Life Planning GUIDE 2011
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Smart Money Tips, from Tots to Retirees
AN ESTATE PLAN ... WHO, ME?
Insurance 101 What a Widow Must Know
Meet Your Financial Team Pop Quiz: Test Your Financial Savvy!
DAILY NEWS NORFOLK
January 11, 2011
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
Pop Quiz: Test Your Financial Savvy QUESTION
QUESTION
According to actuarial charts, how many years can you expect to live?
What percent of a retiree’s income will be spent on healthcare, on average? a. 5 percent b. 10 percent c. 15 percent d. 20 percent
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QUESTION
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At what age is a worker born between 1943 and 1954 eligible for full social security benefits? a. 62 c. 66 b. 64 d. 68
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Procrastination is one of the main ways the average Joe and Jane get in trouble with their finances. Break the bad habit – starting now! Answer these basic questions and see how you rate QUESTION
QUESTION
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9
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How many years, on average, will a U.S. citizen spend in retirement? a. 10 b. 15 c. 20 d. 25
WHAT PERCENT OF EARLY BABY BOOMERS, AGE 56 TO 62, ARE EXPECTED TO RUN OUT OF MONEY TO COVER BASIC RETIREMENT LIVING EXPENSES? A. 17 PERCENT B. 23 PERCENT
QUESTION 4: Income taxes go away after a worker retires. True or false?
QUESTION 7: True or False: If you die without a will, your sur viving spouse will be granted all or most of your assets.
Learn how you can put your confident retirement more within reach. Call us today at (402) 371.6827.
C. 42 PERCENT D. 47 PERCENT
Your credit score is: a. a snapshot of your credit risk b. an objective measurement used by lenders c. available to you on request d. all of the above QUESTION
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QUESTION
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Insurance is a way of: a. saving for a rainy day b. preventing unplanned events c. handling risk d. all of the above
You can improve your credit rating by a. correcting inaccurate information as soon as possible b. disputing negative information c. correcting only the worst report d. asking that negative information not be included in your credit report © CTW Features
Kay Anderson
Darrin Deichmann, CRPC®
Brian Rech, CRPC®
Financial Advisor
Financial Advisor
Financial Advisor
A HOW DO YOU RATE? 10 CORRECT: Warren Buffet is your new best friend!
612 W. Benjamin Ave. Norfolk, NE 68701 (402) 371.6827
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9 CORRECT: Close… but we are not playing horseshoes! 8 OR LESS CORRECT: It’s time to do some homework!
1. The U.S. Social Security Administration estimates that a man reaching age 65 today can expect to live, on average, until age 83. A woman turning age 65 today can expect to live until age 85. To calculate your expected lifespan, go to: http://www.ssa.gov/planners/lifeexpectancy.htm 2. C: 66 years old 3. D: 20 percent 4. False. Pre-tax money a worker contributed to a retirement plan is subject to income taxes when it’s withdrawn during retirement years. 5. C: 20 years 6. D: 47 percent 7. False. Every U.S. state has unique laws governing who will own the property. To calculate the outcome in your state, go to www.mystatewill.com 8. C: Handling risk 9. D: All of the above 10. A: Correcting inaccurate information as soon as possible © CTW Features
NORFOLK DAILY NEWS, Tuesday, January 11, 2011
To find out how to get your financial goals on track, call or visit today.
Brad Pflueger, AAMS Paula Pflueger, AAMS Financial Advisors 434 Norfolk Ave. Norfolk, 371-1703 877-379-1703
Tonya Bousquet, AAMS Financial Advisor 2100 Market Lane Norfolk, 402-371-9072 877-371-9072
Jon R. Hansen Financial Advisor 2501 Lakeridge Dr. Ste A Norfolk, 402-371-9761 888-371-9772
Kent Friedrich, AAMS Financial Advisor 1103 Riverside Blvd. Norfolk, 402-379-0243 877-379-0243
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
An Estate Plan‌ Who, Me? You don’t need to live in a fancy house in a gated community to have an estate. Establishing a solid financial plan, with documents that govern what you own and bequeath, is key to moving ahead in life with confidence and security DAWN KLINGENSMITH CTW FEATURES
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PEOPLE TEND TO PEOPLE TEND TO
delay or avoid estate planning as though drafting a will might somehow hasten their demise. But thought of another way, estate planning actually prolongs one’s presence
among the living.An estate plan allows for calling shots from the grave. The value of property at the time of its owner’s death is an estate. Estate planning begins by taking inventory of someone’s assets, including investments, retirement savings, insurance policies,
real estate and business interests, and then deciding to whom these assets should go. Individuals also must decide who should handle financial and medical affairs if they are incapacitated and ask if they’ll serve as financial and health care powers of attorney, respectively.
