How To Figure Out Elder Care For Your Aging Parent

For T.J. Mancuso, 40, of Apex, N.C., the health of his parents took center stage five years ago when a medical condition left his father unable to qualify for long-term care insurance. Seeing his mother deal with the challenges of being a full-time caregiver, Mancuso decided that it was time for the family to come up with a better plan.

“Knowing that we couldn't do anything for my dad, I was like, ‘let's do something for mom,’ " Mancuso says. So he and his wife Erica purchased a long-term care policy for his mother. “I'd rather spend money on a monthly premium today,” Mancuso says. “Maybe she'll never need it, but I know what I'm spending monthly today is probably what a day or two of help would be down the road.”

Like the Mancusos, many Americans are grappling with the financial realities of caring for an elderly parent. In 2017, the national median cost of a semiprivate room in a nursing home was $7,148 per month and assisted living facilities averaged $3,750, according to the Genworth Cost of Care Survey. With costs so prohibitive, many families feel they have no other option but to take care of mom and dad at home. Ideally, families will figure out how to cover the costs of aging long before the money is needed. 

Here are some strategies that can help: 

Talk things out 

“Everything begins with communication,” says Christopher Krell, a principal with Cassaday & Co., a wealth management firm in McLean, Va. Krell suggests holding what he calls a family wealth summit, where adult children find out what financial resources aging parents have in place for future health care and other challenges.

Also “make sure you have a medical and a financial power of attorney in place,” says Patrick Simasko, an elder law attorney and wealth preservation specialist at Simasko Law in Mount Clemens, Mich. If aging parents have enough assets in place to cover future health care costs, adult children can learn through the conversation how to access them down the road, but if not, it’s time to turn to Plan B.

Look to insurance 

Traditional long-term care insurance policies are designed to pay for costs that occur when you no longer can handle certain activities of daily living such as bathing, dressing or moving around. Money can be used for nursing home care, assisted living or in-home care. There also are hybrid long-term care/life insurance policies, where the policy-holder can tap into the death benefit early to pay for long-term care if they need it. If they don’t, the money would go to the beneficiary upon the policyholder’s death as planned.

“If you don't wind up needing nursing home care, your premiums are still giving benefit to your family,” says Marcy Keckler, vice president of Financial Advice Strategy at Minneapolis-based Ameriprise Financial. While an Ameriprise study released in March found that future health problems topped most respondents’ lists of financial fears, only 25% had long-term care insurance in place.

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The older the policyholder, the more expensive the policy. Also, those with physical ailments may not qualify, so you should apply when you are healthy.  If the elderly parents can’t afford it, adult children can pool their money together and pay those costs since it may be less expensive than paying for care later on, Keckler adds.

Look into public programs

 If long-term care insurance isn’t an option and your family doesn’t have the financial resources to care for an elderly relative, you may need to look to government services to pick up the slack.  Contrary to popular belief, Medicare does not pay for long-term nursing home care. Medicaid, however, will pay for long-term care — if the elderly person has limited income and assets. There also are benefits available to veterans through the Veterans Administration, Simasko says. 

Consider family caregivers’ needs 

Approximately 16%  of Americans 15 and over provided unpaid care to someone 65 or older in 2016, according to the Bureau of Labor Statistics.  Caregivers may even be forced to leave their own jobs to provide assistance full time, which could jeopardize their own retirements, says Sean Scaturro, advice director for the Life and Health Division of USAA, based in San Antonio. “This trickle-down effect of being an unpaid caregiver actually is going to be seen in the next generation and potentially the generation after that,” Scaturro says.

A financial adviser can help you rearrange your budget to deal with the new reality as well as help you identify resources that can help, says Delynn Dolan Alexander,  a wealth management adviser for Northwestern Mutual in Durham, N.C. “Having a good financial plan will give you the confidence to be able to care for your parents and know that you're going to be OK," she says.

