Thursday, October 19, 2017

5 Questions to Ask Yourself After You Retire

Retirement is a destination, for sure, one that we have been working toward for decades. But retirement is also a journey. It begins when we leave work, and can easily last for 20 or 30 years. As with any journey, it sometimes makes sense to stop and review where we’ve been and where we’re going.

Here are five questions I can think of that are important to ask ourselves, when we first retire, then again on a regular basis throughout the rest of our lives. Maybe you have other questions that you think are important. But the point is, just because we're retired doesn't mean that life is over. It means we're living for ourselves rather than someone else, and we should examine our situation every once in a while . . . so we stay true to ourselves.

1. Am I on track? You probably had a vision -- or at least some dreams – of what retirement would look like long before you accepted your Apple watch. You might even have had some concrete plans – and maybe even a budget by the time you actually left work. Now we should ask ourselves:: How am I doing?

Think about your lifestyle. Are you retired to Arizona, like you planned? Or are you still living in your family home, cutting the grass, shoveling snow, and storing old textbooks for your kids? If you haven’t launched your retirement life, what’s stopping you? Is it an emotional issue, or a financial problem? If you haven’t made a plan, or have deferred a lot of decisions, now is the time to take control and get on with your life. 

2. What has changed? Retirement involves a transition from working and saving to relaxing and spending, from answering to others to answering to ourselves. But the way we begin our retirement may not involve the same lifestyle that we settle into a few years down the line.

In my own case, the early retirement years looked similar to my working years, since my partner hadn't yet retired and we were living in the same house, with the same friends. Now we've relocated to Pennsylvania. We're finding new activities, new friends, and trying to figure out how to spend the winter in a warmer clime. Eventually we'll settle down – and we can then re-evaluate our expectations after we’ve tried out our new lifestyle for a while and have a better sense of what the future holds.

3. What do we want to change? We might get a few surprises when we compare the vision we had for retirement with the reality of our current life. So is there anything about your new lifestyle that hasn’t measured up to expectations? Maybe you’ve checked off a few items on your bucket list, and now you’re ready for more. Or maybe some of your original items no longer seem interesting.

Change doesn’t stop just because we’re retired. Some people relocate to Florida only to find they can’t stand the heat, and they move back home – or halfway back to the Carolinas. However far you’ve come in your retirement voyage, stop and consider if you still want to continue in the same direction, or if it’s time for a course correction. 

Don't let the retirement train leave without you
4. Are any surprises in store? When you set your retirement budget, you presumably projected the everyday expenses that will likely not vary much from month to month or even year to year. Then you took into account some discretionary items – a new car or a trip to Hawaii -- and developed a plan to balance your financial resources with your spending expectations.

But sometimes we get a surprise. If you’ve received an inheritance, you might make more ambitious plans. If you faced an unexpected medical bill  or major home project, you might have to make some cuts in your discretionary expenses. The recent surprise in my life? My daughter got married. Yeah, I know, I should have figured she would get married eventually. But who knew they would be sending me the bills . . . and that it would cost so much?!? Anyway, if you haven’t yet been hit with one of life’s surprises, look ahead to see if any unexpected events could be on the horizon.

5. We should have a plan … and be willing to change. It’s prudent to plan ahead. But it’s also important to remain flexible, especially from a financial point of view. We make a plan based on everything we know, plus some reasonable projections. But every once in a while we have to stick our heads out the window to see if the weather is changing – and make adjustments as needed. If you’re overspending, for example, you might consider cutting back on discretionary items or taking a part-time job to fill the gap.

          More importantly, if you realize that you're not doing what you want to do in retirement, that your retirement has gone off the rails, there's no reason in the world why you can't get back on track Sometimes retirement doesn’t play out exactly the way we envisioned when we were younger. There may be periods of uncertainty. But if we’re flexible, and periodically review our situation, then we will most likely find a clear road ahead.

Sunday, October 15, 2017

New Ideas for Old Problems

     I have been AWOL from blogging for the last couple of weeks. My time has been consumed first by a short-term job that I agreed to do, and then by my daughter's wedding which took place in Brooklyn, NY, last weekend.

