Wednesday, August 6, 2014

Social Security: What you need to know, now

"I was too old for a paper route, too young for Social Security and too tired for an affair."
         - Erma Bombeck, American humorist (1927-1996)

5 Social Security Tips
1. Set up a secure personal account at
2. Know your numbers. You may want to “wait to take” benefits.
3. Look into spousal and survivor benefits if you are divorced or widowed.
4. Social Security eligibility applies to same-sex couples, if they live in states that recognize the union.
5. Before making a decision about Social Security, consider your health, income and tax issues to maximize lifetime benefits for you and your spouse.

Retirement planning is only one of several reasons why women should create an online account at and find out more about what benefits could come their way from the federal Social Security Administration.
My friend Alan Edwards, Social Security public affairs specialist in Portland, Ore. emphasizes that "Social Security is so much more than just a retirement plan. As you pay your FICA taxes on earnings during you working life you are preparing for retirement. But you also are buying life insurance and disability insurance,” he says.
There may be variables related to your age, your marital status, other personal circumstances and your physical health that could affect how and when you may receive benefits. For example:
   - If you are widowed and disabled, you may be eligible for survivor benefits on your deceased husband’s work record as early as age 50.
   - If you are divorced but were married to someone for 10 years or more, you may be eligible for a benefit on your ex-spouse’s work record. That’s if you are 62 or older and have not remarried. If they have died, you may be eligible for survivor benefits.
   - As a married couple, you may be able to maximize your Social Security benefits by having one of you claim on the other’s work record while your spouse files but suspends benefits until age 70.
Avoiding Social Security surprises
“The No. 1 and most important thing for people to know about Social Security is their ‘numbers,’” Edwards said. “It’s essential that people know what benefits they are eligible for and how they are calculated. Women are often surprised that their work record may not qualify them for benefits or that their benefits are lower than expected.
The minimum work requirement for Social Security is 10 years but it’s your lifetime of work -- the highest 35 years of earnings -- that Social Security looks at to determine your benefit
To figure all this out, Social Security offers an online calculator that tells you what your monthly benefit will be depending on when you start taking a payout. Again, this is worth checking out because the longer you wait, the more your benefit will increase up to age 70.
For example: If you monthly full retirement benefit at age at 66 is $1,021, it is reduced by 25 percent to $766 month, if you start benefits at age 62. Benefits jump to $1,669 if you wait to age 70 (or an 8 percent a year increase for each year you wait beyond your full retirement age). It’s important to know your numbers, Edwards said.
Benefits based on marriage
Calculating benefits based on marriage is among the more complex areas of Social Security planning. Depending on whether your ex-spouse is alive and has filed for benefits or is deceased and whether you are single or remarried are factors in what benefits you might claim on an ex-spouse’s work record.
“Depending on your own work record and earnings as well as your age, you may be eligible for up to half of the benefit of an ex-spouse,” Edwards said. “If your ex-spouse is deceased, there’s a survivor’s benefit.”
Edwards agrees that figuring out benefits related to a divorced ex-spouse is confusing but it’s worth sorting out. If you are disabled or if the ex-spouse dies, for instance, you may qualify for certain benefits on his or her work record.
“We encourage people to check back in with us if something in their life changes,” he said. “It’s important to screen for all types of benefits. We look at the situation and then evaluate what’s out there.”
Online tools
The biggest change about Social Security in the past few years is that everything has moved to the Internet. The agency no longer mails out annual benefits estimates but instead asks Americans to create their own secure online account where they can get up-to-date information on their estimated retirement benefits and work record.
Even though retirement may be a long way off, it’s a good idea to check the account to make sure no one is committing fraud by using your Social Security number to collect benefits or to work using your number, Edwards said.
“You can easily see estimates for each benefit category and at the same time you get a lot of good information about programs in a simplified format without hunting all over the place,” he said. “If you’re already receiving benefits but still working part-time, it’s important to make sure those earnings are posted correctly. If it looks like someone is using your Social Security number, contact us immediately.”
Low-income people can use their Social Security account to verify benefits for purposes of applying for subsidized housing, for energy assistance or veteran’s services. Through the online account, you can print out your personal verification of benefits letter to help qualify for these services.
Same sex couples benefits
With the federal U.S. Supreme Court ruling this year on same-sex marriages, there is no federal ban on Social Security paying benefits to same-sex couples, Edwards said.
“We may not be able to process applications in some states because of state law but there’s no ban on benefits,” Edwards said. “It depends on where they were married and where they now reside. We defer to the state on marriage and divorce action so same-sex marriage legality is still state by state.”
Meanwhile, those turning 65 must sign up for Medicare through the Social Security Web site at Even if your full-retirement age for receiving benefits is 66 or 67, Medicare eligibility sign-up is required at 65.
“Your really don’t want to get caught without it since there are penalties,” Edwards said.
Meanwhile, knowing how much your Social Security benefit will be is an important part of the retirement planning puzzle.
And don’t rely on friends or even financial planners and investment advisers to have all the Social Security ins and outs, Edwards said. Each situation is different and what might work for your cousin may not be the correct formula or the right strategy for you. Social Security was never intended to be your only source of income when you retire but it certainly is a key factor in your planning.
With Baby Boomers celebrating their 65th birthdays and attending their 50th high school class reunions, it’s no surprise that the Social Security Administration is processing 10,000 retirement applications a day.
For more:
Helpful Web for benefits, planning information.  Social Security calculator. for retirement planning for women. click on SSAnalyze. Strategies to boost your Social Security. Social Security tips for couples.

