Important documents to consider

1. Medical Directive

This document, which is also known as an “advance directive,” is extremely important should you become seriously ill or incapacitated. The directive specifies the extent of care you wish to receive. Some individuals, for example, prefer not to pursue heroic measures to save their life or to be kept alive on artificial support. Your medical directive will address details such as whether you want artificial support from a ventilator to help you breathe or a feeding tube. This provides clarity, comfort and guidance to family members, and protects them from a lifetime of doubt about whether they did the right thing.

2. Power of Attorney

• For Healthcare – While the medical directive outlines what we want to happen with our care, a medical power of attorney gives the person we designate the authority to ensure those wishes are carried out. By appointing someone with the power to make healthcare decisions on your behalf, actions can be made quickly and confidently should you become unable to make them yourself. Otherwise, they may be required to petition probate court to be appointed as a conservator, which can be a slow and very costly process.
• For Finances – A financial power of attorney allows a designated person to oversee an incapacitated loved one’s financial affairs, such as the payment of bills, handling their property including its sale, contracting for services, making living arrangements, and taking care of other monetary obligations.

3. Revocable Trust

This allows a designee to control your estate while making transfers of assets to beneficiaries. The creator of the trust will designate what property — which could include their home, investments, and personal property like heirlooms and jewelry — goes into the trust and to whom it will be granted. During their lifetimes, the creator of the document will act as executor of their own living trust. According to legal experts, a revocable living trust has several important advantages when it comes to dividing an estate, two of the most important being:

• Allowing the estate to avoid probate at the time of the creator’s death, which can be a lengthy, tedious, and costly process in which the court administers the distribution of the estate. If the estate holds property in multiple states, it could further complicate matters by requiring probate in each state involved.
• Ensuring privacy, unlike a will which becomes a matter of public record.

A revocable living trust is one of the most important documents for older adults to have in their estate planning portfolio. It gives them control of their assets as long as they are able to manage them. An important thing to remember is that a person doesn’t need to be wealthy for a revocable trust to make sense. A life insurance policy, checking accounts, house, or other personal property justifies the establishment of a revocable living trust.

4. Will

Likely what comes to mind when most of us think about getting our affairs in order, a will is a legal document that lets you specify who should receive certain items from among your belongings after your death. Wills also can allocate assets and designate caregivers to provide for dependents and other people important to you long after you are gone. Not just for the elderly, wills are a good idea for anyone with valuable property, even if it’s only of sentimental value. People’s wishes often change throughout the course of their lives and they may update their will several times through the years.

How to get your documents drafted

Now that you know what you need, how do you go about getting your documents in order? The best thing to do is to talk to a family law attorney who can assist you in getting your affairs in order with all the paperwork you need in one sitting. Be sure to ask about the lawyer’s fees before you make an appointment, so you’re not surprised later by the bill. Please note, a lawyer isn’t necessary in creating a medical directive. Most states provide the forms for free, and you can complete them yourself. Learn more about completing an advance directive on the National Institute on Aging’s website.

Now what?

After your papers are completed, what should you do with them? Keep your important papers and copies of legal documents together in a secure place. For added security, you might consider getting a fireproof and waterproof safe to store your documents. If your papers are in a bank safe deposit box, keep copies in a file at home.

Visit Bethesda’s Finance & Planning blog for more tips for seniors.

The post Getting Your Affairs in Order: 4 Legal Documents Every Senior Should Have first appeared on Bethesda Health Group.

Despite the best laid plans, however, many of us will have to deal with the expenses of senior care sooner than we would like. Many end up being a caregiver in some capacity for one or both of their senior parents, assuming responsibility of a situation for which they had little opportunity to prepare.

No matter how well things seem to be going, now is the ideal time to begin talking with Mom or Dad about financial planning for seniors, their healthcare needs, and their wishes for the future. Planning before a potential emergency situation is the best way to make sure things go as smoothly as possible when the time comes, and to ensure that all their wishes and needs are met.

What You Need to Know About Financial Planning for Seniors

• Does your senior loved one(s) have any money in savings? If so, how much?
• What are their current and future sources of income?
• Do they have any investments? Do they have any insurance policies and, if so, do they include a long-term care plan?
• Are they using the services of a financial advisor or an accountant? Do they have an attorney?
• Are there any medical conditions your senior loved one is contending with that could affect their care needs in the future?
• Is it their preference to remain in their home as their health needs increase or do they see themselves receiving care in a senior care community? Would there potentially be any health changes or developments that could change their minds?

Once you’ve entered into your elderly parent’s financial planning process, it’s important to keep the lines of communication open and to stay on top of things. Financial documents should be kept organized and always remain accessible. Important documents including bank statements, wills, powers of attorney, investment statements, and insurance policies should be reviewed and updated periodically. Even If your Mom or Dad is still capable of taking care of their finances now, it’s important that you have insight into what’s going on so you don’t miss a beat if things get handed over to you. Once you’ve established what financial resources you have to work with, have a conversation with your loved one to discuss what their wishes and anticipated needs are for the future.