     I realize that the typical blogger would post lots of wedding photos when their daughter got married. But I must confess, I am a rather private person. Now that may seem odd coming from someone who's been blathering on about this and that for the last -- gosh, it's been seven years now! But, actually, for the most part I try to keep my family out of it. After all, they have nothing to do with retirement, and they are vaguely embarrassed by their dad and all his Baby Boomer friends.

     (My daughter, walking around hipster Brooklyn, getting ready for her hipster wedding ceremony, finally admitted to me: "Well, Dad, I guess I am a Millennial after all." But she still won't admit that she's a hipster.)

Street scene from the 2nd best place to retire

     Anyhooo . . . this week it's time for me to file a report from the group of bloggers called the BBB, or the Best of Boomer Bloggers. And if we're not the best, we are at least a representative sample. So here goes:

     Kathy Gottberg produces a blog called Smart Living 365. So it should be no surprise to find out that she's smarter than I am. She's been on vacation, but instead of ignoring her blog as I have, she signed up guest blogger Lynne Spreen of Any Shiny Thing. Spreen has posted an article Your Big Empty-Next House Could Be the Solution to 3 Problems which connects grandparents to a new trend in housing -- and offers an idea for retirees who might want to find more use for their too-big empty nest.

First buss at a hipster bar in Brooklyn

     Meryl Baer of  Six Decades and Counting has also been on vacation. She spent time in her old hometown, where she lived for 30 years while working and raising a family. Then she moved away, only to discover that in her absence the area has become a top retirement destination. Read about her short visit -- and what city is ranked by U. S. News as the 2nd best place to retire -- in Stopover at the Old Hometown.

     Meantime, if Meryl Baer has a knack for leaving town at just the wrong time, apparently Laura Lee Carter became an author at just the wrong time . . . and perhaps many of us will feel her pain. According to Carter in Amazon Says: Save Money, Don't Pay Authors, Amazon has betrayed authors by allowing third-party sellers to deceive customers into buying "new" books that do not come from the publishers, thus cutting authors off from their royalties. But, as Carter admits, all is not lost, for we do not really write for money or fame; we write to learn about ourselves and to make connections with others.

Rita is safe from the sun
     On Heart, Mind, Soul Carol Cassara reports on how a group of women found a more positive way to use Amazon. As we all know, technology and social media can be full of discord and disharmony, but Cassara knows that it can also bring out the best in people. Check out her post Generosity Revolution to see why it's important to look beyond our own limited experiences and reach out to other people in need.

     On the Survive and Thrive Boomer Guide, Rita R. Robison has discovered another benefit to our new technology. She points out that even with something as simple as an oil change, a Smartphone Can Be a Great Help, allowing consumers to compare prices and get the best deal. Then she finds out she needs to Wear Sunglasses and a Wide-brimmed Hat -- and we should too, not just in the summer but all year long, to protect our eyes as well as our skin.

    And finally, a new member of our group, Rebecca Forstadt-Olkowski of Baby Boomster, this week offers an overview of a conference called The New Old Age, hosted by The Atlantic magazine. The conference gathered together a distinguished group of experts who explored the way age is marketed in the media and offered a variety of ways we can change our vocabulary to bring a more positive perception of aging.

    So hats off to Rebecca for a fine wrap-up . . . er, figuratively speaking, since we're all keeping our wide-brimmed hats firmly in place. Have a good week!

Sunday, September 24, 2017

FAQs on Long-Term Care

     Realistically speaking, most of us will need some kind of personal care at one time or another. I posted an article on the subject, Is Long-Term Care Insurance for You? that covered many of the basics, brought to us by Jeremy A. Kisner, a financial expert at Surevest Wealth Management in Phoenix, Ariz.

     Kisner is a Certified Financial Planner and Chartered Life Underwriter, with a degree in economics from UC Santa Barbara. He also writes an informative Retirement Blog that covers various aspects of personal finance and retirement issues.