Wednesday, July 16, 2014

Antiques and collectible trends: No one wants my brown furniture

“I call it guerilla TV.”   - Marsha Bemko Producer of Antiques Roadshow
"My mom decorated with lots of antiques. I never liked it when I was a little girl - I wanted to live in a modern house. But now I love it." - Paris Hilton

Lately PBS’s Antiques Roadshow has been doing what it calls “vintage” episodes where appraisals made on the show 10 or 15 years ago are revalued in the current post-Recessionary resale market. Often times the values have declined.
No surprise.
It turns out that our children and certainly our grandchildren are absolutely not interested in grandmother’s mahogany bureau with the cute pull-down writing table, interior slots for envelopes and stationery and storage drawers. For them, a piece of dark brown desk furniture makes no sense in a world of IKEA, laptops and Facebook.
Never mind that Paris Hilton has had a change of heart.
Unfortunately, that mahogany bureau has sentimental value for me. I picture my grandmother sitting next to it in her small living room while doing her latest embroidery project. My house is full of that kind of stuff – furniture, table clothes, cut crystal and a few of my grandmother’s quilts and needle work. There's a lot of emotional baggage tied up in this stuff. I wonder a lot about what I’m going to do with it all. In conversations with friends, we ask each other the same question. Then we laugh and shrug. What ARE we going to do with our stuff when we downsize?
Following the trends
In July, Portland, Ore. hosts one of the biggest, if not the biggest antique and collectible show in the U.S. The event at the city’s EXPO Center attracts 1,400 vendors and 16,000 visitors over two days. Everything is on display from antique woodworking tools to wind-up clocks, vintage jewelry to movie posters and neon lights. Christine Palmer of Portland-based Palmer & Associates has been part of show for the past 30 years and now owns the show promotion and production business. Here’s what she told me.
Collectibles and antiques evoke a childhood memory of something we experienced or something we wish we had owned. For me those memory-triggers include Western art, cowboy lamps, pictures of horses and for some reason that I don’t understand, tin toy motorcycles and cobalt blue glassware. I’ve collected them for years.
But like everything else, the antique-collectible business is changing as the baby boomer generation approaches retirement. The last of us turn 50 this year. With all the downsizing yet to come that prized family heirloom may have turned into (I hate to say it) junk. Sorry, baby boomers.
What's not in demand
According to Palmer and others, glassware -- those crystal goblets your mother or grandmother so lovingly placed on their Thanksgiving dinner tables – is less collectible and less valuable. No one is buying formal glassware because no one is hosting a formal Thanksgiving or Christmas dinner. No one even wants the formal dining room table.
Upholstered sofas, china hutches, formal dining sets, wood-finished dressers, even pianos have become almost impossible to sell or even give away.
Talk to people like Palmer or read the Wall Street Journal Lifestyle section, which regularly runs articles with headlines like this: “Why the Market for Heirloom and Secondhand Furniture Has Disappeared.”
No one wants "Brown Furniture" reports Alina Dizik in the Wall Street story. Antique oak tables and bedroom sets, Victorian-style mahogany – if it’s brown, forget it.
Who are they buyers?
Palmer said the antique business is alive, but the buyer profile is changing and what they want to buy is evolving. Buyers are 40-year-olds (and younger) who are furnishing their first or second home. They are looking for what the industry calls “mid- 20th Century Casual.” By that we are talking about 1950s dishes in bright colors, '50s and 60s table clothes and other textiles. Younger buyers like decorative outdoor garden items -- the smallish wrought iron table with glass top and two matching chairs. Again, it’s casual not formal or fussy.
In Portland, (near where I live), vintage clothing is popular. By vintage, we’re talking 1930s to the 1970s. That category includes hats, shoes, dresses, jackets and eyewear.
Vintage toys.... G.I. Joe and Star Wars action figures, lunch boxes from the 1980s -- are selling. A generation or two earlier, it was Gene Autry and the Lone Ranger.
In my early years of marriage, I gladly accepted most hand-me-downs from my parents and grandparents…furniture, dishware, sterling silver. It was a way to get started. There was no IKEA or Target or imports from China.
Families ate around a real dinner table separate from the kitchen. Now it’s one big happy free-for-all bar-style meal. Boy, do I sound old-fashioned.
The Age of Consumption is over
The reality is that the collectible business is changing all the time. The big demographic shift under way now has baby boomers downsizing after 50 years of post-World War II consumption. The bad news is that the resale market is glutted with household goods.
Items in the general antique category have lost 50 percent or more of their value since the late 1990s, say some reports. Young families that once bought second-hand furniture or took hand-me-downs, now want new but cheap and sleek imports.
Palmer is confident that Portland’s EXPO Center will continue to host a big show. The antique business, she said, is not dead but in flux. The Internet has certainly been a part of the change; it’s so easy to sell items like dolls, or paper or other small items online. Did you know that some people collect vintage swim suits and make them into wall displays? Vintage office supplies (ala Mad Men) is a fresh collectible this year, according to CountryLiving magazine.

