8FACEBOOK PROFILES RAISE USERS’ SELF-ESTEEM AND AFFECT BEHAVIOR – a study by UW-Madison
Facebook profiles are a version of self; it is tailored for the eyes of family and acquaintances through the use of photos and posts. A new study by UW-Madison assistant professor Catalina Toma finds beneficial psychological effects and influenced behavior. Ms. Toma used the Implicit Association Test to measure Facebook users’ self-esteem. The test showed in 5 minutes of viewing their own Facebook profile participants experienced a significant boost in self-esteem. This is the first time this test has been
done on Facebook users.
Catalina Toma said-
“If you have high self-esteem, then you can very quickly associate words related to yourself with positive evaluations but have a difficult time associating words related to yourself with negative evaluations. But if you have low self-esteem, the opposite is true.”
“Our culture places great value on having high self-esteem. For this reason, people typically inflate their level of self-esteem in self-report questionnaires,” she says. “The Implicit Association Test removes this bias.”
In addition, Ms. Toma studied whether or not exposure to one’s own Facebook profile affects behavior.
“We wanted to know if there are any additional psychological effects that stem from viewing your own self-enhancing profile,” says Toma, whose work will be published in the June issue of Media Psychology. “Does engaging with your own Facebook profile affect behavior?”
After the subjects spent time viewing their own profile they attempted fewer answers during the allotted time than people in a control group, but their error rate was not any worse. Toma says the results are consistent with self-affirmation theory, which claims that people constantly try to manage their feelings of self-worth.
“Performing well in a task can boost feelings of self-worth,” Toma says. “However, if you already feel good about yourself because you looked at your Facebook profile, there is no psychological need to increase your self-worth by doing well in a laboratory task.”
Assistant Professor Toma discourages drawing broad conclusions about Facebook’s impact on motivation and performance based on this particular study because it examines only one facet of Facebook use.
“This study shows that exposure to your own Facebook profile reduces motivation to perform well in a simple, hypothetical task,” she says. “It does not show that Facebook use negatively affects college students’ grades, for example. Future work is necessary to investigate the psychological effects of other Facebook activities, such as examining others’ profiles or reading the newsfeed.”
Gerontology professionals have been concerned for a long time about the negative effects of senior’s feelings of isolation and consider social media a good health improving endeavor. This study seems to support this view. Also consider that medical staffs usually do whatever they can to keep a patience’s attitude and self esteem high in order to promote healing.Continue Reading »
Why would anyone want to restrict their Social Security payments?
Well, it’s not the payments being restricted it is the type of application that is filed. The restricted application is filed when, for example, a wife wants to receive her husband’s spousal benefit instead of her own Social Security benefit. The idea here is to allow the possibly still working wife or early retired wife to receive monthly SS payments from the spousal benefit of her retired husband. This allows her own SS benefit to accrue credits each year until age 70 when she would then stop the spousal benefit from her husband’s SS and begin drawing from her own benefit. For a middle income couple this could increase total Social Security payments by $40,000 to $50,000 depending on earnings during their working years.
This is one of many combinations of Social Security planning and these options have been around for a longtime, some of them since the very beginning of the program. What is different now? Retirees are coming to understand Social Security is a life income annuity with a cost of living feature built in requiring understanding and planning to maximize the benefits.
There at least 81 different Social Security combinations and options to consider when signing up for retirement benefits and it takes a computer program to calculate them all to determine the best one in an individual situation.
If you would like to explore your Social Security benefit options contact Tim Barton, ChFC for an analysis. List your SS estimated monthly benefit for both spouses and current age in the comment section.Continue Reading »
Cash: Cash gifts are the easiest to give to a charity, both in terms of substantiating the deduction and in determining the value of the gift.
Real Estate: Real estate that is owned outright and which has appreciated in value can be given to a charity. The donor can generally deduct the fair market value of the property, up to an adjusted gross income (AGI) percentage limitation. When a charity sells donated appreciated property, the capital gain then escapes taxation, up to AGI percentage limits.
Securities: The best securities to donate tend to be those that have increased substantially in value. As with real estate, the donor can generally deduct the fair market value of the security and the capital gain escapes taxation when the security is sold by the charity.
Charitable Gift Tax Implications:
- Gifts of cash and ordinary income property are generally deductible up to 50% of the donor’s adjusted gross income (AGI).
