Life

Three Ways To Stop Worrying About Money

December 10, 2017 By Twila Van Leer

Things look pretty rosy on the American economic front, with slow but steady improvement in the measures experts use to gauge such things and a stock market that is definitely on the upswing. So how come about half of Americans, even those with six-digit incomes, still say they worry about their personal financial security? Money is, in fact, the number one source of arguments between partners.

What’s in the wallet is not the only measure of monetary comfort. And in today’s world, despite the positive signs, real incomes are not rising much, college costs are off the charts and retirement lasts longer on average. Those are all areas for concern, Marguerita Cheng, a financial planner in Rockville, Md., offers these three ways to keep money concerns reasonable:

Pay less attention to the markets. Worry about the markets seems to be a common stressor, regardless of the amount of the individual’s assets. If you believe more wealth would free you from that concern, forget it. A survey among people with $5 million to $25 million in assets showed they worried too. Psychologists call this “loss aversion.” People tend to fret more over a dip in the portfolio than they celebrate an uptick. A diversified strategy can help you to avoid these lopsided perceptions. Don’t dwell on the market. Do check your portfolio once a quarter. You can be assured that your asset/allocation balance is okay and hopefully fend off obsession with unimportant ups and downs.

Tell someone “Thank you.” People who develop an “attitude of gratitude” for the things they have report themselves to be happier. Try writing a note of appreciation to someone who has given your life a lift at some point. Make it beyond a simple “thank you” card. Be specific about the “gift” you received. People who study such matters report that those who take the time for such niceties are happier. Putting gratitude into writing makes it more real, they say, and takes the writer’s mind off what they do not have in favor of what they do have.

Spend socially. Psychologists report that few people ever arrive at a point that they have enough. And accumulating more and more doesn’t lead to happiness. Strong relationships are more important, whether it is with a spouse, family members, friends or a religious group. Direct some of your spending to others. Plan a family vacation, donate to a charity or simply buy a gift for a friend. In one study, participants were given a $10 Starbucks gift card with instructions to use it, give it to a friend to use or to take the friend to Starbucks and share the gift card. The final choice produced more happiness, the survey said. Giving is a way to boost a sense of well-being.

(These suggestions are adapted from “Never Worry About Money Again,” by Carla Fried, Ian Salisbury and Taylor Tepper. Their article appeared in the July 2015 issue of MONEY Magazine.)

Long-Term Care Costs Complicate Retirement

December 4, 2017 By Twila Van Leer

When retirement looms and you have to give serious thought to your changing personal finances, don’t forget to add the potential costs of long-term care to the mix. It’s a fact that many retirees will at some point need long-term care, but too few people facing the end of their working careers make that reality part of their planning.

It’s rare that a family does not have one or more parents, spouses or even children suffer debilitating illness or injury. In one way or another, it’s a problem that virtually every American family faces, said a spokesman for the SCAN Foundation, which researches such topics.

Among people aged 65 today, some 70 percent will need long-term care before they die, according to U.S. government studies. In many cases, the need will not be for medical care, but for assistance with such daily tasks as bathing, food preparation, shopping and other necessary chores. Often, these needs arise after a medical event, such as injury in a fall or a major illness.

The costs of such care can quickly outstrip what has been saved for retirement. A person who is 65 can expect to incur $138,000 in long-term care costs, according to a 2017 Bipartisan Policy Center report. Other studies determine that few people in the 40-year age range have included provision for such care in their retirement plans.

The AARP, which serves people 55 and older, has a long-term care calculator that shows average costs for different types of services by state and metropolitan region. The most expensive is nursing home care, which now averages $97,000 per year, according to a 2017 survey conducted by Genworth Financial. Assisted living facilities average about $45,000 per year. Adult Day Care centers charge an average of $70 per day.

Too many people facing retirement believe that Medicare will pay for such services. But the federal medical program does not pay for nursing home stays or non-skilled living assistance, which make up the majority of the services needed to care for the elderly. More than 50 percent of those who need these services end up paying out-of-pocket, according to the Policy Center report. The figure rises to 70 percent for those who have more severe long-term needs. Saving are quickly depleted.

