Financial planning lawyers will always emphasize the need to accumulate resources for retirement.
There are those who make no advance plans because they are under the impression that Social Security will take care of everything. The fact is that this program is a safety net, not a retirement plan. If you want to be able to "live the dream" as it were you're going to have to plan ahead intelligently and stick to the plan with diligence over an extended period of time.
The above having been stated Social Security is still going to be an important piece of the puzzle. We would like to share three basic facts that everyone should know about Social Security.
You may have noticed that you are not receiving an annual Social Security statement in the mail anymore. The practice has been discontinued as a cost-cutting measure, but you need this information to be able to make budget projections.
It is still available to you. You can obtain access to your statement by registering an account online at the Social Security Administration website.
Another thing to consider is the application process. You can apply four months before you reach the age at which you become eligible for benefits. You can submit your application over the phone, in person, or online.
The last thing we would like to cover is the eligibility age. At the present time the age of full eligibility is 67 if you were born in 1960 or after. It is 66 if you were born between 1943 and 1954. If you were born between 1955 and 1959 your full eligibility age is somewhere between your 66th and 67th birthdays.
It is possible to begin receiving Social Security when you are as young as 62, but you would not be receiving your full benefit.
To start planning ahead for the future the logical first step is to sit down and discuss everything in detail with a licensed and experienced Reno estate planning lawyer.
Many are concerned that their Social Security will not be sufficient to support them let alone finance the type of retirement that they would like to enjoy. Social Security payments are minimal, with the average monthly benefit being less than $1240 as of this writing. Someone who retired this year having paid the maximum amount into the program over 35 years would receive $2513 per month. Even this maximum benefit is relatively modest when you consider the cost-of-living.
Tthe Social Security Administration recently announced an adjustment to account for inflation in 2013. This year the Social Security COLA was 3.6%, but next year it is going to be just 1.7%. With these modest cost-of-living adjustments the need to plan ahead to feather your own nest becomes all the more apparent.
Medicare Part B is the portion of the program that is devoted to paying for outpatient services and visits to doctors. People who are participating in the program must pay a monthly premium. This premium is deducted from the Social Security payments of seniors who are enrolled in the program. These premiums are going up by about seven dollars per month next year, so this will cut into the cost of living adjustment.
If ydon't want to be concerned about nickels and dimes when you retire plan ahead intelligently, stick to the plan, and live out your retirement dreams.
Comprehensive retirement planning is going to involve deciding where you would like to live after you put your working years behind you. People who live in many of the states have incentives to relocate. Some are looking for warmer climates, and financial matters can enter the equation as well.
Certain states have better tax structures for retired individuals than others, and in fact here in Nevada we are fortunate in a number of ways. Indeed, Nevada residents who are planning for retirement have some incentives to stay right at home.
We are one of the handful of states that does not have an income tax on the state level. This is a huge advantage and it is something to keep in mind if you are considering the possibility of relocating after you retire.
Another thing to consider is the legacy that you will be leaving behind to your loved ones. Some states have an estate tax on the state level. A few have an inheritance tax, and New Jersey and Maryland have both of these taxes on the state level.
There is no type of death tax on the state level here in Nevada.
If you are concerned about taking tax efficient steps as you are preparing for retirement you would do well to consider the advantages that we are enjoying right here in the Silver State. Most people would not want to make a move that results in an increased tax burden at a time when they are going to start living on a fixed income. Also, if you are looking for mild sunny winters, Southern Nevada is certainly a viable option.
Retirement planning requires a firm understanding of all relevant facts, so changes to the Social Security program are certainly something to monitor.
For most people Social Security is going to be an important income stream during retirement. By no means should you depend on it as your sole source of income, if you can avoid it, but it is certainly going to help.
Up until last year the Social Security Administration sent out statements annually to people who have been paying into the program. When you think about the volume of paper involved in something like this and the cost of postage you you realize that this is a very big expense to the government.