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Few Retired People Expect to Pay Off Their Mortgages

Burning the mortgage deed in celebration of owning your home free and clear, once a ritual for most older Americans on their way to retirement, has become less common.

A recent "Retirement and Mortgages" survey by American Financing, a national mortgage banker, found 44 percent of Americans age 60 to 70 have a mortgage when they retire, with as many as 17 percent saying they may never pay it off.

The survey found 32 percent predict they will be paying their mortgage for at least eight more years and 11 percent say it will take six to eight years before their last loan payment.

Another 14 percent say it will take three to five years to reach the payoff, and 7 percent say it will take one to two more years. Twenty percent of those who retire with a mortgage will pay it in full within one year.

The survey found a majority (64 percent) of 60- to 70-year-olds plan to remain in their home and 62 percent plan to leave their home to their children. The majority (71 percent) would rather make home renovations rather than move if a health issue affected their mobility or comfort at home. However, about half (48 percent) are unsure of what they will do if retirement funds run low.

Retirees and pre-retirees can look into refinancing or a reverse mortgage as potential solutions to reduce or eliminate mortgage debt.

A financial adviser can help evaluate those and other options. American Financing's survey found 19 percent of those surveyed don't know what a reverse mortgage is, while 15 percent would be open to considering one.

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Best Cities for Retirement

 50 Places in the US where retirement is affordable, healthcare is excellent and life is good!

• Retirement is something to think about years before you get there.
• Choosing the best place to retire in the US means weighing affordability, quality of life, activities, and healthcare.
• WalletHub ranked the best US cities to live in retirement.
• Many of the top cities are in states with warm weather, such as Florida and Arizona.

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Deciding where to live in retirement may be one of the last major financial decisions you'll make, and picking the right spot is important.

WalletHub set out to put worried minds at ease. The site used available data for the 150 largest US cities to find the best and worst places to lay your hat. We already looked at the worst cities for retirement, so let's take a look at the opposite: the best urban areas to live in your post-working life.

How people spend time when they don't have to go to the office every day tends to be a little different. Many dream of hours full of painting and golf, but there are more practical considerations to keep in mind too.

Along with the weather and nearby museums and tennis courts, reliable, accessible healthcare and affordable housing are important benchmarks when determining where to live in retirement.

WalletHub found that the cities below offered a great quality of life, good healthcare, and plentiful activities — all at an affordable cost.

WalletHub scored each city based on affordability, activities, quality of life, and healthcare. The four categories were weighted equally, and each city was given a total score and then ranked, with the highest overall score designating the best city. WalletHub used data for only the city, not the surrounding metro area.

Florida is considered one of the best states for retirement, so it is no surprise that several Sunshine State cities — including the top three — found their way onto this list.

Other warm-weather locations are also well represented on the list; the five cities with the highest percentage of senior citizens are in Arizona, Florida, and Hawaii.

Keep reading to see the best places to retire in the US, according to WalletHub. We've included the total score for each city (out of a possible 100), with a higher score denoting a better place to live, as well as its ranking out of 150 cities for each of the four categories, with a lower number being better.