Many of the elderly are forced to turn to state Medicaid, programs that supplement health care costs. Rules vary from one state to another, so a review of what your own state provides should be part of your retirement planning. You may be required to spend down your savings to qualify.

Only 11 percent of older Americans have private long-term care insurance. Premiums are prohibitively expensive for most people, the Policy Center said Insurance companies have found that their estimates of how lucrative such policies would be were not correct and the number of companies offering the policies has declined dramatically.

Bottom line: Begin early to look realistically at your retirement provisions and don’t get caught flat-footed when the time comes. If you begin early to purchase long-term care insurance, your premiums will be lower. But you must consider how tight your retirement income will be post-retirement if you expect to continue to buy the insurance when it is most likely to be needed.

Planning For A Career

November 26, 2017 By Twila Van Leer

Career-planning isn’t something you do once and never again. Over a lifetime of work, things change and it’s to your advantage to capitalize as your options are altered. Today, the average worker will change careers (not jobs) many times over his or her lifetime.

Planning next steps puts you in charge, which is liberating and fulfilling. It involves setting goals and making plans for transitioning into a new career. The following tips can help you in the process:

Make attention to career planning an annual activity, not an afterthought. Schedule a retreat to allow you to focus on that priority, a weekend if not more if a change appears imminent. Minimize distractions and carefully think about what you want to accomplish with a change.

Map out your desired career path. Don’t dwell on the past, except to reflect on your experience as a guide to what you want next. If it is just a tweak or if you plan a whole new objective, build on the past. Being fully aware of where you have been will help you map out where to go next.

Let your analysis include your likes and dislikes, needs and wants. If your experience has been less than satisfactory or the current career has become stale, plan on major change. A two-column list of likes and dislikes about your work will help you see the trend. Look at your motivations. What was important to you in your first post-college job may look quite different now. Your goals and objectives may have changed.

Consider the things you like to do when you are not working. Pastimes and hobbies are more important to some than to others. An all-consuming career can leave little time for them. Is your hobby conducive to a business? Some people make a good living out of what began as a hobby. (For instance, Paul Gauguin, the famous French painter, was a successful businessman who gave up that career in favor of painting, an activity he preferred.)

Remember that change is a fact of life. Think about your major likes and dislikes and see how they apply to a career. What do you expect from a career? Simply working until you can retire can be very unsatisfactory.

Take note of past accomplishments. Creating a powerful resume is easier if you don’t shortchange yourself. A realistic record of what you did in your current career can be useful in planning what to do next. Analyze how many of the skills you now possess can be successfully transferred to another job. For instance, a news reporter may not recognize the ability to edit, research, investigation, multi-tasking, meeting deadlines and managing time and information. Breaking the job down into a bunch of skill sets may help you see what might make a good career move.

Make both long-term and short-term goals if you think a career shift would be advisable. A new career path may require additional training and education. Taking advantage of opportunities to add to your skills list is always a good idea, whether a career change is imminent or not. It may take some planning to supplement your training if your decision takes you in a whole new direction. Look within your present company, local universities or colleges and online training opportunities to achieve your goals. Plan your finances to cover additional education if necessary.

Researching career opportunities might give you a sense of direction. Don’t be afraid to look beyond your current field, especially if you are feeling stale or unfulfilled.

Career planning can have multiple benefits, from goal setting to job changes, that lead to a more successful life. You’ll find yourself better prepared, whether there is a job shift involved or not , and the benefits will flow over into all aspects of your life.

Prenuptial Agreements On The Upswing

November 14, 2017 By Twila Van Leer

Deciding before the “I do’s” how they are going to handle their combined assets is become a more popular approach for Americans. A prenuptial agreement can prevent hassles down the road and ease out the bumps that often cause trouble, experts say.

For instance: One of the partners is a very careful budgeter and keeps close track of her assets. Her fiancé tends to be looser in his money management and doesn’t shy from a few risks. An agreement in writing may help the couple find middle ground they both can live with. If, unfortunately, the marriage doesn’t work (half of them don’t) there is more solid ground for settling things.