What You Can Do Now

• If your senior loved one hasn’t already, seek professional advice for them about planning for their future, both financial and legal.
• Investigate what benefits are available for their specific situations. Often, public benefits are available to help pay for senior care. For example, military veterans and their spouses may qualify for certain government programs including Medicare and Social Security. It’s important to know what is available.
• Understand their finances, even if your senior loved ones can still handle things themselves. Instead of waiting until problems arise, a caregiver or next of kin should be aware of their spending habits and bank accounts, which will prevent any financial issues from getting out of hand.
• Protect your elderly parent from scams. Unfortunately, money stealing schemes are becoming all too common, both over the telephone or over the internet through fraudulent emails or hacking. Caregivers and family should be aware of the real possibility that their elderly parents could have their life savings stolen from them in a single moment. Being protected online and aware of common scams is crucial in preventing them from becoming another victim.
• Discuss with your senior loved one what adjustments need to be made now to prepare for the future. Should they downsize or cut back to boost their savings? Are their investments appropriate for their age and their needs?

Don’t Lose Yourself

Admittedly, accepting the responsibility of managing your parent’s finances is going to take up valuable time and add to your stress level, and it’s important to remember that you still need to take time to care for yourself. After all, if you’re not well, you won’t be able to provide your senior loved one with the help they need.

Taking part in financial planning for seniors doesn’t have to be overwhelming. Don’t let it become a second full time job. At Bethesda, we know you want the best for your senior loved one, so we’ve assembled a team of experts to make sure they have all the resources and services available to them while ensuring that all their care needs are covered. Bethesda can help answer your questions and learn more about what to expect. Contact us today!

Interested in more tips on finances? Visit our blog for more information.

The post Top Financial Planning Tips for Senior Caregivers first appeared on Bethesda Health Group.

Advance care directives don’t only account for unpredictable medical occurrences such as strokes and heart attacks. A car accident, a trip and fall around the house, or even a workplace injury are all examples of everyday happenings that could strike anyone at any time, regardless of age or physical ability, leaving the senior incapacitated and unable to make their own decisions.

No one wants to think about having to contend with a healthcare crisis, but addressing it in advance can help avoid stress and strain both now and in the future. Still, polling indicates slightly more than half of people – only 56 percent – have discussed what their senior parents want.

Discussing advance care directives will not only help you to know the answers to specific questions about unpredictable medical occurrences, but it will also give you insight into your senior parent’s thought process and help you to understand what they truly would want in situations you might not be able to anticipate. You’ll be empowered to act as the authoritative voice that speaks for someone who can’t speak for themselves.

Benefits of Advance Care Planning Include:

• Peace of mind for both you and your senior loved one, knowing that should an unforeseen issue come up, you’ll know how to make decisions aligned with their wishes.
• Treatment options are advancing and evolving constantly, so keeping an open dialogue about preferred healthcare decisions can help you to stay on top of the changing times and the choices that are available for your senior loved one.
• Breaking the ice on this sensitive topic should make it easier to discuss other important topics and open lines of communication between you and your senior loved one.
• When an emergency arises, you won’t feel the pressure of trying to weigh all the options when seconds count and the atmosphere around you is chaotic.
• If you reach the point where you must opt to withdraw care, knowing that you’re carrying out your senior loved one’s wishes can lessen the pressure of an already stressful situation.
• Making the tough decisions now and letting the rest of the family in on the role you’re playing in the process will hopefully help to avoid drama and hurt feelings should the need to advocate for your elderly parent’s end-of-life wishes arise. Most people, especially adult children, don’t want to learn they were left out of the decision-making process regarding their parents, when emotions are raw.

Knowing your senior loved one’s wishes will ensure that their beliefs and values are represented when it comes to making life and death decisions. In some cases, mapping out advance care directives may be the only way they can guarantee having a say in their treatment at all. Additionally, in absence of clear direction otherwise, incapacitated patients may be given treatments they would not have opted for, like being placed on life support.

What do you need to know? Advance care decisions can include:

• Consenting to tests
• Consenting to surgical procedures
• Starting or refusing treatment or withdrawing life prolonging measures
• Admission or discharge from a medical facility
• Moving into or receiving personal care in a long-term care home

Consider this: What if you are a senior who hasn’t empowered someone to be your advance care advocate? Choosing the right person to represent you is just as important as the decisions themselves. You should seek someone who doesn’t panic in high-pressure situations, and who you can trust to stick to your wishes even if they don’t necessarily agree with them. Make sure they would be capable of clearly communicating your wishes in a definitive way.

The person you choose as your healthcare decision maker should be someone truly interested in your well-being and your happiness. It’s important that they’re a firm decision maker and that the other people in your family know that you have appointed them with this role. The last thing you want to happen is family members finding out during a crisis that someone else has been named the final authority. This can lead to questions over whether or not the person’s ability to make decisions is legitimate.

Visit Bethesda’s Health & Wellness blog to explore health warning signs and preventative plans.

The post The Importance of Advance Care Planning first appeared on Bethesda Health Group.

That’s right: Millennial caregivers.

And this generation of Americans in their 20s and 30s has definite ideas of what the federal government and employers should do to help people deal with the financial and personal strain of long-term care.

