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Elder Living

New App “Mind Your Loved One” Provides Storage for Important Information

Today, digital apps provide a means by which we can store and send information on our smartphones and tablet devices. Whether engaging in online banking, using a mobile plane boarding pass, or creating work calendars shared in the cloud, the internet of things provides needed connectivity. Yet critical medical information, health care directives, and other essential legal documents tend to remain in older storage formats such as paper files or on-site at a hospital or doctor’s office. The American Bar Association website displays and recommends an app called Mind Your Loved Ones (MYLO) that provides access to this critical information 24/7.

The app allows you to send information directly to health care providers, whether they be an insurance company, doctor, hospital, or trusted friend or family members, via email, text, fax, or print. Information is not stored in the cloud but locally on the user’s tablet or smartphone for enhanced security.  A mobile app like MYLO falls under the Health Insurance Portability and Accountability Act (HIPAA) scope because it handles personal health information (PHI). The information you want resides on your smartphone, and MYLO has no access to the user’s profile beyond an email address and registered name.

Whether traveling for work, leisure, or living in a retirement community, you can securely store your and your family’s health care advance directives, key medical information like prescriptions, physician contacts, medical notes, and insurance information. There is no need to hunt for paper files or sign onto a website to obtain the information, and you can create as many individual profiles on the app as you want. This immediate access to critical information allows your trusted agent to immediately answer difficult questions that an emergency room or other healthcare professionals ask, creating better health outcomes.

Because you can create an unlimited number of profiles, you can use MYLO to store information on your aging parents, yourself, spouse, siblings, children, and even friends. Each profile automatically generates reports that can be shared electronically with the desired recipient. Insurance information includes copies of both sides of insurance cards. Event notes, routine appointments, prescription changes, activities of daily living, and vital signs can all be maintained and measured over time. A dropbox is available to backup, share, and restore profiles, so even if you accidentally delete or damage a profile, it can be easily recreated. An annual subscription service to MYLO is less than ten dollars.

Other apps provide a format to carry your medical history and records on your phone; however, these apps do not combine legal documents as part of the app. MYLO provides ways to track medical, legal, and other information seamlessly in one app, which is a big plus when under duress to provide information to help yourself or a loved one. Remember that you default your or your loved one’s decision-making to hospital authority without proper legal documentation to make medical decisions.

Keeping all of this critical information current is easy by simply uploading new forms, medical information, insurance data, and legal documents to the app. You will not have to guess which prescription information or legal document is most current as all data storage is by date. A medical doctor can even review previous to current medications to make assessments based on health responses to those prescription changes.

The MYLO app does not mean you have to give up your paperwork if you still like that hard copy in a file cabinet somewhere. Many older individuals like covering all bases with both the standard paper file format and the MYLO app. Time is precious when you or someone you love is experiencing an adverse health event. Quick and easy access to reliable health and legal documentation can help drive the best possible outcome for the situation at hand.

If you or a loved one do not yet have health care directives or powers of attorney for financial decisions, we can help. It’s important to have proper legal advice on what options to choose, and to make sure the document fully represents your wishes. If you’d like to discuss this in more detail, please don’t hesitate to reach out. Please contact our Reno office by calling us at (775) 853-5700.

Elder Living

Seniors Victims of Data Breaches

A staggering 100 million Americans were victims in a Capital One data breach earlier this year, bringing this topic to the forefront of conversations. But what hasn’t been receiving much major media coverage are the recent breaches affecting seniors.

One such breach occurred last year in May, and that breach compromised the personal information of almost 4,000 clients and employees of home care and support services for seniors in the bay area. That “personal information” includes quite a lot, from names, emails, and phone numbers to Social Security numbers, financial records, and health information.

2018 saw three times as many records breaches as in 2017, with 15 million patient records compromised in the healthcare sector. And this issue has only been exacerbated in 2019, with potentially more than 25 million records breached as of July.

Just one security incident in April affected at least 60 facilities in Massachusetts, Minnesota, Missouri, and Tennessee, compromising the personal information an unknown number of patients in those four states.

This is an issue that is becoming increasingly important, in a variety of sectors but especially in the healthcare sector. However, many in this area are ill-prepared to handle it. Data breaches are going on for extended periods, and not being reported within the 60 days mandated by HIPAA.

