Personal Finance Blog

Tips And Stories To Help You With Managing Money

Long-Term Care Costs Complicate Retirement

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Long-Term Care Costs
A person who is 65 can expect to incur $138,000 in long-term care costs, according to a 2017 Bipartisan Policy Center report.
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.

Matching Pajamas New Holiday Trend

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Matching Pajamas
Families who were into the fad before it became a fad are wondering why it took the rest of the world so long to catch on to the craze
Ever since “Mama in her kerchief and I in my cap” became a holiday standard (Moore’s “Twas the Night Before Christmas) the idea of special holiday jammies has been part of the fun. And as Christmas 2017 presses into view, it is clear that dressing the family up in marching night togs has become a tradition for many. Move over, ugly sweater. You have been replaced in the holiday wardrobe.

The debate begins early. By November, the argument for stripes (think candy cane colors) or a cutesy print ala Yuletide style is front and center and the decision about to be made. Sometimes even holiday visitors are expected to tog up for the family photo.

PajamaGram and Hanna Anderson have jumped aboard the bandwagon and Burt Bees Baby is taking care of the juvenile end of the craze. Oprah has touted the latter as one of her favorites this holiday.

Target reports escalating pajama sales every year since 2013 and has stocked accordingly. The retail giant says it is offering 22 patterns this season and, just to cover the waterfront, offers some of them in styles for dogs and dolls. Walmart expects to repeat previous successes with its offering of one-piece, zip-up jammies for adults. New this year are designs with polar bears on skis and Santa aboard a unicorn.

Even families that can’t get together geographically for the big day will be togged in their matching sleepwear, sharing the fun via video calls, photos and other media means. In fact, some families who were into the fad before it became a fad are wondering why it took the rest of the world so long to catch on to the craze.

One mom who has decked her children with matching nightwear for years thinks it is the media that has spread the mania. “It’s just that now it’s a lot more visible because everyone can see our pictures on Instagram,” she said.

Jonah Berger, marketing professor at the University of Pennsylvania’s Wharton School of Business, agrees. “It used to be that your uncle did this on a Christmas card, but you only got to see it if you were on his mailing list. Now, it’s a classic case of Internet one-ups-manship. Who can come up with the best matching pajamas and show the world that they’re a good parent?” Berger is author of the book, “Contagious: Why Things Catch On.”

Who Are the Leading Female Financial Advisors

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Female Advisors
These women and an increasing number of others are making their mark, managing billions of dollars and educating others in financial issues as well.
There are no long lists of woman whose expertise in financial advising is readily recognized beyond limited circles. Many are doing well, but it tends to be in a less flamboyant manner than their male peers.

Two whose names are readily recognizable are Suze Orman and Melody Hobson. They are the media darlings, quoted when financial questions arise. Orman started as a stock broker, while Hobson climbed the leadership ladder at Ariel Capital Management to become president. Neither of these industry leaders holds the Certified Financial Planner credential which is recognized as the financial planning standard.

Orman’s accomplishments include a clutch of books, kits, calculators, tools and a resource center. Among her dozen or so how-to financial books are “Young, Fabulous and Broke,” “You’ve Earned It, Don’t Lose It” and “The Laws of Money.” Her business flows over into television and media appearances.

Hobson, just 10 years after graduation from Princeton University, had climbed from intern to president in Ariel. She is a contributor to Good Morning America’s money segments and is a fierce advocate for African American financial literacy. In 2015, she was on the Time Magazine list of 100 most influential people in the world.

Third on the list is Karen McDonald of Morgan Stanley. Barrons ranked her No. 1 in its 2014 survey. She has $21.2 billion in assets under management and heads a team of 15 that serves corporate clients, many of them in the top Fortune lists. She specializes in employee benefit solutions and other employee issues such as educating workers to become better money managers.

Susan Kaplan, top financial advisor, according to the Barrons 2013 survey, is president of Kaplan Financial Services in Newton, Mass. Her $1.4 billion in managed assets includes many accounts in the $3.5 million range. Her average client has $10 million net worth. She has contributed to Louis Rukeyser’s Wall Street and Mutual Fund publications as well as various financial journals and appears on Bloomberg News, CNBC, WGBH and other media outlets.

Gillian KYU of Morgan Stanley Securities in San Francisco, earned the No. 2 spot in Barron’s list in 2013 and No. 6 in 2014. Her $3.5 billion assets under management typically range in the $20 million neighborhood. Her clients average $50 million net worth. She is licensed as both a financial advisor and a broker. She was reared in Taiwan and is fluent in English, Mandarin and Taiwanese and serves many clients with Asian ties in both their Asian homelands and in the United States.

Elaine Meyers ranks fifth in the 2013 Barron’s survey’s overall financial advisor category and third among the women on the list. She manages $2.63 billion, with a typical account size of $30 million. She is managing director of Credit Suisse (USA) Private Banking North America in San Francisco. She has prior experience with other international investment firms as well and has been influential in the financial advisory field for several decades.

While women still lag males in financial advisement, these women and an increasing number of others are making their mark, managing billions of dollars and educating others in financial issues as well.

The Holidays: Time To Overspend?

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The Holidays
Impressing friends and family during the holiday season won’t take away the sting when the holidays are over and your finances are in shambles.
It happens every year. Despite good intentions, more than half of Americans admit they are planning to spend more during the holidays than they have on hand. Fifty-six percent fall into that category and 16 percent of them expect to spend at least six months paying off the overage.

The American Research Group predicts that the average person they surveyed will spend $929 on gifts this season. Among parents, the numbers can go higher. Newly released T. Rowe Price data indicate that on average, parents expect to pay some $422 per child. And 34 percent say they will spend $500 or more.

How do they manage the beyond-budget spending? About 25 percent take drastic measures, withdrawing money from 401(k)s or their emergency savings. Or they take out payday loans to finance their holiday spending. Even among families who start the year with good intentions, 58 percent fail to stick with the holiday budget they have set.

A large number will whip out the credit cards to finance gift-buying, with the inevitable result of laying on credit interest. For instance, using the $929 average figure as a base, if your credit card charges 18 percent interest, you’ll spend $1,022, and each month it takes you to pay off the total amount, the interest cost will rise. While cards are irresistible when you want to give gifts, they can be dangerous if you can’t resist temptation to keep buying until you are maxed out and are not prepared to pay them off right away.

Avoid dipping into the emergency fund. That money is there to take care of such things as car emergencies, leaky roofs and other bona fide emergencies. And the risk doesn’t decline simply because Santa Claus is coming to town.

Retirement savings also should be inviolate. Now matter how much your child or grandchild covets a very expensive toy for Christmas, it isn’t worth the 10 percent penalty you’ll pay, if you’re under 59.5 years old, for the early withdrawal. You’ll also lose the accrued interest on that money. If you are earning an average annual 7 percent return, that $900-plus withdrawal represents loss of about $9,600 by the time you’re 65. And there are all the Christmases to come, remember? If you use the same tactic to finance more Yuletide wishes in the years to come, the loss could be considerable.

That’s not to mention the taxes you’ll pay – about $225 on a $900 withdrawal.

It’s probably useless to advise better planning for this year, but for future reference: Set aside some cash each month in anticipation of the gift-giving season. Stick to your good intentions. Santa will thank you. When you shop, let a list be your guide and don’t get swept away in visions of your own largesse. Impressing friends and family during the holiday season won’t take away the sting when the holidays are over and your finances are in shambles. Don’t take more cash to the stores than you intend to spend.

Planning For A Career

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Planning For A Career
Don’t be afraid to look beyond your current field, especially if you are feeling stale or unfulfilled.
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.