     As Kisner reports, not much has changed on the issue of long-term care. But there are always more details, more questions. So here are the Frequently Asked Questions he sees regarding long-term care:

Q: What is long-term care?

A: Long-term care is both medical and non-medical assistance that hopefully you will never need. However, as you age, at some point you may need help performing the activities of daily living such as bathing, dressing, eating, toileting, transferring. Long-term care is not designed to cure or rehabilitate you. It is just to help you do the things you need to do each day.

Q: What is the probability that I will need long-term care?

A: Approximately 68% of 65-year olds will require some long-term care during their lives. The statistics vary depending on the source, but a rigorous study of the incidence of long-term care, which was cited in Forbes, projected that 58% of men and 79% of women who are currently 65 or older will need LTC services at some point in their lives.

Q: How long do people typically require long-term care services such as home healthcare, assisted living, or nursing home?

A: Some LTC events are brief. Half of them last one year or less. The other half have an average duration of 3.9 years. Many times, the services can be provided by family members. Other times, the need for care is beyond the scope of what friends and family can do for you.

Q: How much does long-term care (e.g., home healthcare, assisted living, or nursing homes) cost?

A: The cost depends on the type of care and where you live. The least expensive type of care is non-medical home care (e.g., bathing, eating, etc.). The national median cost for non-medical home care is around $20 per hour or about $46,432 annually if you need this help 8½ hours a day, 5 days a week. The other end of the cost spectrum is a private room in a nursing home (AKA: skilled nursing facility). The median cost for a private room in a nursing home is $253 per day or $92,378 annually. Look up Long-Term Care Costs in Your State. These costs are typically not included when most people plan budget for healthcare costs in retirement.

Q: Who pays for long-term care services?

A: There are basically three funding options:
  1. Self-fund using your income, savings, and/or liquidating assets to pay for care,
  2. Buy private insurance
  3. Qualify for Medicaid. Medicaid is a welfare program that is only available after you have spent down your assets and do not have enough income to pay for care. There may also be free or subsidized long-term care coverage for veterans through the VA.

Q: What does long-term care insurance cover?

A: Once upon a time, LTC was thought of as nursing home insurance. Most policies today cover home healthcare, assisted living, memory care communities, and skilled nursing facilities. Some policies also cover hospice care. Most long-term care services required are non-medical and provided in the person’s home.

Q: How do I find the right LTC facility for my loved one?

A: Step 1: Ask friends and family whether they have any suggested facilities.

Step 2: You can use these two tools: the Eldercare locator from the Department of Health and Human Services, and /or Medicare’s online nursing home comparison tool. Medicare’s comparison tool can help you evaluate nursing homes based on quality to see whether there are any blips in health and safety inspections. It also offers insight into how people rate a facility’s staff.

Step 3: There is no substitute for boots on the ground (AKA: the good old-fashioned site visit). While you are there, do not hesitate to ask residents and their families how they like the facility and staff.

Q: Do you recommend LTC insurance?
A: Everyone should have some plan to pay for LTC if the need arises. This is most important for married couples so that one spouse does not use up all the assets and then leave the other spouse destitute. The plan to self-insure (i.e., pay out of pocket) may be appropriate for mid to high net-worth households (typically over $2 million). Another option is to depend on Medicaid, which is not a great plan unless you do not have a lot of assets to protect. Medicaid is a welfare program that is only available after you have spent almost all your assets. The third solution is to buy insurance so you don’t have to spend down your hard-earned savings. The prime target for LTC insurance solutions are couples with $200k - $2 million in investible assets.

Q: Can the insurance company increase my long-term care insurance premiums?
A: It depends on the type of policy. Traditional LTC insurance (pool of funds) are “guaranteed renewable,” which means the insurance company may increase premiums, but only on an entire class of policies, not on an individual policy. This used to be rare, but now almost every company has raised rates on in-force business. Hybrid products are classified as “non-cancellable,” which means that the insurance company cannot change the rates.

Q: What are “hybrid LTC products”?