Millennial Caregivers May Lead Government to Act on Long-Term Care

Millennial caregivers are expected to strongly encourage policymakers to pass legislation targeted at relieving the financial burden of caregiving, while pushing employers to embrace caregiving as a workplace benefit. Because Medicare generally doesn’t cover long-term care and Medicaid only offers benefits to the lowest-income Americans, the changes favored by millennials would offer welcome financial relief to family caregivers of any generation. Millennials and seniors alike are lobbying to bridge this gap.

Millennials pay a substantial price for caregiving, according to AARP. Its study found that 73% of millennial caregivers work, and more than half of them say caregiving has interfered with their jobs. They’ve received warnings about performance, turned down promotions and taken other actions that could jeopardize their long-term financial security.

AARP figures millennials pay an average of $6,800 a year in out-of-pocket costs to meet their caregiving responsibilities—a higher percentage of income than other generations.

Top Sacrifices of Millennial Caregivers

The AP-NORC study, Younger Adults’ Experiences and Views on Long-term Care (funded by The SCAN Foundation), said the top sacrifices among millennial caregivers surveyed were:

• Free time
• Leisure and sleep
• A sense of self
• Personal life and privacy
• Career work and education

“How I balance work and caregiving is a big issue,” says Jean Accius, AARP’s vice president for independent living/long-term services and supports.

Where Millennials Stand on Public Policy and Long-Term Care

According to the report, just over 60% of millennials AP-NORC surveyed favored a variety of public policy proposals as well as a recent law aimed at helping people with the costs of long-term care. But fewer millennials supported these than did people 40 and older; 70-81% of the older respondents endorsed these ideas.

Take Medicare Advantage, the comprehensive Medicare health plan offered through private insurers with a designated network of health providers. Legislation known as The CHRONIC Act — Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care — lets Medicare Advantage add long-term care supports and services to coverage. The AP/NORC survey found that 65% of millennials and 81% of people 40+ like that idea.

Similarly, 62% of millennials surveyed approved of tax breaks for purchasing long-term care insurance (such write-offs are limited today to certain taxpayers who qualify); 75% of people 40+ liked this idea.

A full 60% of millennials (and 70% of people 40+) said they’d actually like to see a government-administered long-term care insurance program similar to Medicare.

Millennials Want Employers to Support Long-Term Care Needs

Millennials are especially enthusiastic about employers stepping up – 81% said employers should offer long-term care insurance plans as a benefit. And 62% want to see such a benefit made portable, like COBRA is for employer-sponsored health insurance; 74% of those 40+ felt this way.

But most of these ideas will only help marginally, at best.

For instance, the private long-term care insurance market is shrinking; insurers selling the policies are reducing benefits and hiking premiums. And although COBRA turns an employer-sponsored health insurance plan into a portable benefit, it’s an expensive option, especially if an employee has lost his or her job.

Movement in Washington to Help Caregivers and Care Recipients

Fortunately, there’s been some activity stirring in Washington to help family caregivers and people needing long-term care.

The legislative change that opened up Medicare Advantage to long-term care is potentially a big deal. And the Recognize, Assist, Include, Support and Engage (RAISE) Family Caregivers Act, directs the U.S. Department of Health and Human Services to create an advisory council to recommend strategies that would help family caregivers. Employers will have a seat on this council, and they seem to have heard their employee’s caregiving message.

“Employers see the value of support,” says Accius. “They lose talented workers. It’s a retention opportunity.”

Congress is far from receptive to ramping up another universal government benefit these days. Nevertheless, the odds are improving that family caregivers may get greater support from policymakers and employers over the next few years. Nowhere near what’s needed. But a step forward.

Still, even a modest move counts as progress.

Find more Caregiver Tips and Senior Financial news on Bethesda’s blog.

By Chris Farrell for Next Avenue

© Next Avenue – 2018. All rights reserved.

The post Millennial Caregivers and Long-Term Care Coverage first appeared on Bethesda Health Group.

Providing they are able to retire when the time comes, that is, because the price for being a caregiver is not only physical and emotional, it is financial as well.

According to AARP, family caregivers dedicate approximately 20 percent of their annual income ($7,000 per year on average) to cover care services for their senior loved ones. There are other ways caregivers put their financial future at risk.

Caregivers Raid Their Retirement Accounts

A study by the Transamerica Institute reveals that, “Almost 18 percent (of caregivers) say that they have taken a loan, hardship withdrawal and/or early withdrawal from their retirement accounts as a result of becoming a caregiver.”

Caregivers Curtail Their Careers

Given the average age of caregivers, many would be at the peak of their earning power. However, the time and energy they devote to their senior often reaches a point where they feel they must reduce their hours or quit work altogether. This not only immediately reduces or eliminates income, it makes it almost impossible to earn future promotions and employment opportunities.

Take Stock in What You Want and Need

It is easy for a caregiver to become preoccupied with the challenges of being a caregiver and lose sight of protecting his or her own future. However there are some basic questions to ask yourself.

• What do you want your retirement to look like?
• At what age do you want to retire?
• Do you or your spouse require care for chronic illnesses?
• What resources are available in your community to assist you?

There are also financial considerations. For example:

• How much money will you need to retire?
• What funds have you accumulated through investments?
• What will your social security benefit be?
• Are you entitled to other financial or medical benefits?
• What are your current expenses and how will they change as you age?