Part of the problem is that HIPAA is not well equipped to deal with security needs today, in a technological landscape remarkably different from that of 1996 when HIPAA was enacted. Unfortunately, any legislation or regulation enacted today would face a similar problem: technology continues to adapt quickly, and the market pushes the healthcare sector to invest in technological advances as they come.

A few tips to protect your online information: 1) Never open an email from an unknown sender that contains an attachment. 2) When storing information online with a bank or medical provider, make sure you choose a strong password – one that contains a combination of letters, numbers, and symbols that is not easy to guess. 3) Do not store credit card or social security information online.

If you have questions or would like to discuss your planning needs, we would be happy to help. Please contact our Reno office by calling us at (775) 853-5700.

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Estate Planning

How Do You Contest a Will?

An executor oversees the settling of the estate according to the will after your death, laying out who the inheritors are and what property needs to be divided. For many reasons, beneficiaries can feel slighted by what they did or didn’t receive, and some individuals are entirely excluded from inheriting anything at all. The legal process of challenging the validity of a will is called a will contest (or “contesting the will”).

Once probate is underway, the named executor will take the necessary steps to complete probate and notify beneficiaries named in the will. This legal notice typically limits the time when a beneficiary can contest the validity of the will. Generally, a beneficiary (and even a person not named in the will) has thirty to ninety days to bring legal action against the decedent’s will.

Know that the vast majority of wills pass through probate without issue. The courts rightly view the will like the author’s (testator), last voice. Because the testator can no longer speak to their wishes, the courts try to adhere to the legally filed will stringently. Because of the narrow timeline for filing a will contest and the odds stacked against winning the legal challenge, most challengers will find it a fruitless and costly endeavor.

Under what circumstances then would you want to contest a will? Legally, only a person or entity with “standing” can contest a will. Standing is when the party involved in the will contest will be personally affected by the case’s outcome. Most often, this means an heir or beneficiary already named in the decedent’s last will or any preceding will. It may also include any person (usually a spouse or child) not named in the will, but because of state intestacy laws would be eligible to inherit in the absence of a will. Typically, four grounds are viable for contesting a will:

  • The will’s signing lacked the proper legal formalities
  • The mental capacity of the decedent to make a will is in question
  • Someone leveraging undue influence over the decedent into making or changing a will
  • The will’s procurement is fraudulent

Certain fact patterns may lead to a successful will contest. As an example, if a testator writes their own will, some legal formalities may be overlooked, rendering the will invalid. In particular, the “do it yourself” method for creating a will may not include all of the “what if” scenarios making the will incomplete. In another example, if the testator is experiencing isolation from family and friends, the primary beneficiary’s influence and motives regarding the estate may come into question. If the executor is trying to enforce an outdated will, the newer one should supersede the older one as long as no coercion was involved in writing the most recent version. Finally, some medical evidence may suggest the testator lacked the requisite mental ability to make a will. Occasionally the challenger to an existing will can negotiate a settlement with the estate instead of enduring a court proceeding.

Some wills include a no-contest clause, also called an “in terrorem” clause. This provision states that if anyone files a lawsuit challenging the will’s validity, they will receive nothing from the estate. While this may a powerful deterrent, it may not be allowed in the state where the will is probated.

To protect your will from being contested, even if you have limited assets, your best strategy is to have your will professionally drafted by an attorney well versed in estate planning. Using an attorney can help protect you and your estate from future legal challenges while helping you think through who you want to inherit your money and property, and how each person should receive what they inherit.

If you would like to discuss whether a will is appropriate for you or whether you should update an existing will, we would be happy to speak to you at your convenience. Please contact our Reno office by calling us at (775) 853-5700.

Estate Planning

The Impact of the “For the 99.5% Act” on Estate Planning

On March 25th, 2021, a new bill named “For the 99.5% Act,” was presented to Congress by Sen. Bernie Sanders and Rep. Jimmy Gomez. The bill’s current form is only 18 pages long, but its potential impact on federal estate and gift tax laws significantly affects estate planning. While it is impossible to determine if the bill will pass into law, some of the act’s key elements may inspire Congress to increase the estate tax using other mechanisms should this bill fail. They might also seek to remove well-known tools like trusts to bypass taxation upon your death to generate revenue for federal programs.

In a letter to Congress, 51 national organizations supporting Senator Sanders and Representative Gomez estate tax reform urge Congressional members to adopt the legislation. The letter cites that the richest one percent of Americans own nearly 32 percent of the nation’s wealth, and the bottom 50 percent own just 2 percent. This stark inequality creates constraints and financial growth limitations for the majority of Americans.