Since we live in the digital age and almost everybody is online the SSA made a shift. The statements are no longer being mailed to anyone who is under the age of 61.
However, it is possible to create a My Social Security account on the SSA website and gain access to your statement whenever you would like to see it.
In addition to this there has been a new announcement from the Social Security Administration. As of March of next year paper checks will no longer be an option. Recipients of Social Security are going to have to set up direct deposits or agree to payment through the loading of a special type of debit card.
Officials say that this move along with the discontinuation of some other types of government benefit checks will save some $1 billion over the next 10 years. These savings will certainly be welcomed by those who are concerned about the costs associated with administering the program.
Many people trade up throughout their lives and live in increasingly more valuable homes. This can provide you with an ever-improving quality of life while you put your money into real property. Depending on the markets this can be an efficient course of action all around.
Keep in mind, however, that you will still have to pay property taxes after the home is paid for during your retirement years. Getting a rather large annual bill is something that you have to prepare for when you are budgeting for the future.
Apparently a lot of people fail to do so. At least $7 billion in property tax liens are imposed each year according to the National Tax Lien Association. This statistic includes all people who are delinquent on their taxes and not just retirees,but a number of retirees are at risk when they fail to put adequate money aside for the big tax bill.
Individuals who fall behind on their property taxes can usually arrange for installment payment plans. However, this approach is not ideal because you actually wind up paying more because the county may charge interest. Planning ahead would avoid unnecessary interest.
This is one of the many details that you have to take into account when you are making long-term financial projections. Keep in mind, as well, that as your financial circumstances change, other aspects of your estate planning may need to be adjusted. Contact your estate planning attorney for your regular review and keep your estate up to date.
It is sometimes said that the easiest way to effect change is to change your perspective. This is a principle many discover when planning for their retirement years.
Financial planners and estate planning attorneys are always going to emphasize how important it is to keep your eye on the prize with regard to retirement. Some people follow this advice, but unfortunately many people do not. As a result a significant percentage of individuals find themselves unprepared as they start to see the typical retirement age appear over the horizon.
If you are one of them you may have to change your expectations and adopt a new perspective. This can include the choice to work longer than you absolutely have to in order to make sure that you can retire in comfort.
Working a few years longer may give you a few extra years to pad your retirement savings and this is part of the appeal. In addition you actually increase your Social Security payout when you work beyond your full retirement age as it is defined by the Social Security Administration. Besides the fact that you will continue to have something meaningful with which to fill your time.
You can delay your Social Security application until you are as old as 70 and you accrue delayed retirement credits as a result, which will increase your benefit by 8% per year that you delay your application.
If you enjoy what you do working a bit longer may not be much of a sacrifice, but it could significantly improve the quality of your retirement.
Should you be interested in devising a long-term financial plan with the benefit of expert assistance, don't hesitate to pick up the phone to arrange for a consultation with a licensed and experienced northern NV estate planning lawyer.
Each estate plan is as individual as the person who creates the plan. Having said that, one of the most common components to an estate plan is life insurance. Whether or not you should include life insurance as part of your estate plan will depend on a number of factors; however, there are some things you should take into account when making the decision.
Your age and health. Life insurance is less expensive to purchase when you are younger and healthy, meaning you should be able to lock in the best rates. This is also when most people need life insurance for wealth and income replacement -- before they have other estate assets that can be passed down in the event of death.
Know what kind you are buying. Life insurance falls into two basic types -- term and insurance with cash value such as whole life or universal life. Term insurance only provides a death benefit while insurance with a cash value component potentially earns cash value, as the term implies.
Know your objective. If you only want to provide a financial safety net to your family, sticking with term insurance is likely your best bet. Talk to a financial advisor if you are considering whole life insurance. It can be a complicated investment strategy, but there are benefits that are not available to term policy holders.
Decide how much you need. This can change over the years. If you are young and single, you may only need enough to cover debts and your funeral. As you age, you should factor in what it will cost to raise your children if you die before they reach the level of maturity when they will be able to fend for themselves.
