Bone Asset Management | Financial Advisor Bloomfield Hills, MI

The Best Way to Prepare for Health Care Costs in Retirement

Wed, 27 Apr 2022 15:45:00 GMT

3 MIN. READ

Health care in retirement is a big expense, and it could cost you a large chunk of your retirement money. Smart planning for health care ahead of time will help you better prepare to handle these retirement expenses. Planning a budget for health care costs and enrolling in a health savings account are two ways you can be ready to handle health care costs in retirement.

Plan for health care costs

Planning to save for health care costs should be a big part of your retirement plan. Sadly, health care costs add up for retirees thanks to inflation and will only continue to increase. To get an idea of the health care costs you should plan for, a couple retiring in 2019 at the age of 65 can expect at least $387,000 in health care expenses.

So, as you begin planning for health care costs in retirement, be sure to include all your expenses. These might be premiums, supplemental insurance, long-term care and out-of-pocket costs such as co-pays and deductibles.

Start a health savings account

If you want to set aside money in a separate account solely for medical expenses, a Health Savings Account (HSA) is worth considering. Enroll in a high-deductible health plan to start a health savings account.

A Health Savings Account helps you save money to cover your medical expenses. The money you withdraw from an HSA is tax-free when you use it to pay for qualified medical expenses. Also, you can use the funds to pay for what Medicare does not cover or for long-term insurance (which can be costly).

Other ways to manage health care costs

If you’ve maxed out your HSA contributions or are not eligible, you can use other options to manage your costs. For example, you can separate funds for medical expenses, delay receiving Social Security benefits, maintain your health to reduce your medical costs.

Are you ready for the health care costs in retirement? Start planning for health care expenses today and include them in your budget and retirement plan. If you want to learn more about creating the income you deserve in retirement and learn how to cover medical expenses like those described, join us at one of our upcoming Retirement 101 classes.

The post The Best Way to Prepare for Health Care Costs in Retirement appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

Benefits of Charitable Giving in Retirement

Tue, 12 Apr 2022 15:26:00 GMT

3 MIN. READ

As you planned and saved over the years of your working life, you might have also considered those in need. By year-end, you may have made enough charitable donations to qualified organizations to also enjoy the benefits of charitable giving. You felt good by doing good.

Now that you’ve retired, you can still take advantage of many charitable giving tax benefits. Here are some of the ways to do that.

Plan for giving

To start taking advantage of charitable giving during retirement, calculate your taxable income for this year and how much you can afford to give. You can use the standard deduction, which has increased considerably. You can deduct up to $600 in cash contributions to eligible organizations for the 2021 tax year. The maximum deduction for 2022 has not been determined but is likely to be either $300 or $600.

In any case, if you’re not sure how you’ll file or what your income might be, the best place to start is last year’s return. Unless your income or employment status has changed markedly, your prior year return is a good initial guide.

As noted, the IRS permitted standard-deduction taxpayers to deduct charitable donations of $300 in 2020 and $600 in 2021. The deduction should be available for 2022 gifts, although the IRS has not determined the allowable deduction.

Maximize your benefits

Here are other donation types which benefit not only the target organizations but also your own tax bill and pocketbook.

Qualified charitable distribution

You have the option to make a qualified charitable distribution directly from your IRA to the charity of your choice. By contributing directly from your IRA, you can avoid paying income tax on the distribution. It also works when you must take Required Minimum Distributions (RMD) but don’t need the distribution for your daily living expenses. You can contribute up to the full amount of your RMD avoiding any tax consequences on the RMD for that year.

Form 1040 instructions explain how to account for charitable deductions. If the contribution came from a non-deductible IRA, additional tax documents may be required. Consult your tax professional for additional information.

Charitable gifts of assets

You can also make charitable gifts of assets, such as appreciated stocks or bonds. You won’t have to pay capital gains taxes on those instruments. By donating them, you deduct their appreciated fair market value without raising capital gains by selling them to donate cash to the qualified charitable organization. This allows the amount you would have paid in taxes to stay with the charity, which doesn’t pay taxes.

Once again, you’ll want to consider whether the standard deduction makes this a useful strategy for you or not. If you’re not itemizing, a $300 or $600 stock donation won’t avoid a lot of capital gains taxes.