It’s smart to work with a qualified lawyer to create the legal documents that govern the process of protecting the estate and passing along assets as planned. Take time to get educated on the basics before choosing a professional and sitting down to work on a plan. A WILL The centerpiece of a comprehensive estate plan is a will.The reason a will is important, regardless of net worth, is so assets go to the right people, says Alexandra Armstrong, certified financial planner with the Washington, D.C.-based investment advisory firm Armstrong, Fleming & Moore. Die without one, and in most cases each state applies its
GET ORGANIZED Assemble and store these documents in a bank safe deposit box and/or a fireproof safe to which a trusted individual besides your spouse has access. s 7ILL TRUST AGREEMENTS AND LETTER OF INSTRUCTION s #ONTACT INFORMATION FOR ADVISERS INCLUDING ATTORNEY ACCOUNTANT FINANCIAL PLANNER AND STOCKBROKER s 0OWERS OF ATTORNEY FINANCIAL HEALTH CARE s ,IST OF RETIREMENT BANK AND BROKERAGE ACCOUNTS WITH 0).S s )NVESTMENT DOCUMENTS CERTIFICATES OF DEPOSIT STOCK CERTIFICATES ETC s ,IFE INSURANCE POLICIES s (EALTH AND LONG TERM CARE INSURANCE POLICIES s 3OCIAL SECURITY AND PENSION INFORMATION AND MILITARY DISCHARGE PAPERS IF BENEFITS TRANSFER TO SURVIVORS s -ARRIAGE CERTIFICATE s &UNERAL PREARRANGEMENTS AND CEMETERY PLOT DEED s 2EAL PROPERTY DOCUMENTS SUCH AS DEEDS s 4ITLES AND EXTENDED WARRANTIES TO CARS BOATS TRAVEL TRAILERS ETC s 3AFE COMBINATIONS s ,IST OF STORED OR LOANED VALUABLES Š CTW Features
standard formula to decide who gets what, without regard to wishes or the needs of heirs. For example, in the absence of a will in the District of Columbia, only one-third of the deceased’s assets not jointly held will go to a surviving spouse; twothirds goes to the children. In most places, when a single dies without a will, his or her parents inherit all assets or, if Mom and Pop are dead, the siblings inherit in equal measure.That means the brother who won the lotto gets the same amount as the brother who went into social work and the estranged sister with a gambling
addiction. A will is also the best place to name guardians of children. Standard forms are available for the simplest of situations.“But most people should consult an estate-planning lawyer�for will preparation,Armstrong advises. Leave a copy of the will with a lawyer, and keep a copy. A LETTER OF INSTRUCTION A letter of instruction to survivors includes bequests not specified in the will, including sentimentally valuable possessions like Grandma’s china and the oil painting over the mantel. Here’s where to
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
communicate to family members the type of memorial service wanted, including “in lieu of flowers” specifications and wishes to be cremated or buried. Individuals might even write down key points for their obituary in case loved ones omit one of our prouder accomplishments. A LIVING WILL A living will or advance medical directive spells out wishes regarding life support or medical intervention and care. For someone in a coma who does not want to be kept alive on life support, a living will
spells that out.A health care proxy names a person to carry out those wishes.A lawyer can create this document. Keep signed, witnessed copies at home; give signed copy to those entrusted to make decisions. Because of strict privacy rules that govern doctors and hospitals set forth by the Health Insurance Portability and Accountability Act, a HIPAA waiver also should be considered.This lets people name individuals with whom health care providers can discuss condition and care. Unlike a power of attorney, folks
named in the waiver are not entitled to make medical decisions on someone else’s behalf. POWER OF ATTORNEY A durable power of attorney names a person to act on an individual’s behalf in financial matters: investing money, signing checks, selling real estate. Keep a signed copy handy and give one to the person designated. A TRUST In some cases, individuals decide to create a trust, which puts conditions on how and when assets will be
distributed.Trusts are designed to achieve different goals. Often, they allow the wealthier among us to reduce estate taxes.They can also be used to hold money for underage children; provide care for disabled children; or equalize inheritances.A financial adviser can help determine whether it makes sense to set up a trust, Armstrong says. Keep in mind that retirement accounts such as IRA and 401k plans, have designated beneficiaries apart from what it says in someone’s will,Armstrong says. So it’s important to review
and amend these accounts periodically – along with a will, pension plans and life insurance policies – especially if marital status changes. A rainy day fund of three to six months’ expenses is also a key component of an estate plan.“Settling an estate doesn’t happen overnight,”Armstrong says, “and meanwhile a surviving spouse needs something to live on, a cash reserve to carry them through.” A final and crucial step in estate planning is assembling pertinent documents (see sidebar) and making sure a survivor is aware of and
has access to them. “You’d be surprised by the number of life insurance policies that are issued but never paid because the survivors don’t even know they exist,” says Wayne Copelin, founder and president, Copelin Financial Advisors, Sugar Land,Texas. He recommends keeping original documents in a bank safe deposit box and a set of copies at home. It’s important to designate a signatory who is authorized to unlock the box in the event we die; otherwise, a court order must be obtained, he adds. © CTW Features
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
Meet Your Financial Team
It takes a team to make financial goals a reality. Here is the roster of folks you want to have working for you TANIESHA ROBINSON CTW FEATURES
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PERSONAL FINANCE can be a source of stress, which is why a lot of folks like to rely on a professional when it comes to crunching numbers. Whether the goal is to dig out of debt or to get ahead on retirement savings – and stay there – turn to someone trained and qualified to offer professional guidance in matters of saving, investing and planning to get on the road to
? QUESTIONS TO ASK A FINANCIAL PLANNER There’s no substitute for a face-to-face chat to decide if a professional financial planner is right for you. Among the questions you should ask:
financial balance. Read on to learn more about the pros to recruit for a top-notch personal finance team. FINANCIAL PLANNER/ADVISER Financial planners help clients invest and increase capital at an acceptable level of risk. “I look at my role as being the quarterback of the financial team, bringing all the other financially related people who a client interacts with together,� says Paul Winter, president of Five Seasons Financial Planning in Salt Lake