- The fair market value of gifts of long-term capital gains property (e.g., real estate, stock) is deductible up to 30% of AGI. There is, however, a special election through which a donor may deduct up to 50% of AGI if the donor values the property at the lesser of fair market value or adjusted cost basis.
- Charitable contributions in excess of the percentage limitations can be carried over and deducted for up to five succeeding years.
- The donor must itemize income tax deductions in order to claim a charitable deduction. A portion of itemized deductions is phased out for taxpayers with an AGI above certain limits.
Life Insurance: If a charitable organization is made the owner and beneficiary of an existing life insurance policy, the donor can deduct the value of the policy as of the date of the transfer of ownership. The donor may then deduct all future amounts given to the charity to pay the premiums. If a charity is named just the beneficiary of an insurance policy on the donor’s life, no current income tax deduction is available. At the donor’s death, however, the donor’s estate receives an estate tax charitable deduction for the full amount of the policy death benefit.
For help you may ask questions in the commentsContinue Reading »
Americans are uncomfortable with their financial situation and don’t want to talk about it.
According to AVIVA USA and the Mayo Clinic wellness survey. Aviva and Mayo Clinic surveyed 2,000 U.S. adults on their financial preparations and health habits to determine the affects on their overall well being.
“Many people choose to ignore rather than address their financial wellness” said Mike Miller, Aviva vice president.
Key Wellness Survey results:
- 2 in 3 are uncomfortable with their financial situation
- Only 1 of 3 think they are or will be prepared of retirement
- Only 1 out of 5 work with a financial advisor
- Twice as many who consult with a financial advisor feel comfortable with their finances
Why two thirds of American feel so much stress and choose silence rather than seeking help on one hand is a mystery and on the other a little understandable. This survey clearly finds that those who discuss their financial situation with a professional feel much better and this makes the rest of their lives more enjoyable too; some even lose weight.
For help you may ask questions in the comments
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This is a surprise considering 60% of women say they are the primary breadwinner in their household
- 54% of respondents describe themselves as the household CFO.
- 49% sometimes fear becoming a “bag lady”.
- 27% of those earning more than $200,000 per year share that fear.
Inside the study
- More than 2,200 women ages 25-75
- Minimum household income of $30,000 a year
- “Bag Lady” fear extends to all corners of life and affluence
- Was highest among single respondents at 56%
- Significant concern for divorced women 54%
- Widows 47%
- Married women 43%
Despite feeling more empowered about financial planning
- Forty-two percent said they believe financially independent women are intimidating to men and often end up alone
- (31%) said those women are hard to relate to and often don’t have many friends.
- This feeling was even higher among single women at 47% and 32%, respectively.
Allianz Life Vice President of Consumer Insights Katie Libbe comments-
“When Allianz Life conducted the initial wave of the Women, Money & Power Study seven years ago, we discovered that women everywhere – even well-educated, successful, financially independent women – have major gaps and unmet needs when it comes to achieving comfort and confidence with money,” “Today, women clearly feel more invested in financial planning, however, fears of fiscal failure still persist. The real message here is that the financial services industry needs to help women learn about money and prepare for their retirement.”
In the Age of the Financially Empowered Woman
- 57% of all women surveyed said they both “have more earning power than ever before” and also “handle major investment decisions and retirement planning.”
- 55% noted they take the lead in suggesting new investing or retirement ideas.
- 60% said they were responsible for handling tax preparation and planning.
- 90% of women surveyed agreed that in today’s world, women need to be significantly more involved in financial planning than in the past
- 96% of divorced women felt this way.
- 67% of women surveyed said that becoming more knowledgeable and involved in managing their finances has improved the quality of their life, 71% of single women agreed.
“Allianz Life is dedicated to the mission of achieving financial literacy and independence for every American, so we’re especially keen to design solutions that are relevant, responsive, and sensitive to helping women accomplish greater financial security,” noted Libbe.
Financial Crisis of 2008-2009 Drives Behavior Change
- 68% say they have increased their financial involvement since the crisis
- Women ages 45-54 (72%) and widows (75%).
- 43% of women surveyed said they don’t feel any smarter about how to manage their money than before the crash. That feeling was shared by 36% of women with the highest income (household income of $200,000+).
When asked what key issues will have the greatest effect on their retirement outlook
- “lack of adequate retirement savings”
- ”the future of Social Security,”
- ”rising health care costs,”
- “tax changes.”