Donor-advised funds

If you’re planning a lot of charitable giving and have sufficient assets, you can consider creating a donor-advised fund . This method lets you make distributions to the charitable organizations of your choice. A donor-advised fund is a separate account operated by a qualified charitable organization, called the sponsoring organization. The account includes contributions made by various donors.

As the donor, when you make a contribution, the organization has legal control over it. However, you or your representative can still advise about the distribution of funds and the investment of assets in the account.

You can deduct a significant portion of your donor-advised fund contribution. However, you should know that the IRS is aware of abuses related to the use of donor advised funds. So, do your due diligence and talk to your financial advisors to find the best options for you.

Charity still begins at home

As you can see, retiring doesn’t mean you can no longer make contributions to qualified charitable organizations. In fact, with IRAs and other retirement vehicles, it can even be easier to make them.

Another benefit of retirement is that you can make a gift that most charitable organizations are desperate for in today’s busy world — your time. At the beginning of this century, one in four Americans volunteered. Today that number is far less, especially since the pandemic began. Think about ways that you can be of value, both as a giver and a volunteer or even a cyber-volunteer. You’re still feeling good by doing good.

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Do You Pay Income Taxes in Retirement?

Wed, 30 Mar 2022 15:43:00 GMT

3 MIN. READ

As you get closer to retirement, one question that may cross your mind is whether you still have to pay income taxes? This is a key question for retirees since typically they no longer earn a steady income. However, taxes are almost inevitable. So, with the proper planning, you can lower or potentially eliminate your income tax burden during retirement.

Taxes are certain

While retirement ends steady earnings and the daily commute to the office and never-ending Zoom meetings, one thing that remains unchanged is income taxes.

Therefore, to plan properly, it’s important to understand what taxes you must pay when you are retired and what portion of your income is taxable. The following are some basics considerations:

How to lower your tax bill in retirement

Taxes in retirement could make up a large portion of your expenses, which is one reason to make sure you plan well. Although the part of your income that’s taxable varies, there are several tools you should be aware of that can help decrease or eliminate your taxes in retirement.

As you begin your financial planning, consider some of the following strategies:

Plan your retirement properly

Whether you’ve already started planning for retirement or are just about to start, it’s never too early or too late to talk to a financial advisor. A financial advisor will help you create a retirement plan that’s best suited for you and can provide guidance by adjusting your current investments.

Whether you start early or late, you’ll find that discussing your financial situation with an experienced financial advisor is beneficial in planning for retirement properly. This is especially true with so many investment and retirement options, each with its own unique and often overwhelming tax rules. Contacting a qualified financial advisor will certainly help you figure out if you’re on the right track or if there are other better options available for you.

Learn more about how taxes can affect your retirement by attending one of our Retirement Planning 101 Classes .

The post Do You Pay Income Taxes in Retirement? appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

How to Better Ensure Your Retirement Nest Egg Lasts

Sun, 20 Jun 2021 22:22:00 GMT

No matter how much you have saved, it’s important to remember that your returns will always vary. Instead of planning on regular returns each year, consider planning for volatility by varying what you withdraw and when.

Be Ready to Flex

Since the bond market is extremely low, your retirement investments are probably concentrated in stocks. When the return is good, it may be tempting to set your withdrawal rate a bit higher than 4%, but when the return drops or the market contracts, you will be better off having more money available to buy back into the market.

Hold Off on Social Security
If you’ve included social security dollars in your retirement calculations, it may be best to hold off until you’re at least 67 years old to get your best benefits from what you’ve earned. Before choosing your retirement date, carefully review any pension benefits you’re entitled to make sure that you:

If you’re not eligible for Medicare at the time you plan to retire, you may consider starting your pension before you apply for social security for an easy transition from pension to social security.

Phase Out of the Office
Instead of leaving the office cold turkey, you may have better luck phasing out of employment. For many professionals, their workplace has been a place for socialization as well as professional fulfillment. Many workers face a big emotional boost right after retirement but can struggle with post-retirement depression . To protect yourself from that feeling of social isolation, consider doing either part-time or consulting work to stay connected and keep your income flowing to avoid pulling cash from your retirement in the event of a market contraction.

This part-time connection will also allow you to keep a schedule and maintain a sense of continuity in your daily activities. If you choose to work in the morning and take a class in the afternoon, you can expand your social connections, built community, build a new schedule and keep earning.

