Tuesday, May 3, 2016
Harvard Law Professor Robert Sitkoff made his contribution to the Last Lecture series with his March 29 lecture titled ‘Hope for the best; plan for the worst.’ This article provides a video of the lecture delivered by Mr. Sitkoff, who is an expert in trusts and estates. “The Last Lecture Series, which is organized by the Class Marshals, asks popular HLS professors to give lectures addressing the graduating class.” The main goal of the lecture was to discuss private law and to distinguish it from public law. He discusses ways that the private law practice can be improved and how lawyers need to address their client’s concerns. Another thing that he discusses is how law schools can work to improve the legal education that is provided to students to help get them more prepared for private practice.
See Raishay Lin, A trust and estates lawyer’s ‘last lecture’: ‘Hope for the best; plan for the worst’, Harvard Law Today, April 27, 2016.
Monday, May 2, 2016
This article provides important information that people need to know about Social Security. People need to be aware of the fact that the full retirement age is changing, and this article offers a chart that shows the ages which the changes will effect. The age that a person claims matters for how much benefits they will receive from Social Security, and the maximum age a person should start claiming is 70 or older. The benefits that a person receives are based on 35 years of working. It is also important for people to be aware of widow and survivor benefits. Married couples should coordinate their Social Security planning with each other. Being informed about Social Security techniques and when to claim can save people a lot of money.
See Casey Fleser, What You Don’t Know About Social Security Could Cost You, The Motley Fool, May 2, 2016.
During difficult financial times people may need to have immediate access to a source of cash. This article discusses the issues with cashing in a life insurance policy to meet immediate income needs. “Cash-value life insurance, such as whole life and universal life, builds reserves through excess premiums plus earnings.” There is a cash-accumulation account within the policy that holds these deposits. “Learn the differences between these two types of insurance in Permanent Life Policies: Whole Vs. Universal.” This article describes some of the consequences that can occur with cash-value withdrawals from a life insurance policy. It also describes how most of the cash-value insurance policies permit people to borrow money from the issuer by using their cash-accumulated account as collateral. People can also surrender (cancel) their policies in certain circumstances. Finally, this article describes the life settlement concept.
See David Rando, Cashing in Your Life Insurance Policy, Investopedia, May 1, 2016.
Friday, April 29, 2016
Congress has recently made many changes to Social Security. This article wonders if there are any good Social Security strategies left that people can still use. The file and suspend technique was done away with at the end of this month of April. Another loophole being done away with is the “deemed filing” loophole which “allowed married couples to claim just a spousal benefit at their full retirement age, while allowing their own benefit to grow and accumulate delayed retirement credits until age 70.” This article discusses some alternative Social Security strategies that married couples might be able to use. “One strategy that could work well for married couples is to have the lower earner apply for benefits on time, while the higher-earning spouse waits and lets their own retirement benefit grow.” There are also more policy changes that will likely be made in the future as congress attempts to fix Social Security funding issues.
See Matthew Frankel, Did Congress Kill All the Good Social Security Strategies?, My San Antonio, April 29, 2016.
The file and suspend strategy that spouses use with Social Security was done away with in the Bipartisan Budget Act of 2015. Today is the last day that file and suspend will be available as an option. “This option allows filers to apply for their benefits and then immediately suspend them and allow them to grow into a larger benefit in the future and collect spousal or other family benefits in the meantime.” Those who have been caught unprepared and failed to use the file and suspend strategy by today’s April 29 deadline may still be able to use a Form 795 to buy an extra six months to get the actual filing done. In order to qualify the person should be at least 66 years old and must file the Protective Filing Statement using Form 795 by today.
See Mark P. Cussen, Late to File and Suspend? File Form 795 for an Extension, Investopedia, April 28, 2016.
This article examines the growing trend of senior citizens living with friends in their old age. There are two events coming up that this article mentions. “April 30 is National Cohousing Open House Day, when more than 90 cohousing communities around the country will welcome visitors for tours and Q&A sessions. Then on May 20 and 21, a national cohousing conference, Aging Better Together, will take place in Salt Lake City.” Cohousing is becoming a more attractive and affordable option for senior citizens who are looking to cut down on expenses. This is a new developing industry that will likely expand in the upcoming decades. This article attempts to provide accurate information to dispel many of the popular misconceptions that people have about cohousing.
See Denise Logeland, The Pros And Cons Of Living With Friends In Older Age, Forbes, April 29, 2016.
Wednesday, April 27, 2016
High-deductible health insurance plans can be a double edged sword for consumers. There are many consumers who enjoy the lower premiums, but might get into a difficult bind if hit with a serious illness. The insurance industry has been offering critical illness insurance to allay fears about the financial impact of having a serious illness. The coverage limits of these policies can vary tremendously and many consumers are attracted to the affordability of a lot of these policies. These policies are growing in popularity though there are some health industry experts who express skepticism about what they offer. It is a good idea to do careful research into any policy that is being considered. This article also mentions alternative options that consumers can consider when planning for health care expenses related to a serious illness.
See Daniel Kurt, What Is Critical Illness Insurance?, Investopedia, April 27, 2016.
Tuesday, April 26, 2016
Surviving spouses are the only beneficiaries who can roll over a deceased spouses IRA into their own IRA, but this might not always be the best option. Whether rolling over an IRA is a good idea will depend on the circumstances. It is important to remember “that if you roll it into your own IRA, it is treated as if it were always yours. If you are under age 59½ and roll the money into your IRA, you will have the 10% early distribution penalty to contend with should you want any cash.” There are circumstances when it might be better to just leave the money in the inherited IRA. It is a good idea to speak with an experienced estate planning professional about whether rolling over an IRA is a good decision.
See Dan Moisand, Spouses have special powers when inheriting IRAs, Market Watch, April 22, 2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Monday, April 25, 2016
There are a growing number of senior citizens who are turning towards short-term care insurance policies. The sales of short-term care insurance policies has increased significantly over the past few years. “Short-term care insurance policies generally provide coverage for up to 360 days and can pay for home care assistance, assisted living and skilled nursing home care costs.” The purpose of this type of coverage is to help cash strapped senior citizens fill in the gaps for certain things that other sources of income are not sufficient for. The vast majority of buyers of short-term care insurance, more than 90 percent of them, are over the age of 60. As the elder population continues to grow the cost of certain types of end-of-life healthcare will likely skyrocket and these types of tools may become increasingly necessary.
See Karen Demasters, Short-Term Care Insurance Policies Increasing In Popularity, Financial Advisor, April 25, 2016.
A person’s personal life expectancy plays a key role in decisions that they make about Social Security. Taking out early benefits can have consequences for the amount of benefits that a person will receive. For single retirees that don’t have any children the decision about whether to take out early Social Security will often depend on their health and life expectancy. Things get more complicated when there is a spouse or other family members involved who can claim as beneficiaries. There is also a possibility that lawmakers might change Social Security policies in the future because the average life expectancy is continuing to rise. Any potential policy change will have an impact on whatever retirement planning a person has done and plans to do in the future.
See Dan Caplinger, How Does Life Expectancy Affect Social Security Decisions?, The Motley Fool, April 24, 2016.