Shop around. Just as with other types of insurance policies the policy rates can vary widely. Take your time and compare rates before you commit. You should also be certain you are dealing with a company that is secure, so look at their rating with AM Best or Standard and Poors.
Know when to terminate or convert. Life insurance is rarely the best way to invest your money, but when it comes time to collect, your loved ones will find that you have provided well for them. Review your financial portfolio and your needs on a regular basis not only with your financial adviser, but your attorney, as well. You may find that you no longer need to include a life insurance policy for wealth or income replacement, but it could be useful in your estate plan as protection from estate taxes, expenses of administration, or other financial burdens of which you may not be aware.
The liklihood that you will need long-term care towards the end of your life is relatively high. Budgeting for this cost is important because contrary to the beliefs of some people, Medicare does not pay for long-term care. If you think you can just simply write a check and be done with it you may not be aware of the extent of the costs associated with long-term care.
Every year the MetLife Mature Market Institute releases a survey that contains a great deal of information about long-term care expenses in the United States. They have just put out their 2011 version, and once again long-term care costs have gone up significantly.
If you were to spend a single day in a private room in a long-term care facility in 2011, the national average cost was $239, which is a $10 increase over 2010 figures or a 4.4% increase. A year in a private room in a nursing home in 2011 averaged $87,235. According to the United States Department of Health and Human Services the average length of stay is between two and four years.
When you see the facts it becomes clear that these are no trifling expenses. To devise a plan that prepares you for all eventualities, including the possibility of long-term care, simply take a moment to arrange for a consultation with a good Reno financial planning attorney.
A recent article in Forbes, quoting statistics provided by the Harris organization, found that out of 1022 people polled only 35% had executed a last will. Among younger Americans the figure was even lower as you might expect, with just 24% of the people who participated in the survey, under the age of 35, had executed either a last will or a living will.
Estate planning is an area where procrastination not only puts that person at risk it also puts there loved ones in a difficult position in the event of death or disability.
Most younger families rely on earned income to maintain quality of life. For this reason, it is essential that such families have an income replacement vehicle. This need is often met through life insurance. Coverage should be revisited as financial responsibilities increase. All families are well advised to implement a sound long-term financial plan. If this sounds like a good idea to you, take the first step and arrange for a consultation with a licensed and experienced Reno financial planning attorney.
There are people who think that things will take care of themselves as the years pass, but the reality is that each of us must take responsibility for our own futures. There is more to planning for the latter stages of your life than simply anticipating your Social Security check and drawing up a last will.
You will eventually have to fund your retirement years if you do in fact expect to retire, and Social Security, even if it still exists in its present form by the time you retire, is probably not going to be enough. So if you want to be truly prepared you must anticipate your expenses and devise a plan that enables you to meet them comfortably.
There's also the possibility of incapacity. Approximately four out of every ten people who reach the age of 85 are suffering from Alzheimer's disease according to the Alzheimer's Association. Alzheimer's causes dementia, which can make it impossible for its victims to render sound financial, personal, and medical decisions. If you were to become incapacitated without making any advance plans, the court could appoint a guardian of its choosing to act in your behalf and you would become a ward of the state. This is a possibility that can be circumvented through the execution of the appropriate durable powers of attorney.
Of course there is also the matter of your legacy. Do you have specific things in mind that you would like to be able to do for your family members as your final act of giving? Do you perhaps have the desire to give something back to your favorite charitable organizations? If you do, these intentions will have an impact on your budgeting for the period of time that precedes your passing.
Because of all the different matters that must be addressed, it is a wise idea to tap into the expertise of an experienced estate planning attorney who has a thorough understanding of retirement and estate planning. He or she will advise you appropriately so that you can be sure that all of your bases are covered as you enter the latter portion of your life.
When you pass away, your estate will either be solvent or insolvent. What does this mean? And more importantly, why do you care?