City.To do this, planners attempt to obtain a comprehensive look at clients’ entire financial situation – bank accounts, brokerage accounts, retirement accounts and other investments. Winter refers to himself as “a conduit of information� and formulates plans for his clients based on the information he collects regarding the client’s assets and goals. Interview a few planners before committing to one, and be sure to find out if the planner’s services are commission-
s 7HAT IS YOUR AREA OF EXPERTISE s 7HAT IS YOUR EDUCATIONAL BACKGROUND s 7HAT FINANCIAL PLANNING CREDENTIALS HAVE YOU EARNED s 7HAT FURTHER EDUCATION IN FINANCIAL PLANNING DO YOU PLAN TO PURSUE s !RE YOU A MEMBER OF ANY PROFESSIONAL FINANCIAL PLANNING ASSOCIATION s (OW LONG HAVE YOU BEEN OFFERING FINANCIAL PLANNING SERVICES s 7ILL YOU PROVIDE REFERENCES s (AVE YOU EVER BEEN CITED BY A PROFESsional or regulatory governing body for DISCIPLINARY REASONS s )N THE LAST YEAR HOW MANY CLIENTS HAVE STOPPED USING YOUR SERVICES 7HY s $O YOU DO THE WORK OR WILL ) BE TURNED OVER TO ANOTHER EMPLOYEE IN YOUR FIRM s (OW ARE FEES CALCULATED
based or fee-based. STOCK BROKER A broker isn’t just the person that carries out desired investment transactions. According to the Financial Industry Regulatory Authority, a broker’s role is legally defined as a person or company that buys and sells stocks,
s 7HAT IS YOUR APPROACH TO SAVING AND INVESTING s 7ILL YOU PROVIDE AN INDIVIDUALIZED FINANCIAL PLAN #AN ) LOOK AT A RECENT EXAMPLE OF A PLAN PREPARED FOR SOMEONE IN SIMILAR FINANCIAL CIRCUMSTANCES s 7HAT KINDS OF COMMUNICATIONS CAN ) EXPECT FROM YOU ON AN ONGOING BASIS ACCOUNT STATEMENTS NEWSLETTERS ETC s (OW OFTEN WILL YOU REVIEW MY PORTFOLIO s (OW ARE YOU COMPENSATED FOR THE SERVICES YOU PROVIDE s /N AVERAGE HOW MUCH CAN ) EXPECT TO PAY FOR YOUR SERVICE s 7HAT DO ) RECEIVE IN RETURN FOR THAT FEE s 7HAT IF ANYTHING DO YOU EXPECT OF ME DURING OUR RELATIONSHIP Source: www.ChoosetoSave.org Š CTW Features
bonds, mutual funds and other securities on behalf of customers and/or for its own account. Brokerage firms fall into two categories: discount and fullservice.Transaction services from discount brokers are usually cheaper but come with little advice. For investment counsel, investors can employ a full-service broker.To learn more about how to find a qualified broker go to www.finra.org and click on “Investors.� Use the FINRA BrokerCheck tool to track down background information on brokers. INSURANCE AGENT Licensed insurance agents are essentially salespeople who provide clients with life, health or property insurance policies. FINRA outlines two categories for agents: an independent insur-
ance agent who may represent multiple companies to find the best coverage for an individual client; and a “captive� agent who only recommends policies from one company. Agents are licensed by the state. Find financial and disciplinary information on insurance companies nationwide on the National Association of Insurance Commissioners website, www.naic.org. CERTIFIED PUBLIC ACCOUNTANT Those who are selfemployed or simply have complex tax situations should consider employing the expertise of a CPA. CPAs undergo rigorous certification and licensing procedures in most states.As a result, they can handle the nuances of self-employment and can also provide some financial planning
NORFOLK DAILY NEWS, Tuesday, January 11, 2011
advice.Their services can be expensive.A cheaper option may be an enrolled agent, says Lauren Lyons Cole, financial planner in residence at LearnVest. com, a personal finance website. ESTATE LAWYER Shockingly, simply signing away worldly possessions on a cocktail napkin doesn’t pass muster for a will.That’s where a lawyer schooled in estate planning comes in.This specialized attorney will draft proper wills, living wills and trusts, which dictate how property and assets will be distributed upon death or in the event one
becomes incapacitated. The more complex familial circumstances are – multiple marriages or children, for example – the more critical it is to have plans in place. PERSONAL BANKER The friendly faces at the bank are not just there to transact deposits and withdrawals all day. Personal bankers can review accounts to determine eligibility for a higheryielding account and if there are new credit or debit cards available that offer better rates or rewards.They will also field questions regarding mortgages or car loans and can put individuals in
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touch with the appropriate loan officer. AT-WORK HUMAN RESOURCES PROFESSIONAL Lyons Cole says that HR managers are some of the most underutilized financial resources.They know the details about the company’s insurance policies and 401(k) or other retirement programs sponsored by the company. “That’s really their job, to provide for their employee in many financial spheres so employees can go to work, be productive and not have to worry about benefits,”Winter says. © CTW Features
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
Financial Planning Timeline TANIESHA ROBINSON
CTW FEATURES
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GOOD FINANCIAL habits start early. The very best last well into old age. For those somewhere in the middle and still trying to figure it all out, there’s help. No matter what stage of life, a person can always take steps to improve his or her finances, says Julie Jason, president of the Jackson, Grant Investment Advisors, Stamford, Conn. Here are tips on what family members need to think about and plan for at all stages of life, from childhood to retirement.
How to think smarter and plan better in money matters at all stages of life, from tots to retirees
CHILDREN
TEENS
If little ones start to learn the basics of money management as they grow, perhaps they can avoid the debt and exuberant spending habits that plague many adults. It’s important to teach children that every dollar they receive is not a dollar they can spend, says Manisha Thakor, personal finance expert for women and author of “Get Financially Naked,” (Adams Media, 2009). Kids should learn to divide allowances into three buckets:one for savings, one for charity and one for spending. Thakor recommends parents help children allocate 10 percent for savings, 10 percent for charity and 80 percent for spending.
As kids approach their teenage years, they can start to grasp the truth in the old adage “money doesn’t grow on trees.”Thakor tells teens to think about how many hours they would have to work to earn enough to buy an item they want.This way, they begin to understand how much labor really goes into an iPod or Xbox purchase. Encourage a teen to find a part-time job, and share your views on money matters and what you’ve learned about saving and spending.
tip Help kids learn to save: Fiddle with the online allowance calculator at www.threejars.com to come up with a weekly sum that’s reasonable, based on the age of the child and the parent’s own experience.
tip Required reading: Jean Chatzky, awardwinning financial journalist, wrote “Not Your Parents’ Money Book: Making, Saving and Spending Your Own Money,” (Simon & Schuster, 2010) to help start teens on a path to financial success.