50. Chandler, Arizona

49. Washington, D.C.

48. Nashville, Tennessee

47. Columbus, Ohio

46. Charlotte, North Carolina

45. Lincoln, Nebraska

44. Virginia Beach, Virginia

43. Phoenix, Arizona

42. Birmingham, Alabama

41. Henderson, Nevada

40. Dallas, Texas

39. Portland, Oregon

38. San Antonio, Texas

37. San Diego, California

36. Pembroke Pines, Florida

35. Tallahassee, Florida

34. Overland Park, Kansas

33. Tempe, Arizona

32. Oklahoma City, Oklahoma

31. Baton Rouge, Louisiana

30. St. Louis, Missouri

29. Reno, Nevada

28. Seattle, Washington

27. Richmond, Virginia

26. Tucson, Arizona

25. Colorado Springs, Colorado

24. Boise, Idaho

23. Los Angeles, California

22. Sioux Falls, South Dakota

21. San Francisco, California

20. Cincinnati, Ohio

19. Raleigh, North Carolina

18. Port St. Lucie, Florida

17. St. Petersburg, Florida

16. Madison, Wisconsin

15. Fort Lauderdale, Florida

14. Minneapolis, Minnesota

13. Cape Coral, Florida

12. New Orleans, Louisiana

11. Pittsburgh, Pennsylvania

10. Las Vegas, Nevada

9.  Austin, Texas

8.  Denver, Colorado

7.  Honolulu, Hawaii

6.  Salt Lake City, Utah

5.  Atlanta, Georgia

4.  Scottsdale, Arizona

3.  Miami, Florida

2.  Tampa, Florida
1.  Orlando, Florida

http://www.businessinsider.com/retirement-best-cities-us-ranked-2018-2?utm_content=buffer6aaa7#2-tampa-florida-49

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Should You Help Your Child With A Down Payment For A House?

SHOULD YOU HELP YOUR ADULT CHILD WITH A DOWN PAYMENT FOR A HOUSE?

Here are a list of guidelines you can follow.

Author: Tanisha A. Sykes, Special to USA TODAY

Published: 03/13/18

More than one-third of Millennials looking to purchase their first home say they plan to rely on a loan or a gift from a relative to cover a key portion of their down payment, according to a recent survey.
And even if your own kids haven't yet asked for a hand, many of them might be considering it. The "Modern Homebuyer" survey from ValueInsured, a company that sells insurance to consumers that pays back their down payments if the value of their home falls, indicates that nearly 60% of Millennials looking to buy their first home aren't confident they can afford to do so.

So if your adult children could use some help buying their new digs, should you reach into your savings — retirement or otherwise — to help them out? The answer, as usual, when it comes to issues of personal finance — is, well, personal. But here are some guidelines you can follow:

When It’s a Bad Idea...

If you are a middle-income earner. “A middle income earner, despite their best intentions, should not support their child’s purchase of a home if it means sacrificing contributions to their retirement,” says Jacob I. Milder, CFP, at Oak Street Investments in Denver. If opportunities still exist to contribute to a 401(k), 403(b), or IRA, loaning money would mean decrease these contributions, he says.

If you have to use your nest egg. Interest rates on 401(k) loans can be very appealing, but some experts say not so fast. “Many 401(k) plans will not let you continue to contribute money until you have repaid the full amount borrowed,” says debt resolution attorney Leslie Tayne.

If you are nearing retirement. “Parents who invest their money instead of giving it to the children could potentially leverage another 10 to 15 years of compounding interest and market returns,” says James Nichols, Head of Advice and Retirement Income Strategy for Voya Financial Retirement Solutions in Windsor, Connecticut.

When It’s a Good Idea...

If it’s a good investment. If you plan to lend the money instead of gifting it, you may reap some financial benefits. “Many of my clients feel that bonds will likely return very little if any returns for the next decade,” says T. Eric Reich, CFP and President of Reich Asset Management in Marmora, N.J. “You can lend money at a cheaper rate than banks and possibly get a greater return than you could expect in a fixed-income portfolio for the foreseeable future.”

If your child has a steady source of income. Make sure your child can afford all of the responsibilities of owning a home. “For instance, if your child has just completed graduate school or is already employed in a position that has a strong earnings trajectory, then consider a loan with an agreed upon timetable for repayment,” says Milder.

John Reinmuth, 74, a retired pastor from Gig Harbor, Washington, and his late wife Jan, a former elementary school teacher who died in 2013, decided to help their son who works in theater set construction and their daughter-in-law who works in a college admissions office with a the purchase of a house. The Reinmuths matched what the young couple could accumulate with a gift of $8,000, helping them to buy a starter home with a 10% down payment.

And In 2011, the Reinmuths gave a daughter and son-in-law $12.000 toward a down payment. Added to their savings, the couple made a 20% down payment, eliminating the need for private mortgage insurance and got a better interest rate, Reinmuth says.

