Feb 23, 2013
By Rick Law – Elder Care Advisor and Estate Planner in Aurora.
Now we that we have a better idea of where we’ve been, where the current financial market is, and how and estate planner can help seniors, let’s look ahead.
Where do we go from here?
How do I know what I’ve got, and how much planning and investment I will need for my retirement?
Our good friend Matt Zagula, a nationally known author and respected financial advisor, asks this starter question:
“What is your money for?”
In other words, what basic goals do you have for what you have accumulated?
We often meet with clients and they provide a financial summary or statements showing their assets. These folks have raised their children, put them through school, paid for a home, completed a career, and now sit before us with a stack of papers that reveal to us what they have.
But, as Matt points out, the important question is, “What’s the money for?”
Some people have never really thought about it, perhaps because they were busy earning it, trying to invest it wisely, and in this economy trying not to lose it… spending some, saving some, worrying over it some. And now here they are with their net worth on paper.
When asked, “What’s the money for?” we sometimes get a blank stare, a confused look, or at least a long pause. It may be that they haven’t considered exactly what they have accumulated it for; or it may be that they’ve never tried to articulate it. No one has asked them to verbalize their hopes and dreams for the ride that’s ahead of them. Some have very specific plans, but most need to think about it.
We will prompt them by throwing out some ideas:
“I suppose you would like to enjoy your retirement. Do you have any immediate plans?”
This generally stimulates some conversation. The man usually talks about being able to live comfortably during retirement, about not becoming a burden to his family, and about making sure that his wife has enough when he is gone. If he hasn’t thought that far ahead, we discuss their income—what their income is now and what their estate will be when only one of them remains.
What income will be lost at the death of the husband?
What income will be lost if the wife dies first?
This can sometimes be a very eye-opening conversation.
You might be surprised to know that many couples don’t understand that they will lose one Social Security check and possibly half (or even all) of the deceased spouse’s pension income.
Many people don’t even know if their pension goes on to the surviving spouse, suffers a reduction, or stops completely. We point out that sometimes income drops by as much as two-thirds, while expenses barely diminish at all.
Taxes are the same, utilities are the same, gas for the car is the same, and insurance on the house and car are the same. The only expense that may go down is the grocery bill. The cost of the supplemental healthcare insurance may be reduced; however, if the insurance was through the husband’s pension and that is lost, now the wife must pay for a policy to supplement her Medicare.
Too often, the assumption is that if the couple has their home paid for and some money put away in savings and investments, they will be OK. But women outlive men of the same age by an average of seven years. If Jim and Shirley are 65 and 63, that means it’s
likely that Shirley will need to be provided for during nine years after Jim dies. If Jim suffers from any long-term illnesses, it’s likely they will have to dip into the funds they have set aside. So when Jim dies, Shirley has less income and fewer assets, but nearly the same expenses.
Right afer the stock market had a major drop in 2008, one client said,“My 401(k) is now my 201(k).” Financial experts counseled you to just leave your investments alone and they would eventually come back—that is, if you’re young enough to wait that long.
We were meeting with individuals and couples who didn’t have that kind of time. Their income sources included Social Security, maybe a pension or maybe not, and interest and dividends that had all but dried up. The assets they had been counting on to take them through retirement were now drastically reduced.
Worse yet, Social Security, Medicare and other programs baby boomers have been paying into for years, now face cuts or even elimination. More people are withdrawing from the government programs than paying in.
If any of these situations describe you (the senior), your spouse, or an aging parent, now is the time to act. Don’t be left out of money and out of options.
If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now.
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care. Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet. Call 800-310-3100 for your free consultation now!
My wife and I had our first child three years ago. That’s when we decided to set up a trust, should anything happen to either of us. We reached out to Zach Hesselbaum to help us out. He was very thorough and professional throughout the whole process. Zach went above and beyond to make sure that we understood every detail of setting it up and he did an excellent job. We recently had our second child a few months ago. With the new baby, he helped us make the necessary revisions to the trust. Zach made this process great for us! I would definitely recommend using him for any of your estate planning needs!
Tom G., Naperville, IL