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Tips to Safely Store Your Financial and Legacy Information

It is crucial to store your estate planning documents like your will, living wills, powers of attorney, trusts, medical directives, and financial information securely somewhere your survivors can easily access. Additionally, you need to securely store information about birth certificates, marriage licenses, even divorce decrees, as well as medical records and property titles.  In your project, include recurring bills, digital assets, including computers, devices, social media, online storefronts, and smartphone passwords, which you want to keep accessible for your survivors.

Many people are attempting to become as paperless as possible and storing the data onto memory sticks or an external hard drive. Still, others are opting to use online data storage services that keep this information in the cloud. There are still those individuals who prefer maintaining this information themselves, in their homes, and a copy in a safe deposit box.

How you choose to store your relevant data is indicative of the amount of labor and time you are willing to invest in creating and maintaining your information system. Going paperless is generally the most convenient, safe, and quickest. After all, much of our information is already in an online format.

But the online option precludes a trusted person from finding clues about your assets’ locations, what bills need payment continuation and what services to close out. LA Times finance columnist Liz Weston quotes a friend regarding organizing your data, “Your frequent flier miles could disappear while your Netflix subscription continues indefinitely.”

Your list depends on the complexity of your circumstances and the age at which you die. An individual lost to a family in their early forties probably has more moving parts and information reflecting their daily life than someone in their eighties who has likely been downsizing and simplifying their life. Changes in circumstances are an illustration of the importance of updating your information because of life changes.

How to Safely Store and Share Your Digital Information

Some of your organizing will include creating digital copies of important documents like social security cards, birth certificates, passports, marriage, and driver’s licenses. Scanning these documents does not make them a legal copy; however, it will be easier to replace lost or stolen documents if you have a copy. It also puts the information in an easily accessible format rather than rummaging through your home to find the document. Of course, the original documents need to be in a fireproof safe or a bank deposit box, while others can be solely in digital form. For a list of hard copy documents and how long you might keep them, look here.

If you are not comfortable using digital devices, ask someone in your family who can help you set up your digital file system and show you the basics. Your documents can travel with you wherever you go, and you can also share this information with others.

Online storage possibilities are many, but the most popular options are Microsoft OneDrive, Google Drive, and Apple iCloud. These services already offer free limited storage in the cloud, and you can purchase an upgrade for additional storage capability.

If you prefer storing documents locally on a physical storage device, you must include a backup plan and run it regularly to keep your information up to date. A Windows 10 computer permits scheduling backups automatically using Windows File History. Simply type <backup> in the search bar and select <Backup Options> from the results. You can also find this location by right mouse clicking Start>Settings>Update & Security>Backup. If you use a Mac, there is also an auto-backup feature. Read about Apple’s Time Machine to back up your files here. This URL explains other methods to employ when backing up and restoring files.

You can also purchase an external USB hard drive for file backups. Look for a 1 or 2 TB drive that can house all of your information and updates quickly. Smaller USB memory sticks also work but are typically limited to 256GB of information, which can be enough for your needs and transport easily if you travel and want to keep your information at hand. These backup methods should have an extra drive to store identical information in a fireproof safe or a bank deposit box.

The truth is safely storing your financial and other valuable personal data is often a combination of these methods and information types. For your loved one to access financial records, they require your personal information such as usernames, passwords, and social security numbers, in addition to account numbers and online site URLs.

If you feel unsure about your ability to organize and safely store this critical data cohesively, talk with an accountant, attorney, or other trusted advisor to create a structure to implement before copying and scanning data. Everplans is an online service that allows you to store your information in their format for a fee or can provide a starting point to understand the scope of this type of project. Do your research first, and then implement your strategy for best results.

Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your planning needs.

The Elderly Are Facing Financial Challenges

Financial difficulties are a reality for many older Americans. One article addressed some of the seniors’ biggest financial challenges and what they can do to fight back. What follows is a summary of the article.

Historically Low-Interest Rates

For almost a decade, the Federal Reserve has kept the federal funds rate at a record low. This might be good if you are refinancing debt, but it is disastrous for those who stay in fixed-income investments such as certificates of deposit, money market accounts, savings accounts, and bonds—all long-time favorites of seniors who are more risk-averse than other investors.

Low Trust in the Stock Market

The recession provided an opportunity for long-term investors to snap up stocks at attractive lower prices. But for many seniors, it was a reminder of the volatile nature of the stock market which is contrary to their more conservative investing approach. Many of them stayed in their low-yielding fixed-income investments and lost out on the subsequent gains of the rebounding market.