A solvent estate means that there are enough assets to cover your outstanding debts and still provide some form of an inheritance to your heirs.
If your estate is insolvent, you don’t have enough assets to cover your debts and your heirs end up with nothing. How can this be, you wonder?
Before your heirs can inherit any portion of your estate, your outstanding debts must be settled. There is a legal procedure for this of course, and any creditors wanting to file a claim against your estate must do so within a certain amount of time.
However, if a creditor does file a claim and the debt is valid, your executor or personal representative must use funds from the estate to pay the debt. If there aren’t enough liquid funds, the executor will sell off assets to create the cash needed to cover the debts.
The more debt you have when you die, the more assets that may need to be sold to pay off your debts. If your outstanding debts are greater than the value of the estate, there won’t be any assets left for your loved ones to inherit. To prevent this scenario, you need to start planning now.
Good estate planning attorneys can help you draft a plan that addresses your debts and earmarks funds and/or assets to cover them. This will ensure that your loved ones receive the heirlooms and inheritance you want them to have.
To learn more about debt planning, get in touch with the Reno estate planning lawyers at Anderson, Dorn & Rader, Ltd.
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With a Roth IRA, your contributions (and the interest they earn) can be withdrawn tax-free. While this tax benefit may be the most significant aspect it offers a few more perks as well.
For starters, the Roth IRA is a contact that directs the payment of the balance of the account at your death to your designated beneficiary. So any funds that remain in the account when you die can be passed to your designated beneficiary without probate. But unlike other retirement plans, it doesn’t require you to begin withdrawing money at age 70 ½.
With a traditional IRA, for example, you must make minimum withdrawals beginning at age 70 ½. This amount will vary depending upon your age and the age of your designated beneficiary. The reason for this requirement is to ensure that you – not your beneficiary – receives the bulk of the funds in your IRA before you pass on.
A Roth IRA, however, doesn’t require you to withdraw any funds. So, unless you need the money, you can just leave it in account where it will continue to grow. Upon your death, all the funds will pass to your beneficiary, income tax-free.
To learn about more ways to avoid probate, contact the Reno, NV probate lawyers at Anderson, Dorn & Rader, Ltd. today!
Are you thinking about creating joint accounts to avoid the process of probate? These co-owned accounts are a common way to assure that your funds pass quickly to your loved ones without the need for probate. You should be aware, however, there are some pitfalls involved in joint accounts that you will need to consider.
A joint account can transfer to the surviving account holder(s) upon the death of another joint owner. For this to happen, the survivor(s) will need to provide a death certificate to the institution where the account is held.
Perhaps you wish for more than one person to inherit the money in a joint account. Unless their name is on the account, they will not, even if you have so stated in your will or trust. The only way for another person to have a share of this money, if they are not on the account, is for the surviving account holder(s) to gift it to them. Because the funds in the account are now owned by the survivor, making such a gift may cause your loved ones to pay a gift tax if the gift is over the annual exclusion amount.
Another issue arises when one of the account holders has not contributed money into the account. When this is the case, if the account owner dies and the money passes to non-contributors, these funds may be considered a gift and the gift tax may be applicable.
Joint accounts are especially troublesome when there are creditors of one of the account holders. If one of the account holders loses a lawsuit, the account may be frozen or garnished to cover the liability. For this reason many people should avoid holding joint accounts.
What if you wish to leave your account holdings to a child who is still a minor? If you put the child on your account, upon your death your account will be controlled by a court appointed guardian until the child reaches eighteen. Then at age eighteen the entire account is available to that young person.
It is usually a better option to have the accounts held in a revocable living trust. In the event of disability, the trustee will still have access to your account, but their creditors will not. If the beneficiary is still too young, it can remain in trust and made available for their education and other needs, but not turned over to them until an age when they are more likely to have matured.
Joint accounts can be one among many useful estate planning tools. They are simple to set up and administer, but they may have serious disadvantages. Be sure to visit a qualified estate planning attorney to become fully informed.
