Reply-To: "Merilee Kern" From: "Merilee Kern" To: "Merilee Kern" Subject: Associated Press Placement Date: Wed, 1 Feb 2012 15:01:27 -0800 Organization: Kern Communications MIME-Version: 1.0 Content-Type: multipart/related; type="multipart/alternative"; boundary="----=_NextPart_000_4433_01CCE0F2.5F898FE0" X-Priority: 3 X-MSMail-Priority: Normal X-Mailer: Microsoft Outlook Express 6.00.2900.5931 X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2900.6157 This is a multi-part message in MIME format. ------=_NextPart_000_4433_01CCE0F2.5F898FE0 Content-Type: multipart/alternative; boundary="----=_NextPart_001_4434_01CCE0F2.5F898FE0" ------=_NextPart_001_4434_01CCE0F2.5F898FE0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable http://news.yahoo.com/groundhog-day-7-mistakes-retirees-repeatedly-202111= 774.html Groundhog Day: 7 mistakes retirees make repeatedly By DAVE CARPENTER | Associated Press - 1 hr 58 mins ago =20 =20 CHICAGO (AP) - Despite the best of intentions, retirees tend to make the = same money mistakes over and over and over again. Repeating the same scenario isn't all unpleasant, as Bill Murray = discovered while endlessly reliving Groundhog Day in Punxsutawney, Pa. = You can learn to play the piano, speak French, ice sculpt, go out to a = lot of nice dinners, and more. But eventually you're going to run into trouble if you don't break the = pattern of financial neglect. The money simply may not hold up in the = long run. It's time to wake up and address your errors before you get stuck in = your own bad-money time warp. A discussion of seven common retiree mistakes and how to avoid them: -1. Being too conservative with money. Treasury bonds, certificates of deposit and other savings instruments = with scant yields can give retirees a false sense of security. They = guarantee some income, however small, and can provide soothing = protection from dizzying stock market volatility. But they don't provide = even a fighting chance to keep up with inflation in the long term. Most financial planners say the safer move for the long haul is to = devote a healthy portion of your portfolio to stocks. "Retirees tend to be too willing to sacrifice future safety for = incremental yields today," says Bob Wiedemer, managing director of = Absolute Investment Management in Bethesda, Md. Inflation's impact is real, and ravaging over time. To illustrate its = effect to his clients, financial adviser Allan Flader of RBC Wealth = Management in Phoenix reminds them of the change in the price of a stamp = over the past three decades - the length of many retirements nowadays. = The cost of mailing a letter has gone from 18 cents in 1981 to 34 cents = a decade ago to 45 cents today. FIX: A rough guideline for asset allocation is to own a percentage in = stocks equal to 110 or 120 minus your age. In other words, a 70-year-old = would have 40 or 50 percent of her investment portfolio in stocks. -2. Putting off planning. Failing to create a financial or estate plan isn't just a matter of = missing out on investment opportunities or tax advantages. It can get = you in trouble later in retirement when you're no longer at the top of = your game mentally. About half the population over 80 suffers from significant cognitive = impairment. And a decline in financial and investing skills can start = much earlier. Without guidance or a plan, elderly investors can harm their finances = through unwise decisions. FIX: Prepare thorough financial and estate plans and discuss future = aging-related scenarios with an adviser. -3. Bailing out the kids. It's possible to be too selfless and charitable in retirement if it = means putting your own financial security at risk. Financial advisers cite many instances of overly generous retirees. Some seniors contribute to down payments for their children's first = homes even though they're struggling to fund their own retirements. = Others stretch to pay for the college expenses of a child or grandchild. = One of the oldest maxims of financial planning bears repeating: You can = take out loans for college but you can't take out a loan to pay for your = retirement. Kelley Long, a personal finance expert with the National CPA Financial = Literacy Commission says too many retirees are overly concerned about = leaving a legacy "when in fact their children would trade their = inheritance for the knowledge that their parents were living out their = days in comfort." FIX: Put your financial needs in retirement first. Make sure you know = how much you can safely spend from your savings each year. -4. Paying too much in taxes. Retirees usually are in lower tax brackets than in their working years. = But they often fail to make adjustments that could lower their taxes. Putting off taking withdrawals from an individual retirement account = until they are required at age 70=BD also can be costly. That's because = such amounts are taxable and often bump retirees into a higher tax = bracket. A plan of gradual withdrawals starting in your 60s can be a = more effective strategy. Seniors who do regular volunteer work tend to leave tax deductions for = mileage and out-of-pocket costs on the table. And snowbirds who spend = months in the Sunbelt often don't know they could save thousands of = dollars by changing their legal residency to a state with a smaller or = even no income tax, as with Florida. For example, if you own a home in = Minnesota but spend 183 days a year out of state you can switch, = assuming you meet the other state's minimum residency requirement. "For people who are already spending significant time elsewhere, it can = be a big savings," says David Levi, a tax director with tax consultancy = CBIZ MHM in Minneapolis. FIX: Have a plan to minimize the tax impact of withdrawals, keep your = receipts for volunteering costs, don't miss out on any deductions. -5. Following financial advice from friends and family. Many seniors living on fixed income wouldn't consider paying a planner = to help organize their finances. But enlisting a financial professional = can pay off in the long run. Julia Valentine, a financial adviser in New York City, hears it over and = over when she gives seminars at nursing homes: Retirees rely on families = for advice about buying or selling homes, estate planning, wills. One = client even bought a house in Florida as an investment property on the = advice of her manicurist, then couldn't find a renter. Stocks, bonds, budgeting, IRAs, insurance - seniors routinely act on = guidance from their friends and family. Not only is that risky, the = willingness to follow off-the-cuff advice increases their vulnerability = to financial scams targeting the elderly. FIX: Validate any advice from friends and family with objective = materials from somewhere else. If not an adviser, that means at least = credible online resources or organizations, notes Jean Setzfand, = director of financial security for AARP. -6. Underestimating the costs of health care. The ability to pay for health care is an increasingly critical part of = retirement income security. What was once referred to as the = three-legged stool of retirement security - with legs for pension, = savings and Social Security - now effectively needs a fourth pillar in = health care savings. A typical 65-year-old couple retiring now needs roughly $230,000 to = cover medical expenses in retirement, not counting long-term care, = according to Fidelity Investments. But surveys repeatedly show that most = people don't have a plan to cover those costs. They don't realize that = long-term care and many other costs associated with health care fall = outside Medicare coverage. FIX: Buy Medigap supplemental insurance that fills in benefit gaps in = traditional Medicare. And strongly consider buying long-term care = insurance, which pays for in-home care and nursing home care, unless = your health or age make it unaffordable. It can help ensure that = significant medical expenses later in retirement don't wipe out your = assets. -7. Underestimating how long they'll live. This may be retirees' biggest mistake of all. With all the advances in = medical technology, life expectancy is growing faster than ever before. The downside is most seniors don't have nearly enough savings or income = to stretch over a retirement that could last 30 years or more. Old age = is now the longest stage in life. What's more, they couldn't imagine = planning for it. "It happens all the time that a 65-year-old couple come in and think = they only need a nest egg for 10 years," says Flader, the financial = adviser in Phoenix. In fact, there's a 63 percent chance that at least one member of a = 65-year-old couple will live to 90 or older, according to the Society of = Actuaries. FIX: Ideally, financial preparation for a long life starts during your = work career with the creation of a financial plan that will provide = income deep into retirement. Failing that, working past your anticipated = retirement age, even part-time, will allow your existing savings = additional time to grow. ____ Personal Finance Writer Dave Carpenter can be reached at = http://twitter.com/scribblerdave. ------=_NextPart_001_4434_01CCE0F2.5F898FE0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
http://news.yahoo.com/groundhog-day-7-mistakes-retirees= -repeatedly-202111774.html
 