Watch for Bargains
As noted above, if you experience a market contraction, having some cash to put back into the market can add to your nest egg. If you want to do other activities with your retirement dollars, you now have the time to watch for bargains. For example, if you’re interested in taking a cruise, you may get a much better price flying out of a city on the southern or western coast.

As a retiree, you have the time to make arrangements to get to these port cities. For example, if you live in the Midwest and are interested in a cruise to see the glaciers in Alaska, you have the time to take the train through the Rockies, enjoy Seattle, and then cruise to Alaska.

Be Ready to Buy

Keep an eye out for bargains to keep your expenses low. This can mean buying a smaller home to lower your maintenance labor and free up your time; keep the profits from the sale of your existing home handy so you can either invest in products that will pay off later or use part of it to treat yourself on an item or activity that you’ve always wanted to enjoy.

Many retirees and those approaching retirement have faced a lot of uncertainty in the past 15 months. Trying to be certain of your retirement funds means breaking away from the yearly focus on 4% of your total investments. Instead, consider doing your best to take out what you need for the bargains that matter to you, don’t go cold turkey on your employment, and do your best to hold off on drawing social security until you reach full benefit age.

The post How to Better Ensure Your Retirement Nest Egg Lasts appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

The Benefits of Having a Schedule in Retirement

Fri, 18 Jun 2021 22:26:00 GMT

In the retirement years of life, many people are often freed from the obligations that they had when they were working. This can be a highly valuable time in one’s life, and yet it is often not treated as such.

There are many benefits to having a schedule in retirement, including increased productivity, improved health, and more time to spend with family members.

For some people, this may mean going back to work on their terms or volunteering at chosen organizations. There needs to be a balance between personal desires and responsibilities, though, so if you’re finding yourself being pulled too much toward either side, then take steps now towards getting your priorities straightened out.

Daily Schedules Are Important for Retirees
Daily schedules are important for retirees, too because even though they have more free time to do as they wish, the structure provides a certain focus and allows for creativity and new ideas. A solid schedule can also remove a lot of uncertainty that comes with change.

Schedules are important for retirees because they provide stability and structure to retirement. They also help with any uncertainty that may come from change. If you’re finding yourself being pulled too much toward either side, then take steps now towards getting your priorities straightened out.

It Helps to Start a Weekly Planner
Talk with someone who has retired from a similar career. Ask them what they do each day and week on their schedule. This can give you some clues about where to start when designing your daily routine for the coming years of retirement life.

The point is that we must keep ourselves busy during retirement by maintaining a weekly planner, which will help us stay focused so that our days are not wasted. If we allow things like Facebook, TV shows, movies, video games, etc., to become our main activity, we could fall into a rut and end up wasting a lot of valuable time.

Try Some Morning Activities
Early in the morning, before we begin our daily tasks and work routines, try out some of these activities to help us stay focused on what matters:

-Read a spiritual book. The Bible is an excellent choice for this purpose because it has so much wisdom that can help fill up those empty hours with meaning and satisfaction.

-Meditate for fifteen minutes or more by listening to music or reading from your favorite inspirational text. This will bring peace into chaotic situations while also providing you with fresh ideas about getting things done during the day ahead.
-Exercise and get outside to enjoy nature. Start gardening, try yoga, or go for long walks to center yourself.

Exercise is one of the best ways to get your blood flowing and give yourself the much-needed energy you need for the day ahead. Take advantage of all that nature has to offer by going outside instead of sitting inside, staring at a screen, or watching TV.

In the Afternoon
-Orient yourself. Take a walk in your neighborhood and get to know the people around you, or visit that museum you’ve meant to go to for years now.

-Do something relaxing like taking a bath or reading an interesting book. It’s important to take some time every day just for yourself, so make sure this is done at least once each afternoon.

-You could spend some time learning online or by visiting a library to stock up on good books.

-Take some time to socialize with others and volunteer for your favorite causes.

In the Evening
-Eat a nice dinner. Spaghetti sauce, lasagna, and meatballs are just some of your options for delicious dinners that can be made in advance. You could also make soup or bake cookies to enjoy on a cold winter’s day – whatever suits your taste buds!
Dinner is typically eaten at around 5 or 6 pm each evening. But you might need to try different times until you find what works best for you. Just make sure not to eat too close to bedtime to not disrupt sleep patterns even more than they already have been disrupted by retirement life!