Knowing what to expect
Selling antiques and collectibles can be a fun part-time business in retirement but you’ve got to be prepared to sell online, to sell at shows and to maintain a niche sales display in an “antique mall.” The three-way combination can pay off in revenue with little expense. Meanwhile, the old line antique store is gone.
If you are a baby boomer getting ready to downsize:
- Find out what your kids really want. Don’t be hurt, if they’re not interested in the “priceless” Spode china.
- Network with those in the business. What’s selling, what’s not?  Ask about trends.
- Look at eBayCraigslist and other online sales Web sites to get real about values and prices.
- Go to a few garage sales, estate sales and antique shows. Look at the prices.
- If you decide to have an estate sale, do your homework. I wrote about how to hire an estate sale business in a previous post, click here. Be sure to interview several estate sale business owners before narrowing it down.
- Get real about values of your priceless items. It won’t hurt so badly later when you try to sell it or give them away. Your stuff, especially your brown furniture, may be worth a lot less than you think. Sorry.
For more:
Consumer Reports, click here.
Estate sales, click here.
How to hold a garage sale, click here.
What antiques to collect, click here.

Saturday, July 5, 2014

What the 2014 Second Quarter tells us. The news is good.

"The American people are among the most productive in the world. We have the best technologies. We have great universities. We have entrepreneurs."
                   -  Ben Bernanke, former Fed chairman.

Among the interesting things about living in retirement is the ongoing challenge of managing your money. To do that well --so you can sleep at night -- requires keeping up on market trends, reading business news publications and taking advantage of (free) expert advice available online and face-to-face. Last winter, the folks at Fidelity Investments hosted a local economic outlook seminar where experts explained to a large group of retirees how shifts under way in the U.S. economy might affect stock market sectors in the coming year. Basically, what they said has proved true.
Using 80 years of prior market history, the experts explained that as a bull market moves into its later phases, share price growth shifts from discretionary retail sectors into industrial, manufacturing, energy and construction sectors. That means some of the retail stock darlings of 2013 have become the dogs of 2014 while industrial sector stocks, energy stocks and manufacturing have begun to show life. For example in my region:
Intel Corp. shares were up nearly 20 percent in the second quarter on a stronger outlook for the company’s computer chips. Greenbrier Cos., which makes rail cars in Portland, Ore. saw a share price increase of 18 percent in the second quarter on demand for new rail cars especially “safer” oil tanker cars. In the past six months, the Greenbrier share price has climbed from below $35 a share in January to $67.29. That’s a 52-week high. The company’s stock price is up 208 percent in the past 12 months.
After large gains last year in stock prices in 2013, many wondered if the rally would continue. The second quarter 2014 proved that the bull market still has strength.
Other second quarter winners:
Nike Corp. -  After seeing its stock price fall sharply in January and February, Nike shares have been moving steadily higher since April and are now near a 52-week high of $80 a share.
Hewlett-Packard Co., which at one point was declared dead, has also seen steady stock price improvement since May. At $34 a share, HP is near its 52-week high. Another steady recovery in the second quarter.
Nautilus Corp., the Vancouver-Wash.-based exercise equipment manufacturer, had a great second quarter, with a big jump in share price from $8.50 to more than $11. Again on a positive sales outlook.
A really big Northwest regional winner: Lithia Motors. Stock in the Oregon-based automotive franchise and retailer has been on a tear...up 74 percent this year. Lithia announced plans in June to pay $43 million for a dealership on the East Coast. That gave the stock a big second quarter boost.
Were there losers?
Most of our second quarter stock price losers were in the retail-consumer spending category, which typically loses momentum in the later stages of a bull market. It would be hard to repeat another year of price growth after a strong 2013.
Among our second quarter 2014  losers were:
 - Whole Foods, down 38 percent on weak sales revenue.
 - Staples, down 30 percent.
 - Bed, Bath & Beyond, down 29 percent.
You get the idea. Others in the loser category included Vancouver-based Papa Murphy's Take & Bake Pizza, which was out with an IPO in the second quarter at $12 a share. The price is now $9.50 or so.  Other retail losers included Urban Outfitters, Kohl's, Ross Stores, PetSmart. None of these declines are a surprise to the experts in terms of classic market trends. None of these declines mean that the companies are in trouble. It's just that they can't repeat year-over-year gains.
The outlook?
Meanwhile, the 2014 outlook remains positive, although markets may be more volatile. The U.S. stock market rally, now in its fifth year, is outlasting most bull markets. But the prior recession and bear market sell-off of 2007-2009 was deeper. So everything seems to be balancing out.  Thank you, Ben Bernanke!
Analysts writing in the Wall Street Journal, at and elsewhere see a stable outlook for corporate revenues through the rest of the year with stock prices, even now, only "slightly above" long-term averages.
Low interest rates and strong corporate profits mean higher dividends and higher stock prices for investors and savers.
Are there risks: Yes....the economies of Japan and China. They both are a big part of the global economy we now live in.
For a second quarter analysis and a list of winners and losers, click here to read a Barron's report.

Saturday, June 14, 2014

Why a bank trust may make sense: Questions to ask.