“Working with a certified financial professional, we learned that our pensions, Social Security, and IRAs provided a 98% likelihood that our retirement resources would not run out before we died,” Reinmuth says. “Thus, we felt comfortable helping our son and daughter-in-law to purchase a house."

Will You Outlive Your Retirement Savings?

Your nest egg needs to sustain you throughout retirement.  Here's how to make sure it does! 

Of the various things today's older workers might fear — losing their jobs, needing to quit due to health issues, and so forth — there's perhaps no prospect more terrifying than the notion of outliving their savings. In fact, 60% of Baby Boomers claim they're more worried about running out of money in retirement than actually dying.

Sadly, it's a valid concern, especially since countless older Americans are also considerably behind on savings. The Economic Policy Institute reports that the median savings balance among workers ages 56 to 61 is a mere $17,000 — hardly enough to live off even with Social Security factored into the mix.

If you're concerned about outliving your savings, then you'll need to be proactive in avoiding that fate. And there are steps you can take to improve your long-term financial picture. First, however, you'll need to assess your personal risk, which you can do by asking yourself the following questions:  

1. Have I been saving 15% or more of my income?

It used to be the case that to retire comfortably, you'd need to set aside 10% of your earnings over time. Not anymore. Given the way health care and other costs have inflated in recent years, you'll need to do better if you want enough money to cover the bills for the long haul. That's why workers today really need to set aside 15% or more of their income for the future.

If you've been saving at that level, or somewhere in the vicinity, then you're probably in pretty good shape. Similarly, if you haven't been saving that much, but are still relatively young with many working years ahead of you, there's a good chance you'll come out just fine if you ramp up immediately. But if you're already in your mid- to late 50s and haven't been hitting that threshold, there's a strong chance you'll run out of money at some point if you don't take steps to compensate.

How do you do that? It's simple: Work longer, and max out your savings for as many years as you can. If your original goal was to retire at 65 and you push yourself to work until 70, all the while maxing out your 401(k) during that five-year period, you'll have an extra $122,500 to play with in retirement — and that assumes zero investment growth. Not only will extending your career offer you an opportunity to save more, but it'll also help you avoid dipping into your existing savings for however many years you remain on the job.

Another option: Continue working in retirement, albeit on a part-time basis. You can approach your long-term employer about a partial retirement, or pursue something new if you can't bear to keep plugging away at your current job any longer. The key is to generate enough income to avoid depleting your nest egg prematurely.

2. How much of my savings do I plan to withdraw each year?

The key to stretching your nest egg is knowing how much of it you can afford to withdraw annually during retirement. For years, experts have lauded the 4% rule as a solid withdrawal strategy, since the rule is designed to make your savings last for up to 30 years — but unless you fit very specific criteria, withdrawing that much of your savings each year could cause you to deplete your reserves sooner than expected.

The problem with the 4% rule is that it makes certain assumptions about your portfolio and its growth potential. One is that you still have more than half of your assets in stocks, and that your bonds generate a respectable level of income. But what if you unloaded most of your stocks in an effort to lower your risk? Suddenly, that formula is thrown way off. Similarly, bonds today pay considerably less than they did back when the rule was established. So today's retirees need to adjust their withdrawal strategies accordingly.

What should you do? Use the 4% rule as a starting point, but develop a withdrawal plan that better aligns with your circumstances. For example, if you're heavily invested in bonds, and they aren't paying much interest, start out by withdrawing 2% of your nest egg rather than 4%. Being conservative with your withdrawals will help sustain your nest egg, so it's there for you throughout retirement.

3. Am I underestimating my life expectancy?

Many seniors plan for something in the ballpark of a 20-year retirement, but for some folks, that's a dangerously low estimate. That's because one out of every four 65-year-olds today will live past the age of 90, while one in 10 will live past 95. If you're one of them, yet you retire in your mid-60s, you could easily end up in a situation where you run out of money with several years of retirement left ahead of you.