-Journal about how your day went before going off to bed with calm thoughts racing through your mind. T

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Savings vs. Income in Retirement

Tue, 25 Feb 2020 20:35:00 GMT

When thinking about retirement, you should make sure to have a clear understanding of savings vs. income. When thinking about retirement, many think about a particular savings amount that they would like to reach. This type of thinking comes from how general purchases are made. If you want to buy a computer, you would save the amount of money that you would need to buy a computer. However, saving for retirement is not as easy.

The issue with retirement planning is that you do not know how exactly your investments will perform. You also do not know how long you will live. When thinking about retirement, many recommend that you have at least 70%-80% of your pre-retirement income. Considering that you might spend additional money on travel and leisure in retirement, only being able to spend 70%-80% of your pre-retirement income may not be comfortable.

You should carefully plan how you want to live in retirement so that you can determine the income that you need. Reducing your expenses on housing and transportation can positively impact your budget and give you more flexibility. Once you determine the income level that you will need, you should determine the approximate amount of savings that you will need. Figuring out your desired lifestyle is an important part of determining your needed savings and income.

Many individuals do not truly know how much money they would need to comfortably retire. For example, you are only supposed to withdraw 4%-6% every year of your savings for retirement. If you have $300,000 saved, you would only be able to withdraw $12,000 to $18,000. According to SmartAsset , the median average net worth for a head of household aged 55-64 in the United States is only $187,300. For many of them, Social Security benefits that average $1,354 is there only source of income. Considering the somewhat fragile state of Social Security, relying on Social Security for a significant part of retirement is not a good idea.

Many individuals planning for retirement today are planning to work in their retirement. The reality is that working when older can become difficult because of health issues. There is also a good amount of age discrimination in many companies. Obtaining a new job at 55 years of age is difficult. At 70 years of age, obtaining a new job can be nearly impossible. Also, if your spouse needs support, working in your later years can no longer be an option.

Another important point in determining your savings and income needs is determining what sort of housing you will want in retirement. One of the goals of many is to own outright a house or apartment. However, you should consider the interest rate on your mortgage. If the expectation of your investment returns going forward is greater than the interest rate on your mortgage, you should keep your money in your investments.

Another consideration with housing is the liquidity of your assets. If most of your money is in your house, you will not be able to use those savings for emergency income. You should also consider the riskiness of your investments. Many recommend extremely safe investments for your savings. Having all of your investment in riskless investments is probably not a smart choice if you are planning to live many decades after you retire.

You should carefully consider your income needs. You should also plan for increasing healthcare costs as you age. Also, you should plan that as you age your mobility may decrease so that you will need to pay for additional expenses such as a stairlift that Medicare does not cover.
https://www.forbes.com/sites/kristinmckenna/2019/07/10/debunked-6-myths-about-retirement/#439c8a955e8b

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Changes to Required Minimum Distribution Rules

Mon, 24 Feb 2020 20:28:00 GMT

With the passage of the SECURE Act in December 2019, current and future retirees can expect to see significant changes which are likely to impact their tax planning for retirement. Most notably, perhaps, is the increase in the Required Minimum Distribution (RMD) age from 70 ½ to 72.

For affluent retirees – and soon-to-be retirees – affected by the new RMD age, both the increase in the RMD age and the proposed new life expectancy tables on which individual RMDs are based are a bit of a double-edged sword. Since annual RMDs are simply a calculation of the total amounts in your traditional IRA, 401(k) and/or other employer-sponsored retirement account divided by your remaining life expectancy in years, the proposed revisions to the life expectancy tables appear to be a boon – at first. With more years statistically ahead of today’s 72-year-old retiree than in the past, this RMD calculation will initially be lower than before, leaving a larger portion of your portfolio to grow each year.

Which brings us to the other edge of the sword. All other things being equal, including average annual return, the RMD amount will likely increase over time because of the growth advantage provided by the revised life expectancy table. And failure to withdraw the RMD will incur a 50% penalty of the RMD amount. (For example, failure to withdraw an RMD of $20,000 will result in a penalty of $10,000.) For those expecting to leave a legacy behind for heirs or for charitable purposes, the prospect of losing significant net worth to taxation later in life seems onerous indeed.