The Sanders-Gomez proposal wants to reverse this trend and increase the estate tax rate currently in place, topping out at 65 percent on estates over one billion dollars. In contrast, President Biden’s campaign estate tax plan would retain the 40 percent estate tax rate currently in place. Much is unknown, but one thing is clear; change is coming to the inheritable asset and gift tax classes.

The Joint Committee on Taxation (JCT) believes the Sanders bill can raise 430 billion dollars over ten years. Some of the bill’s main provisions that generate this revenue include:

  • Gift tax exemption reduction from 11.7 million dollars to 1 million dollars annually
  • Federal estate tax exemption reduction from 11.7 million dollars to 3.5 million dollars
  • Increase in gift and estate tax rates from 40 percent up to a top rate of 65 percent
  • Elimination of the short-term Grantor Retained Annuity Trust (GRAT) with no “grandfather” exemption for existing trusts
  • Grantor trust inclusion in a decedent’s estate. Many irrevocable trusts are grantor trusts for income tax purposes, although trust assets are excluded from the grantor’s estate for federal tax purposes. Enacting “For the 99.5% Act” into law will end the Grantor Trust type of estate planning. Additionally, without very careful planning, Irrevocable Life Insurance Trusts will no longer provide shelter for life insurance proceeds from estate taxation
  • Elimination of minority discounts on valuations for the transfers of non-business assets held in a business entity such as a partnership or limited liability company controlled by or majority-owned by members of the same family
  • Elimination of certain marketability discounts for passive assets not used in an active trade or business
  • The implementation of a federal 50-year rule against perpetuity will result in estate taxation at some point for Dynasty Trusts

The 99.5 Percent Act will provide beneficial valuation rules for small businesses and farms as well as land subject to qualified conservation easements. The Sanders-Gomez bill will give family farms extra protection by allowing lower assessed value on farmland up to three million dollars, exempting even more farms from tax.

There is overwhelming public support to raise taxes on Americas’ wealthiest. Still, some of these inheritance tax rate changes will affect the so-called “middle-class millionaires” who will need to restructure their current estate plans if the 99.5% Act is passed into law. The proposed tax rate of 45 percent on estates between 3.5 to 10 million dollars will affect family generational wealth more so than the top tax rates for mega multi-millionaires and billionaires.

If you have questions about this pending legislation and whether it could impact you, please don’t hesitate to reach out. We would be happy to discuss planning options with you to minimize your tax liability. Please contact our Reno office by calling us at (775) 853-5700.

Elder Living

Be the Best Caregiver You Can Be

There is a large number of Americans, 53 million in fact, that are the primary caregivers for family members. About 17 percent of the US population is a family caregiver, and most are losing sleep, worrying, losing income, struggling to balance caregiving tasks with their workload and other family responsibilities. These caregivers are often experiencing ill health of their own and putting their well being at a lesser priority to their family loved one. The coronavirus pandemic further complicates matters as an October 2020 poll from The Associated Press-NORC Center for Public Affairs Research reveals that family caregivers provide 36 percent more care than one year ago due to the virus. Many family caregivers are exhausted, keeping their older loved ones safe and socially connected, often while working from home and supervising children during home school days. To be good to others, you must first be good to yourself. Making self-care a top priority allows you to be a more effective caregiver to your loved one. Here are ten strategies to implement today to ease family caregiver burnout.

Relentlessly add some “me time” into your schedule. There is time to enjoy life, visit (even if virtually) friends, read an enjoyable book, do some artwork, practice meditation, or just lay down and relax. Whatever it is that brings you joy and peace of mind (and it can be changeable!), put it in your schedule routinely.

Prioritize your healthcare. You cannot be an effective caregiver if you are unwell. It is a trap to spend all of your time managing your loved family member’s doctor appointments and medication while forgoing yours. When was your last checkup? Are you experiencing new symptoms under the stress of caregiving that you are not sharing with your doctor? Make those appointments for your well being today.

Eat a healthy diet and get enough exercise. Neglecting the very basics of a healthy lifestyle encourages health problems to present themselves in you. A healthy diet coupled with exercise will bring balance to your well-being, and from there, all things become possible. Ditch the fast food, drop the daily glass of alcohol, and practice a healthier lifestyle.