A better bet? Assess your health, and if it's relatively strong, assume the best when it comes to your lifespan. If you operate under the assumption that you'll live until 90 and pass away at 88, you'll have a little something left over to leave to your heirs. And that's a much more ideal scenario than spending down your savings and burdening your family with your bills in your late 80s — assuming you even have that option, which many seniors don't.

If there's one risk you can't afford to take as a senior, it's outliving your savings and scrambling in your old age. So don't put yourself in that situation. Assess your personal risk early on, and take steps to compensate. Otherwise, you could end up falling victim to the fate that's so many retirees' worst nightmare.

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Nearly 1 in 4 Americans Has Done No Retirement Planning

It used to be that many American career paths included pensions. Employees would put in their time in the office or factory, and employers would take care of them when they got too old to work.

Today, jobs with defined-benefit pension plans are few and far between. Left to our own devices, are Americans taking care of their retirement needs? Our new survey says no.

"Companies have realized they can shift much of the risk and responsibility of managing a retirement plan to their employees by ditching the traditional defined-benefit plan for a defined-contribution plan," says Chartered Financial Analyst Phillip Christenson at Phillip James Financial in Plymouth, Minnesota. "While this isn't inherently a bad change, when combined with a general lack of financial education and low interest rates, it has contributed to a challenging retirement picture."

In an exclusive MoneyTips online survey, 452 Americans were asked about preparing for retirement. Some of those were already enjoying retirement, while others were decades away from their golden years.

We asked the 194 subjects yet to retire:

More than half (59.3%) revealed they had invested in a 401(k) or other retirement vehicle, which was the most popular response, followed by "Saved money" (39.7%), "Set up an IRA" (39.2%), "Invested in mutual funds" (32.0%), and "Participated in a Pension Plan" (26.8%). Nevertheless, nearly 1 in 4 (23.3%) admitted doing absolutely nothing to plan for retirement.

We also asked 258 current retirees:

Current retirees seem to have done a better job preparing, with less than 1 in 11 (8.9%) doing nothing to plan for retirement. More than half had invested in a 401(k) (57.4%), saved money (55.8%), participated in a pension plan (55.4%), and/or set up an IRA(50.8%). While those yet to retire were a little better at investing in a 401(k) or other retirement vehicle (59.3% vs. 57.4%), the future retirees had made fewer investments in IRAs, pensions, stocks, mutual funds, and bonds than current retirees had.

Says financial advisor Christenson, "One of my big concerns is not how a client is saving but whether they are saving enough. A retirement can be a 30-plus-year proposition. It's very hard to go back to work in your 80's if you realize you are running out of money."

We also asked those yet to retire:

The sad results are that more than 1 in 5 (21.1%) are not saving anything for retirement, and more than 1 in 3 (36.1%) are saving less than $100/month. Saving at least $100 but less than $1000 monthly was the most-popular answer (45.4%).

Commented Christenson, "We are heading towards a crisis with over a third of those surveyed saving less than $100 each month. This means their only chance at retirement is Social Security, which most likely will change by the time many people start drawing from it."

We broke down those numbers by gender, and found men are saving more than women are.

Nearly 1 in 4 women (23.9%) are not saving anything for retirement, compared to just 1 in 6 men (17.6%). Moreover, more than 4 in 10 women (41.3%) are saving less than $100 per month, compared to less than 3 in 10 men (29.4%). This could be because on average, women earn less than men do. When we looked at income, we saw that nearly half (47.2%) of people in families earning less than $100,000 annually were saving less than $100/month for retirement.

Added Christenson, "We are seeing more women as the primary and even sole bread-winners in a family. It really doesn't matter who is earning the money as long as the family is properly saving for retirement, education, and their other goals. A couple should plan together on what to spend their money on and how much to save. Getting on the same page with your significant other is crucial to implementing a savings plan."