So what can high-net-worth individuals do to preserve their legacy and mitigate the risk of account balances being drawn down at disproportionately high rates later in retirement?

Perhaps the most obvious solution is Roth conversions – the sooner, the better. For individuals whose net worth sits predominantly within a traditional 401(k) or other employer-sponsored plan and who have not yet established a traditional IRA, the Roth conversion process will consist of four equally important steps.

1. Open a traditional IRA. If you are satisfied with your current brokerage, set it up there.

2. Roll the full amount of one’s 401(k) balance into the traditional IRA. Specifically, you will want to request a “trustee-to-trustee” transfer of the full account balance so that the funds never pass through your hands and trigger taxation or penalties.

3. Open a Roth IRA. Again, your current brokerage is an excellent place to set this up.

4. Once these accounts are both in place, begin transferring balances annually from the traditional to the Roth IRA according to your ability to pay the taxes at your marginal tax rate. For example, if your current tax bracket is 30 percent based on employment income, the amount of the Roth conversion which represents an increase in income sufficient to raise your tax bracket to 35 percent will be taxed at 35 percent.

Numerous guides for doing Roth conversions are available online. However, since these are written for a broad audience and only you know your exact situation and financial goals, always speak with a reputable financial planner to determine the best way forward for you and your loved ones.

While the change in RMD age and other aspects of the SECURE Act appear problematic to those who haven’t fully assessed the implications for their personal financial situation, Roth conversions and other tactics can mitigate potential losses of one’s net worth to taxation. For more information, talk to a financial planner today.
https://www.cnbc.com/2020/01/03/how-changing-required-minimum-withdrawals-affects-retirement-accounts.html

The post Changes to Required Minimum Distribution Rules appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

Thinking About Rolling Over Your 401k?

Fri, 21 Feb 2020 20:26:00 GMT

>An increasing number of employers offer 401(k) plans for their employees. It’s estimated that the average employee will have 10 jobs before they hit 40 years old. This means that there are millions of 401(k) accounts that are essentially orphans. Most companies will allow old employees to leave the money alone, and 22% leave their money with their old employers. However, you might want to roll over your 401(k) to your new employer’s plan or an IRA.

Check Fees

Fees and expenses are one of the most important issues you’ll want to consider before rolling your 401(k) over. If your new employer has a plan with options that charge lower fees, it’s probably a good idea to roll your money into the new plan. Small plans can charge average fees of more than 1.4% on their employees’ investments. If you’re paying more than 0.50%, it’s probably a good idea to begin the rollover process. You can move your money over to your new employer’s plan or an IRA. If your new employer has higher fees, you’ll want to leave your money alone or roll it over into an IRA.
Investing Options

Another consideration that you’ll want to take into account when deciding what to do with your IRA is the number and the quality of the investing options. Some smaller employers will have few options for their employees. Some of these will perform poorly when compared to the S&P 500 or another index. If you’re leaving an employer with a roster of proprietary funds, you’ll probably want to roll your money over into a new account. Many employers are starting to get the message that their employees want to keep more of their money away from fund managers and financial advisers. Therefore, more are offering more affordable options like index funds.
Control

Deciding upon whether you want to invest your old retirement savings through a new employer’s 401(k) or a rollover IRA can sometimes depend upon the level of control you have over your savings. Most employers have a relatively low number of options in their retirement plans. With an IRA, you can have nearly unlimited investing options . If you want to invest in ordinary stock or bond funds, you can do so with an IRA. You can also use an IRA to make investments in other asset classes. You could buy a house to flip with an IRA. You can also hold physical gold or cryptocurrency in an IRA.
More Tax Options

Most people save in a 401(k) plan that allows for tax-deferred savings. Rolling a small 401(k) into a Roth IRA can allow that money to grow tax-free. A Roth IRA also allows for tax-free distributions. If you have a small tax bill in the short run, you could really wind up with a massive amount of tax-free income later in life if you roll your 401(k) into a Roth. Of course, if you have a large amount in your 401(k), you’ll probably want to roll a small portion over each year to avoid winding up with a large tax bill.

Many times, leaving your money in a 401(k) can be a good idea, but there are also situations in which you’ll want to roll your money over. Your decision will depend upon your particular situation. You’ll want to ask questions related to the fees and the choices that are tied to each plan. You’ll also want to take your current tax situation into account so that you can make an informed decision that will work best for you in the long run.

