many online training opportunities available, keeping workers happy and upskilled is easier than ever. Group training and team building can boost morale and help employees learn how

to leverage their own skills with the skills of others in their work environment. • Cross training staff members so that each employee can do multiple job tasks helps to keep your employees learning and growing within the company. It also allows a company to ease the lack of work being performed when an employee takes leave for a short- or long-term leave.

How to get more engagement, more productivity Economies ebb and flow, but one of the surest ways a leader can stay competitive in today’s market is to keep your workforce engaged and productive. Do this by encouraging and embracing a diverse workforce with a wide range of skills, invest in training and support for upcoming leaders and always keep your eye on the future skills that will be needed in your industry, keeping an eye out for talent. The key takeaways to building a strong pipeline of workers for the future: • Education matters in K-12 and the right curriculum will ensure our students are armed with skills for high skilled jobs of the future. • Technology skills across the board are needed in almost every occupation to help business grow and thrive. These are important skills for students and adults in the workforce to continually stay up to date on. • Apprenticeships are effective workforce strategies for many companies to consider. Work and education that are concurrent, help many learners that don’t have success with education alone. • As an employer, get involved with your local school system. Provide coaching and mentoring opportunities for students to expose them to jobs within your organization or take on an intern. With an unemployment rate around 3%, hiring, training and retaining the right people are keys to staying competitive. After all, your workforce strategies and human capital development are critical to sustaining and growing your business. Tammy Molinelli is the Executive Director of the Bergen County Workforce Development Board (Bergen WDB). Whether you represent a business or are a job seeker in search of a new career, you are invited to put the Bergen County WDB to work for you. To learn more about the Bergen WDB and the services we offer to job seekers and businesses, please visit: bergenworkforce.org

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Meadowlands Financial Futures: Business 4.0 | meadowlands.org

The Changing Face of Retirement Planning When it comes to retirement planning, one size does not fit all

ou cannot take a cookie cutter approach and expect the results to fit your individual needs. There are so many variables that can have an impact on a person’s particular situation. In addition, there are many complexities today that we were not aware of or did not exist years ago. As recently as 1985, retirees relied on Social Security for 65% of their retirement income. That number is now down to 27%, putting more of the responsibility on the shoulders of retirees. Some of those are changes in the type of pension plan most often utilized as well as the overall availability of plans, an increase in longevity, increased costs for healthcare, an increase in the number of people (especially young people) changing jobs and the declining dependency on Social Security. Types of qualified plans Qualified plans are still the best vehicle for accumulating retirement funds because of the tax deductibility of contributions and the fact that employers often contribute to the plans. There are two general types of qualified retirement plans: defined benefit plans and defined contribution plans. Defined benefit plans provide retirement income based on a formula that takes into consideration your age at retirement, your final average income over a period of years and your years of service. Most, if not all, of the plan’s contributions are made by the employer. Since it is based on a predetermined formula, the benefit is easy to estimate. For small, closely held businesses, where the principals are usually older and have significantly higher incomes, a defined benefit plan can be a great approach for the business owners. Defined contribution plans, also known as money purchase plans, provide a benefit based on the value of the funds as well as the individual’s age at retirement. The most common example of these plans is a 401(k). Unless the funds are in a fixed interest account, market fluctuations will impact the 12

retirement payout. These plans are usually funded either partially or entirely by employees. Profit Sharing Plans, IRA’s and Roth IRA’s are also types of defined contribution plans. For employees who stay with one company, defined benefit plans often offer a better option since more of the funding comes from the employer and the benefit is more predictable. The trend, however, is toward defined contribution plans since the year to year cost can be better controlled by the employer. As of 2018, 58% of full-time employees had access to defined contribution plans only, 16% both defined contribution and defined benefit plans and only 3% defined benefit only. This means that less than 80% of full-time workers have pension plans available and less than 20% participate in defined benefit plans. Factors that go into planning Longevity People are living longer and so have a legitimate fear of running out of money. The life expectancy of a 65 year old has increased by over 20% since 1990, thus requiring greater contributions during the earning years. There are (at least) two ways this can be addressed. Build up an account that will,

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at least initially, generate enough income so you do not have to dip into principal. An alternate approach is to plan on using annuities that can provide lifetime income, no matter how long you live. The first approach requires you to accumulate a bigger retirement nest egg. However, it also provides a hedge against inflation since you can ultimately start drawing down some of the principal. Annuities need less funding but most do not address the issue of inflation. Also, if you choose the annuity approach, you may need to consider a payout option that includes your spouse/significant other since a standard annuity payment ends upon the annuitant’s death. There are some annuities that offer increasing payments but that may require receiving lower payments in earlier years. With people living longer and families more spread out, there is a greater likelihood that someone will need some sort of long-term care. According to the Centers for Medicare and Medicaid Services, about 60% of people over 65 will require some type of long-term care services during their lifetime. More than 40% will need care in a nursing home for some period of time. Longevity also increases the risk of dementia, making someone more susceptible

to scams or money mismanagement, so that needs to be included in the planning process. It makes sense to turn over partial or full control of your funds to a trusted family member at some point to avoid this.