COLLEGE STUDENTS
The average collegeage credit card holder carries a balance of more than $3,000, according to Sallie Mae. Fortunately for frisky, young credit users, credit card reform measures that started rolling out in 2010 make it more difficult to overload on credit and debt, requiring anyone under age 21 to show proof of income or get parents to co-sign in order to get a credit card. College students shouldn’t avoid credit cards completely, however.A student should get one credit card in his or her name; monitor his credit record at the three major agencies; and pay off the bill every month. Used responsibly, a credit card can help young adults build a strong credit profile.
NEWLYWEDS
A new couple’s main financial goal should be to build a solid foundation that includes an emergency fund to cover three to six months of living expenses,Thakor says. However, this should happen only after each partner pays down any debts they may have accumulated before marriage.Thakor urges newlyweds to conduct financial check-ins on all assets at least semiannually. Couples should save 20 percent of their income,Thakor says. Investment smarts: If
tip Investment smarts: If
your employer offers a tax sheltered savings plan, such as a 401(k), sign up and contribute all you can. Your taxes will be lower, your company may kick in more, and automatic deductions make it easy. >> CONTINUED ON PAGE 10 14
NORFOLK DAILY NEWS, Tuesday, January 11, 2011
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
Once the storks start dropping baby bundles at the doorstep, it’s time to think about life insurance. Whole life insurance is expensive and unnecessary in Thakor’s opinion. She suggests acquiring term life insurance instead, which provides coverage for a set time period usually five to 30 years - at a fixed rate. Keep retirement saving in mind, despite the focus on children. You can put $5,000 a year into an Individual Retirement Account (IRA) and delay paying taxes on investment earnings until retirement age. If you don’t have a retirement plan (or are in a plan and earn less than a certain amount), you can also take a tax deduction for your IRA contributions.
“Fifty is the time of preparation and a time of opportunity,” says Julie Jason, author of “The AARP Retirement Survival Guide: How to Make Smart Financial Decisions in Good Times and Bad,” “The challenge as you (Sterling, 2009). Make enter into these years catch-up contributions, an extra is to avoid lifestyle amount those over 50 creep,” Thakor says. “It’s very easy to start can add to 401(k) and other retirement living beyond your means. The more you accounts. At age 59 1/2 you will no longer be earn, sometimes the hit with tax penalties more you spend.” on withdrawals from This presents a big retirement accounts, problem for savings but leaving money in for a couple’s means more time for retirement and their it to grow. children’s college Imagine you’re education. Thakor has retiring on Monday noted another and need to calculate dangerous trend in this age bracket: risky how long your funds will last. Jason says investments. An this scenario forces investment portfolio at this age should be a people to look at their low-cost, high-quality expenses, savings and income sources mix of stocks, bonds and mutual funds that outside of work. “If you do the analysis, grows conservatively you can adjust your over time, she says. savings and investing,” she says.
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The minimum age to receive Social Security benefits is age 62, but delaying to a later year will mean a bigger monthly benefit. Generally, governmentsponsored Medicare health insurance is available to those age 65 and older. At 66, those born between 1943 and 1954 are eligible for full Social Security benefits. Jason says that those at age 65 must realize that they’re targets for every ambitious financial advisor. “Put on a skeptics hat,” she says. Retirees should interview professionals to make sure they have prior experience with retirement accounts and clients in financial situations similar. Making decisions for a $100,000 account is very different from making decisions for a million-dollar
account, Jason says. “Now is the time to review assumptions and make adjustments to your cash flow and to your investments,” Jason says. At the outset of retirement, people assume that healthcare will be their greatest expense. It turns out that the largest expense is most often taxes. Plan to begin taking minimum withdrawals from most retirement accounts by 70 1/2 or you may be charged a penalty.
Healthcare and legacy planning should come into the picture around age 85, Jason says. Long-term care for husbands and wives should be determined. “At a certain point you have to bring in your spouse and see if you’re in sync with each other,” Jason says. She reminds retirees to include the desire to leave an inheritance in their planning. © CTW Features
Tips MARRIED WITH A FAMILY College planning: The College Savings Plan calculator at the financial education website www.mindyourfinances.com, can help families develop or fine-tune a college savings plan, factoring in number and ages of children in the family. Click on “Financial Tools.” 30s AND EARLY 40s Start early. Make retirement saving a priority. Devise a plan, stick to it and set goals. Grab a quick estimate of your retirement needs using the “Ballpark Estimate” tool at www.choosetosave.org/ IN YOUR 50s Get Going! Are you on track financially for a comfortable retirement? The Financial Planning Assoc. offers an interactive Financial Roadmap tool to help highlight areas where you need to improve: Go to www.fpaforfinancialplanning.org/ and click on “Financial Roadmap” under Tools & Resources. IN YOUR 60s Learn what your estimated social security benefit will be at retirement by using the retirement estimator at www.ssa.gov/estimator or call 1-800-772-1213.
NORFOLK DAILY NEWS, Tuesday, January 11, 2011
Insurance for Beginners
Genuine financial security often includes a few safety nets. Here’s an intro to insurance options to get on the road to feeling secure MARILYN KENNEDY MELIA CTW FEATURES
IT DOESN’T MATTER if every penny is pinched.A calamity can arrive unannounced and wipe out any family’s financial security. The only way to ensure protection is to start
paying attention to the invisible risks that could lie ahead. It’s not easy, though, to get a focus on the insurance protection a family really needs – and can afford. Here, experts share tips for those who want to guard their financial security – without
wasting a penny: LIFE INSURANCE Even the financially unsophisticated have heard about life insurance, an insurance policy that pays a sum to a spouse, or provides for children or other dependents should one suddenly pass
away. In fact, that’s the central reason to buy life insurance: to replace the income dependents would need, says James Hunt, a former Vermont insurance commissioner who now analyzes life policies for the Consumer Federation of America. “Term” life policies are the least expensive, which is why it’s often the choice of young adults who have responsibilities, such as kids and a mortgage, but not a lot of extra cash, Hunt says.The premiums for term life insurance only pay out should you die during the specified period.