The post Thinking About Rolling Over Your 401k? appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

To Work Or Not To Work In Retirement. That Is The Question.

Sun, 16 Feb 2020 20:22:00 GMT

The retirement age of 65 was chosen for Social Security at a time when the average life expectancy was 67. Overall, life expectancy has trended up since then, so it should come as no surprise that 9 million Americans over age 65 now work either full time or part-time.

That’s nearly one in five people who theoretically should be retired. This trend towards working at least part-time after age 65 is one of the realities of the new economy that gets relatively little press.

This decision-making process looks different depending on where you are in life. If you are already retired and are considering returning to work, that’s a very different scenario than if you haven’t yet retired and are thinking about how you want to handle the upcoming years.

Social Security
The rules for Social Security are such that it is best to simply delay starting those payments. The longer you delay starting Social Security, the larger your check will be.

If you are in good health and your income can adequately support you, delaying your Social Security benefit until later is a wise move. But it gets a lot more complicated if you have already started receiving your benefits and are considering returning to work.

If you resume working while drawing Social Security, your benefits can be reduced if you earn over a certain amount of money per year. If you are already drawing Social Security, you should meet with a financial advisor and find out exactly how returning to work could impact your Social Security benefits.

Time is Money
If you have already retired and you are thinking of returning to work, take a few minutes to consider your current lifestyle. If you are shopping sales, cooking from scratch and generally using your time to live well for very little money, returning to work may not be as profitable as you imagine.

Before you brush off your old resume, calculate how much lunch at a cafeteria or eatery could likely cost and factor in expenses like work clothes. It might make more sense to clip a few more coupons or pursue a casual income instead of a job.

Other Obligations
Think about how you are living now and whether or not you have taken on personal responsibilities without really thinking about the obligation it entails. For example, perhaps you have fallen into the habit of keeping your grandchild a few hours a week at your place.

Ask yourself: Is this de facto free daycare? Will it be a hardship your family to have to look for a daycare provider if you are no longer available?

Your Health
Your health may seem fine while not working, but can it stand the burden if you resume working? If you are in fragile health, working full time may be financially counterproductive if it leads to a big increase in medical expenses.

Casual Income
Instead of getting a job, it may make more sense to pursue a casual income. These days, it is possible to pursue part-time, flexible work in a way that didn’t exist historically. This may make more sense than returning to a regular job.

“If you rest, you rust.”
Money is usually the primary motivator for continuing to work, but it’s not the only reason to keep working. Some people believe that staying active helps keep you alive and maintains a higher quality of life.

Working part time may be a great compromise. It can provide a great work-life balance while easing the financial pressure.

The post To Work Or Not To Work In Retirement. That Is The Question. appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

The Good and Bad of Retiring Early

Fri, 14 Feb 2020 20:20:00 GMT

When it comes to retiring early, some of the benefits are obvious. You get to live your life without the constraints of work, and you are able to pursue your own interests. But there are other good reasons for retiring early, and there are some reasons why retiring early is not the greatest idea.

Your Dedication is Gone

One of the good reasons to retire early is that you are simply not dedicated to working anymore. When you are no longer emotionally interested in working, your performance deteriorates and your company suffers. Working Took its Toll
In some professions, such as construction and law enforcement, the physical and emotional demands of the job can become too much over time. After a few years in a high-risk profession, your body and mind have simply had enough and it is time to go home and rest.

Your Finances Become More Flexible

Most people do not realize how expensive it is to work until they are no longer working. When you work any job, you incur expenses such as wear and tear on your car, transportation expenses such as gas or bus passes, work clothing costs, daycare and miscellaneous medical costs for work-related injuries. If you have planned your finances to allow yourself to retire early, then you will find that your money goes much further when you are not working.

Your Health Could Suffer

For some people, retiring early means abandoning the daily physical activity working required and giving up a big piece of their identity. Retiring early can cause physical and mental problems that could become very serious over time.

You Lose Your Social Circle

After years of working, you tend to take for granted the notion that you will see most of your friends at work five days out of the week. Even people who think that the people they work with are only acquaintances suddenly find that the loss of the social circle they developed at work is devastating.