Fight back: Be willing to invest a portion of your investments in the stock market. It’s one of the few places you can invest your money that, over the long term, will outperform inflation. And with people living longer today, your savings will need to last longer than before.

Rising Health Care Costs

Medicare doesn’t cover all medical costs, and out-of-pocket expenses can be substantial. One survey found that 20% of seniors did not see their doctor because of the out-of-pocket costs. Also, the costs of drugs, diagnostics, and medical devices continue to rise.

Fight back: Use some of your savings, investment income, or work income to purchase supplemental health insurance that will help cover medical expenses not covered by Medicare.

Social Security Issues

According to the Social Security Administration, more than half of all couples rely on Social Security for at least 50% of their retirement income, and almost half of unmarried seniors rely on it for at least 90% of their retirement income. But the cash reserves that supply this income are in trouble and, unless Congress addresses the problem soon, they could run out by 2033.

Unfavorable Job Market

Going back to work is an option for many seniors who have little retirement income or rely heavily on Social Security income. Yet it takes older workers longer to find employment and they are often competing with younger workers who are willing to accept lower wages.

Fight back: Working longer at your current job may be a viable option. You may also be able to find paying work in a hobby or avocation. You may even be able to start a small business to supplement your income.

Debt…and Feeling Obligated to Help Adult Kids

Fully 45% of all homeowners over the age of 62 still have a mortgage payment. Many have credit card and other consumer debt. Of those age 60 and over, who are no longer working, 43% admitted to helping their adult children pay their bills. Many seniors have student loan debt for themselves, their children, and dependents going to college.

Fight back: Learn to say “no,” especially if your retirement funds are limited. This is your retirement, and your children and grandchildren need to respect that. If you are earning extra income, use some of it to pay off your debt.

Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your long-term care needs.

 

Baby Boomers Are Not Prepared For Retirement

Bankers Life Center for Secure Retirement commissioned The Blackstone Group, to perform a study of how prepared baby boomers really are for retirement, and the results are troubling. According to the survey above, the bleak financial reality of this demographic is that 79 percent of middle-income baby boomers have NO savings put aside to cover their retirement care. Couple this disaster savings scenario with the US government’s admission that for the first time since 1982 Social Security trust funds are being used to pay current benefits to recipients and Medicare’s reserves are being used to cover the costs of that program as well. It is the perfect storm of a looming retirement insolvency crisis.

Middle-income baby boomers for this study are defined as aged 53 to 72 with an annual income of $30,000 to $100,000 and less than one million dollars in investable assets. For those baby boomers in this demographic, a mere 4 percent of them have more than $100,000 saved for health care retirement planning, long-term care, and general retirement preparedness. While 65 percent of these survey respondents prefer to receive retirement care in their current homes only 55 percent of them expected to be able to do so, and there is a disconnect at what age these care services will be required. A full 45 percent thought that assisted living circumstances would be needed between the ages of 71 and 80 while 37 percent said it would be between the ages of 81 and 90. The problem with these hopes is the ever-increasing presence of Alzheimer’s and other forms of dementia which can push retirees younger than ever into the need for assisted living and retirement care.

According to the survey, 40 percent of those surveyed consider retirement care planning to be a low priority or not one at all, 42 percent thought it to be a medium priority, and only 18 percent identified retirement care planning as a high or very high priority. Incredibly 56 percent expected that Medicare would pay for retirement care as needed, including long-term care needs which Medicare does not cover. The costs of long-term care policies are cited as the biggest reason for not making the prudent insurance purchase.

Dangerous misperceptions about how much retirement care costs and how to pay for it exist. It may seem incredible, but the truth is that baby boomers are better prepared to die than to live. Among middle-income baby boomers, 81 percent have formally made at least one preparation for when they pass away, usually in the form of a will or trust, while only 32 percent have a plan as to how they will receive retirement health care should it become necessary.

The message is unmistakable; middle-income baby boomers need to address their underfunded retirement plans pronto. There is overconfidence in this demographic that allows them to think they will be able to manage their and their spouse’s healthcare costs as they continue to age. The reality is that many of them are one bear stock market or health care crisis away from disaster. The federal government and its programs are just as unlikely to be able to stave off the financial crisis brought about by this willful ignorance of the costs of aging successfully.