Health insurance Most people will lose their health insurance coverage when they retire. With the cost of insurance growing at a much greater rate than inflation, this needs to be considered when projecting income needs. In addition to paying for parts B and D of Medicare, a Medicare Supplement plan and prescription drug plan are also important. Based on an estimate by Fidelity, an average couple retiring today will need $280,000 to cover healthcare and medical costs in retirement. For single retirees the estimate is $150,000 for women and $135,000 for men.

Changing jobs It is an increasingly common practice for people to change employers as a means of improving their compensation and having better career opportunities, especially when they are young and relatively new to the

business world. Often little or no consideration is given to the effect the move may have on future retirement benefits. This is a big shift from a time when a person would typically spend years with the same company and would retire with a reasonable benefit. Although any pension contributions made by an employee are his or hers to transfer or rollover, the majority of pension plans have a vesting schedule that limits the amount of company contributions that are available. In the case of a 401(k) plan, when an employer matches employee contributions, some or all of those funds may revert back to the employer if the employee is not 100% vested.

Social security There are many who feel that Social Security will not be available when they retire. Although that is an extreme position, the likelihood is that in the future Social Security will look different than it is today. Changes in demographics are having a negative impact on the Social Security Trust Fund with a smaller workforce having to support an increasing number of retirees. Increasing life expectancy adds to this prob-

lem. Projections say that the Trust Fund will be insolvent sometime between 2033 and early 2040’s. After that time, income will cover about 77% of scheduled payments. Though this is clearly not ideal, it is not as dire as the predictions that say there will be no Social Security in the future.

Looking ahead Financial/retirement planning has a lot of moving parts and needs to be continually tweaked during the accumulation period. You need take advantage of tax qualified investment vehicles if available, especially when employer funding is involved. Where employer contributions are dependent on those of employees, as in many 401(k) plans that have matching contributions, employees should be sure they receive the maximum matching payments. Bob Ehnert is the owner of the Ehnert Agency, a full-service life and health insurance agency that specializes in retirement planning, life insurance planning and retirement and estate planning.

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Thinking in the Future Tense “The future ain’t what it used to be.” — Yogi Berra “Change is the law of life. And those who look only to the past or present are certain to miss the future.” — John F. Kennedy

Two items for the record: 1. This article has nothing specifically to do with personal financial planning. 2. If you are beginning to read this article, I expect that you are already somewhat ahead of your peers.

ou see, the majority of people I meet are so wrapped up in their day-to-day concerns about the goings on in their personal and professional lives that thinking about the long term has almost become extinct. Today, long-term planning seems to be considering what you’re going to do after lunch. It’s easy for some to say: “What’s the usefulness of planning? Whatever will happen will happen.” I ask you to resist that fatalistic temptation for a moment. If we aren’t willing to exert influence over our future actions, in essence, we are relegating ourselves to acting like puppets, hoping that someone will pull our strings in ways we like. I have a hard time accepting that proactive executives would ever want to operate that way. Some background Scenario planning or scenario analysis is an adaptation of the strategic planning method used by the US military intelligence to make flexible, long-term plans. At its core, it combines known facts (relative to your marketplace) like demographics, unemployment rates, interest rates, zoning regulations, commercial real estate occupancy rates, and industrial capacity information with some assumptions about the future. It is designed to identify some key drivers that could have a significant impact on your business or life and therefore would require a quick change of objectives and tactics. In other words, scenario planning is not just random dreaming. Think “what if...” Start by visualizing what future conditions or situations are probable and think through potential personal, professional, and organizational impacts. 14

In case you’re wondering about my intent, I’m not asking you to predict and control “the” future. That has proven time and again to be a daunting task with more downside than upside for the effort expended. I am asking you to think through multiple possible futures so you can anticipate change, quickly capitalize on the opportunities that surface, and mitigate risks soon after you identify them. This type of planning gives you a chance to rehearse the future. It also gives a more than adequate supply of Plan Bs to consider when something suddenly appears in your field of vision. You won’t lose time to your competitors while you and your team sit around a table scrambling to put together a flawless plan and hoping you’re guessing correctly. Your brain is your best friend or worst enemy Our brains automatically revert to a reptilian response when under stress (think fight or flight), cutting off access to higher level thinking within the amygdala or neocortex. So, you are literally be setting yourself up to lose by creating undue levels of stress caused by a lack of advanced planning. At the time it’s most urgent for you to think clearly, it is least likely to happen. This is exactly why military and airline pilots spend so much time in simulators. They train their brain to automatically respond to achieve the desired outcome. When is this approach most helpful? A scenario-based approach to management decision-making is particularly useful when: • Decisions or issues at hand are highly uncertain and involve a range of complex factors that the company cannot control and that will play out over time. • There is a clear question about the future, but expert opinions vary and research is not yet definitive due to the evolving and complex nature of the underlying issues. • Management decisions need to be made sooner vs. later, but clarity surrounding the issue is evolving over time, and a robust yet flexible fact-gathering process may help minimize risk.