“Permanent” life insurance pegs a portion of each premium payment as savings, which the insured can borrow against – or in some instances, withdraw from – to pay for certain expenses, explains Catherine Theroux, a spokeswoman for LIMRA, an insurance research group. Permanent insurance comes in two main types: whole and universal. Premiums for whole life policies tend to stay level, while premiums for universal policies allow you to elect to pay certain minimums, with a lesser investment build-up over time.
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YOUR ACTION PLAN Contact agents in your area to investigate possible prices and coverage plans. Check with current car or homeowner’s insurance companies to see if they provide life policies as well. Speak to your employer’s human resources department about potential life policies available as part of its group benefits. DISABILITY INCOME INSURANCE Death is certain. But none of us know whether an accident or serious illness will prevent us from working for a prolonged period.
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
According to the Insurance Information Institute, 43 percent of workers between ages 40 and 65 will suffer a disability that causes an earnings disruption of at least 90 days.The Social Security system has a disability benefit program, and many lower income workers depend on this, Hunt says. Some employers also offer disability coverage as part of their group benefits. For those who are high earners but do not have an employerbased disability plan, neglecting to purchase private disability coverage could mean a dramatic change in lifestyle should they be injured or unable to work and their paychecks stop, says Jeffrey Shaw, executive director of the Life Insurers Council. Purchasing a plan on your own is similar to buying term life; there are various coverage levels and prices. YOUR ACTION PLAN Talk to your employer’s human resources department about what disability policies are available as part of the group benefits. Your state’s insurance department will have names of agencies and companies offering policies in your state; find them at www2.iii. org/stateorganizations/.Visit the Social Security website at
www.ssa.gov/disability/ to learn more about disability programs. LONG-TERM CARE INSURANCE In our aging society, nearly everyone knows someone who needs years of nursing care, which can quickly put a drain on life savings. Fortunately, as long-term care needs become more prevalent, insurers are offering more ways to insure against the cost. For instance, many states now participate in a “Partnership for Long-Term Care”program – a cooperative program between state governments and insurers that “is one of the best-kept secrets,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. The partnership programs allow more affordable long-term care insurance and provide special asset protection. Private insurance agents sell the partnership plan and traditional longterm care plans. The cost of longterm care plans varies, depending on the amount of coverage and whether home, assisted-living and nursing care are included. YOUR ACTION PLAN To find out if your state has a LTC partnership, visit http://www.aalt-
ci.org/long-term-careinsurance/. BLENDING HEALTH INSURANCE AND SAVINGS Paying for health insurance and saving are two of the biggest financial challenges families face. If you purchase a high-deductible health insurance plan – either on your own or through your employer – you may qualify for a health savings account, paying less for premiums and building savings. Your employer’s benefit manager or a health insurance provider can help with details, but briefly, because deductibles are high – for 2010 and 2011 it’s at least $2,400 for families – monthly premiums are lower.An employee can contribute to a tax-advantaged savings account and tap it to pay the deductible when needed, or keep on saving, perhaps for retirement health expenses, explains Roy Ramthun, a fellow at the Council for Affordable Health Insurance. YOUR ACTION PLAN Review your health insurance plan and/or speak with your employer’s benefits manager to see if health savings accounts are available as part of your plan. © CTW Features
What a Widow Needs to Know The death of a husband launches many women into uncharted territory: financial planning
Although women generally outlive their spouses, it’s still common in this day and age for husbands to handle long-term financial planning with little or no involvement from their wives. Some women cede control not only because they’re overwhelmed by the estate-settling and grieving processes but also because they doubt their abilities when it comes to “high finance,” says behavioral psychologist Matt Wallaert, the lead scientist at Thrive, financial management (JustThrive.com). Women routinely handle day-to-day household finances such as paying bills and
Checklist for New Widows & Widowers
• Get multiple, certified copies of the death certificate • Find the will and any trusts • Find any life insurance, including company insurance, and put in a claim immediately • Inventory the safety deposit box • If you’re covered under your spouse’s company health insurance, find out immediately about keeping the policy • Find the rest of the assets (including deeds, securities, bank accounts, retirement accounts, stock options) and liabilities (including mortgages and debts) • Pay all bills on time if they relate to your personal life • Claim any benefits you’re entitled to • Call your spouse’s employer to see how much money is due, and follow up with a letter
Source: “Making the Most of Your Money” by Jane Bryant Quinn (Simon & Schuster, 2010) © CTW Features
managing bank accounts, Wallaert adds, but due to lack of exposure they tend to underestimate their investment-management capabilities. When put to the test, though, women usually know more about investing than they think they do. The basics of financial planning can be learned. Meanwhile, newly widowed women should make it clear they intend to retain control over their investments, that they’ll make adjustments in their own time and that they won’t tolerate strong-arm tactics or dismissive treatment. However, Armstrong advises against making immediate changes. Unless an adviser’s dealings seem shady, in the beginning it’s easiest to work with that person because he or she is already familiar with the couple’s situation. This also applies to lawyers and accountants, Armstrong says. “In six months to a year, you can reassess these relationships,” she says. A widow’s first order of business when working with an adviser is calculating how much it will cost her to live. The adviser should provide her with a list of records she needs to assemble. She might want to take someone with her who’ll ask questions that don’t occur to her. Before inviting a family member, she should
consider whether that person’s interests might be self-serving. She should take notes and ask that any recommendations be put in writing. “It’s a difficult time. Things go in one ear and out the other,” Armstrong says. Initially, the goal is to make sure the widow has sufficient income to pay her current expenses. “Very rarely is there a situation where something immediate needs to be done with the investment portfolio,” Wallaert says. So if an adviser presses, a widow might want to hire a replacement once the estate is settled. Often, “adult children kind of swoop in and take over,” Armstrong says. “Don’t succumb to any undue pressure from anyone, including family.” If a widow ultimately decides to hire a new financial planner, she should ask other trusted advisers (accountant, lawyer, banker) for recommendations, as well as her widowed friends. An adviser should offer an initial consultation for free. Armstrong recommends asking whether the adviser belongs to an Estate Planning Council. Many competent advisers don’t, she says. But membership is a good indication the adviser is interested in working with widows. © CTW Features
NORFOLK DAILY NEWS, Tuesday, January 11, 2011
radius, says Nanette Overly, vice president of sales and marketing. But if they stay put in their own home, many opt to redecorate or remodel so it’s more convenient for their empty-nest years. Others downsize to a smaller home or condo to cut expenses and upkeep. And still others upgrade to have more room for kids and grandkids.