“I had an inheritance from my father,
It was the moon and the sun.
And though I roam all over the world,
The spending of it’s never done.”
 Ernest Hemingway, "For Whom the Bell Tolls"

Editor's note:
Since first writing this piece a few weeks ago, I ran across this chilling story about elder financial abuse published in the Washington Post. The message from the article --- be careful in choosing the person or entity that will manage your money when you are no longer able. Again, a bank trust, which is required by regulatory law may be a better choice than an single individual who has no reporting obligations.  Click here for the Post story

It's been several months since my mother died at age 98 after a rich and fulfilling life. The settlement of her estate is being negotiated by a bank trust manager in her home town who got the job after my mother decided several years ago to put her assets into trust management. It's worked out pretty well.
For a monthly fee -- figured at about 1- to 1.8-percent of her total assets -- the bank has paid my mother's bills, paid her taxes (state and federal), managed her farm property and kept track of her income and investment holdings. Along with this responsibility came a monthly statement from the bank mailed to my mother as well as to her heirs, my sister and to me, showing the prior month's activities.
Now that my mother is gone, the bank also is in charge of settling her estate, which includes the farm and investments portfolio. The process first required an appraisal of the farm property and then negotiations with my sister over whether she wants all or part of the real estate as her half of the inheritance. So far, so good.
Has bank trust management been worth it? I'd say yes.
For those without direct heirs, for those with dysfunctional and special needs family members or for those who just want an outside disinterested professional third-party to manage and then settle their affairs, a bank trust makes sense. The record-keeping and tax-reporting alone have been a plus.
Bank trust managers are bound by regulation to put the interests of the trustee (my mother) first. Bank trust managers consolidated my mother's assets -- investments, annuities, loan debt owed her, real estate holdings -- under one umbrella. The bank paid my mother's expenses in her last years related to her assisted living care. Running the farm took a big burden off of everyone including the renter-farmer.
Over the several years the bank was in charge of my mom's assets, the bank gingerly reshaped my her investment portfolio so risk was more diversified with an emphasis on income and growth. Management was certainly in line with what my mother would have done at an earlier time in her life when she was physically and mentally more able.
As part of the trust responsibility the bank is now settling the estate. Another plus.
Instead of my sister and me trying to add up assets, find documents, arrange a farm appraisal, the bank is doing it. It is acting as a third-party to find an acceptable agreement for my sister. Better the bank than any attempt I could make. While this is taking time...slow progress is better than no progress.
If you are interested in finding out more about bank trusts and the management fees they charge, contact the institution directly and ask for a fee schedule. Often those can be found online. The first question to ask yourself is whether there's enough money-assets in a trust to make bank management cost-effective.
I get the idea that banks are targeting high-net-worth individuals with assets totaling at least $2 million as their prime customers for these services. But certain special circumstances such as a disabled child, may require bank management, which they should be willing to do.
Are there downsides to a bank trust? Sure. Don't expect bank trust managers to be too keen on getting in the middle of a big family fight. They like it when things go along in an orderly way. Bank trust managers are not in the business of setting the world on fire or acting as an unpaid psychologist. Their job is to manage the assets.
Questions to ask when choosing a bank trust department or manager:
1. What is the experience and training of the trust manager?
2. How long has he or she been doing trust work?
3. How comfortable is the person in managing difficult family issues?
4. What kind of services and reporting does the bank provide...monthly, quarterly?
5. What's the fee schedule? Does the bank charge extra for certain additional services? What are those services and fees related to tax preparation etc.?
6. How will the investment portfolio be managed? Will the trustee have input?
7. How available will the trust manager be to family members?
8. What kind of turnover has there been in the trust department office?
9. What happens to my trust if I become mentally incompetent?
10.What language can I put into the trust document that will prevent legal wrangling among my heirs at my death?
My final advice: Before looking into the benefits of a managed bank trust, meet with your family estate-planning attorney for guidance. Your attorney should be well-versed in both estate-planning legal strategies and how those options may apply to your family situation and your heirs.
Like everything else about getting older, things become more complicated. Having gone through the past 10 years of my mother's life, I'm glad she took the steps she did to provide third-party management of her financial and business affairs. Each of us may have unique situations that require an updated will as well as trust directives. This stuff is easy to push off to the future but you do yourself and your heirs a favor by working on it now.

Thursday, May 22, 2014

Our aging brains! What to do about them

"This is devastating...he believes that Rachel was helping him. She created a dream state and kept him there." - Brett Hall, attorney for Ralph Raines Jr. quoted in Willamette Week.

