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When Should You Get Power of Attorney?

October 24, 2018 in: Senior Finances,

There comes a certain time in your life when you and your parents are no longer able to live together in the same house. Their needs change and with your demanding job, you are not able to give them the attention they deserve. This can have a huge impact on their life if they are suffering from fluctuating blood pressure, diabetes or Alzheimer’s disease.

For this reason, to provide your parents with a healthy environment where they are taken care of and have the freedom to live their life, you can admit them into a retirement or memory care facility.

Six Tips to Help You Save on Long Term Care Insurance

November 30, 2017 in: Senior Finances,

Long Term care insurance can protect you and your family from the financial burden of caring for a loved one, but it can be pricey. The good news is there are options to keep costs down. Here are six strategies to save.

1. Buy early. Ideally, you want to buy the policy at a time when you can get the most benefits for the lowest cost. Most experts agree that the best time to buy long-term care insurance is in your mid-fifties to age sixty, while you’re still healthy enough to qualify for better rates. Premiums are based on your age, so if you’re in this age group, you’ll save money if you buy before your next birthday.
According to the American Association for Long-Term Care Insurance, the cost of long-term care insurance for a 65-year old could be more than twice as much as the cost of insurance for a 55 year old. Because premiums are based on your age when insurance begins, those who buy early often end up paying the same cumulative premium, but for a much longer duration, than those who purchase at later ages.

2. Apply with your spouse or partner. Long-term care insurance companies offer discounts to married couples and domestic partners who live together. You could save up to 30% if you apply with your spouse or partner. Most carriers will give a partial discount even if only one of you is approved.

3. Consider shared care. Consider sharing a policy with your spouse. Typically in a shared policy, you are each buying a policy whose benefits can be pooled together. Couples can essentially double their potential coverage without individually having to purchase more coverage. Shared care can be valuable for any couple, but particularly in cases where there is a large age difference.

4. Choose your benefits wisely. If you can afford to pay for a few months of long term care, consider increasing the waiting period in exchange for lower premiums. Similarly, if you think you’ll be able to cover some costs out-of-pocket, consider lowering the daily maximum benefit. Finally, review the type of inflation protection the policy provides. If you believe your income and savings can cover the cost increases, eliminating inflation protection from your long-term care policy can cut the premium in half.

5. Plan ahead. Start to form a picture of your retirement. Costs for care vary greatly from region to region. Do you plan to stay where you are? By making your home more accessible, you may not need as much assistance as you age. Considering a move to a new location? Be sure to factor the relative costs of care into your decision. You can explore various costs across the country here.

6. Seek expert advice. For most of us, long term care insurance options can be quite complicated. Not only do available plans differ among insurance companies, but premiums for similar coverage can also vary dramatically. Your best bet is to work with a long-term care specialist who has relationships with multiple insurance companies and can customize a plan for you.

How to Determine How Much Money You Need to Retire if You Live Until 90 Years Old

November 06, 2017 in: Senior Finances,

As retirement approaches, many people get scared about their future living. At an average, most retirees are able to replace only 60% of their income, whereas the required rate is 80%. If you are one of those persons who started thinking about their retirement fund at an early age, then you should have amassed a lot by now. However, how do you know it is enough to keep you afloat?

Here’s a quick tip: In order to know how much you should have in your bank account by the time you retire, multiply your current salary by 12. This is a ballpark figure and you shouldn’t be too comfortable with it because, depending on your expenses and the economy, things can change and they will. However, maintaining this amount in the account is quite hard and therefore, you should start saving at the age of 35. Following is a simple way to calculate your savings and determine how much more money you will need by the time you reach the age 90.

Calculate Your Spending

Calculating what you have spent so far can be quite intimidating. You don’t need any fancy apps for that except your bank statement. Sum up all the amounts and divide it by the number of withdrawals you have made this year so far. This will give you an average amount of your spending. Let’s say that when you retire, you will be spending $60,000 (adjusted for inflation) every year.

Calculate Existing Income Source

After retirement, your existing income source might be your pension and social security. Discarding any other income source which you might be tapping into, let’s focus on these two. The amount you receive from these two is $10,000. As you can see, you are still $50,000 short. It’s time to bring out your calculator now.

Let’s do the Math

You now know that you need to come up with $50,000 to match your retirement fund estimate. Say, you are earning 5% on your investments. To make up for that missing 50k, divide $50,000 by 5% and you get $1,000,000. This means that by the time you retire, this amount should be in your account.

How Much Your Current Savings Will Help You in the Future?

Let’s assume that so far, you have saved $250,000. In the next 20 years, you will be 90 and you want to reach your goal of $1,000,000 before that. There’s a possibility that you might not be able to work that hard to achieve this goal. This is where you need a professional calculator to see where and what budget cuts you need to make so that you can reach that amount.

Retirement calculators do the calculation based on your age and annual income. Of course, if you are getting benefit from Uncle Sam, then all the better. Try this calculation method and you will find an estimated amount, based on which you can start saving.

How to Help Parents Manage Finances as They Get Older

July 14, 2017 in: Senior Finances,

Your parents have been there for you through every step of your life, making sure you maintain a decent and comfortable lifestyle. But as they start to age, roles often reverse and the perks of adulthood start to dawn upon you. Soon you’ll realize that you’re in charge of taking care of their needs instead of them taking care of yours. The major problem that aging parents often have trouble with is their finances. Usually because of diseases caused by old age, they are incapable of handling finances and that’s when you should step up and return the favor.

How can you help?

First and foremost, you need to understand that your parents might not always come to you for help, so you need look at possible signs indicating a warning. These may include:

  • Cognitive impairment
  • Physically weakening illnesses
  • Emotional stress
  • Unopened mails or unpaid bills
  • Lack of activities that they once enjoyed
  • Loss of a spouse

These are some of the major signs and if you feel like there’s a financial crisis that your parents may not be talking about then here’s how you can help:

üBring up the topic

This is the tricky part because you need to empathize with your parents, especially if they’re choosing not to talk to you about finances. Brace the topic with caution and let them know you’re there to help. You can do this by:

  • Helping with a financial chore they don’t particularly enjoy
  • Ask for financial guidance
  • Talk about setting up and power of attorney for yourself and then have them guide you via the necessary documentation.

Remember to be cautious and not let your parents feel like you’re imposing a financial plan upon them.

üAutomatic bill payments

This is a simple way to ensure that your aging parents don’t miss deadlines. By setting up automatic bill payments, deductions are made in a timely manner and they don’t have to take any extra stress over it.

üMoney gifts

Remember when you sometimes received money as gifts, from your parents, and how happy that made you? Well, why not try the same thing except gift your parents enough for them to tackle a certain financial crisis? It relieves the burden, of a crisis, from their shoulders without being asked for it and the best part? You’ll be put in their good graces!

üFinancial plan

Sometimes you have to brace the subject directly and see if they have a financial plan set up for the future. You can do this and have an intervention with them and your siblings to see who would be a suitable power of attorney in future cases.

üRetirement homes

Financial crisis are inevitable and sometimes, to ease their burden, you can also suggest retirement homes such as The Palazzo in Phoenix, AZ. They’re not only comfortable to live in, but they take the load off of some of the major financials.

You can try these tips and see if your parents are willing to oblige. Remember, it’s not always going to be easy especially with your own financials at hand but at some point your help will be an absolute necessity.

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