If you are in these incomes and age brackets, it is time to take a realistic look at what you can do to better prepare yourself for the coming years ahead. Being financially unprepared to age brings stress and family discord at a time when you should be living your best life. Be proactive, contact our office today and schedule an appointment to discuss how we can help you with your planning. Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your long-term care needs.

How to Discuss Finances and Estate Planning with Your Aging Loved Ones

It is essential that as your parents’ age, you have conversations with them about their finances. To broach the topic, you might bring up current events like the coronavirus pandemic, its effect on economic conditions, and how it relates to the security of their financial future. The conversation should come from a calming place of love and concern. Speak to them respectfully about how the coronavirus pandemic has you thinking about the importance of their planning and preparedness.

Once you begin the conversation, move away from the pandemic as your introductory technique as you do not want to create a sense of panic or fear.  Instead, delve into legal and financial reviews, processes, and parameters. US News reports that your parents’ financial analysis should include essential legal documents, financial accounts, and associated vital contacts, long-term care decisions, and claims. If you live apart, lay the groundwork to help them with their finances remotely.

It is generally most comfortable to begin your conversation with legal documents that hopefully your parents already have in place like a will, trust, living will, and a health care proxy. If your parents do not have these documents, they must retain an attorney and create the ones that best suit their needs. If you need to help your parents manage their finances, you must have a durable power of attorney. A durable power of attorney allows you to make financial decisions for your parents in the event they become incapacitated. This is an essential estate planning document. In the absence of a durable power of attorney, the courts become involved, and solving health or financial issues becomes a lengthy, expensive process over which you have little control. If your parents already have their legal documents drawn up, find out where they keep them and review them carefully. If any documents need to be amended, suggest that your parents meet with an attorney to make the relevant changes. Be sure their documents reflect the state law in which they reside.

Once you have assessed your parents’ legal documents, it is time for some financial discovery. Even if your parents do not currently need help, having an overview of their finances and a durable power of attorney to help them in the future is crucial to their aging success. Begin by listing all of their accounts, account numbers, usernames, and passwords as well as employee contact names. Include insurance policies, the agent’s name, and where the policy is, as well as how they pay their premiums. Include any online medical accounts or list their doctors’ names and office numbers. The idea is to create a comprehensive list of all of these accounts. Gather your parents’ Medicare and Social Security numbers and their drivers’ license numbers. Know where they keep this information so that in the future you will know where to look. Also, learn about any online bill paying or automated, re-occurring activity. These usually include monthly bills like electricity, natural gas, water, etc. but may also include quarterly payments or annual subscriptions.

If your parents still live in their long-time home, discuss if it is viable that they live out their days there, or if downsizing to a retirement community or moving closer to where you live appeals to them. Help them come to a decision that is best for their set of circumstances.  If they do not have long-term care insurance or some other mechanism to aid them in times of need, talk about the topic, and try to come up with a solution. If they do have long-term care, be sure you have a copy of the policy, contact information, and the name of the insurer and agent. Review the requirements for receiving benefits so you can help them when they need to file a claim as most policies have a waiting period of 30 to 90 days before benefits begin. Know what to expect.

Digital technology has made oversight of parents and their finances easier than ever as long as you have a durable power of attorney and access to their account information. If they do not yet pay their bills online, or use auto payment, help them set up this option for their monthly bills. Remind them you will provide oversight to ensure proper billing. Offer to help them with their annual tax filings. Your help relieves some pressure on them and provides you with information about the goings-on in your parents’ accounts. For your parents’ peace of mind, you can establish a monthly video chat to let them know their bill payments are progressing normally. Your involvement will allow you to identify any abnormalities in account activity, which may indicate scam attempts.

Having these financial and planning conversations with your parents today can help them live more securely and with less stress as they age. Most parents will try to avoid these discussions with their children because they may not be adequately prepared for what can lie ahead. Conversations that focus on proper legal documents and gathering financial account information will give you the data you need to help protect your parents.

We would be happy to help you and your parents with critical planning documents. We are open and taking new clients, and we hope to talk with you soon about your particular needs. Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your estate planning goals.

Social Security Myths Debunked

Americans file early for benefits even though researchers claim it would be better to wait to claim their social security benefits. According to NerdWallet, more than half of Americans apply for social security before reaching their full retirement age, and more than 30 percent of those apply for benefits at 62 years of age. It DOES matter when you opt-in to take your social security benefit. Between the age of 62 and full retirement, your benefits increase by about 7 percent each year and additionally 8 percent each year between your full retirement age and 70. These percentages reflect an actuary adjustment to ensure those Americans who opt for a larger check for shorter periods do not receive less than those receiving smaller checks for more extended periods.