By Julia Anderson
Willamette Week in Portland, Oregon, does a darn good job of supplying its readers with edgy news. The recent article, “A Fortune Felled,” is no exception. Writer Kate Willson tells the story of Ralph Raines Jr. who lost his timber-family fortune to a pack of scammers through what investigators call “sweetheart fraud.”
The fraudsters, a mother and daughter plus other co-conspirators, took between $12 million and $20 million from Raines (and his 80-something father) over several years after “befriending” them. Arrests came thanks to an anonymous tip. But by then most of the money had gone into new cars including a $200,000 Ferrari, lavish trips to Las Vegas, rental property purchases and, as they say, thin air.
The story is all too familiar (see earlier sixtyandsingle posts on elder abuse) and raises these questions: What happens to our brains when we get old and why do we lose reasoning capacity that protects us from scammers when we’re younger?
Financial predators show up in many forms. They can be aggressive investment brokers who make a commission every time they sell an annuity or churn an account or caretakers who begin by paying your bills but are soon tapping  checking accounts and selling your house.
Having watched my mother age over the past 20 years before her death earlier this year, I’d say she began to lose it in her mid-80s when two separate brokers sold her annuities, one at $50,000, the other $40,000. In both cases, when questioned later, she did not understand how they worked or why either annuity would benefit her or her heirs. It turns out they didn’t. Meanwhile, both financial advisers earned hefty up-front commissions on the sales. A couple of years later, a family member coerced my mother into writing a $10,000 check to finance a poorly thought-out wrongful firing lawsuit. Of course, the case went no where. My mother was not senile in any obvious way. She sincerely believed that she could still manage, and with most things such as re-upping a CD investment she did. Only when pressured did things slip.
In her 90s she finally sought the help of a bank trust to manage all her assets -- a producing farm and her investments. That allowed her to live her last years in relative peace at the care center in financial security.
Research shows that older women such as my mother are nearly twice a likely to become victims of financial abuse as men, frankly because men die earlier and women are left to fend for themselves.  Family members, friends or neighbors are often the financial abusers.
My mother’s slip-ups were small compared to the Raines’ story.  But every day, every where, the elderly are putting their trust in people who may see them (the elderly person) only as a meal ticket, if not a free trip to Vegas.
Aging brains
So what happens to our brains?
New neuroscientific and psychological research shows that as people age “they become more focused on maximizing positive emotions and social interactions,” reports Jason Zweig in a recent Wall Street Journal article on the topic. “Older people become more determined to block out negative experiences. This leads older people to pay more attention to those who make them feel content and comfortable.”
In the Raines case, when investigators confronted him with the harsh facts of his financial abuse, he denied at first that there was a problem and refused to believe he’d been duped.
But wanting to feel positive about those around us as we age is not the only challenge, researchers say.
Our cognitive abilities begin to slip as we move into our 70s and 80s. Older investors, for instance, tend to make simple errors that younger investors would avoid, wrote Zweig.
It may be particularly difficult for those who have made sensible financial decisions throughout their lives to in old age come to terms with a decline in their reasoning capacity. These people may continue to feel confident even as they begin to lose it, experts say.
Robert Willis, an economist and professor at the University of Michigan, has made a study of financial decision-making among the elderly. (click here for his research on the impact of retirement)
In a workshop, Willis points out that we face a “growing complexity of decisions” related to old age. Everything from medicines people take to their health care insurance becomes more complex. Never mind investment decisions and asset management that the elderly must grapple with.
“While people accumulate financial knowledge and skills over their lifetime, at older ages they confront the serious risk of losing these capacities if they acquire Alzheimer’s disease or other type dementia that causes progressive declines in cognition and eventual complete loss of functional capacities,” Willis writes. “This may pose an enormous financial risk to all members of a household.”
Financially vulnerable
Forgetting to pay bills is minor compared with being duped in fraudulent schemes or signing contracts that we don’t understand.
“Regardless of cognitive status, older American are more financially vulnerable than the general population,” Willis underscores in “The Implications of Alzheimer’s Risk for Household Financial Decision-making” co-written with Joanne Hsu of the Federal Reserve Board.
So as we age, how can we gracefully manage our decline into happy old age, free of financial abuse?
The trick is putting a plan in place before that time comes. Who or what organization will manage your assets when you get old? And how do you avoid being scammed?
Here are some tips from the U.S. Department of Labor:
 -- Don't let fear, desperation, or the need to catch up financially push you (or family members) into any hasty investment decisions. In all legitimate investments, higher returns are accompanied by higher risks - risks you may well not want to take as you near retirement. Be wary of anyone who claims they can sell you a product that offers great reward without great risk - a sure sign of a scam.
  - Recognize that anyone can claim to be a "financial consultant” or "investment counselor.” That person may not have the special training, expertise, or credentials necessary to back up the claim. Ask about licensing and professional designations and check them out with securities regulators and any trade groups in which they claim membership.
  - Understand your investments and never be afraid to ask questions. Good financial professionals are never pushy, and they never dismiss your concerns.
  - Don't let embarrassment or fear keep you from reporting suspected investment fraud or abuse.
  - Never judge a person's integrity by how they sound or how they appear. The most successful con artists sound extremely professional and have the ability to make even the flimsiest investment seem as safe as putting money in the bank.
- Monitor your investments. Ask tough questions and insist on speedy and satisfactory answers. Make sure you get regular written and oral reports
Here’s where my advice comes in. Turn to a bank trust department to manage your assets, pay your bills and take care of your finances. Banks are bound by law to take a conservative and professional approach to their customer’s money. They must send you a monthly financial report showing income and outgo. For a small fee (1-2 percent of total assets) a bank trust manager is there to be a gatekeeper, to make sure you can live comfortably and happily in your old age. The challenge is figuring out when you should no longer be in charge. While bank trust may be an answer, it requires the same homework that you would do when investing with a broker. Ask a lot of questions, get references and check out the bank's fees and track record. This is your money, this is your life.
If you are the child or other family member of an aging relative, check in on them regularly. Ask them if there’s anyone new in their life and how they go about paying bills. Meanwhile, we baby boomers should set up a simple plan and stick with it, as recommended by Laura Carstensen, director of the Stanford Center on Longevity. Click here for her profile and for her TED Talk on aging,
It seems that Ralph Raines Jr. did not have a plan or have anyone close to provide honest financial advice. Instead he turned to scammers who made him happy and comfortable as they stole his fortune.
For more:
To report financial abuse contact at
National Council on Aging, 22 tips for avoiding scams & Swindles, click here.
National Center on Elder Abuse, click here.
Elder Abuse: Financial Scams Against Seniors, click here. Nolo Law for All
National Institute of Justice, Financial Exploitation of the Elderly. click here.
Would Your Adult Children Rip You Off? click here.