See if your 401(k) needs fixing with a free analysis. For more of our exclusive retirement data and insights, visit MoneyTips Retirement Survey Findings.

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Consumer Concerns Have Increased Over Financial Retirement Risks

The Society of Actuaries (SOA) recently released its ninth biennial Risks and Process of Retirement SurveyOpens a New Window., which identified an overall increase in consumers’ level of concern for their finances both prior to and during retirement in 2017.

The survey shows a significant number of retirees and pre-retirees reporting that they feel unprepared to navigate financial shocks and unexpected expenses. 61 percent of pre-retirees and 47 percent of retirees feel unprepared for expenses in retirement that could deplete their assets.

Anna Rappaport, fellow of the Society of Actuaries (SOA) and chair of the SOA's Committee on Post-Retirement Needs and Risks discussed with FOX Business how Americans can understand, prepare for and manage retirement risks in retirement.

Here is what you need to know.

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Boomer:  What steps can pre retirees and retirees take to deal with the financial risks they may face in retirement?

Rappaport:  Pre-retirees and retirees alike face significant financial risks in retirement, most notably that they’re preparing for an uncertain time period with finite financial resources. And while the new survey from the Society of Actuaries shows that consumers are taking steps to mitigate these risks by saving money, eliminating debt and cutting back on spending, there’s still work to be done.

Many retirees have too short a planning horizon and do not consider longer-term issues including preparing for healthcare, long-term care, and inflation costs. These three categories consistently rank as Americans’ top retirement financial concerns, and it’s crucial to account for the costs during the retirement planning process. Long-term care is particularly challenging to plan for since most long-term care is not covered by Medicare, and the vast majority of retirees have not planned for this expense.

Another important step retirees can take is to prepare for unexpected events, such as major long-term care events, unplanned medical expenses, family members needing help and a variety of other expenses to ensure all financial bases are covered in retirement. The Society of Actuaries offers a discussion of shocks and unexpected expenses in an earlier report.

Additionally, pre-retirees and retirees can review another Society of Actuaries report that offers a comprehensive view of many retirement risks.

Boomer:  Most Americans can expect to spend at least 20 years in retirement, how can they plan in advance to not outlive their assets.

Rappaport:  Preparing for long-term issues is very important, however Society of Actuaries research shows that many retirees only focus on shorter-term expected expenses.  Claiming Social Security later is one way to help as it increases monthly income during retirement, and that income is inflation protected.  Buying an annuity is another way to use assets so that they are guaranteed for life.  They can also be guaranteed for the life of a spouse.  The Society of Actuaries offers decision briefs that provide information about Social Security claiming and about making resources last through life.

Boomer:  What can couples do to ensure their financial resources last for the partner that lives the longest of the two?

Rappaport:  There are a variety of ways that couples can work together to protect the longer-living partner.  For example, if the higher earning partner claims Social Security later, that will help ensure financial resources for the longer-living souse. Annuities, if used, should include a survivor benefit.  Life insurance is another way to protect survivors.  The couple may also wish to pay attention to the ownership of all assets, and include survivor protection in most or all of them. Finally, long-term care insurance can also help, because if one partner becomes seriously ill and needs a lot of care, that can mean that assets are used for that care, and there is little left for the survivor.

Boomer:  What is the “Spend Safely in Retirement Strategy”?

Rappaport:  The “Spend Safely in Retirement Strategy” is an approach to address the various financial challenge of retirement. It was identified as an optimal retirement income strategy by the Society of Actuaries and Stanford Center for Longevity. So what exactly, does the strategy entail? It recommends delaying Social Security benefits as long as possible – but no later than age 70 – which may be the only guaranteed lifetime income needed for many middle income workers. Another core component of the strategy is to invest any additional retirement savings in low-cost target date, balanced, or stock index funds, and use the IRS required minimum distribution to determine the annual withdrawal. This strategy produces a higher than expected average income, keeps pace with inflations and produces low measures of volatility, compared to other retirement income strategies.

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