Groundhog Day: 7 mistakes = retirees=20 make repeatedly

By DAVE=20 CARPENTER | Associated=20 Press =96 1 hr 58 mins ago
 
 

CHICAGO (AP) =97 Despite the best of intentions, retirees tend to make the = same money=20 mistakes over and over and over again.

Repeating the same scenario isn't all unpleasant, as Bill Murray = discovered=20 while endlessly reliving Groundhog Day in Punxsutawney, Pa. You can learn to play the = piano, speak=20 French, ice sculpt, go out to a lot of nice dinners, and more.

But eventually you're going to run into trouble if you don't break = the=20 pattern of financial neglect. The money simply may not hold up in the = long=20 run.

It's time to wake up and address your errors before you get stuck in = your own=20 bad-money time warp.

A discussion of seven common retiree mistakes and how to avoid = them:

=971. Being too conservative with money.

Treasury bonds, certificates of deposit and other savings instruments = with=20 scant yields can give retirees a false sense of security. They guarantee = some=20 income, however small, and can provide soothing protection from dizzying = stock=20 market volatility. But they don't provide even a fighting chance to keep = up with=20 inflation in the long term.

Most financial planners say the safer move for the long haul is to = devote a=20 healthy portion of your portfolio to stocks.

"Retirees tend to be too willing to sacrifice future safety for = incremental=20 yields today," says Bob Wiedemer, managing director of Absolute = Investment=20 Management in Bethesda, Md.

Inflation's impact is real, and ravaging over time. To illustrate its = effect=20 to his clients, financial=20 adviser Allan Flader of RBC Wealth Management in Phoenix reminds = them of=20 the change in the price of a stamp over the past three decades =97 the = length of=20 many retirements nowadays. The cost of mailing a letter has gone from 18 = cents=20 in 1981 to 34 cents a decade ago to 45 cents today.

FIX: A rough guideline for asset allocation is to own a percentage in = stocks=20 equal to 110 or 120 minus your age. In other words, a 70-year-old would = have 40=20 or 50 percent of her investment portfolio in stocks.

=972. Putting off planning.

Failing to create a financial or estate plan isn't just a matter of = missing=20 out on investment opportunities or tax advantages. It can get you in = trouble=20 later in retirement = when you're=20 no longer at the top of your game mentally.

About half the population over 80 suffers from significant cognitive=20 impairment. And a decline in financial and investing skills can start = much=20 earlier.