Thursday, May 8, 2014

For women who marry older men: Your financial planning is more complex

By now you've been together for seven years, maybe longer.
He's 70 and retired, you're 50 and still working full-time.
Or maybe you're working part-time at 40 but he's 60 and talking more and more about the golf courses in Palm Desert.
Maybe he's married you. Maybe you don't see the point of that.
He's taking Social Security benefits. You've got 12 years to go until at age 62 you first can even consider taking benefits.
Of course there are his grown children, almost as old as you are, and your grown kids. And there's the child from your second marriage, who is still at home and going to junior high.
So where is this all going? On the personal front, it's great. You're comfortable, happy.
You found in him something that younger men didn't, maturity and a calm appreciation for who you are. He enjoys your beauty, your youth and wit and the love you have for him as the anchor of your life. Likely you met at work where he was a manager, a boss, a team leader who admired your talent, who appreciated your enthusiasm, smarts and flashy good looks. You couldn't help yourselves.
Certainly he was unhappy in his marriage and ready to move on. There were painful conversations that led to a scramble to be together. The divorces were messy. Now things are settled and you're into a new life together.
You love him and care for him. He for you.
But do you ever talk about money?
Do you ever talk about what it will be like when you're 60 and he's 80, which happens to be the average life expectancy for American men, if they don't smoke or drink too much? Have you talked about what happens when he dies? About who gets what and when? Have you talked about his kids, you and your kids, if something happens.
What happens to his pension? Too late for that one since he's already taking the full amount.
Do you realize that the federal government requires that he start withdrawing from his retirement savings at age 70 and one-half. Will that money be gone by the time you might need what's left?
What happens if he doesn't die but needs long-term care at home? Where will the money come from for that?
How much debt do you have on board...a new mortgage? What about the inheritance from his parents? Of course, his kids get that. Let's say he dies at 85, which makes you 65. You could live another 30 years on your own. What financial resources do you have through your employment savings plans? Is his putting money away for you?
Did you know that if you are made the beneficiary of his nest egg and you are 10 years or more younger, he doesn't have to make as large a required minimum withdrawal at age 70 and one-half? That leaves more money for you, later.
Hazards of not planning
I'm not the first to raise these questions when it comes to May-December relationships. Candace Bahr and Grinita Wall, founders of, and others write about how a couples with a 20- or 30-year age difference face unique challenges when it comes to financial and retirement planning simply because the clock keeps ticking.
"Marriage between contemporaries is tough, but a 20-to-30-year age difference can make it a whole new ballgame," they say in their piece called Financial Planning for May-December Relationships.
The same goes for Joe Mont. "The hazards of a May/December romance go far beyond raised eyebrows or having to endure a waitress greeting you as the daughter. There is also a whole set of financial issues," he said at The Mont points out that the older partner may retire or leave the work force, which means there's only one "working" income."The older partner may be winding down their spending at a far greater pace than the younger one," he said. "Having a much younger spouse can mean a whole new round of planning for young children. Meanwhile, one spouse is usually bringing the majority of the assets to the table, which may mean there's a lot of discussion about whether those assets are passed to their lineal decedents rather than those of their spouses."
Robert Laura writing for Forbes about "sugar daddies and cougars," said that "While the typical age gap between married couples is slightly less than four years, couples with age difference of 10 years or more have a few planning opportunities particular to their situation that they need to understand and employ."
My read on all this is that women are more often the younger person in a May-December arrangement and have a lot to lose if they don't talk about the future, about money and estate-planning.
Here's what the experts recommend:
- Marry the guy but get a prenup in place and a will that outlines the assets you are entitled to at his death. A prenup forces both of you to disclose all assets and liabilities. If you just live together until he dies, it's a lot more difficult to sort out benefits, pension money and assets. If you are married for 10 years or more, you can claim spousal benefits from Social Security for instance.
The prenup planning process forces you to think about what could happen if one of you becomes sick or permanently disabled, say Wall and Bahr at
- Buy a term life insurance policy naming you as the beneficiary. This protects you if all his assets go to his kids, not you. That way you're not hanging out there with nothing.
- Buy long-term care insurance on the older spouse as a way to keep care costs from eating up your combined nest egg. Very little of in-home care is covered by Medicare. This is the most under-planned part of peoples' estate planning, my financial adviser friends tell me. Will you be caring for him and working at the same time? Probably not.
- Take charge of your own money. Women tend to not invest as aggressively as men. As a result their retirement investments lag in growth value. right now, your household is supported by two incomes his and yours. Put more of yours into retirement savings while you can.
- Make a list of tangible assets designating who gets what when. Does his furniture go to his kids, if he dies? What about the cars, the camping equipment? Make sure you know what happens, if something happens.
- Get your wills and health directives up to date. If he has a stroke, what measures does he want taken or not taken in terms of keeping him alive?
- Don't just sit there in a relationship where you can already see how it's going to end.
As they put it at, "One of the greatest gifts you can give to each other is settling these issues before something really bad happens." Thank god for Viagra! At least that's not a problem.

