Saturday, January 19, 2013

Secure Your Retirement - A New Year Resolution

By:  Susan M. Graham, Certified Elder Law Attorney, Senior Edge Legal, Boise, Idaho

A new year is the time to take a deep breath, and make a fresh start.  There were probably things you did or did not do in 2012 that in hindsight you wish you had done.  That’s just life repeating itself.  No matter, you still have a chance to improve your retirement future.

The Wall Street Journal recently identified “Five Big Retirement Mistakes”[1]

         1.  Not paying for financial guidance.  Most people pay for an accountant to do their taxes and an attorney to write their estate planning documents, but they often expect free advice on how to invest their assets.   The financial people have the ability to plug your assets, income, expenses and other variables into computer programs that will help you project your financial future.

         2.   Investing in something you don’t understand.  If you can’t explain how your investments work to someone else, then don’t buy it.  

         3.  Supporting your adult children.  If you co-sign on a student loan, on a house mortgage or on a car loan that means your child does not have the financial ability to get the funds.  You are on the hook when the child does not pay.  Last month, one of my clients told me they co-signed on a son’s house and now the house is in foreclosure.  My clients will be responsible to make up the difference between the house sale and the mortgage that is much larger than the house is worth today.  What does that mean for them?  They will have to pay over $50,000, a huge part of the nest egg they set aside for their retirement. 

         4.   Lowballing eldercare costs.  Most people ignore the reality of aging.  Look around you.  Older people more often than not need help with daily living activities.  Expecting family or friends or the government to provide this assistance is an unrealistic fantasy.  The cost of home care is approximately $25 per hour or $200 per day for an 8-hour shift. 

         5.    Underestimating how much you will need.  This issue goes back to the first point, talk to a professional financial person to help you get a more accurate picture of what it will cost to live the lifestyle you want for the rest of your life no matter how long that will be.  You may live longer than you anticipate.   My father-in-law planned to be dead at age 80 and was irritated at the surprise birthday party I arranged.  I took him aside and asked why he was so grumpy when I had set up such a grand party.  His answer:  “I don’t not want to be 80.”  I told him “get over it”--you are stuck.  My Cousin Kathie never dreamed that she would be 99 when she died after living in a nursing home the last 4 years of her life, paying over $8,000 per month for her care. 

         6.  What can you do to create a more secure retirement?  Follow the steps outlined above.  In addition, make certain your estate planning documents are up to date.  Are your agents still available to help out when you need them to step up if you are unable to care for yourself or when you die?  Do your planning papers reflect your current wishes or have things changed and you need to adjust your documents? 

         The security of your future is in your hands.  Start the process by talking with a professional: a financial person, your accountant or lawyer to cover all the bases.

         Happy New Year!

[1] Five Big Retirement Mistakes, Ellen E. Schultz, The Wall  Street Journal, p B9, December 29, 2012


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