Retirement Living: Should We Stay or Should We Go?
FIND A MORE APPEALING LOCALE All sorts of reasons spur boomers to move - from wanting to be closer to children, live in a different climate, find a state with lower costs of living and estate taxes, or to simply have a new adventure in a new community. They also look for a variety of housing stock, from single-family homes to condos and retirement
villages. With so many options, it’s not surprising that the easiest solution for many is to stay put. Nevertheless, the visibility and affluence of this generation has given rise to experts from different disciplines who have lots of advice to share on how boomers - and anyone debating what to do - can be better prepared. Here are nine questions experts suggest boomers ask themselves to make the smartest, happiest move:
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nationally recognized geriatric care manager and author of “Elder Care Made Easier” (Addicus Books, 2006).
2. ARE YOU UP FOR THE UPHEAVAL? Redecorating, remodeling and moving all require time, money and patience, and typically add to stress levels. “Ask yourself whether you have the stomach to go through a remodeling or move,” suggests Laura Meyer, co-author of “Remodel This!” (Perigee, 2007). Some older homeowners tolerate 1. WHAT ARE YOUR GOALS? stress better since Before you focus on the they’re not dealing with type of house you seek, young children. think about your bigpicture goal, whether it’s 3. ARE YOU READY TO CUT THE UMBILICAL CORD? to be closer to your People become attached children and to their homes, Meyer grandchildren or even says. “Are you really farther away, says ready to leave?” she Marion Somers, the
As they near retirement, it’s the question all boomers are asking BARBARA BALLINGER CTW FEATURES
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As more baby boomers reach their 60s and start to ponder retirement, many begin to debate where they should spend their golden years. Highly educated and active, boomers aren’t following in the footsteps of their parents, many of whom migrated to warmweather destinations. Stories of older relatives and friends who fell ill far away from loved ones or become lonely after the excitement of a new destination dimmed that dream of retirement. In addition, the boomer generation those born between 1946 and 1964 - is highly diverse and no single
solution appeals to them all, says Carol Orsborn, author and co-founder of Fleishman-Hillard’s boomer-focused practice, FH Boom. The prime destinations seem to be communities close to home with residents who vary in age - where boomers can continue to feel young and maintain friendships - and downtown urban centers, where they can make do with less space and fewer cars, all while staying close to hospitals, a host of restaurants, shops and cultural events. Ann Fry, a life coach and speaker who focuses on reinvention, is a prime example of this trend. When she hit 60, she relocated to New York from Austin,
Texas. Fry decided to rent initially, explaining “I love it, being able to call the super and say, ‘Fix this’.” Boomers contemplating retirement choose one of two main paths: find a location close to home, or move to a new location that’s closer to family or that offers longed-for social, cultural or natural amenities. STAY CLOSE TO HOME Because relationships are so important to this generation, many choose to stay within the same community, Orsborn says. In fact, most of those who move into Dublin, Ohio-based Epcon Communities’ various boomer-geared developments come from a 7-to-10-mile
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
asks. dreams, Somers says. to be TO 4.They WILLalso YOUneed CONTINUE HAVE A GOOD SUPPORT sure their setting offers SYSTEM YOU ARE the rightWHERE amenities. For OR WHERE YOU GO? those not sure, Somers Ithas may be your children them answer quesor a good network of tions, talk about possifriends, but you need to bilities, and put down know that you have responses on paper. people you can rely on, says Ann A. Fishman, president 7. WHENofIS YOUR Generational-Targeted DECISION GOING TO Marketing Corp., New BE MADE? York. Even if you move hasto clients toSomers be closer children, determine timetable realize they amay not rather stay thanthere. put it off always indefinitely. 5. WILL YOU BE WITH LIKE-MINDED 8. CAN YOUFOLKS? AFFORD Boomers are social and YOUR DECISION? like to be surrounded by Too many boomers people of varied ages, don’t know how says Fishman. Onemuch money they need to solution for some boomers is to says. shareThey a age, Fishman condo ortake house. need to intoSmart development account statecompanies and estate are building communities targeted at homeowners with likeminded interests, Overly says. 6. WHAT TYPE OF HOUSE AND COMMUNITY MAKES THE MOST SENSE? Boomers need to carefully weigh their housing choice and what level of services they want, based on realistic factors such as health and not just pipe dreams, Somers says. They also need to be sure their setting offers the right amenities. For
those Somers taxes not andsure, the cost of has them answer daily living, including questions, talk about housing, health possibilities, andcare put and entertainment down responses on paper. costs, she says.You also have to take into 7.account WHEN ISany YOUR DECISION possible GOING TO BE MADE? income changes. Somers has clients determine a timetable 9. HAVE YOU rather than put it off TRIED OUT indefinitely. YOUR DECISION? 8.It’s CAN YOU hard to AFFORD test-drive a YOUR DECISION? decision without ownToo boomers ing amany home, but The don’t know how much North Carolina Center money they need to age, for Creative Retirement, Fishman says. They part of of need to the takeUniversity into account state and North Carolina at estate taxes and the costsemiof Asheville, offers daily living, including nars and a Creative housing, health care and Retirement Exploration entertainment costs, she Weekend program. says. You also have to Manyinto communities may take account any offer similar programs. possible income changes. © CTW Features 9. HAVE YOU TRIED OUT YOUR DECISION? It’s hard to test-drive a decision without owning a home, but The North Carolina Center for Creative Retirement, part of the University of North Carolina at Asheville, offers seminars and a Creative Retirement Exploration Weekend program. Many communities may offer similar programs. © CTW Features
START EARLY, SAVE MORE
RETIREMENT COMMUNITIES Banish the phrase “old folks home” from your vocabulary. Retirement living options have never been more varied. Among them: AGE-RESTRICTED COMMUNITIES Great for people interested in living amongst their peers, these communities have a mix of housing types and feature amenities like tennis courts and golf courses. COLLEGE TOWN RETIREMENT COMMUNITIES Ideal for anyone seeking a more youthful environment, these communities include varying forms of independent off-campus housing while providing access to university facilities and programs ASSISTED LIVING These residences provide apartment-style living and offer personal care and support services with basic daily activities ranging anywhere from bathing and dressing assistance to medication management. Communities also include meals, housekeeping, activities, transportation and varying levels of security.