Current State of Retirement

Currently, full retirement age is 66 for those born before 1960 and 67 for those born after that. Social security benefits will max out at age 70 and by waiting that long your checks could be 24 to 32 percent more than what you would receive at full retirement age and a whopping 76 percent larger than what you would receive at 62. However, statistics show that only about 1 in 25 applicants will wait to collect benefits at the age of 70 when monthly benefits hit their peak. Economic hardship for some seniors clearly defines part of the trend in early benefit assumption, but what of those who have retirement planning in place?

Currently, low-interest rates and survivor benefit rules coupled with longer life expectancies generally mean most retirees would benefit by delaying their benefits as long as possible. Those destined to become super-seniors, living well into their 90s and 100s, can quickly run out of savings and may end up depending entirely on their social security benefits check. Having delayed taking social security provides maximum benefits for these super-seniors. Additionally, this older age group typically has qualities in common like a strong work ethic, positive outlook, close bonds with family, and a tendency to be religious. These traits factor into a purposeful life so that even on limited social security benefits when combined with the help of their family and community systems, they can still make ends meet.

At the other end of the spectrum are those Americans who feel, or know, they will have shorter life term expectancy. The Stanford Center on Longevity, however, reports that most people underestimate how long they will live. Today a 65-year-old man can expect to reach 84 years of age while a woman of the same age will probably reach 86.5 years. Studies by the Society of Actuaries are reporting life expectancies for those currently in their mid-50s (one in two women and one in three men) will live into their 90s. The cautionary tale is even if you project that you may not live long, you might indeed. It is best to anticipate being around and making financial decisions about social security benefits that reflect a longer life.

The Pitfalls of Claiming Benefits Early

Claiming benefits early to invest the money does not mean you will come out ahead and may put you significantly behind. There is no guaranteed investment product with a return as high as delaying your application for social security benefits. Claiming benefits early can also shortchange your spouse. A married couple will lose one of their checks when the first spouse dies. The loss of a check can create a severe drop in income even if the survivor receives the larger of the two checks. This benefit loss should incentivize the higher earner of the couple, with the larger check, to delay taking their benefit so that the survivor spouse benefit is more substantial.

You do not need to claim your social security benefit as soon as you stop working. Most financial planners will suggest tapping into other sources of income like a retirement fund or additional savings that allows your social security benefit to grow. Just delaying your benefits from age 62 to 66 can translate in a sustainable annual increase of 33 percent, so even a four-year delay can provide substantial returns.

The Future of Social Security

What about 2035 and the projected insolvency to fund social security benefits? If Congress does not act, the social security system will only be able to pay out 77 to 80 percent of the benefits promised. While this is not good, social security is not going bankrupt. The funding mechanisms must, however, get straightened out by politicians who want your vote to keep them in office. The silver tsunami of voters ensures that Congressional leaders and policymakers cannot overlook the senior demographic, which is critical to their re-election.

Each person’s or couple’s situation is different; their savings, assets, debt, work history, and retirement planning all vary widely. Additionally, according to Barrons.com, every state has a distinct annual spending threshold recommended for a comfortable retirement. To learn your best options and create your plan for a successful financial retirement, including when to take your social security benefit, talk to elder counsel. The social security benefit structure and rules are changing, change with it to maximize your benefits.  If you have questions, please don’t hesitate to reach out. We are here to help. Please contact our office by calling us at (318) 255-1760 and schedule an appointment to discuss your planning needs.

Are Millennials Onboard with Financial Planning?

Living through this economic volatility, not seen since the Great Depression, gave rise to the fiscally conservative millennial mindset. Millennials include fiscally conservative, savings oriented, and future planners seeking financial freedom as core attributes. A large part of millennials’ formative years was influenced by the US sub-prime mortgage crisis beginning in 2007, shortly followed by an international banking crisis, which led to what became known as the Great Recession. The millennial generation would have ranged from ages 11 – 26 years of age when this economic downturn began. The other socio-economic force that continues to shape the millennial fiscal mindset is the student loan crisis. Cbinsights.com finds 41 percent of millennials carry student loan debt for which there is no personal bankruptcy relief. This debt crisis places unique financial pressures on nearly half of a generation, and many are seeking new ways to manage their income, debt, and future savings.