Retirement is the worry that keeps most women up at night.
Second only to loss of spouse/significant other. “Running out of money in retirement” is a worry that keeps 57% of women up at night and is the number one worry for single and divorced women.
For help you may ask questions in the commentsContinue Reading »
At one time, there were only two ways to tap into the value of your home:
Sell your home
BUT… then you would have to move somewhere else.
Borrow against the equity in your home
BUT… then you would have to make monthly loan repayments.
Many people have retired with what they assumed would be a comfortable retirement income into the future, only to find that inflation, rising health care costs and unexpected expenses have worked to make their retirement less secure. These people may have substantial equity in their homes…equity they would like to convert to cash without having to move or assume debt that has to be repaid.
A reverse mortgage, which converts a portion of a home’s equity into cash without requiring that the home be sold or that the equity be repaid currently, may provide the answer.
What Is a Reverse Mortgage?
A reverse mortgage is a loan against the value of your home that does not have to be paid back for as long as you live in the home. Simply put, a reverse mortgage converts some of the equity in your home into income.
The proceeds from a reverse mortgage can be paid to you:
•In a single lump sum;
•As a regularly monthly income; or
•At times and in amounts of your choosing.
While reverse mortgages typically require no repayment while you are living in your home, they must be repaid in full, including interest and any other charges, at the earliest of:
•The death of the last living borrower (meaning that a surviving spouse may continue to live in the home without repaying the reverse mortgage);
•The sale of the home; or
•The last living borrower moves permanently away from the home, such as to an assisted living facility or nursing home.
Think long and hard before moving forward on a reverse mortgage while exploring other options such as an out right sale or finding a less expensive place to live.Continue Reading »
The Roth IRA may be one of the most under used retirement income strategies. Due to the deductibility of other retirement saving plans like Traditional IRAs and the 401(k); Roth IRAs are usually just an afterthought. After all who does not want to pay as little income tax as possible? It seems a very simple rational decision. Initially a Roth has no effect on the amount of income tax due because the taxpayer receives no immediate tax deduction.
Do you think tax rates are headed down, stay the same or will they go up in the future?
Clearly if you feel tax rates are going rise at some point then the decision is to pay a smaller tax now or a bigger tax on a larger sum later. A Roth IRA is worth serious consideration, especially if you consider an enhancement by utilizing available lifetime income options.
The new generations of annuities offered today either have income options built in or offer the option to purchase a guaranteed lifetime income rider. Using either of these options the annuity owner has the ability to start lifetime income at a specified age.
If retirement planning is being done correctly income points are identified. These are points in time when a retiree needs to start an income stream.
To help understand the magnitude of the enhanced Roth advantage let’s use a simple example. A future retiree is currently 49, they start contributing to a Roth annuity with lifetime income available as early as age 59 ½. The Roth’s income benefit base has grown to $100,000 with an annual tax free lifetime payout of 5% available ($5,000). Whether or not they actually plan to retire at this early date they should start the lifetime income payout. Why? Because the income is for life, the earlier it is started the greater chance they will live long enough to get into company money. In other words they would receive all of their money, interest earned and then they receive company money for as long as they live. If cost of living increases are built onto our $5,000 yearly income example so much the better.
Besides, even if still working, who wouldn’t appreciate some additional tax free income every year after age 59 ½?
For help you may ask questions in the comments
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Fear # 1 - American Retirement Crisis/Unprepared:
- 92% of Americans believe there is a retirement crisis and fear they are unprepared
When asked “Do you believe there is a retirement crisis in this country?”
- 92% answered absolutely or somewhat.
In the age group 44-54
- 54% said they feel unprepared for retirement.
- 57% of all respondents worry about their nest egg safety and it may not be large enough.
- 47% fear they will not be able to cover basic living expenses.
Fear #2 – Americans fear outliving money more than they fear death
- Increasing longevity mean more people are spending more years in retirement.
- 77% of all age groups worry about living too long. So much so a shocking 61% feared outliving their assets more than they feared death.
The market meltdown of 2008-2009 caused a profound financial rethinking for Americans.
- 53% reported their net worth was significantly eroded in a very short period of time.
- 43% had their home values drop
- 41% realized they were not “in control” of their financial futures as they’d thought.
As a result of this financial turmoil many research participants said they changed their behaviors.