CO-HOUSING In co-housing communities, residents actively participate in the design and operation of the neighborhood. Each home is privately owned and decisions are made cooperatively. Residents often share the cost of health aides or an on-site healthcare provider. NATURALLY OCCURRING COMMUNITIES NORCs are a response to retirees who want to remain in their homes for as long as possible. Essential services are pooled so that maintenance, transportation, eldercare, shopping and other basics are readily available to the community’s seniors. SUSTAINABLE COMMUNITIES For seniors who want to live green into their old age, these communities promote conscious living practices in every aspect from the neighborhood building materials to waste disposal. © CTW Features
—Danielle Cadet, CTW Features Sources: Co-Housing Association of the United States; Campus Continuum; NORC; Ecovillage Network of the Americas
10 Tips to Jump-Start Your Savings
Rule of thumb: Everyone should have six months’ worth of living expenses tucked away in savings. Reality: Few folks do, and the proverbial “rainy day” looms. Remedy: Start setting aside money today. Here are 10 ways to save before you get soaked. 1. Set a budget and stick to it. “Budgeting is the No. 1 surefire way to save money,” says Ethan Ewing, president of Bills.com, Set specific goals, such as lowering grocery bills, and budget accordingly. 2. Carry cash. People who count out bills instead of paying with debit or credit tend to spend less and make fewer unplanned purchases. 3. Optimize your cell phone plan. Billshrink.com, can help you find better credit cards and cell phone plans to suit your individual needs. 4. Buy a la carte. This seems counterintuitive, but it may be cheaper to cancel subscriptions and memberships and pay as you go instead. Likewise, downloading your favorite TV shows off the Internet for a per-episode fee might be cheaper than cable. 5. Redeem reward points. If your credit card offers them, check your statement to see how many you have and then go to the rewards website to find out if it’s possible to convert them into cash or gift cards. Some credit cards double the value of rewards at specific retailers, Ewing says. 6. Ferret out special offers. “Any time you make a purchase from a major retailer - a new computer, flowers, furniture - check out your credit card and car insurance websites for deals. 7. Negotiate car insurance. Once a year, compare different providers’ rates. Even if you stay with the same company, you likely can save money by adjusting your deductible; unloading unnecessary services (such as roadside assistance if you’re an AAA member); or asking about repeat-customer, low-mileage and safe-occupation discounts. Use Sethi’s negotiating script:tinyurl.com/carinsurance1. 8. Sell stuff. Auction off unneeded items on eBay or hold a yard sale. 9. Sock away windfalls. When you receive extra cash - such as a tax return, bonus, birthday gift or proceeds from your yard sale - save it. © CTW Features 10.Eliminate temptation: unsubscribe. Many retailers send special offers via e-mail.