A: The insurance solutions include: traditional LTC insurance, as well as hybrid insurance products. The hybrids include life insurance policies that allow the death benefit to be used to pay for LTC or an annuity with a rider that increases your payments during a qualifying LTC event. There are a couple of obvious advantages to the hybrids. Specifically, the death benefit on the life insurance or account value of the annuity is paid to your beneficiary if you do not use the funds for LTC while you are alive. This is a big difference from traditional LTC insurance, which does not have a cash value or death benefit.

These products become more attractive at older ages for two reasons:
  1.  Inflation protection associated with traditional LTC insurance becomes less important when purchased at older ages.
  2.  Underwriting guidelines are more lenient on the hybrid products than on traditional LTC insurance. The one downside of hybrids is a large single premium is usually required to fund these products.

Q: How do I qualify for Medicaid?
A: You must spend all your non-exempt assets, which includes investment accounts, savings accounts, retirement accounts, and the cash value of any life insurance—down to $2,000 if you are single before Medicaid kicks in. If you’re married, there are spousal impoverish standards that allow the healthy (community) spouse to keep assets up to the “community spouse resource allowance,” which is set by your state—ranging from $24,180 to $120,900 and monthly income “minimum monthly maintenance needs allowance” of $2,030 - $3,022 (as of 2017).

Exempt assets are not counted and include your wedding ring, one car, and your house. However, there are limits on home equity ($560 - $840k) depending on your state, and many states will put a lien on the house to collect retroactively after both spouses have passed or sold the house.

Q: What is the best age to purchase long-term care insurance?

A: The average purchaser of LTC insurance is 57 years old. Naturally, all insurance solutions (traditional LTC insurance, hybrid life insurance and annuities) have a lower annual expense when purchased at younger ages.

Q: Is it difficult to qualify for long-term care insurance?
A: Yes. If you have a hang nail, you will not qualify. Okay, that’s a slight exaggeration, but it has gotten significantly more difficult to quality for traditional LTC Insurance. The insurance company bases its underwriting on your medical history, family health history, current health status, and lifestyle. When you apply, you must be mentally fit and able to perform all activities of daily living, which are defined as bathing, dressing, eating, toileting, continence, and transferring. Life insurance with a LTC rider is easier to qualify for, and annuities with LTC riders are the easiest. In fact, most of the annuity solutions do not have any medical underwriting. Sadly, they also provide the least effective LTC coverage.

Q: What do these LTC insurance terms mean: elimination period, benefit period, and pool of funds?
A: Traditional long-term care works like most types of insurance. There is a deductible, which is known as the “elimination period.” This is the time -- typically 90 days -- when you must pay out of pocket before the insurance kicks in. Once insurance starts, you have a daily or monthly maximum the insurance will cover. For example, you would be required to pay the $50 out of pocket if your cost of care is $250 but your daily max is only $200.

There is also a “benefit period,” which is the number of years the insurance will cover you if your cost of care is equal to or greater than your daily maximum. You can figure out your total “pool of funds” by multiplying your daily maximum x 365 days x the number of years. For example, if your daily max is $200 and your benefit period is 3 years, you would have a pool of $200 x 365 days x 3 years = $219,000. Your benefits would last longer if your care costs less than your daily max. For example, your pool of funds would last 6 years if your care was only $100 a day, even though the stated benefit period was 3 years because you would still have money left in your “pool.” These policies have a host of riders that enable you to customize coverage. This is why it really helps to work with an agent who is well-versed in LTC.

Q: Are LTC Insurance premiums tax-deductible?

A: Premiums for “qualified” long-term care insurance policies are treated like any other medical expense for tax purposes. You only get a deduction for the amount of total unreimbursed medical expenses (including Medicare premiums) that exceed 10% of your Adjusted Gross Income (AGI). A policy is “qualified” if it was issued after January 1, 1997 and meets certain requirements.

Q: Are LTC benefits taxable?

A: Benefits are tax-free as long as they are less than $360 a day or the cost of care, whichever is greater.

