Playing It Safe

Ray’s Take: With the rise in major hacking instances, it’s more important than ever to be safe, savvy and vigilant when it comes to online accounts. Not only were there major hacks to some of the big-box stores like Target and Home Depot, but they also happened at sites that are perceived to be much more secure. Like Experian – and the federal government. Remember the hack into the personnel database?

What’s the average person to do in the face of all this hacking? A few preventive measures you can take would be these.

Start with a fraud alert. Very effective and not as cumbersome as a credit freeze. Check your bank and credit card transactions online regularly – no less than once a week. Banks and credit card companies are much more vigilant and effective at spotting suspicious activity and reaching out to you, but no one knows your business better than you.

Try not to sign up for every website and web service that asks you to. This spreads your information so far across the web that you’ll never remember where you have accounts. Keep an eye on your email and junk folder. If a website you’ve forgotten about sends you an email, let it be a flag to go there and delete your information and close the account. I’d like to say read what you’re accepting when you sign up for things, but that’s hardly realistic.

Minimize the information you share on any website. If your phone number and address are required to create the account, go back after you’ve signed up to see if you can change or remove information. Try editing the phone number to 1234, or street address to Property SearchCrime ReportNeighborhood ReportWatch Service" style="color: #7d0200; text-decoration-line: underline;">100 Main St. for sites that don’t truly need that information.

Be as careful, and as vigilant, as you can. Keep an eagle eye on all of your accounts. But the harsh cold facts of the new world are that true privacy does not currently exist.

Dana’s Take: When it comes to privacy on the internet, the younger generation seems to be unfamiliar with the concept. Every aspect of their lives is splashed across social media like the latest movie trailer or hot book.

Keeping privacy settings up to date can seem like a full-time job – and sometimes a nightmare. How public are your posts on social media? Have you ever thought about Facebook “about” information like high school and colleges attended? We could be supplying a scammer with a script to say he or she attended the same class. I suppose one has to think like a criminal to set security settings. Or opt out.

Think about how much information you’ve made public already before sharing access to your life and family.

Continue reading
2 Hits

Medical Planning for Two

Ray’s Take: Planning how you’ll handle health expenses is one of the crucial jobs for any couple when planning for retirement. While many elements of health insurance are based on the individual, it’s important to evaluate these expenses as a couple because what happens to one person inevitably affects the couple as a whole. From a financial point of view and also from a caregiver point of view.

Trying to figure the impact can be difficult. The range of what health care costs could be in retirement can run from nominal to explosive. You can plan for “average,” but you have to look at best case and worst case as well. Remember that retirement is like a cross-country car trip with no gas stations. What’s in the tank at the beginning is likely to be all there is!

Take a realistic look at your health and your spouse’s health. Know the family history of health issues like heart disease and Alzheimer’s. It’s important to take these factors into consideration when planning for retirement. And to make contingency plans to cover the possibilities. Will your spouse be your main caregiver and vice versa? Or do you have another preference?

People tend to assume Medicare will cover health expenses in retirement, but this simply isn’t true. Medicare covered 62 percent of an individual’s medical expenses in 2013, according to a 2017 report from the Employee Benefit Research Institute (EBRI). That’s on average. Even with Medicare, retirees are going to pay more for health care than many are accustomed to under their current employer-sponsored health plans.

You may not be able to reduce your risk of some diseases, but you cantake care of your health, which will keep your costs down. Retirement is a complex and expensive phase of life, and all aspects should be calculated as carefully as possible prior to taking the plunge. It’s usually not inflation or even market performance that presents the biggest risk to your retirement plan. It’s unexpected medical expenses.

Dana’s Take: Dreaming about retirement with your significant other can be a thoroughly enjoyable experience. Planning for that retirement, however, can be less pleasant. One spouse may take the role of optimist, assuming today’s health and wealth will continue forever. This can place the other spouse in the role of pessimist if he or she wants to plan for assisted living and significant health care expenses.

A couple of good tips for these conversations. Be ready to compromise and be respectful of each other’s views. Nobody wants to feel like they’re being railroaded into something.

Meeting with a financial professional can take some of the pressure off.

Having a third party who sees things from outside can help a couple to bring their differing ideas into a cohesive plan that works for both.

Continue reading
5 Hits

Estate Planning for Blended Families

 

Ray’s Take: Estate planning has undergone a lot of changes over the years, and one of the most significant doesn’t have anything to do with the tax laws. It is the change in family relationships. Chances are, you or someone you know is part of a blended family. This was once an uncommon situation, but in today’s world fully 42 percent of adults have some kind of step-relationship, according to Pew Research.

This state of affairs can make things extra tricky when it comes to estate planning. In these blended family situations, there are more opportunities to get it wrong, and your intentions – like your assets distributed to a current spouse, or that your children and stepchildren are treated according to your wishes – need closer attention to make sure everything is set up correctly.

One area where the wheels are most likely to come off of the best-laid plans is in beneficiary designations on retirement accounts and insurance policies. A perfect plan can be destroyed by an incorrect beneficiary designation because the beneficiary designation trumps everything else – including your will.

Another area where issues may arise is a will that leaves everything to the surviving spouse in the belief that the surviving spouse will provide for all of the children fairly and equally. That’s a lot to expect, and it doesn’t always happen in reality, and the better way to ensure the distribution of assets is to set up a trust that will handle this particular situation.