The most common trends to think through usually fall into the buckets of social, technical, economic, environmental, and political changes (STEEP), as well as regulatory/legal changes, demographic shifts, and marketplace fluctiations. Today, sophisticated organizations have already begun thinking through the potential impacts of the following areas. These are just some of the 22 trends that are affecting to all of us today—whether we are conscious of them or not. These shifts impact firms serving both business-to-business and business-to-consumer markets in the Meadowlands Region.

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• Generational shifts • Internet of Things (IoT) • Urbanism • Modern family and multigenerational living • Cyber consciousness • Future of food • Social activists • Consumerization of health and wellness • Dynamic retail • Sensorial branding • Digital blur • Smart surroundings • Inside-out health • Curated lifestyle • Future of travel

What’s the process? 1. Decide on the key question or questions to be answered initially. 2. Decide on the timeframe and scope on the table for discussion. 3. Identify the major stakeholders involved or impacted. 4. Reach agreement on which basic trends and driving forces can impact the key question. 5. Where possible, clump together the trends or driving forces to reduce the number of items that must be solved for simultaneously. 6. Uncover the key uncertainties that are truly important to be discussed. 7. Identify the extremes of the outcomes to be considered while taking into account plausibility and the time frame being considered. 8. Define two to four scenarios. Avoid the tendency to only create best- and worst-case scenarios. 9. Write out the scenarios, giving each a catchy name. Describe the circumstances that created them. Include the rationale to make it easy to revisit these in the future. 10. Objectively assess the scenarios: are they relevant? 11. Identify what needs to be researched further. 12. Develop methods to capture the research needed and create models that will clearly show those results.

13. Build consensus on what fundamental issues and areas need to be planned out and executed well going forward. 14. Assign a champion that will make sure this stays on everyone’s radar until the plans are completed in sufficient detail to be able to take action. What’s the endgame? Done well, scenario planning helps leaders better understand areas of vulnerability and minimize their risk while opening up avenues of opportunities to explore and capitalize on. Speaking personally, I wouldn’t want to be on a plane or spaceship where the captain said to me: “Don’t worry about a thing, I’ll just figure it out as we go.” Would you?

Doug Brown is CEO and chairman of Paradigm Associates, LLC, based in Cranford and is a consultant to the Meadowlands Chamber Board of Advisors. Paradigm Associates provides tailored consulting, assessment, and coaching solutions that improve business results and create a sustainable competitive advantage. Paradigm helps firms: think and plan strategically; assess and coach their executives and key people; develop leaders and managers more effectively; increase revenues via sales training and development; keep loyal customers; develop a culture of employee engagement; and increase operational effectiveness by improving processes. Visit www.ParadigmAssociates.US or call (908) 276-4547 for more information. CONSIDERATION #17

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state and elder law planning is not just for the aged. Being prepared as it relates to your estate and elder law planning needs can look very different depending on your personal circumstances and stage of life. With built in flexibility, planning for what we know and can reasonably anticipate is key to being equipped to face the challenges and opportunities that our futures may bring. This article discusses general planning that each adult individual (age 18 and over) should have in place and elaborates upon important estate and elder law planning considerations at various life stages. When most people think about having an estate planning, the main concern is how assets will be distributed after death. Estate planning, however, is much more than just having a Will. Not only should it contemplate what should happen after you die but it also should thoughtfully consider all the “what ifs” that may occur during your lifetime. The fundamental estate planning documents that all adults should have in place include: • A Last Will and Testament is a legal document that allows you to direct how your property is distributed and debts are to be paid upon your death, and to appoint an Executor to make sure that your wishes are carried out. • A Durable Power of Attorney is a legal document that allows you to authorize one or more individual(s) to assist you with your financial and related matters during your lifetime, particularly in the event of mental incapacity. • A Healthcare Proxy is a legal document that allows you to authorize a succession of individuals (joint agents are not recommended) to act on your behalf with regard to healthcare matters during your lifetime (if you are unable to speak for yourself or are incapacitated). • A Healthcare Directive (commonly referred to as a Living Will) is a legal document that allows you specify what actions should be taken relating to your healthcare during your lifetime (if you are unable to speak for yourself or are incapacitated). 16