You Didn’t Plan Well

When you retire before the age of 65, you run the risk of losing out on health insurance. Medicare automatically kicks in for every American when they turn 65, but what would you do until that age? Did you plan your retirement finances right, or will you run out of money? Many people forget to take inflation into account when they plan their retirement, and that makes retiring early financially dangerous.

There are two sides to every story, and that includes the story that goes with retiring early. The idea of walking away from work before the age of 65 can sound appealing, but there are plenty of variables to consider before you make that decision. If you do want to retire early, then talk about it with your family and ask your financial adviser if you have structured your savings properly to be able to live without a paycheck for the rest of your life.

Sources:
http://money.usnews.com/money/blogs/on-retirement/2015/02/05/6-reasons-you-shouldnt-retire-early

http://www.bankrate.com/finance/retirement/signs-ready-to-retire-early-1.aspx

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Long Term Care, Why It Matters

Fri, 14 Feb 2020 20:13:00 GMT

Millions of people in the U.S. are unable to care for themselves and need long-term care services . These people need assistance in performing one or more self-care activities of daily living such as eating, bathing, dressing, and executing basic movements like walking, sitting, or standing. Services can be provided in the patient’s home, a residential care community, nursing home, assisted living facility, adult day service center, or at a hospice. Housework, money management, shopping, organizing medication, and helping with communication are some of the other long-term care services that are provided.

The need for long-term care services has grown as the life expectancy of the U.S. population increases. There is a 70% chance a person who is 65 years of age or older will need long-term care, and women are more likely to need this care because they live longer than men on average. It’s not just the elderly who are most likely to need long-term care services. People who have been in an accident or have a chronic illness or chronic condition due to poor eating habits, lack of exercise, or family history are more prone to need long-term care services. Also, people who live alone are likely to need long-term service if they don’t have family or a partner nearby to help take care of them.

Long-term care services can be expensive for most people, and the longer a person needs servicing, the more expensive it gets. The average length of care for women 65 years of age or older is 3.7 years, and for men, it’s 2.2 years, but 20% of people 65 years or older will need five or more years of care. Costs vary by state, and the provider being used and the type of services being provided can also influence long-term care costs. The average national annual cost of long-term care are as follows:

• Home health care: $45,760 – $46,332
• Adult day health care: $17,680
• Assisted living facility: $43,539
• Nursing home care: $82,125 – $92,378

Costs for some providers are all-inclusive, and other providers have a flat fee then add extra charges for services beyond room, food, and housekeeping.

Health insurance only provides limited coverage for specific types of long-term care medical needs, and disability insurance doesn’t provide any long-term care coverage. Health insurance, including Medicare , generally covers skilled nursing facility stays after a recent hospitalization and medically necessary skilled home care. Disability insurance is only designed to provide an income to a person when they become disabled and are unable to work.

Long-term care insurance is specifically designed to cover the cost of long-term care services that are provided in a variety of settings. This insurance is comprehensive, and it’s flexible enough to provide a person with individualized coverage. The monthly premiums for a long-term care insurance policy are based on a person’s age at the time they apply for a policy, the type of policy they apply for, and the type of coverage they select.

Long-term care is a complicated process that involves family, nursing care representatives, and in some cases, social workers, and legal counsel. It can be a delicate time for everyone involved. It’s important to take the time to make the right decision so that the person who needs these services can be satisfied with the decision.

The post Long Term Care, Why It Matters appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

Money Conversation with Your Kids

Tue, 11 Feb 2020 14:56:00 GMT

Planning for retirement sometimes is filled with numerous preparations. One step at a time you put your life and your finances in order so that the remainder of your years are spent enjoying the lifestyle and security you have worked so hard to achieve.

Preparing for retirement includes steps to prepare your children for the decisions you have made. Sitting down with them and laying out your plans is an important step in the process and one that can prevent misunderstandings and mistakes along the way.

Let Them Know Long Before the Retirement Party

When the timeline for retirement grows closer, make sure that you fill your children in on the development of your plans. Some experts advise letting kids in on it when you are about five years away from retirement to prevent catching them by surprise. If your plans include downsizing to a smaller home or a move to a new location your children may need time to prepare.

Retirement means a change in lifestyle. For some people, this means a reduction in monthly purchases. Inform your children of these changes so that they can be prepared and less likely to worry that you are struggling financially.