This conservative mindset has underpinnings of investment optimism about achieving financial goals according to reporting by the Union Bank of Switzerland Investor Watch report (UBS), and millennial goals are different from generations before them. The definitions of what being successful include a focus on personal success rather than maxing out returns on investments. This personal success is a balance of financial, relationship, and experiential factors, prioritizing long-term financial considerations like retirement or caregiving aging parents. Millennials understand their number one goal is to attain financial freedom, with a conscience. The UBS report goes on to say that 78 percent of millennials are more likely than other generations to believe income is a critical success factor and feel that income should be about 220,000 dollars to be considered a success. Millennials are also more apt to think money can buy happiness because their pursuit of money is geared toward financial freedom rather than excessive accumulation.

UBS Investor Watch Report

According to Forbes, many mid-life millennials (late 20’s and 30’s) are changing the order of, or opting out of traditional family and financial milestones of their predecessor generations. Some will have children before marriage; others will resolve all debt (think student loans) before entering into homeownership, and most will invest with sustainability and environmental concerns at the forefront of decision making. As the oldest millennials turn age 40 in 2020, many are conducting personal financial checkups, taking stock of their assets, liabilities, and insurance needs. Re-evaluation of and adjustments to financial plans help to ensure financial goals can be met.

Though most millennials do not yet have a professional financial advisor, ten self-directed steps can help to evaluate your current financial plans and make any necessary adjustments.

  • Specifically, relist your financial goals and work backward from them to see what financial processes you need to put in place to achieve those goals. Embrace learning and be patient as you track your spending, pay yourself first, and break long term goals into short achievable steps.
  • Think about life insurance. What will happen to your family or loved ones in the event your family has to survive without you and the income you provide? A death benefit will provide financial stability and help them to survive.
  • If you have not already done so, make a will and include medical directives, and consider a durable power of attorney should you become incapacitated.
  • Revisit the parameters of your current budget, and if you are willing, get outside professional input as most people’s expenses are higher than they think. There is a human tendency to overlook some existing expenditures and not be aggressive enough when it is time to make cuts in spending.
  • Assess and update your investment choices. Particularly pay attention to your 401(k) plan and other retirement savings vehicles like IRAs. Confirm they are aligned to your risk tolerance and perhaps reduce the number of high-risk equities into slower, high-dividend stocks. Look at the advantages of adding an annuity into your 401(k) plan and other changes that the SECURE Act of 2020 brings to retirement planning. Understand that the old model of 60 – 40 equities to bond ratio is no longer deemed advisable.
  • If you have excessive credit card debt, address it now. Pay down the highest interest balance(s) first if you are servicing debt as opposed to attacking a principal payment.
  • Do you have student loans? Again, pay down the highest-interest loans first by monthly auto-deducting it from your checking account. Explore the possibility of consolidating multiple student loans into one payment and negotiate a lower rate and longer time to pay lower monthly payments.
  • Weigh the costs of homeownership. Some millennials, particularly those without children, may prefer not to be anchored to home real estate, maintaining the flexibility of movement for job opportunities. Those who want a home must assess financial responsibilities beyond the costs of a mortgage and real estate tax, considering the workload and cost of home upkeep.
  • Review your health insurance, and be sure it is adequate to cover your family’s needs. Children especially are subject to many doctor visits and requirements for attending school with proper vaccinations. If you are fortunate enough to have health insurance through your employer, check that the deductible and co-insurance options make the most sense for your situation.
  • Finally, take a good look at your health situation. While this doesn’t sound related to finances in the long run, it is. Is your diet unhealthy, and are you overweight? These factors potentially set you up for the likelihood of diabetes two and future joint and mobility problems. Are your cholesterol and blood pressure numbers in a healthy range? Do you need to reduce alcohol intake? Do you work out consistently in the three formats you need, which are weight training (strength building), aerobic exercise, and a stretching routine like yoga? Being as physically healthy as possible reduces overall health costs.

Millennials are at the cusp of their middle age planning stage of life and realizing that life’s priorities are a moving target.  While the above pertains to millennials, the importance of planning – both legal and financial – is critical at any age.

We help families of all ages plan for what is important to them, and to make sure their plans and wishes and properly documented. Contact our office by calling us at (318) 255-1760 and schedule an appointment to discuss how we can help you with your planning.