Sunday, May 4, 2014

Retirement mistakes and how to avoid them

"Some will win.  Some will lose.
 Some were born to sing the blues.
 Oh, the movie never ends  It goes on and on and on and on."
- Journey, "Don't Stop Believin"

If I had to do it over again, I would do a few things differently as I transitioned from full-time work to retirement and part-time work. Turns out that many people like me have regrets that can be difficult to undo.
Two areas of confusion: How and when to take Social Security benefits as part of your long-term retirement plan. And how to protect as much of your retirement income from hefty federal income taxes over the first 20 years of retirement.
Like most people, I didn't really think much about retirement other than to know that I needed to save a bunch of money in my 401(k). I also built a separate traditional Individual Retirement Account. But every time I thought about converting that IRA to a tax-free Roth IRA, I hesitated. Converting it meant paying taxes as part of the conversion. I didn't want to do that. So the conversion never happened.
Now (Mistake No. 1), I wish I had a Roth IRA. Any money coming out of my 401(k), which is now a Rollover IRA and from the traditional IRA will be taxed as regular income. I did not realize that when I reach age 70 and a half, the IRS tells me how much must be withdrawn form my nest egg account. The rate of withdrawal is about 4 percent. That's more than I want to withdraw but I have no choice. I'm freaking out about making my money last until I die. Roth IRA vs. traditional IRA, click here.  My mother passed at age 98. I could have a long way to go.
Mistake No. 2 was deciding to start taking Social Security benefits at age 64 on my own account. If I'd been smart, I would have filed on my ex-husband's account, not my own. While I would have received a smaller amount in monthly benefits this strategy would have allowed my own Social Security account to keep growing (8 percent a year in increased benefits until age 70). (For more, click here.)
Or instead of taking Social Security at all, I should have considered withdrawals from my Rollover IRA. I did not do the math on the trade offs. If I had done the math, I'd might have made a different decision. I would have had less money in my Rollover IRA but I would have made up for that in bigger Social Security benefits later. At the time I signed up for Social Security, you could still pay your account back and restart benefits at a higher level. Social Security changed that rule just as I was making the decision.
If I had to do this all again, I would have sought the advice of a tax-savvy Certified Public Accountant or seasoned investment counselor who could have provided more tax-related and income options. This would have been a fee-only hour of expert advice. I did not want to get a sales pitch about buying an annuity. I did not want someone to say they would put together a plan and manage all my money. I felt confident enough to do that myself, thank you very much. But some expert information would have helped.
Recently, I reported and wrote about the mistakes new retirees make. Here's what else I found out from talking with local financial advisers Rob Pool and Linda Haines.
An ongoing process
Pool sees retirement as an ongoing process that evolves as markets go up and down, personal circumstances change and “things happen.”
“The key to getting off to a good start in retirement is building in flexibility,” he said. “If you set up a (household) budget and you’ve had a good year in the market, then take that trip to Europe. If it’s a bad year, defer the trip.”
I remember that it wasn't always that way. In the old days... say 20 years ago... brokerage firms put together multi-page leather-bound plans with lots of charts and graphs. The binders then were handed across a desk to the clients with the message, “Go and be retired.”
Most advisers now counsel against locking in fixed (possibly unrealistic) automatic withdrawals from retirement nest eggs. Most say managing your expenses, your money and nest egg investments is part of the job of being retired. The good news is that there is plenty of expert advice on how to avoid mistakes.
Steps to Social Security
Linda Haines, a broker with Morgan Stanley, said a good first step is deciding how and when to those Social Security benefits that I was talking about. Often people sign-up as early as possible at age 62. But there's more to it than that.
“Couples need to decide whether one or both of them will take Social Security payments at full retirement or file and suspend one or something else,” Haines said. “This decision can make a big difference in your retirement funds.”
Social Security can be so complicated that some may need professional help to determine what’s best. The optimum strategy is hardly as simple as just waiting another year, or waiting until 70, particularly when it comes to couples, writes Janet Novack for Forbes magazine.
Factors such as differing ages, earnings and health; spousal and survivor benefits; the concept of joint life expectancy; and Social Security rules that allow a couple to maximize their combined take with various “file and suspend” strategies, all may play a role in the decision, Novack writes.
Shared dreams?
But even before deciding the Social Security issue, Haines says couples should talk candidly about their retirement expectations. If you're on your it out with a trusted friend or adviser.
“Make sure you talk to your spouse about what your ultimate dream of retirement is,” she said. “You may be surprised with the answers. You may assume your spouse wants to do exactly what you do and it ends up they have something completely different in mind.  In this time of life, communication is key,” she said. To start, the basics must be in place, she said.
“People need to make sure they have defined their goals, evaluated their current financial situation to make sure they have enough to achieve those goals, and have created a financial plan. They then need to implement that plan and review it regularly,” she said.
Health care costs, down the road
Both Haines and Pool encourage those moving into retirement to take into account future health care costs including long-term care not covered by Medicare.
“Healthcare costs are one of the most important costs that people tend to under-plan for,” Haines said. “That can be devastating to a portfolio, if not protected adequately.”
For her, it’s all about creating a plan that lasts as long as you do by not underestimating how long you might live.