Set Them Free

Children who are financially dependent on you may need time to get their own houses in order. Your retirement plans could very likely require you to pull back any financial support. Chances are you may need to issue deadlines to your kids if they need to begin paying for their own cell phones, insurance, or rent each month.

Cutting your kids off financially can cause rifts in your relationship. It may help to hold a conversation long before the time frame becomes critical. Help formulate a plan to remove your children from their dependency on you. Keep them involved in the process so that they have the time to prepare themselves and their own financial future.

Communicate Your Plans

Nearing retirement means you are getting older. Any discussion about aging requires a reality check about the potential effects of illness and other conditions can have on your lifestyle. Now could be an ideal time to layout your plans and your wishes to your children, especially if they could be tasked with making decisions for your future.

Communicate your wishes and desires and inform your children where important documents are located. Include a medical power of attorney, financial power of attorney, and other medical directives along with other financial documents. If you choose one of your children to act as an executor in your will or a beneficiary to insurance policies you will need to provide them with copies of your documents.

Discuss Your Final Plans Now

While the topics you might discuss with your children prior to your retirement might include your finances and your travel plans, it may also be a good time to fill them in on your final wishes. A discussion about your funeral plans may not be a fun conversation to have, but it is an important one.

Disclosing your wishes for your belongings now is another part of sharing your final plans. If you have multiple children and grandchildren giving them explicit directions about who gets what when you pass on may help save years of sibling strife in the future.
https://money.usnews.com/money/retirement/baby-boomers/articles/2018-06-08/the-talk-to-have-with-your-kids-before-you-retire

The post Money Conversation with Your Kids appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .

How to Recognize and Prevent Elder Financial Abuse

Tue, 14 Jan 2020 14:58:00 GMT

Financial abuse can be a complicated subject, but at its most basic level, it involves taking advantage of an older adult through manipulation or intimidation to steal their money or property.

What are the risk factors for financial abuse?

Elderly adults are some of the most vulnerable to financial abuse. Some of the biggest risk factors for older adults include:

• Isolation
Isolation can cause extreme loneliness in seniors, leaving them desperate for any sort of social connection. Many abusers target elder adults for this reason.

• Lack of knowledge of financial matters
Elder adults who don’t pay much attention to or don’t understand financial issues can be tricked into giving over secure information.

• Disability
Whether the older adult has a physical or mental disability, they are dependent on others to take care of themselves. This leaves them vulnerable to manipulation and intimidation by caregivers. Disability can also make an elder adult seem less likely to take action against the abuser.

Who is most likely to abuse?

Unfortunately, abusers are rarely unknown to the abused. In fact, those who are most likely to abuse are the ones who are closest to the elder individual or someone that he or she trusts. The most common financial abusers include:

• Family members
Family members can have different motivations for committing financial abuse. They may feel entitled to their relative’s money or property, especially if they are due to inherit from the elder or are in a caretaking position.

• Caretakers
A caretaker can be a family member or someone who is paid to provide care to an older adult in the elder’s own home. As such, a caretaker is the person who has the most access to the elder.

• Professionals in whom the elder trusts
Professionals are people in whom the elder adult depends on to take care of the things he or she is not capable of handling alone anymore. These services can range from attorneys to someone your relative hires to take care of the lawn. Abusers can take advantage of older adults by overcharging for services or manipulating them into signing documents that they don’t understand.

• Scammers and con artists
Some predators prey specifically on elder adults, counting on their social isolation and lack of knowledge about financial matters to be able to gain access to their victims and their financial assets.

What types of financial abuse exist?

Financial abuse can take different forms, depending on the relation of the abuser to the elder adult. Common tactics include (but are not limited to):

• Theft of money or property
• Using manipulation or intimidation to force him or her to sign legal/financial documents
• Forging his or her signature
• Fraud
• Telemarketing and email scams

How can you prevent financial abuse of elders?

The best thing that you can do to prevent elder financial abuse is to keep your older relative or friend from being isolated. Check-in regularly, make sure you know who has access to him or her and know the signs of financial abuse. Keep an eye out for suspicious signatures on checks, suddenly unpaid bills, and new and unexplained “friends.” By knowing the signs, you can help prevent the financial abuse of your loved one.

The post How to Recognize and Prevent Elder Financial Abuse appeared first on Bone Asset Management | Financial Advisor Bloomfield Hills, MI .