When it comes to estate planning for a blended family, the concept of “yours, mine and ours” can complicate the process to the point that family dynamics become permanently strained. The alternative is denial resulting in nothing being done, virtually guaranteeing disaster. Working through these details not only can avoid future estate planning hassles but also help maintain healthy relationships between all parties involved. A good estate attorney can help ensure things happen the way you intend.

Dana’s Take: Those of us of a certain age remember “The Brady Bunch” on TV with fondness. Who couldn’t love them?

But that’s TV, not real life. Seriously, six kids and one bathroom? Further, the show didn’t address the anger children and teens can feel when asked to share a parent, home and resources with siblings they did not choose. This is particularly difficult when a family of lesser means blends with one of greater means; issues like a teen’s first car can create fireworks.

No one can predict the way the emotions will make them feel when one parent is gone and there’s nothing in writing about where the assets are going.

Blended families can represent the beauty of new beginnings. But they can also be heartache waiting to happen down the road if solid plans are not put into place early.

Continue reading
8 Hits

Maximize Your Retirement

Ray’s Take: One day you’ll be able to take a deep breath and say you’ve made it.

All the planning and worry and strategizing has paid off, and you’re retired – or at least have the choice of whether or not you want to work. A wide array of new possibilities has become available to you. You now have the opportunity to create a life that’s determined by your interests, desires and priorities, without the constraint of having to earn a living.

But many people don’t take advantage of the possibilities that retirement offers. They just continue with their daily routine, minus the job.

Expect life changes when you retire – both positive and challenging. Step back and take a look. This stage of your life deserves a more big-picture thought process and plan than simply assuming that you’re beginning a very extended long weekend. Put some thought into what you want your life to look like. How will you get the most out of each and every day?

Successful retirees balance leisure over a lot of different activities and take the opportunity to participate in new things and avoid getting into a rut. You probably have some ideas about what you want to do after you retire, places you want to travel, hobbies you want to spend time on or new things you want to learn. Taking care to manage your money well will open doors to many new experiences.

Money buys options. Maintaining and creating new relationships is another key to a successful retirement. In real-life terms, having people close to you who will share your life and be there for you will not only add to your overall life enjoyment, but will also add years to your life.

Being retired shouldn’t mean there’s nothing interesting about you or that you’re bored with your life. Spend money wisely while creating your new life. Celebrate family events and holidays. Create a new network of friends and an array of activities. Keep growing and learning.

Dana’s Take: Post-retirement can be a good time to look into part-time work that may provide lifestyle perks as well as extra income. Think about airlines with flying privileges and hotel chains with discounted stays. You can even search other countries or cities for an opportunity. How about working as an English tutor in China or as a nanny in New York? The sky is the limit.

Job listing websites like glassdoor.com are searchable for categories like part-time work or work in a particular industry, or location. Think about your dream job or favorite hobby and start searching.

Retirement is a time of maximum flexibility. That can mean new work options in new places and more time to enjoy the fruits of your labor.

Continue reading
10 Hits

Bookends of Retirement Planning

Ray’s Take: Planning for your financial independence can seem overwhelming with a minefield of moving parts. Achieving the dream of a secure, comfortable retirement is much easier when you know the significant numbers involved.

The first four are expenditures, portfolio return, inflation and estimated life expectancy. While the sequence of portfolio returns really doesn’t matter during the accumulation phase of life, it matters a great deal during the distribution phase. Certain retirement planning events are triggered at specific ages and knowing those ages and their significance can save you from problems, such as when you are required to take IRA distributions and the early withdrawal penalties.

Two numbers you should pay very close attention to are age 59 1/2 and age 70 1/2. They can have a serious impact on your finances.

For those with hopes to retire early, it’s imperative you know and take into consideration the 10 percent penalty for early withdrawal from certain types of accounts so you can factor that eventuality into your plan by making different decisions about which vehicles you will use to fund your finances in the early years. Life is expensive enough without paying additional penalties.

The other end of the bookend of retirement ages is 70 1/2. This is the age at which you are required to begin taking Required Minimum Distributions (RMDs) from your tax-deferred accounts, whether you want to take them or not.

Withdrawals from traditional retirement accounts become required after age 70 1/2, and each distribution is taxed at your ordinary income tax rate. If you fail to take a required minimum distribution or you withdraw the incorrect amount, the amount you should have withdrawn is penalized at 50 percent, in addition to the regular income tax you owe on it.

Without a solid retirement plan, that light at the end of the tunnel might turn out to be the headlight on a financial train wreck bearing down on you with all the speed and weight of unexpected expenses.

Dana’s Take: Why do people retire early?

Sometimes it’s unplanned like a company downsizing you out of your position. Other times, it’s a conscious decision to give you time to pursue personal interests like traveling or having more time to dedicate to hobbies or volunteering. Early retirement can also serve as a means of getting away from an uninspiring career, a toxic work environment or a frustrating job where you have no room to advance.

If you fall under the second scenario, keep in mind that retiring early may not be the answer you’re looking for. Retiring early has its own challenges – some of them financial. A career change or working part-time might be a better financial choice. And have a more positive impact on finances.

Continue reading
12 Hits