Elder law, much like estate planning, encompasses planning for the “what ifs” during life and upon death. But it also focuses on specific issues that face older members of our society, including those who never got around to planning for incapacity and death. In addition, elder law includes planning for long term care with an eye on protecting the family of the aging individual and that individual’s assets. Your stage in life (and the stages in the lives of your family members) will greatly impact your planning at any given point in time. Following are common life stages and steps that might be advisable to consider at each such stage: Young and broke When most children turn 18, they are still heavily reliant on their parents to assist them financially and medically. However, it is at this time that a parent loses parental rights and no longer has the legal authority to assist in this regard. While the transfer of assets on death might not be a main concern to an 18-yearold that has little or no assets, most still want their parents to be able to continue to help them with their finances and medical decisions if they are unable to so do them-

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selves. Therefore, it is imperative for a young adult to sign legal documents, such as a Durable Power of Attorney and a Healthcare Proxy, which would allow this type of assistance to continue if needed (or to appoint another trusted adult who might be appropriate to assist in these capacities). A young adult should also give some consideration to how he or she would like end of life decisions to be made in the event of a medical emergency, and to memorialize those wishes in a Healthcare Directive (Living Will). These documents are revocable (assuming the individual has capacity), so they can always be modified as that young adult grows up and becomes established and would like to appoint other individuals to assist them in this way. Single and advancing financially Just like the young adult above, a single individual building a career and portfolio should have in place the fundamental documents discussed above appointing individuals to assist them with finances and medical decisions during life. While still probably not too terribly concerned with the transfer of assets on death, putting a Will in place might make sense at this life stage (it does not have to be complicated!). There

Newly betrothed or married By the time an individual has chosen his or her life mate (whether married or not), they should consider updating the agents designated on a Durable Power of Attorney and Healthcare Proxy to include their life partner. Discussions should also be had with your loved one as to end of life decisions so that he or she may understand your wishes in that regard. If a Will is not already in place, at this point in your life you should consider having one. If you already have a Will, it should be reviewed to ensure that it accurately your wishes. While married couples may have some protections under intestacy laws, depending on your state, unmarried couples might not have those same protections, and even if there are protections, they still might not reflect your specific wishes. This is also a good time to review beneficiary designations on non-probate assets to ensure that your goals and objectives relating to the transfer of those assets upon death are also appropriate. And baby makes three (or two!) The first thing a new parent should do (whether single or coupled) is update your Will to include your child in your estate plan and name a legal guardian for your child in the event that something happens to you. The addition of a new baby is also a good time to consider obtaining or increasing life insurance to cover your new baby’s future expenses (especially if you are not there to provide for him or her). The advisability of adding trusts for the benefit of your child(ren) should also be considered once added to the mix. Divorce, (potential) remarriage and newly widowed In the event that you separate from your spouse (or your spouse passes away), it is imperative to review your estate planning documents and consider modifications that can be made to reflect your changed marital status. There may also be important tax considerations to contemplate. If you are getting divorced, once finalized, you can revisit your planning to ensure that your updated wishes (in conformity with your divorce agreement, if applicable) are reflected.

If you are considering remarriage (especially if you have children from a previous relationship), it is important to consider how your new blended family will impact your estate plan. Careful consideration should be given before and after your new marriage to proactively address the very sensitive issues that can arise when families join together. Your agents under your Durable Power of Attorney and Healthcare Proxy should also be revisited at each of these stages. Nearing retirement with an eye on future care needs If you have not looked at your estate planning documents and beneficiary designations in a while, now would be a good idea to pull them out to make sure that they still make sense. If you have not already done so, you might also consider and evaluate whether long term care insurance makes sense for you. This is also a good time to consult a professional to evaluate your options relating to potential long-term care needs and the impact on your finances. Conclusion Regardless of your stage in life, we all have opinions and objectives as it relates to our

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estate and elder law needs. It is important to choose a legal advisor that can guide you in making these important decisions by helping you think through and understand the sometimes complex implications of the options available to you. It is imperative that you clearly communicate your wishes and legally document your objectives so that your goals in any given circumstance can be achieved. It is also important to monitor and adjust your plans as time goes on and your circumstances and/or the law change, and to continue these important discussions with your loved ones so that they understand your wishes.

Naomi Becker Collier is a Partner at Pashman Stein Walder Hayden. Her practice is concentrated in the area of trust and estates with an emphasis on addressing the specific needs of aging individuals, people with disabilities and their families. She provides her clients with practical guidance and education, addresses their individual needs and assists them in achieving their goals, while simultaneously maximizing the flexibility and planning options available to them. If you would like additional information on this topic, please contact Naomi at ncollier@pashmanstein.com.

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A Roadmap for Estate and Elder Law Planning

might also be beneficiary designations on life insurance and retirement assets that require some attention.

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