- Cut back on spending
- More interest in financial news and studying the markets
The majority agreed- “That the safety of my money matters more.”
“Asked to consider the features that would be most important to them if they could build the ideal financial product?”
- 69% of survey respondents said they would prefer a product that was “guaranteed not to lose value”
- Only 31% would choose a product that is not guaranteed with the goal of “providing a high return.”
Annuity-like solutions are gaining relevance and appeal.
For help you may ask questions in the comments
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Throughout history many of the greatest discoveries and inventions happened by accident, someone trying to solve an unrelated problem.
Imagine if we had a battery in all of our devices that charged in seconds rather than hours or days. Well actually its a capacitor not a battery but I’ll let the video explain the difference.
Think of the freedom you’d have to travel and explore if a car powered by a capacitor could be charged back up within a couple minutes.
If this graphene capacitor can be developed for a broad spectrum of applications we are looking at a real lifestyle changer.Continue Reading »
Last night large sections of Arizona received significant snowfall. What the heck? My Arizona clients were expressing at the start of our conversations this morning; some used a slightly stronger version of that expression. After all, we should feel sympathy for those who pulled up their Wisconsin, Minnesota and North Dakota roots choosing to move to Arizona in order to enjoy their endless sunny days of retirement.
Here is a news video from an Arizona news station.
The definition of “significant snow” differs by region. Arizonians apparently define it as .30 to 1.26 inches.
When many of us are feeling the pangs of spring fever while staring at snow outside our doors measured in feet rather than inches and the wind howling out a sub-zero windchill…
How much sympathy do you feel?
Do you know anyone in Arizona? What will say to them?
Anyway, try and be polite when you speak with your friends in Arizona.Continue Reading »
The horse (Mariska) in this video has been dubbed “Houdini Horse”. What’s not like about a horse or anyone else’s desire for freedom?
The lust for freedom is a natural yearning programmed right into the core of our DNA. Over time life experiences such as raising a family and career may have dulled this desire. However, I don’t think the desire to be free and do what you want on your own schedule ever goes away.
When I am asked “What is number one motivation to retire?” The soon to be retirees I work with express a desire to get off the treadmill, stop producing for someone else, travel when they want or to simply reassert control of their daily schedule. Everyone who works has a vision of their perfect retirement which almost always includes maximum personal freedom.
Apparently Mariska A.K.A. Houdini Horse not only wants personal freedom she wants freedom for all her companion horses as well.
The market crashes and low interest rates during the last decade have put serious crimps in many retirees’ personal retirement freedom. Some have had to work part time jobs others have had to cut back their spending in order to keep the household budget balanced, crimps to retirement freedom.
Unfortunately many financial planners are still using outdated retirement income models from the 90’s and because these models do not work in the “new normal” they are exposing their client’s retirement freedom to unnecessary risk. As I have written in several posts it does not have to be this way. The tools are available to help retirees maintain retirement freedom.
Comment below or privately Contact Tim BartonContinue Reading »
Most people perceive the items they place in bank safety deposit boxes as valuable, hard to replace documents or that are significant part of family history, money, jewels, you name it.
Safety deposit boxes are safe right?
Certainly the items sealed in the boxes are safe from hazards such as theft, rain, fire, etc. But what happens when the owner forgets about the box and its contents?
In WI as with all states there are laws regarding the disposition of abandoned property. In WI the Office of State Treasurer has the responsibility to return property to its rightful owner after 5 years of missed rental payments. Last year they returned about $35,000,000 to the owners. So far the 2013 total is at $4,188,844 and counting.
Sometimes they cannot find the owners or heirs to return the property. In other cases the contents of the safety deposit box is not worth the back rent payments to the person so the State Treasurer will destroy and dispose of documents such as insurance policies, marriage licenses, birth certificates, passports, etc.
Items that have value will be sold at auction; this is where EBay enters the process. Kurt Scheller State Treasurer has setup an EBay account for the state of Wisconsin and auctions off unclaimed items monthly.
Right now there is a “Be My Valentine” auction. All things related to Valentine’s day are being auctioned. Bids start at a penny.
Here some photos of other items sold at previous EBay auctions.
Continue Reading »
The Social Security Administration estimates that 96% of American workers are covered by Social Security. Many Americans, however, don’t have a full understanding of Social Security and the benefits it provides.
For example, many people are not aware that:
- Social Security is currently the largest social insurance program in the U.S., funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA).
