Get Ready for 7 Serious Life Transitions Ahead

Get Ready for 7 Serious Life Transitions Ahead

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  ADVISOR/CLIENT EDUCATION BRIEF GetReady for 7 Serious Life Transitions Ahead !"#$%&'()#*%+",-#.*/0 Most baby boomers will face seven key events in their last stage of life that will color their finances and investments. Prepare for these events by thinking about them now. It can be dangerous to generalize about the baby-boom generation, but there are seven key events that nearly InsurMark everyone will face as they move through the last third of 820 Gessner, Suite 970 their lives. Unlike earlier, happier events such as getting Houston, Texas 77024 married, having children, and moving up the career ladder, some of these events may be anticipated with dread. For 713.973.7575 this reason many boomers may put off facing them. But 800.752.0207 lack of preparation can make a bad situation even worse. Fax 713.973.5252 Warning: the terminology used here is rather blunt. 1. Your parents will get old If your parents are still living active lives, you will have to face the fact that your parents will eventually get old. You should start thinking about this now and begin gathering resources so you won’t be at a com- plete loss when your parents can no longer function independently. There is nothing worse than to discov- er that a parent has lost the ability to pay bills, make nutritious meals, or seek proper medical care when a little attention and advance planning can allow you to step in before their parents harm themselves. Here are some of the things you should begin discussing with your parents: Health status. As parents age and the possibility of medical complications increases, make yourself aware of your parents’ health status. Long-term care. Every family needs to consider the possibility that the parents may someday become unable to function independently. What type of care would your parents want? What plans have they made to pay for it? !"#$%&'()*+*,-..*/00123456"%4147"3)(8*99!:**/;;*<&'()4*<141%=1>: 9&?1041*@A*6B/CD,-../ |1
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  Power of attorney.By signing a durable power of at- expenses. These may include premiums for Medicare torney for health care and a durable power of attorney Part B (outpatient care) and Part D (prescription for finances, your parents can appoint you or another drugs) as well as the costs of alternative treatments family member to step in and make decisions and and other private-pay services for boomers who want execute financial transactions should they become the very best in health care. unable to do so. 4. You will reach retirement age Estate planning. Do your parents have a will? Does an existing will need to be updated for new grandchil- Whether or not you ever plan to retire in the tradi- dren or other family members? tional sense of the word — and many studies have shown that you won’t — the vast majority of boomers will reach traditional retirement age. This is the age 2. Your parents will die at which you may take advantage of certain tax ben- Sorry to be so blunt about it, but this is the natural efits and entitlement programs developed under the order of things. You will face both emotional and traditional retirement system. Boomers who aren’t financial issues when your parents die. Go to A Healing thinking about retirement as such will still want to Place (www.ahealingplace.org) for insights and take advantage of them. resources that can help with the emotional issues. As far as financial matters go, this is what you will face: Social Security. Full retirement age is the age at which full Social Security benefits may begin. The estate must be settled. If you’ve never For baby boomers born between 1943 and 1954, experienced a death in the immediate family, you full retirement age is 66. You can apply for Social may not realize that there are many steps involved in Security anytime between age 62 and 70. Get some settling an estate. Knowing about these ahead of time help deciding when is the best time to file. will help prepare you for your responsibilities. Medicare. To avoid a 10% penalty on Part B Inherited assets must be managed. Financial premiums, you’ll need to apply for Medicare at age institutions across the nation are just waiting to 65 unless you are covered by a health plan at work. swoop down on boomers who will be receiving some Go to www.medicare.gov for more information trillions in inherited wealth. Find an advisor now on Medicare. that you can trust so that if and when you come into these assets, you’ll have a ready source of guidance. Tax issues. The IRS calls people age 65 and older “the elderly.” Boomers are not likely to identify with this term, but if you can admit to turning 65, 3. You will fight to stay healthy you can claim an extra standard deduction for the Boomers are starting to come to terms with aging, elderly and/or blind. See IRS Publication 554, “Older but serious illness is still largely unexplored territory Americans’ Tax Guide,” for more tax issues that will for most of them. More and more, boomers will be come up as you age. paying attention to their health, either working hard to stay healthy or managing chronic illnesses. Here is 5. You will need to manage multiple sources of income a glimpse of what’s ahead: Even boomers who say they’ll “never retire” will Navigating the health care system. Boomers who likely have multiple sources of income that will need have been healthy all their lives will be in for a shock to be managed. These may include the following: if they encounter insurance deductibles, co-pays, and denied claims resulting from inadequate insurance Self-employment income. Boomers who leave and lack of preparation for expenses they thought their primary careers to do consulting or freelance would be fully covered. work will need to ensure that this new form of income is adequate to meet their needs and that they High out-of-pocket costs. Even with private health make estimated tax payments as necessary. They will insurance and/or Medicare, many boomers will also need to consider how their earnings will affect find themselves paying out-of-pocket health care their Social Security benefits. Copyright  ©  2011  Annexus/Horsesmouth,  LLC.    All  Rights  Reserved. . * License  #:  HMANX2011A 2|
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  IRA distributions. Whetheryou start these early 7. You will die under a program of substantially equal periodic payments or wait until you are forced to take Again, sorry to be so blunt, but you know it’s going to required minimum distributions at 70-1/2, you will happen. Boomers seem to be somewhat more open to need advice and counsel on how to plan out your contemplating their own deaths than their parents’ IRA withdrawals over your remaining life. generation, perhaps because they still see it as a long way off. Investment income. If you are used to receiving Life expectancy. Go to the Real Age website (www. regular paychecks from an employer, you’ll need to realage.com), and take a test to find out your “real shift your mind-set toward paying yourself. That age” along with health tips that will help you “live means carefully managing all investment accounts to life to the youngest.” ensure sufficient inflation-adjusted lifetime income. Legacy planning. As they review their lives, boomers 6. You will get old are starting to consider legacy planning and ethical Boomers can barely imagine it now, but like their wills. This life-centered approach to death can lead parents, boomers themselves will get old someday. to some of the estate-planning tasks you should be And they — and their children — will face the same executing now, including advance directives and wills. issues you faced when your parents were getting old. What types of assisted living arrangements will you want to consider? How will you pay for it? What can you do now to make this phase of life more comfortable? Another term that is commonly used under traditional retirement and entitlement systems that boomers tend not to relate to is “disability.” Definitions vary depending on the program, but any boomer with a chronic illness or condition may qualify for various private or public disability benefits. !"#$%&'()*+*,-..*/00123456"%4147"3)(8*99!:**/;;*<&'()4*<141%=1>: 9&?1041*@A6B/CD,-../ |3