A worst case scenario might be a husband stricken with Alzheimer’s disease who requires nursing care that may cost as much as $10,000 a month. By the time he dies, the nest egg is gone and the wife is left on her own in poverty.
Research shows that eight out of 10 couples will have one of them requiring long-term care.  Long-term care insurance may be the answer, but it’s expensive and requires careful planning. Again deciding whether to invest in insurance requires doing your homework, comparing plans and reading the fine print, not just taking what someone tells you for granted.
Strategies for second marriages
Advisers are seeing more baby boomers in second and third marriages. Each may have grown children, some who may need money. Advisers caution against co-signing on loans for children or co-signing on student loans for grandchildren. It’s important for these couples to plan for who gets what when one of them dies.
Obviously, there can be conflict between providing for a surviving spouse and providing for children from the first marriage. Again, it’s all about taking time to do the planning.
Pool recommends that his clients create a “legacy” drawer” where family or a surviving spouse can easily find wills, trust account information, insurance records, investment accounts and passwords. “It makes the transition easier in times of stress,” he said.
A friend of mine just tipped me this week to a smart phone app called My Health Care Wishes that allows you to store your own advance directive or family members' on your phone.
According to a New York Times article by Paula Span. "If and when you need them, the app lets you present such documents as well as other health information and contacts."
According to the report, May Health Care Wishes comes in two or $3.99, if you want unlimited storage for any number of people. The reality is that few of us have bothered to actually create these documents in the first place. Yes, I've got one but it's in a folder at my desk.
Tax strategies
And while most people understand the basics of retirement planning, they may not be aware of retirement tax strategies that can make a big difference in their long-term financial well being.
“It’s important to plan for a less expensive tax situation,” Pool said. “Money coming out of a 401(k) or traditional Rollover IRA is taxed as ordinary income,” he noted. “Alternatives are to either put money in a Roth IRA or convert retirement savings into a Roth IRA, if the stars are aligned,” Withdrawals from a Roth IRA are tax-free.
Even if you're "retired" you may still be able to start a Roth IRA. That's if you are still working part-time. Only "earned" income can be considered for a Roth.
Taking drawdowns
For many experts, the easiest avoidable retirement mistake is failing to “rebalance” your investment portfolio with the ups and downs of markets or to adjust your withdrawal rate to accommodate changes in markets and the economy.
Charles Sizemore writing for Forbes magazine says, “An absolute nightmare scenario for any retiree is to build a retirement plan based on the assumption of say 4 percent annual drawdowns, then have a major bear market put your entire standard of living at risk.”
Drawdowns of 4 percent, he said, "are no problem at all in a bull market that sees the market rise 10 percent to 20 percent per year. But if you go through a prolonged bear market, taking regular drawdowns can dig deeply into the capital that you need to last for the next 20 years.”
An old rule of thumb has been to put 30 percent of your nest egg in stocks and 70 percent in bonds. But with today’s near non-existent bond interest rates that ratio no longer makes sense.
“Just because you’re retired doesn’t mean you have to have everything in bonds and cash,” Pool said. “With our long life expectancies, you’ve got to have a fair amount in equities…that will grow over time.” But they've got to be managed by you or someone else. (Warning: Avoid exceptionally high yields. It's a red flag).
Pool counsels a withdrawal rate based on a percentage of the portfolio value each year rather than locking in a fixed withdrawal rate no matter the value of the nest egg.
“Using the percentage of the total lowers the risk of running out of money,” he said.
Talking about retirement
For Haines, the technical questions surrounding a transition to retirement can be managed but communication about expectations in retirement may turn out to be a bigger challenge.
“You may assume your spouse wants to do exactly what you do and it ends up they have something completely different in mind in retirement,” Haines said. “In this time of life communication is key. After either or both spouses were working and apart most of the day or one spouse working and one at home during the day having both of you suddenly always at home or together can be a little overwhelming,” she said.
She said retirees tell her that it's good for each of you to have time to do something on your own, go to lunch with a friend, take an exercise class or go golfing with your friends.
“It makes the time when you get together more interesting and fun,” she said.
Both Haines and Pool agree that retirement planning is not a one-time slam dunk.
“Retirement is a living breathing process that evolves as markets change, personal circumstances change,” Pool said.
For Haines, it's all about making the adjustment, staying busy and having a plan.
“Some people do fine, others need to work a little harder at finding what is interesting to them to keep them busy,” she said. “Some end up going back to work on a consulting or part-time basis to bridge into full retirement. The journey and who you include in this new part of your life are what is important.”
Am I losing sleep over my retirement mistakes? No.  --- Julia
Editor's note: Before taking any steps to retirement, consult with a good tax attorney or CPA. Their expert advice may put you exactly on track.

Over the next 20 years, 10,000 baby boomers will turn 65 every day.
Today, only 23 percent of Americans plan to retire before age 65.
Forty percent of Americans plan to work until “they drop.”
Though they may be “retired,” 74 percent of Americans expect to be working.

- Don’t start Social Security benefits too soon. Seek advice.
- Discuss your dreams for retirement with your spouse. You may be surprised.
- Don’t under plan for health care costs.
- Put together a “legacy” drawer of your accounts and passwords.
- If you’re in a second or third marriage, plan for who gets what, when one of you dies.
- Set up a flexible budget and withdrawal plan to adjust to market changes.
- Take advantage of tax strategies. Seek advice.
- Don’t give money to your kids that you will need or co-sign on loans.