One couple agreed to separate her retirement savings from his business funds. She had the peace of mind that her retirement would be more secure. He was on notice that he needed to remain within his means as he undertook new ventures.

Millennials tend to put off marriage until later in life than did their parents. They are more likely to have established careers, businesses and property. They can be protective of these assets. They are more open to a prenuptial agreement. Old perceptions that such an agreement is unromantic or selfish or that it indicates a lack of trust are being set aside in favor of a practical approach.

Back in 1975, about 43 percent of women were stay-at-home mothers and housekeepers. In 2016, that figure was 14 percent. The majority of women now have assets of their own when they are ready to marry. They are not as dependent on a husband for their living.

Prenuptial agreements have gained popularity for all these reasons. The increase of divorces in America also is a factor, according to the American Academy of Matrimonial Lawyers. An academy survey said that 62 percent of the lawyer members had seen an increase in the number of couples seeking prenups in the past few years, especially among those in the Millennial age span.

The pre-marriage agreements have also changed, the academy found. Initially, they were seen as a way to protect one of the partners if he or she had more assets or appeared likely to benefit from inheritances.

Now, they focus on such things as property and dividing debt, particularly student loan debt. The agreement can forestall sticky situations in the future. One man, for instance, wanted to assure his parents, who were likely to bequeath him a considerable amount of money from their business, that his inheritance would stay in the family should his planned marriage fail.

For some couples, such an arrangement is “the first step to a divorce.” But for some couples, pre-existing situations make a prenuptial understanding a good idea — for instance, when there are children from a previous marriage.

Some couples bypass the prenuptial agreement, but make legal arrangements after their marriage to address issues that could become stumbling blocks.

The experts defend pre-marriage agreements on the basis that “marriage is a financial decision and divorce is a financial decision” and the best approach is to keep them upfront.

Ready for Retirement?

November 10, 2017 By Twila Van Leer

Saving for retirement is getting harder. Not many Americans are accumulating the amount of money the experts say they will need to tide them over the remainder of their lives, and the U.S. Congress is taking steps that complicate the process further.

The idea is circulating in D.C. that the tax breaks associated with 401(k) savings should be curtailed. As our representatives look for ways to adjust taxes, that idea is still on the table.

Most Americans facing retirement become painfully aware that they will need a substantial amount of savings as well as Social Security payments to get by. The cost of health care is a bug-a-boo for too many as they age and general inflation takes a swath out anything that is set aside for the future. Here are some things to consider:

About half of Americans have a retirement account such as a 401(k) provided by an employer or and Individual Retirement Account (IRA), according to the Federal Reserve.

Not all jobs offer the 402(k) option. Only 35 percent of low-income working households have the job savings plan or anything similar that automatically sets money aside for retirement. For high-income households, the figure is about 80 percent, according to a study by the U.S. Government Accountability Office.

The average savings of most households that have a savings account is $60,000, but there is a wide range on both sides of the average. The typical household headed by someone under 35 had savings of only $12,300 last year, if they had savings at all. The savings cushion ranges from $403,000 at the top to a median of $25,000.

Millennials have more tucked away than their parents did at the same age, Compared with 1989, when a family headed by someone under 35 had just $7,500, today’s family in the same age group has $12,300, after accounting for inflation.

The age at which individuals can qualify for Social Security is rising. Sixty-six is now the threshold for receiving full retirement benefits. The figure is slated to go up slowly until it hits age 67 for those born in 1955.

The average life span is increasing. A woman at 65 can expect, on average, to live another 20.6 years. For men, the figure is 18 years. Retirement income has to last longer for most Americans.

Projections for health care costs are scary. A 65-year-old couple will need some $275,000 to cover medical needs through retirement, according to Fidelity. That doesn’t take into account nursing home or long-term care if necessary.

Fewer companies are offering formal retirement plans for employees. Only 13 percent of private-sector workers were enrolled in such a plan in 2014, says the Employee Benefit Research Institute. In 1979, the figure was about triple that number at 38 percent.

All of these factors suggest a more careful analysis of your prospective retirement income, with adjustments if necessary.