Find Experts to Help

Arriving at a viable retirement plan can be a complex and confusing challenge. However, financial planners, elder-law attorneys, or geriatric care managers can help you sort through the process.

Financial advisors can create strategies for reducing your financial risks while caring for your loved one. As well as financial planning, they can assist with investments, taxes, and wealth management.

Elder law attorneys handle a wide range of legal matters for older or disabled people. Their services include retirement and estate planning, and Social Security and Medicare/Medicaid benefits.

Geriatric care managers have a wealth of experience and knowledge for people as they age, including expertise in health care, explanation of benefits like those provided by the Veterans Administration, planning for long-term care, and home health resources.

Aside from assisting the caregiver’s senior, all these professionals can provide recommendations for the caregiver’s future retirement while reducing the current cost of care for the senior loved one.

Protect Your Future

The emotional pressure and difficult decisions involved in being a family caregiver can be enormous and can lead the caregiver to sacrifice his or her own future.

If you feel you must reduce your work hours, see if your employer can provide a work-at-home opportunity. At the very least make your boss aware of your situation with your senior. Of course, during this COVID-19 pandemic, there are a staggering number of unemployed people in the U.S. and drastically reduced job opportunities, which adds to the pressure of trying to maintain employment.

AgingCare provides information on benefit programs for caregivers, including the U.S. Family and Medical Leave Act (FMLA) which allows for up to 12 weeks of unpaid, job-protected leave each year for qualifying workers to care for an immediate family member.

Not every employer or employee is covered by the FMLA. More information can be found on the U.S. Department of Labor website.

Also, outside home care services may be an option that can allow you to work and continue to contribute to your own retirement.

As everyone’s financial situation and family dynamic is unique, planning for retirement is unique to each family caregiver. But the basics are as follows:

• Be aware of the financial costs you are incurring as a caregiver
• Identify your situation and how you envision your retirement
• Enlist the help of an expert if you are overwhelmed
• Try to find ways to protect your financial future

To learn more about planning and preparing for the future, check out the Finance & Planning section of our blog.

The post Planning for Retirement as a Family Caregiver first appeared on Bethesda Health Group.

Estimate Your Retirement Health Costs

It is critical to estimate the overall cost of health care during your retirement years. Estimating involves starting with an accurate number and using an accurate inflation rate. Unfortunately, too many articles on this topic provide an annual cost figure without explaining that the estimate is only for a portion of your overall cost.

To approach the estimate comprehensively, think of your costs in two categories:

• Routine medical costs
• Custodial care costs.

Routine Medical Costs

Routine out-of-pocket costs will include Medicare premiums, Medigap premiums and uncovered expenses. Leaving out any of these areas from your financial plan will lead to underestimating your overall cost. Remember that Medicare benefits begin at age 65.

Most financial advisors have tools to calculate these costs. For example, Jester Financial Technologies estimates that a 65-year-old will spend approximately $6,000 to $9,000 for them in 2015, while most Americans are closer to the $6,000 side. Keep in mind that the higher your taxable income, the higher your Medicare premiums.

Also, remember that health care inflation is historically well above the overall inflation rate. A 6 percent annual inflation rate is realistic for routine medical costs, based on historic rates.

Custodial Care Costs

Planning for custodial care is beyond the scope of this article, but a few thoughts are warranted. The national average for nursing home care is approximately $90,000 per year and in-home care is close to $70,000. Since paying for those costs out of savings is not possible for most Americans, funding a long-term care insurance policy or hybrid policy is the ideal solution.

Change Your Saving and Investing Approach

The next step in planning for retirement health costs is to change your traditional approach to saving and investing during your pre-retirement years.

Since the amount of your annual Medicare premiums is determined by your taxable income, it is important to accumulate assets in accounts that will provide a tax-free cash flow.

A new law will trigger higher Medicare Part B &D premiums for individuals with incomes between $133,500 and $214,000 starting in 2018. As Mark Miller wrote on Next Avenue, those with incomes of $133,000 to $160,000 would pay 65 percent of total premium costs, rather than 50 percent today. Those with incomes between $160,000 and $214,000 would pay 80 percent, rather than today’s 65 percent.

Consequently, it’s now even more important to create sources of tax-free income in order to prevent an increase in your Medicare premiums.

There are two good ways to do this—create Roth 401(k) and Roth IRA accounts. Income from either type during retirement is free from taxation.

If your employer offers a Roth 401(k) option, use it instead of the traditional 401(k), even though you won’t be able to deduct your contributions. Over 50 percent of employers offer Roth 401(k)s, but fewer than 10 percent of employees use them. Since the income from a Roth 401(k) during retirement won’t be taxable, that money won’t push you into owing higher Medicare premiums.

To qualify for a Roth IRA, your income must be below $193,000 if you’re married and filing jointly, and below $131,000 if you’re single. If you qualify, contribute to one and use your catch-up provisions as you approach retirement. The catch-up rule lets people 50 and older contribute up to $6,500 to a Roth IRA in 2015, compared with the $5,500 limit for those who are younger.