- The Social Security retirement benefit is designed to replace a percentage of earnings at retirement and the amount received will depend primarily on two factors…lifetime earnings history and retirement age.
- Depending on year of birth, taking Social Security retirement benefits early can result in as much as a 30% reduction in the retirement benefit that would be payable at full retirement age.
- On the other hand, deferring Social Security retirement benefits to age 70 can result in as much as a 32% higher retirement benefit as compared to the benefit available at full retirement age.
- A portion of the Social Security retirement benefit may be subject to income tax.
- There are a variety of strategies that can be used to enhance the value of Social Security retirement benefits.
For most people, their monthly Social Security check will form an important part of their retirement income.
My free “Retirement and Social Security” Life Guide can help you understand what you can expect to receive from Social Security when you retire. To have a copy emailed to you contact me privately here: Tim Barton Chartered Financial Consultant and request “Retirement and Social Security” in the message section.Continue Reading »
Advance Directives are a way to “have your say” about the type of care you receive (or don’t receive) in the event you suffer a catastrophic medical event, such as a stroke or an accident, that leaves you unable to communicate your wishes. Every adult should plan ahead by completing an Advance Directive that specifies his or her personal preferences in regard to acceptable and unacceptable medical treatments.
There are two types of Advance Directives:
A Living Will states your preferences regarding the type of medical care you want to receive (or don’t want to receive) if you are incapacitated and cannot communicate. You specify the treatment you want to receive or not receive in different scenarios.
Medical Power of Attorney
Also known as a durable power of attorney for health care or a health care proxy, a Medical Power of Attorney names another person, such as your spouse, daughter or son, to make medical decisions for you if you are no longer able to make medical decisions for yourself, or you are unable to communicate your preferences.
Note that a Medical Power of Attorney is not the same as a Power of Attorney, which gives another person the authority to act on your behalf on matters you specify, such as handling your financial affairs.
Important Points to Remember
- Each state regulates Advance Directives differently. As a result, you may wish to involve an attorney in the preparation of your Advance Directive
- You can modify, update or cancel an Advance Directive at any time, in accordance with state law.
- If you spend a good deal of time in several states, you may want to have an Advance Directive for each state.
- Make sure that the person you name to act for you – your health care proxy – has current copies of your Advance Directive.
- Give a copy of your Advance Directive to your physician and, if appropriate, your long-term care facility.
For help you may ask questions in the commentsContinue Reading »
Longer Life Expectancies
- Longer life expectancies increase the risk of retirees outliving at least a portion of their retirement income. Those reaching age 100 are fastest growing population segment in the United States.
Discipline to Save
- Many people find it difficult to form the habit of “paying themselves first,” by making regular deposits to a savings plan.
Saving to Spend
- Money is saved for retirement purposes, but then is spent to make purchases.
- Income taxes can erode the growth of your retirement savings and as I write this we do not know what the 2013 tax rates will be.
- Longer life expectancies also increase the risk of inflation eroding the purchasing power of retirement income. For example, if inflation increases at 3.5% a year, it would require over $14,000 in 10 years in order to maintain the original purchasing power of $10,000.
Since Social Security and your company pension plan probably will not provide the income you need for a financially-secure retirement, how can you overcome the obstacles you face in planning for retirement?
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Imagine there is a bank which credits your account with $86,400 each morning, carries over no cash balance from day to day, and every evening cancels whatever amount you have failed to use during the day.
What would you do? Draw out every cent, of course!
Well, everyone has such a bank. Its name is TIME. Every morning, it credits you with 86,400 seconds. Every night it writes off as lost whatever time you have failed to use to good purpose. It carries over no balance. It allows no overdraft.
Each day it opens a new account for you. Each night it erases the records of that day. If you fail to spend the day’s deposits wisely, the loss is yours. There is no going back. There is no drawing against the “tomorrow.”
You must live in the present on today’s deposits. Invest it so as to get from it the utmost in health, happiness and success! The clock is running. Make the most of today.
•To realize the value of ONE YEAR, ask the student who has failed his exam.
•To realize the value of ONE MONTH, ask the mother who has given birth to a premature baby.
•To realize the value of ONE WEEK, ask the editor of a weekly newspaper.
•To realize the value of ONE DAY, ask the daily wage laborer who has ten kids to feed.
•To realize the value of ONE HOUR, ask the lovers who are waiting to meet again.