SAVED $2,000 PER YEAR Kept money in account until age 65
AMOUNT INVESTED $0
$20K
$40K
$60K
INTEREST EARNED
$80K
$100K
$120K $140K
$160K
FINAL TOTAL
$180K $200K $220K $240K
$260K
The longer money is invested, the more time it has to grow, thanks to compound interest. See how a conservative four percent annual rate of return can make a small stash grow big over time: steps to fix any errors you may find. © CTW Features
$107,209
From age 20 through age 30 From age 20 to age 65
$251,578 $152,288
From age 30 to age 65 $85,688
From age 40 to age 65 From age 50 to age 65
$41,015
Source: American Savings Education Council; Employee Benefit Research Institute
NORFOLK DAILY NEWS, Tuesday, January 11, 2011
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When Home Alone Isn’t Enough
Families face difficult choices when one or both of their parents can no longer live on their own JIM GORZELANY CTW FEATURES
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ONE OF THE toughest decisions many of us will face in our lifetimes is what to do when an aging parent can no longer live independently. Just ask Theresa Duff of Joliet, Ill. Her mother, Rita, already losing her eyesight from macular degeneration, was further hobbled by a broken shoulder and two shattered wrists due to a fall.“It was painful to see mom, who had raised a house full of kids, nursed her husband after his stroke and remained active into her 80s, suddenly become so frail,” Duff says. As the population ages, the number of adults who need longterm care rises.About nine million senior citizens will need some form of long-term care this year, according to
Serving Norfolk and 14 counties in Northeast Nebraska
the U.S. Department of Health and Human Services.While the department says family members and friends are the sole caregivers for 70 percent of the elderly, this may not always be possible or practical.“Mom wasn’t ready for a nursing home just yet, but none of the family members still living in the area had homes that could accommodate her limited mobility,” Duff says. “We had to weigh our
TAKE CARE People age 60 and up are twice as likely to be the victims of fraud and financial scams. To register a telephone number on the federal government’s national Do Not Call Registr y call (888) 382-1222 or go online at www.donotcall.gov. 72506
choices carefully to address her needs, wishes and dignity.” If a family member feels a parent who’s living on his or her own is on the decline and needs custodial assistance, he or she should consult with a medical professional. Either way it’s essential to determine what level of care is needed.This can run from simple help with housekeeping and shopping to more acute levels of care such as health monitoring and physical, speech or occupational therapy. Ultimately, this becomes a decision based as much on a
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NORFOLK DAILY NEWS, Tuesday, January 11, 2011
family’s financial resources as it is on an aging parent’s needs. That’s because neither Medicare nor most supplemental health insurance policies pay for long-term care costs. For many, in-home health care can be a desirable and reasonably affordable option. Those who require only modest assistance may have their needs served by a part-time caregiver. Those requiring additional help may require 24-hour live-in assistance.Aside from the cost, family members have to consider the effort involved in hiring a caregiver and following up regularly to ensure that proper care is being given. Another approach is to use the services of a licensed home health care agency, which is a necessity if an individual requires skilled nursing care or physical therapy services.The National Association for Home Care & Hospice maintains a national database of such agencies with tips on how to choose and deal with one on an ongoing basis at www. nahc.org. If living at home proves to be particularly difficult because of stairs or other hazards, placing an elderly parent in an assisted living facility may be best. Residents often live in separate apartments, enjoy communal meals and participate in planned activities. Costs usually
depends on the size of the living area, services required and where the facility is located, adding up to several thousand dollars a month. For those who require constant care, a nursing home may be the only option, albeit a costly one. Medicare pays for skilled nursing facility care for a limited period following a hospital stay for rehabilitative purposes, but not for ongoing care. State Medicaid programs will generally pay for basic nursing home services, but only after an individual’s personal assets are exhausted and he or she has no other means to cover the cost. All nursing homes that participate in Medicare or Medicaid are subject to annual inspections. In addition to personal vetting of any facilities under consideration, it’s a good idea to compare these inspection records by consulting the “Nursing Home Compare� resource at www.medicare.gov. So how did the Duff family finally decide to care for their mom, Rita? “We wrestled with our options and though the family would have preferred that she live out her final years at home, we finally settled on moving her to an assisted living center,� Duff says.“We didn’t have to worry about caregivers not showing up or being inattentive to mom’s needs, and it
Providing quality and caring services:
LONG-TERM CARE RESOURCES s &OR HELP IN IDENTIFYING elder care services and facilities in the community, contact the state or city’s elder care agency. Find the contact information online at www. eldercare.gov or by calling (800) 677-1116. s ,OCATE A LOCAL HOME health care agency at the National Association for Home Care’s website, www.nahc.org. Click on “Consumer Information.� s &OR INFORMATION ON assisted living homes, consult the Assisted ,IVING &EDERATION OF America at www.alfa. org. s #HECK LOCAL HOME health-care agency and nursing home accreditation via the Joint Commission on the Accreditation of Healthcare Organizations at www. jointcommission.org. s 2ESEARCH INSPECTION records of nursing homes at www.medicare.gov. Click on h2ESOURCE ,OCATOR v Š CTW Features
afforded her some independence and socialization without her having to be cooped up alone at home.� Š CTW Features
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Credit Check
For better or worse, there’s a number associated with your name. Make sure your credit score is all it can be
Now more than ever, it pays to have an excellent credit score. The best interest rates on auto loans go to folks with scores of 730 and above. And 60 percent of employers pull credit reports for some or all of their prospective hires, according to the survey by the Society of Human Resource Management. The rationale: people with a pattern of mismanaging their own finances exhibit poor judgment, an indication that they may lack the maturity and sense of responsibility it takes to be a trusted employee. Don’t let a low number hold you back in life. It can take months or even years to boost a low score, but there are steps you can take to gain a few points and perhaps qualify for a lower interest rate. Get your credit history for free from annualcreditreport.com
- the only authorized source for the free credit report that’s yours by law. The report does not include your credit score, which costs a few dollars to obtain. What you’re looking for is negative information that could be lowering your score. Correct any errors or inaccuracies, such as accounts that aren’t yours or old information that should no longer have any bearing on your score. Under the Fair Credit Reporting Act, credit bureaus must investigate any disputed items and remove them from your credit report if they cannot be verified. Though there is no quick fix for poor credit, paying down credit card balances can boost your score. A history of late payments will hurt you, but you can start to mend your credit by paying every bill on time from now on. Treat your debt obligations responsibly and your score will start to reflect that.
The amount of your total debt relative to your total available credit has a significant impact on your score. Ten thousand dollars in credit card debt looks better if your line of credit is $100,000 vs. $15,000, she says, because you’re not as close to maxing out your accounts. The length of your credit history also affects your score, so don’t close your oldest accounts. Use those cards occasionally to keep the accounts active and avoid cancellation. Borrowers should pay off any overdue bills or old debts they forgot about, and pay down high credit card balances to improve their credit utilization ratio (how much of their available credit line they owe.) Credit card balances in excess of 50 percent of their limits will raise eyebrows, while 30 percent or lower is seen as responsible. Only time and discipline can mend a damaged credit record. Š CTW Features