Work with your financial adviser and tax professional to convert appropriate levels of existing IRA assets into Roth IRAs. This process involves paying current taxes on the amount converted in order to enjoy tax-free income during retirement. That tax-free income won’t push you into paying higher Medicare premiums. The income limits that prevent some individuals from making a contribution to a Roth IRA do not exist for Roth conversions.

Sign Up for a Health Savings Account

When you reach retirement, why not pay your Medicare premiums with tax-free cash flow from your HSA account? Based on 2015 HSA contribution limits, a 50-year-old couple who puts in the max of $6,650 and earns 8 percent on the money would accumulate approximately $200,000 by age 65.

If you have a high-deductible/HSA eligible health insurance plan, consider using a Health Savings Account (HSA). HSA contributions are tax-deductible, and earnings are tax-free. Distributions for qualified health care expenditures are also tax-free. Use the HSA as a long-term investment account that you can tap into during retirement to help cover health expenses.

Fund an Annuity

Finally, consider funding an annuity from money that’s not in your IRA or employer-sponsored retirement plans. Many retirees go through periods where their income exceeds their expenses and an annuity lets you reduce taxable income during those periods by deferring taxes on its investment earnings.

In addition to the enormity of its cost, health care will be one of the only mandatory expenses you have in retirement. Traditional approaches to financial planning should be modified to best prepare for them.

To ensure you are prepared for your retirement, read Bethesda’s financial advice on our blog.

The post Planning for Retirement Health Care Cost first appeared on Bethesda Health Group.

Filing for an Extension

The IRS provides tax information specifically for seniors. Topics covered include:

• Social Security and Railroad Retirement Benefits
• Individual Retirement Arrangements (IRAs)
• A Tax Guide for Retirees
• Tax Filing Information
• Credits and Senior Tax Deductions
• Reporting Income

There is also information on how to apply for an extension until Oct. 15, and links to the required forms.

According to the IRS, there are requirements for filing an extension:

• An extension of time to file your return does not grant you any extension of time to pay your taxes.
• You should estimate and pay any owed taxes by your regular deadline to help avoid possible penalties.
• You must file your extension request no later than the regular due date of your return.

Economic Impact Payments

Economic Impact Payments are, technically, a tax credit. The IRS does not add the amount to your income. The payments will not increase your tax bill or reduce your tax refund.

The latest round of Economic Impact Payments, in accordance with American Rescue Plan 2021, are being sent throughout May 2021.

If you did not receive a first and second Economic Impact Payment, or received less than the full amount, you may be able to claim the 2020 Recovery Rebate Credit.

Larger Standard Deductions

According to AARP, standard deductions are much better this year, regardless of your age.

The standard deductions for the 2020 tax year is $12,400 for individuals and $24,800 for married couples filing jointly. This is an increase over the 2019 tax year. If you are filing as a head of household (a filing status for single or unmarried taxpayers who have maintained a home for a qualifying person, such as a child or relative), the deduction has increased to $18,650.

The standard senior tax deductions, however, are even better. Married taxpayers born before Jan. 2, 1956–, whether filing jointly or separately–, get an extra $1,300 apiece added to their standard deductions. The additional standard deduction is $1,650 for singles and heads of households.

You are also eligible for these same standard senior tax deduction amounts if you are younger than 65 and blind. If you are over 65 and blind, the amounts double.

There is a special tax return for those 65 and above that makes calculating the standard deduction much easier. — Form 1040-SR, “U.S. Tax Return for Seniors.”

For this to be effective, your eligible medical expense deductions need to add up to more than the standard deduction. And you deduct only medical expenses that are above a specified threshold of your adjusted gross income (AGI). Due to the pandemic, that number is 7.5 percent, rather than the previous 10 percent.

Among the available senior tax deductions are:

• Out-of-pocket fees to doctors and dentists
• Costs of nursing home care, provided that medical services are the main reason for being in the nursing home

• Acupuncture sessions
• Smoking cessation programs
• False teeth
• Some insurance premiums

A Higher Tax Filing Threshold

If you are 65 or older, you may not even have to file a tax return, if the filing threshold equals the standard deduction you are entitled to claim. (See above, under Larger Standard Deductions).

Most single taxpayers must file tax returns when their earnings reach $12,400 in the 2020 tax year, but you can earn up to $14,500 if you are age 65 or older. You can jointly earn up to $26,100 if you or your spouse is 65 or older and file a joint return. If you are both 65 and older, you can earn up to $27,400.

Taxable Social Security Income

Whether or not your Social Security income is taxable depends on your overall earnings.

Add up all your income from sources other than Social Security and what would normally be tax-exempt interest. Then add half of what you collected in Social Security benefits during the course of the tax year to that total. (The Social Security Administration should have sent you Form SSA-1099 around the first of the year, showing how much you received)

None of your Social Security income is taxable if the total of all your other income and half your Social Security is less than $25,000, and you are a single head of household or a qualifying widow or widower.

This increases to $32,000 if you’re married and filing a joint return, and drops to $0 if you file a separate return after living with a spouse at any point during the tax year.

Credit for the Elderly and Disabled

There is a significant tax break available to older adults called the Tax Credit for the Elderly or Disabled. This credit can remove some, if not all, of your tax liability if you end up owing the IRS.

Depending upon your ability to meet income thresholds and other requirements, the amount credit ranges from $3,750 to $7,500. This is called Schedule R: The Tax Credit for the Elderly or the Disabled.