•To realize the value of ONE MINUTE, ask the person who has just missed the train.
•To realize the value of ONE SECOND, ask the person who has survived an accident.
•To realize the value of a MILLI-SECOND, ask the person who has won a silver medal in the Olympics.
Whether or not we make, break or keep New Year’s resolutions this is an ageless parable worth remembering and reflecting on throughout the year.
Happy New Year.
Continue Reading »
According the SEC
“Fraudsters who carry out affinity scams frequently are (or pretend to be) members of the group they are trying to defraud. The group could be a religious group, such as a particular denomination or church. It could be an ethnic group or an immigrant community. It could be a racial minority. It could be members of a particular workforce – even members of the military have been targets of these frauds. Fraudsters target any grup they think they can convince to trust them iwth the group member’s hard-earned savings.”
The SEC indicates, affinity fraud usually involves:
- a phony investment
- promote false information such as historical returns, track records of investors, risk of loss and/ or idenity of the investment promoter.
- many affinity frauds are pyramid schemes.
How do you protect yourself from affinity fraud:
- Even if you know the person make sure you research their background no matter how trustworthy they seem.
- Research the investment on your own.
- Be aware the person explaining the investment to you may have been fooled into believing the investment is legitimate when it is not.
- Never make an investment based solely on a recommendation of a member of the organization.
- Do not buy investments that promise huge profits.
- Be very wary of any investment that claims there is no risk of loss. No investment is risk free.
- Become very suspicious if you are told to keep it secret.
Don’t let anyone rush you into buying before you have had time to do your research. Just because someone else claims to have made money does not mean you to will make money. Be very leery of any sales pitch claiming the investment is ”once in a lifetime” or based on “inside information”.
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The “Fiscal Cliff” is the description some economists have used to describe the potential situation at the end of 2012 when several U.S. tax and fiscal changes are scheduled to occur. This “perfect storm” of change includes the expiration of the Bush income tax cuts at the end of 2012, and in January 2013 some new taxes plus scheduled increases in income and estate taxes. Some Federal spending cuts are also scheduled to occur as part of the automatic spending cuts Congress agreed to in the Budget Control Act of 2011. The concerns are that all of these changes could lead to a double-dip recession. In other words a recession followed by a short recovery, then another recession in 2013.
What is involved with the fiscal cliff?
Automatic spending cuts are set to begin in 2013 in the following areas:
- Non-Defense areas such as education, food inspectors, air travel safety, etc
The Bush tax cuts expire including:
- Income tax rate increases
- Capital gains rates increase
- Qualified dividend rates increase
- Child tax credit is reduced
- American Opportunity Tax Credit expires
- Earned Income Tax Credit changes
- Marriage penalty relief expires
- Estate tax exemption decreases
- Gift tax lifetime exemption decreases
- Top estate and gift tax rates increase
Other tax changes include:
- Increase in the employee payroll tax withholding
- No Alternative Minimum Tax patch
- New 3.8% Medicare surtax
- New .9% Medicare additional withholding
Miscellaneous changes include:
- Unemployment benefits extension expire
- ”Doc Fix” which is a cut in reimbursement rates that physicians receive for treating Medicare patients is implemented.
This is not intended to be a complete list.
We cannot predict the future or how the President and Congress will act. However, there are opportunities that are available before any potential changes occur.
Items to consider before 2012 year end:
- Did a Roth conversion take place?
- Capital Gains/Dividends: Discuss the 0-15% rates with your tax advisor
- Charitable donations: No itemized deduction phase-outs
- Gifts: $5.12 lifetime gift tax exemption and $13,000 annual gift tax exclusion
- Nonqualified annuities: If appropriate for your situation, may provide income-tax deferral of earnings and retirement savings
Items to consider after 2012 year end:
Get updates on current tax information; estate and gift tax information, see your tax advisor as needed.
It would be nice to believe that health care cost increases were a temporary phenomenon. Unfortunately, that’s not the case…the cost of medical care has outpaced inflation for the past 20 years and predictions are that medical and long-term care costs will continue to escalate as much as 10% to 15% per year into the future.
The decisions we make as to how and where we live in retirement are unique to each individual or couple. The options open to us, however, are frequently determined by our financial resources…our ability to pay. This review of the various ways to pay for health and long-term care costs during retirement is offered in the hope that it will be of assistance to you as you make decisions regarding your retirement plans.