Q: What is the LTC Partnership Program?
A: The Long-Term Care Partnership Program is a Federally-supported initiative that allows individuals who purchase a qualified long-term care insurance policy to protect a portion of their assets from Medicaid spend down.

For example, if you purchase a qualified LTC policy and subsequently collect $300k in benefits, you (or your spouse) would be able to qualify for Medicaid while keeping $300k of additional countable assets. Here's a list of states that participate in the Partnership program.

Thursday, September 21, 2017


     Remember Andy Rooney on 60 Minutes? I feel a little like Andy Rooney in this post today, recounting a day-in-the-life of a retired person.

     Yesterday B and I bicycled across four states. Well . . . that's not exactly true. We bicycled from Pennsylvania to New Jersey. Then we crossed a bridge from New Jersey into Pennsylvania, then went back to New Jersey and returned again to Pennsylvania. Back and forth across a state line, four times. We were biking a route along the Delaware river.

     Since we moved into town, and the terrain around here is relatively flat, we've decided to get bicycles. We can ride to the library, the museum, the theater, the restaurants. We have to weave through traffic; but there isn't that much traffic and the cars are going pretty slow. Plus, part of the way around town is on a bike path and the rest is along the side of the road marked off for bicycles.

     Riding a bike is supposed to be good exercise for my old broken down arthritic knee. Maybe I can avoid a knee replacement if I build up the muscles and keep my leg strong and limber.

     After our bike ride I settled down to read my book. I picked up The Caribbean by James Michener a couple of weeks ago. The paperback was a freebie in the lobby of our library. (I love the library; even better than Amazon!) I'd read a couple of Michener's other books, and now with the Caribbean in the news I thought I'd give this one a try.

     It's an interesting tale beginning with the pre-Columbian Arawaks and Caribs. The book, published in 1989, covers in fact and fiction a number of topics, from sugar plantations, slavery and pirates, up to the Rastafarians, Fidel Castro and hurricanes. But it is a long book, weighing in at over 800 pages. I wonder if Michener were writing today, with our fast-paced lives and shortened attention spans, would he be nearly as popular?

     I was sitting there reading, sipping coffee from the mug I bought this summer on Cape Cod, when I suddenly noticed the mug has the date of 1602 on it. Wait a second. 1602? Where did they get that? When did the Pilgrims come over and land on Plymouth Rock anyway?

     So I went to the trusty Internet . . . and sure enough, the Pilgrims landed on Cape Cod in 1620, before sailing on to Plymouth Rock and founding America. So where did they get 1602? Is it a typo? No. Apparently Cape Cod was a landmark for early explorers, perhaps going back to the Norsemen, circa 1000 AD. It was 1602 when English explorer Bartholomew Gosnold sailed by and named this spit of land Cape Cod. Samuel Champlain and Henry Hudson both explored the area over the next couple of years, so by the time the Pilgrims got there, even though it hadn't been settled, it was well-trod territory.

     But wait a second. The Pilgrims didn't found America. And by the way, I read up a little on the Pilgrims. They left England where they were not welcome, went to The Netherlands where they didn't fit in, and finally set off for the New World where they could exercise their religious freedom -- and then deny everyone else religious freedom, which is how Connecticut and Rhode Island were founded, by people cast out by the Puritans.

     We hear about people proudly tracing their heritage back to the Mayflower. If I had an ancestor on the Mayflower I don't know if I'd want to brag about it. Let's face it. They were a bunch of pretty strange dudes.

     And so how do the Pilgrims get all the credit for settling America when, first of all, the Spanish were roaming around the Southwest even before 1600, and we all know it was Jamestown, founded in 1607, that was the first permanent English settlement in America.

     Of course, we've heard of Captain John Smith and Pocahontas, and know the mostly apocryphal story about how she fell in love with him. But Plymouth Rock gets most of the credit. Is it because we re-enact the other mostly apocryphal story of Thanksgiving every year in November? Or is it because the media is concentrated in the Northeast, and so anything that happens in New York and Boston commands more attention than events occurring in coastal Virginia . . . which is, after all, west of the Hudson River?