IRA Contributions

You have until May 17 to make contributions to a traditional IRA for the 2020 tax year. The contribution would reduce your taxable income. People who are 50 and older can contribute up to $7,000. You can only contribute earned income to an IRA. Social Security payments, pension payouts, dividends and other types of income don’t count.

If you or your spouse is covered by a workplace retirement plan such as a 401(k), you can deduct the full amount of your contribution. The deduction faces limits if you or your spouse is covered by a retirement plan at work, or if your Modified Adjusted Gross Income (MAGI) exceeds certain levels.

There is now no age limit on making contributions to a traditional IRA.

Health Savings Accounts (HSAs)

You have until May 17 to make an HSA contribution for the 2020 tax year. The maximum annual contribution is $3,550 for yourself, or $7,100 for families. If you are 55 or older, you can add another $1,000.

You need to be insured by a High-Deductible Health Plan (HDHP) to make a contribution. To qualify as an HDHP for 2020, the plan must have a minimum annual deductible of $1,400 for individuals and $2,800 for families. It also must have an out-of-pocket maximum of $6,900 for individuals and $13,800 for families.

Long-Term Care Expenses

If you are close to overcoming your standard deductions, don’t forget to deduct the premiums you pay for long-term care insurance. This is a medical expense deduction, which means you can only deduct the amount of your qualifying medical expenses that exceed 7.5 percent of your Adjusted Gross Income.

The IRS does allow you to deduct an increasing amount of those premiums as you get older.

Taxes are just one aspect of proper financial planning for seniors. To get help creating your financial plan, visit our blog.

The post What Seniors Should Know About Their Taxes first appeared on Bethesda Health Group.

According to elder law attorney Paul Gantner, a partner with the firm Amen, Gantner & Capriano, it’s not a question of being able to afford such an attorney. “In the vast majority of cases, you will be saving money by doing so,” Paul says. The key, he says, is not waiting until you no longer have the finances to retain the services of these experienced professionals.

Why Hire an Elder Law Attorney?

The scope and complexity of issues faced by seniors and family members, especially when it comes to planning for the future, can be daunting and confusing. An elder law attorney can relieve family stress in the decision making process and provide a sense of relief that the senior’s affairs are in order. Here are some of areas elder law attorneys focus on:

Estate planning. This includes drawing up power of attorney documents to enable an appointed person to make financial decisions should the senior become incapacitated. Establishing trusts, managing estates and writing wills also falls under this category.

The focus is on making the probate process reflective of the senior’s wishes, primarily by having wills that make the senior’s intent clear or, many times, avoiding probate altogether.

While there are many attorneys who offer estate planning services, elder law attorneys specialize in providing a more comprehensive scope of services beginning long before a person passes away.

Guardianship and conservatorships. This can be a complex process to appoint someone to care for an elderly person who is unable to care for himself or herself. Hiring an elder law attorney ensures the process is handled properly.

Tax planning and long-term care needs. “Elder law involves tax planning that makes the most of a person’s financial assets,” Paul says. “While everyone should have a basic estate plan, most do not require advanced estate tax planning. What the majority of seniors need is help in dealing with long-term care needs. Elder law is for everyone who gets older and/or has special needs—physical or cognitive challenges.”

Elder law attorneys advise clients based on the level of care needed, relying on care managers and physicians to help determine what those needs are. From there, the elder law attorney will determine the costs associated with the required care and the resources available to pay for it.

Benefits. Elder law attorneys are versed in benefit programs that include Medicare, Medicaid, and Veterans benefits, as well Social Security, disability claims, and long-term insurance issues. Paul advises that if the senior is a Veteran, the elder law attorney retained should be certified by the Veterans Administration. “This is a separate certification needed to handle Veterans benefits,” he says. “And it’s a financial resource many are not aware of and could miss out on.

“Coordinating these benefits is a huge task for someone who may be moving from the home they’ve lived in for years, and who may have physical and cognitive issues,” Paul says. The complexity and decision making can also be an issue for family members who need expert guidance for the best path forward for the senior. Making the wrong decisions may require a family to provide from its own financial resources when it otherwise wouldn’t be necessary to do so. “These issues are not something a person can just step into without some background, knowledge, and support, not to mention the time saved by being able to delegate this work,” Paul says. “Family and loved ones are already busy with everything going on in their own lives.”

The impact it can make. Paul tells the story of elderly man living in his home while his wife was in a senior living community. The man’s son struggled to convince his father to see Paul. His father said he couldn’t afford an attorney. Paul told the son the consultation was free and if he couldn’t save the father any money he would tell him so. The father reluctantly came in, and in the course of the conversation, Paul learned he was a Veteran. In accessing his Veterans benefits — ones the elderly man wasn’t aware of — the father received thousands of dollars to help defray his wife’s expenses and care for himself. Beyond that, his wife qualified for Medicaid benefits, receiving the same care, at the same facility, in the same bed. “If he had done nothing, it would have cost him over $300,000 more,” Paul says.

“Our focus is on saving the family home or someone’s last $100,000 or $10,000. The biggest mistake people make is to do nothing because they feel they can’t afford our services, and then they run out of money,” Paul says. “A reputable elder law attorney will tell you, upfront at no charge, whether or not they can help, and suggest other options if they cannot.”