The options available to pay for medical and long-term care costs in retirement include the following:
Retiree Health Insurance Plans:
- If your company provides retiree health care benefits, make sure you know how much of the premium you will be required to pay, as well as deductible and co-payment requirements. Retiree health insurance plans are generally designed to coordinate with Medicare benefits. Caution: Even if your employer currently provides retiree health care benefits, there is no guarantee those benefits will be available when you retire. The escalating costs of medical care, combined with the “Baby Boom effect”…a large “bubble” of people who will make a substantial contribution to the size of the aging population… are causing employers to rethink their retiree health care plans. Some companies are requiring that retirees pay a higher share of the premiums to cover themselves, their spouses and any dependents. Other companies are implementing higher co-payments and/or deductibles. Still other companies are discontinuing retiree health insurance plans altogether.
Medicare and “Medigap” Insurance:
- Most people qualify for Medicare insurance when they reach age 65. Medicare helps to protect you from the costs of medical care during retirement. One fact, however, is evident…there is no “free lunch.” You will have costs related to medical care and the likelihood is that those costs will continue to increase each year.
- Medicaid is a joint Federal and state program that helps with medical costs for some people with low incomes and limited assets. To qualify for Medicaid, federal poverty guidelines for income and assets must be met. In addition, there are state requirements for Medicaid eligibility. Medicaid is essentially a safety net for those who didn’t adequately plan for their financial needs in retirement, or who encountered unexpectedly large expenses that depleted their financial resources.
Long-Term Care Insurance:
- Long-term care insurance can put you in control, preserving your dignity and allowing you to select the type of facility and setting in which you want to receive long-term care services, if needed. Long-term care insurance also helps protect your personal assets, preserving them for your use or as an inheritance for your family. Suggestion: Check with your employer…your company may offer long-term care insurance as a voluntary or supplemental employee benefit!
- Review your retirement plan to make sure that it adequately takes into account the potential costs of medical care and long-term care in retirement. If you find a shortfall, you may want to increase your personal savings now in order to have sufficient funds available after you retire. Some experts suggest setting up a separate fund or account specifically to pay for health care needs in retirement. This approach adds focus to your plan and better enables you to assess your progress.
- Many retired people have built up substantial equity in their homes. There are a variety of ways to tap that equity if needed to pay for health care costs in retirement, including selling the home, arranging a home equity loan or line of credit or using a reverse mortgage to supplement your retirement income.
Going Back to Work:
- When it comes to planning for health care needs as we age, it’s time for a reality check. It’s fine today, when our health is good, to state the intention to return to work if financial needs arise, but how many 70+-year-old people with health problems really want to be out looking for a job? In reality, planning to return to work in order to pay for health care needs during retirement isn’t so much a plan as it is a hope…a hope that we won’t face substantial health care costs as we age.
by VSA LP ©2012Continue Reading »
What kind of person do you suppose I’m likely to meet? That’s a significant question, it seems to me. He may be an enthusiastic person who has grown old gracefully and is surrounded by a host of clients, associates and friends who regard him as successful because of what his life and its work have meant to them and to others. On the other hand, he may be a bitter, unsuccessful, even cynical old buzzard without a good thought about anything or anybody.
The kind of person I meet depends entirely on me. Actually, that old person will be me. He will be the composite of everything I do, say and think today and tomorrow. His mind will be set in a mold that has been fixed by my attitudes and actions. Every thought — positive or negative — goes into his makeup. That person will be exactly what I make him — nothing more, nothing less. It’s all up to me, and I’ll have no one else to credit or blame. Every day and every way, I’m becoming more and more like that old person. That’s amazing, yet true. I’m getting to look like that person, think like that person, and talk like that person.
A good point for me to remember is that things don’t always tell immediately, but they do show up sooner than we think. The little things, like attitudes, beliefs, commitments, ambitions, dedication and desire, are so unimportant now, but they all add up inside, where I can’t see them, crystallizing in my mind and heart. One day, they will be hardened into that old person, and nothing will be able to soften or change them.
It’s quite apparent to me that the time to take care of this old person is now — today, this week, this month, this year. I need to check on him carefully. I would be smart to work that person over while he still is plastic, still in a formative position. One day soon, it will be too late to make any changes. Hardness will set in, the character will have crystallized, and that will be the last chance for him and for me.
Published by VSA LP ©2012
Continue Reading »