     By the way, they're taking down statues of Robert E. Lee for being a traitor, and Christopher Columbus for bringing the murderous Europeans to America. So why are they not taking down monuments to the Pilgrims who, after all, were there for the start of the deforestation of our woodlands, the decimation of wildlife, the pollution of lakes and rivers, and the near-extermination of Native Americans?

     And speaking of decimation, as the day ended I sat down to watch another episode of the Ken Burns Vietnam program on PBS. Good show; bad war. What else can be said?

     See what I mean? A little bit of Andy Rooney.

Monday, September 18, 2017

What Me Worry?

     As I mentioned in my last post, I've taken several road trips lately, spending a lot of time behind the wheel of my car, which has given me plenty of time to reflect on what's going on in the world. Instead of focusing on the latest silliness in the news -- whatever Trump tweeted, whoever just got hired or fired, how the political parties are posturing -- I've been trying to focus on what's important in our lives.

     And if we step back -- well, I'm in my car, so I'm only stepping back figuratively speaking -- I think that what should most concern us is what is most likely to kill us, or hurt or maim us.

     With the recent hurricanes, it's hard not to think about global warming and the destruction it will eventually cause. With North Korea in the news, it's hard not to worry about a nuclear holocaust.

A scary sight
     But with that ten-ton semi bearing down on me, hurtling along at 70-some mph, and the aggressive driver weaving in and out of traffic, I realize that the most immediate and deadly danger is something I face every day, right here in front of me on the American roads.

     When you're on the highway, with speeding cars, tailgating trucks, and motorcycles weaving in and out between cars, you realize that the biggest danger we face today -- all of us -- is the high degree of lawlessness on American roads. People routinely drive 10, 15, even 20 mph over the speed limit. A significant portion of drivers tailgate, pass on the right, weave in and out of traffic, fail to use their turn signals. And god only knows how many are doing all this while they're talking on the phone or fiddling with their iPod.

     Haven't you seen the line of six or eight cars in the left-hand lane of the highway, all going 75 mph, and all about 10 feet behind one another? If the slightest thing goes wrong, the result is . . .  well, according to the New York Times there were 40,200 traffic deaths in 2016. After going down for years, due largely to seat belts, airbags and other safety features, traffic deaths are now on the rise again.

     The latest reports say Hurricane Harvey killed 82 people in four days. What we totally ignore is that some 440 people lost their lives on American roads during that same time period. Hurricane Irma killed 26 Americans in three days, while those same three days claimed 325 lives on our highways.

Remember these old signs?
     So what is President Trump doing about this increasing threat to Americans? The same as Obama, Bush, Clinton . . . nothing. What are governors and mayors doing about it? I know in my old hometown there's a project to widen an old parkway and straighten out some of the curves. But still, nobody wants to enforce the speed limit. Traveling 70 mph on a narrow curvy road, where the official speed limit is 55 mph, seems to be within the bounds of acceptable behavior. Nevermind the 40,000 dead, and countless more injured.

     And so the postscript? Actually, drug addiction now takes more American lives than traffic accidents. But I don't worry about drug addiction for myself, because I don't take drugs . . . while I do drive, which is why driving is my number one issue. My kids don't take drugs either (although my niece does and I do worry for her). But my kids also drive. And so whenever I know they're on the road -- my son drove from New York to Baltimore last weekend; my daughter is driving from North Carolina to Brooklyn in a couple of weeks -- there's always that little bit of anxiety lurking in the back of my mind. Are they going to be okay?

     Don't you have that same anxiety? Aren't you just a bit unsettled when you know your kids are on the road?

     Regardless, the message of this post is: please, slow down and obey the traffic laws, for your own safety as well as the safety of those around you. And let's be more careful of the drugs we use, prescription or otherwise, lest we or our loved ones become victims ourselves.

     And by the way, why can't the researchers at our top universities, big hospitals or major drug companies discover an effective nonaddictive painkiller?

     Anyway, sometimes we forget . . . we live in a dangerous world. So let's not worry about the small stuff, let's try to keep safe.