How to Choose an Elder Law Attorney

When considering retaining an elder law attorney, Paul suggests checking out their website. “See if it is obvious they have extensive experience in elder law,” he says. Paul also suggests asking family, friends, or trusted professionals for a referral.

With many firms, especially with a referral, the initial consultation is free, but ask in advance. While there, inquire about the scope of the elder law practice. How long have they been practicing in this area of law? What percentage of the practice deals with elder law? Paul also advises that you should only work with an attorney you are comfortable with. “In elder law, the attorney should have some emotional intelligence; some empathy for what the senior and his or her family are going through,” he says.

“Some attorneys are very good, technically, but they don’t understand the intimidation factor of sitting with an attorney to plan the rest of a person’s life. An attorney should not start the conversation with ‘We’ll get you on Medicaid,’ without really listening. In some situations, it’s better to pursue private pay than use Medicaid right away or, say, taking a look at the senior’s long-term care policy. You need an attorney who will listen to you first.”

Ask friends and family members who have had experience in employing an elder law attorney. And while it is not necessary to be an elder law attorney, there is a CELA certification that requires practicing elder law for a certain number of years and hours each week, and participating in continuing education. Paul suggests searching the National Academy of Elder Law Attorneys (NAELA) site to find an attorney, including those with a CELA certification.

NAELA is comprised of attorneys who focus their practice on elder law and also on continuing education. The website has a database of attorneys organized geographically. You might then check the internet for reviews on reputable sites like the BBB and AVVO.

Some elder law attorneys bill their clients based on the hours spent on their affairs. Others, based on the dialogue between the attorney and the clients, bill at a flat rate for the service upfront. According to Paul, seniors and their families need to understand that billing on flat fee is not like buying an item in a store. “Every case will be different; unique in the scope of services, benefits, and costs associated with accessing them,” he says. That is why the attorney should discuss the options and resources that can be provided to the client before talking about costs.

“What you need is an elder law attorney firm that offers the full breadth of services for a clear, up-front fee agreement,” Paul says.

“We give our clients a clear idea of their options,” he says. “This is what will happen if you do nothing, and this is what will happen if we implement this plan, and this is how much it will cost.”

There are many resources available to seniors to ensure they are taken care of in any way. For more information about these resources, visit our blog.

The post Why and How to Choose an Elder Law Attorney first appeared on Bethesda Health Group.

There are two ways to calculate how much you’ll need during your retirement years.

Estimating Your Budget for Retirement

One approach is to estimate that you will need 70-80% of your pre-retirement gross income. That’s the rule of thumb many financial advisers use.

This approach focuses on the budget method, since hitting 70-80% of your gross isn’t necessarily going to work for everyone. “That’s a target, a benchmark,” said Joe Ready, executive vice president, Institutional Retirement and Trust, Wells Fargo Bank. You might be on track to replace your goal of 60% of pay based on the income you expect to have in retirement. Or you may realize you aren’t anywhere near the 70-80% benchmark and don’t believe it’ll be possible.

If you’re not close to being able to retire on 80% of your gross pre-retirement income, “back into a simpler, easier lifestyle,” Ready said, “especially if you have no dependents at this point in your life.”

Longevity Expectations Are Important

Before you look at your projected numbers — expenses and income you expect to have in retirement — think in terms of longevity as well.

For an estimate, you can use a life expectancy calculator, such as the one on the Social Security Administration website. Or you can begin by looking at how long your parents lived (or are living) and your own health. “Most people are going to live longer than their parents,” Scott said.

The actuarial table on Social Security’s site estimates that men who are 65 today are expected to live a bit older than 82½ and women to just over 85.

Creating a Detailed Budget for Your Retirement Lifestyle

The second approach to budgeting for retirement is to create a monthly budget. After taking your projected lifespan into consideration, create a budget that shows all your current and expected monthly expenses during the years when you’ll likely have less income than today. Create an initial budget based on what you expect to spend during the first year of retirement. Then, be prepared to adjust it as your retirement lifestyle develops over time.

When preparing your detailed budget, ask yourself: “What expenses will continue to exist and which will go away?” Ready said. “You might find some current expenses will not be there when you retire.”

For example, if you’re considering downsizing your four-bedroom house to a townhouse, your housing expenses are likely to be less. You may also consider moving into an independent retirement living community, which will have set monthly costs and no maintenance fees.

Most major financial companies offer retirement expense worksheets that can help you pencil out your budget. For example, The Vanguard Group has a monthly anticipated retirement expenses worksheet that lets you put in dollar amounts for categories ranging from housing to food to transportation to health, travel, entertainment, and hobbies.

Early Years of Retirement Versus Later Years

Your budget numbers will be based on what you have been spending and how you expect them to change during the first year or two of retirement. Typically, people spend more on travel and leisure activities during the initial retirement years. Later, they’re likely to spend more on health.

Everyone’s situation is different, so this is the time to reflect on how you expect to spend money as you move into retirement. Will your income in retirement be able to support that lifestyle? If not, look at each category to evaluate where you may be able to trim your expenses.