Without guidance or a plan, elderly investors can harm their finances = through=20 unwise decisions.

FIX: Prepare thorough financial and estate plans and discuss future=20 aging-related scenarios with an adviser.

=973. Bailing out the kids.

It's possible to be too selfless and charitable in retirement if it = means=20 putting your own financial security at risk.

Financial advisers cite many instances of overly generous = retirees.

Some seniors contribute to down payments for their children's first = homes=20 even though they're struggling to fund their own retirements. Others = stretch to=20 pay for the college expenses of a child or grandchild. One of the oldest = maxims=20 of financial = planning bears=20 repeating: You can take out loans for college but you can't take out a = loan to=20 pay for your retirement.

Kelley Long, a personal finance expert with the National CPA = Financial=20 Literacy Commission says too many retirees are overly concerned about = leaving a=20 legacy "when in fact their children would trade their inheritance for = the=20 knowledge that their parents were living out their days in comfort."

FIX: Put your financial needs in retirement first. Make sure you know = how=20 much you can safely spend from your savings each year.

=974. Paying too much in taxes.

Retirees usually = are in=20 lower tax brackets than in their working years. But they often fail to = make=20 adjustments that could lower their taxes.

Putting off taking withdrawals from an individual retirement account until they are = required at=20 age 70=BD also can be costly. That's because such amounts are taxable = and often=20 bump retirees into a higher tax bracket. A plan of gradual withdrawals = starting=20 in your 60s can be a more effective strategy.

Seniors who do regular volunteer work tend to leave tax deductions = for=20 mileage and out-of-pocket costs on the table. And snowbirds who spend = months in=20 the Sunbelt often don't know they could save thousands of dollars by = changing=20 their legal residency to a state with a smaller or even no income tax, = as with=20 Florida. For example, if you own a home in Minnesota but spend 183 days = a year=20 out of state you can switch, assuming you meet the other state's minimum = residency requirement.

"For people who are already spending significant time elsewhere, it = can be a=20 big savings," says David Levi, a tax director with tax consultancy CBIZ = MHM in=20 Minneapolis.

FIX: Have a plan to minimize the tax impact of withdrawals, keep your = receipts for volunteering costs, don't miss out on any deductions.

=975. Following financial advice from friends and family.

Many seniors living on fixed income wouldn't consider paying a = planner to=20 help organize their finances. But enlisting a financial professional can = pay off=20 in the long run.

Julia Valentine, a financial adviser in = New York=20 City, hears it over and over when she gives seminars at nursing homes: = Retirees=20 rely on families for advice about buying or selling homes, estate = planning,=20 wills. One client even bought a house in Florida as an investment = property on=20 the advice of her manicurist, then couldn't find a = renter.

Stocks, bonds, budgeting, IRAs, insurance =97 seniors routinely act = on guidance=20 from their friends and family. Not only is that risky, the willingness = to follow=20 off-the-cuff advice increases their vulnerability to financial scams = targeting=20 the elderly.

FIX: Validate any advice from friends and family with objective = materials=20 from somewhere else. If not an adviser, that means at least credible = online=20 resources or organizations, notes Jean Setzfand, director of financial = security=20 for AARP.

=976. Underestimating the costs of health care.

The ability to pay for health care is an increasingly critical part = of=20 retirement income security. What was once referred to as the = three-legged stool=20 of retirement security =97 with legs for pension, savings and Social = Security =97=20 now effectively needs a fourth pillar in health care savings.

A typical 65-year-old couple retiring now needs roughly $230,000 to = cover=20 medical expenses in retirement, not counting long-term care, according = to=20 Fidelity Investments. But surveys repeatedly show that most people don't = have a=20 plan to cover those costs. They don't realize that long-term care and = many other=20 costs associated with health care fall outside Medicare coverage.

FIX: Buy Medigap supplemental insurance that fills in benefit gaps in = traditional Medicare. And strongly consider buying long-term care = insurance,=20 which pays for in-home care and nursing home care, unless your health or = age=20 make it unaffordable. It can help ensure that significant medical = expenses later=20 in retirement don't wipe out your assets.

=977. Underestimating how long they'll live.

This may be retirees' biggest mistake of all. With all the advances = in=20 medical technology, life expectancy is growing faster than ever = before.

The downside is most seniors don't have nearly enough savings or = income to=20 stretch over a retirement that could last 30 years or more. Old age is = now the=20 longest stage in life. What's more, they couldn't imagine planning for = it.

"It happens all the time that a 65-year-old couple come in and think = they=20 only need a nest egg for 10 years," says Flader, the financial adviser = in=20 Phoenix.

In fact, there's a 63 percent chance that at least one member of a=20 65-year-old couple will live to 90 or older, according to the Society of = Actuaries.

FIX: Ideally, financial preparation for a long life starts during = your work=20 career with the creation of a financial plan that will provide income = deep into=20 retirement. Failing that, working past your anticipated retirement age, = even=20 part-time, will allow your existing savings additional time to grow.

____

Personal Finance Writer Dave Carpenter can be reached at=20 http://twitter.com/scribblerdave.

 
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