Perhaps you can find a less expensive cell phone plan or a more moderately priced combination phone/Wi-Fi/cable bundle, for instance. Maybe you can reduce the number of times you dine out each week.

When to Claim Social Security

If you are able, avoid taking your Social Security benefit at as soon as you reach 62 years old—the earliest age you’re allowed to do so. By delaying your start date, you’ll increase the size of your benefit.

Set up a MySocialSecurity account at the Social Security site and you’ll get an estimate of how much you would receive by claiming benefits at 62, 66, and 70. If you were born between 1943 and 1954, for example, and begin claiming at 62, you’ll receive 75% of what you would receive monthly if you waited until 66.

One way to postpone Social Security to bolster your retirement income is with self-employment income from an entrepreneurial pursuit you develop before you retire. Another, if your employer is receptive, is to keep working at your job but cut back the number of hours so you don’t face income loss all at once.

How Much to Withdraw From Your Savings

Finally, when calculating your assets during retirement, think about how much you could comfortably withdraw — or spend down — each year. For years, financial advisers recommended withdrawing 4% a year. But many have changed their minds recently, given current low interest rates on bonds and CDs.

Wade D. Pfau, professor of retirement income at the American College of Financial Services, says these days, the 4% rule “cannot be treated as a safe initial withdrawal rate.” Instead, you need to take into consideration interest rates, the volatility of your investments and your total resources when considering how much is safe to spend down annually.

See all of our tips for preparing for retirement and planning for your future on our blog.

By Harriet Edleson for Next Avenue.

© Next Avenue – 2018. All rights reserved.

The post How to Budget for Retirement first appeared on Bethesda Health Group.

What about your senior parent or parents? Do you know their financial state? Would a downturn in health put them in a financial crisis? What plans have been made for their future? Here are four ways to help you talk to your senior parent about finances.

How to Talk to Your Senior Parent About Finances

1. Talk Sooner Rather Than Later

Though it may seem intrusive, you should begin talking sooner rather than later about their finances. If you start too late, financial problems will multiply, and your senior parents’ ability to understand their situation could be diminished.

People with dementia or other cognitive challenges often find finances a difficult thing to manage, but even people without cognitive difficulties who can manage their own finances may not anticipate expenses for future healthcare and residential care needs.

It would also be a good idea to talk to your parents’ physician for his or her assessment of your senior parent’s ability to handle financial details.

2. Talk After Assessing and Preparing

Family members should begin reviewing and assessing their seniors’ financial situation as their loved ones’ health starts to decline. Plenty of peripheral signs exist that show that Mom or Dad are losing their ability to manage their finances. For example, while visiting the home, you notice:

• Housekeeping standards have declined
• Food has gone bad
• Items in disrepair
• Poor personal hygiene
• Medications not taken

These are detail-oriented activities, and managing finances is all about handling details. Other things you may notice specific to finances:

• Unopened bills
• Overdue notices
• Complaints about being short of cash

In addition, your parents’ checkbooks can reveal expensive purchases they would not normally make, as well as math errors, regular monthly payments that have been missed, or a number of checks to suspicious charities and causes.

Your parents’ caller ID logs may reveal numbers for creditors and collection agencies repeatedly cropping up, as well as calls from credit card companies.

3. Talk With Compassion and Understanding and Offer Solutions

Admitting a decline in their ability to manage their money puts many senior adults on the defensive if not handled correctly. When you talk to your senior parent about finances, look for openings where you may offer help—a moment in the home when Mom or Dad is puzzling over a bill. Ask if they mind if you take a look, and evaluate the response. If it is positive, you might mention you have noticed some unopened mail that looks like bills as well and offer to assist.

From that point, the discussion can become an open and honest conversation (in an undemanding tone) about the money problems you see as a conc.

Offer solutions and options, and listen to your senior loved ones’ responses. Explain there are many things to help improve their finances, or at least slow some of their expenditures. For example, you could place your name on their checking account, have your parents grant financial power of attorney to someone in the family, and place them on a no-call list to thwart scammers.

Do not put off discussions about financial matters, but do not blurt out all the challenges at one time. Let your parents absorb and discuss options over as many conversations as they need. If you push too hard, they could become confused or push back.

4. Talk with a Professional in the Conversation

Uncertainty about the future and how to best plan for it can cause stress, family arguments, and the inability to make necessary decisions.

There are a number of complex and difficult choices to be made involving finances for senior adults:

• What is their current financial status?
• How do you pare down expenses?
• Are there financial documents to find and organize?
• To which benefits may your seniors be entitled?
• What other financial help is available to seniors?
• Can you anticipate some of the future health care needs and costs?
• Will home health be needed?
• Is a new life in a senior community a good option?

All of these questions and more can be discussed in consultation with a geriatric care manager, a skilled professional who knows the ins and outs of many issues facing seniors and their families. With their experience and knowledge, they can solve many challenges, reduce stress, and be an unbiased source of information and assistance when you talk to your senior parent about finances.

As our parents age, it is important to stay in the know. Bethesda has programs to support family caregivers and adult children to lighten the burden. Contact us to learn more about our solutions.

The post 4 Ways to Talk to Your Senior Parent About Finances first appeared on Bethesda Health Group.