Connect with other caregivers. It is so helpful to address your caregiving frustrations out loud to others in a similar situation. You might find they experience similar feelings to your own. It is not a failure on a caregiver’s part to have these feelings. You are human and, as such, have frailties. Never try to be invincible. If you feel you need more help than this, seek professional counseling. A counselor can help you sort through the complexity of your situation and feelings, providing tools to navigate family caregiving’s complex emotions. Select a therapist who specializes in helping those who are caregivers and the associated dynamics.

Learn more about your loved one’s health condition to better prepare for what lies ahead. You can’t know the future, but a medical prognosis and additional research can go a long way to addressing uncertainty that increases stress levels. Understanding possible future scenarios will let you plan and reduce the number of surprises that can catch you off guard.

Learn to set boundaries and don’t let old family dynamics dominate today. As your aging loved one requires more care, your downtime can become non-existent. Stay true to your schedule and your needs. If your loved one requires more help, it is time to call in other family members for financial or hands-on assistance or hire a service to provide additional care. Also, do not fall into child mode and allow your parent to push your buttons as they may have in earlier years. Stay in the present and focus on the task at hand. If you find it hard to separate then and now behaviors with your parent, seek support groups or find a counselor to learn ways to combat falling into old patterns.

Get help and get it sooner than later. It is not your destiny to go through this alone. Talk to your family or your doctor to strategize about ways to reduce your workload and stress. Bring in professional care, even if just a couple of times a week for some relief. Ask for help and then accept it! Your family members may be willing to help financially and spend time remotely with your loved one while you take a well-deserved break. When someone steps in to help, do not hover or micro-manage the situation. Walk away and clear your head. The world will spin without you being the family caregiver for a few hours or even a few days. Do not delay. Take good care of yourself to be your best for others.

Make sure you have a plan. If something should happen to your health, have you put into writing who should make decisions for you, who should manage your affairs, and what your wishes are regarding your care? If not, the time couldn’t be better. We can help, and would welcome the opportunity to make sure your wishes are properly documented. If you’d like to discuss your particular situation, please contact our Reno office by calling us at (775) 853-5700.

Elder Law, Elder Living, Estate Planning, Healthcare

How Do the Stimulus Payments Affect Medicaid?

The federal government has issued direct payments, “stimulus checks”, to most Americans to invigorate the economy after the devastating coronavirus pandemic. This money is to ease the pain of the Covid pandemic and to jump-start the economy.

The stimulus money should have arrived in the same way that Social Security payments or tax refunds are made, either direct-deposited into a bank account or mailed as a paper check. If the money has not arrived, or for guidance in general, consult the IRS website:

https://www.irs.gov/coronavirus/economic-impact-payment-information-center#more. Other options are to call 800-919-9835 or 800-829-1040, or you can visit your local Taxpayer Assistance Center.

Those who are receiving means-tied government assistance, like SSI, VA benefits, or Medicaid to pay for long-term care, need not worry that stimulus money will be counted against them for eligibility. As long as recipients spend the money within twelve months, the money will not push them over the maximum amount they are permitted before they are penalized.

Recipients may use the money to buy new clothing, cell phones or televisions, toiletries, snacks, dental treatment, or improved quality of medical supplies. They may buy an irrevocable funeral trust, to avoid future expense to family members. They may give the money away to family or charities. The money might pay for updating estate-planning documents, or for consulting a geriatric care manager. (Some commentators believe that you could give the money away to family or charities. While this may be OK under federal law, it’s probably best not to take chances with how the states may interpret it. Spend the money, don’t donate it.)

Provided that the money is not spent on what could be called an asset or an investment – like, for example, rare coins or stocks or bonds – the money will not be counted against the asset limit for Medicaid eligibility. And, again, the money must be spent within twelve months. It must not be forgotten-about or left unnoticed in a bank account.

It also must not be misappropriated by nursing homes or assisted-living facilities. If this has happened to you or your loved one, inform the facility manager that the money must be refunded to the resident. Cite the law that carves out the payment from being counted toward federally assisted programs like Medicaid: 26 U.S.C. § 6409.  Or, show them a handout downloadable from the Congressional Research Service.

If the facility will not refund the money, contact your state’s attorney general. Then lodge a complaint with the Federal Trade Commission.

Recipients of assistance, like anyone else, are free to spend their stimulus money. The money is theirs. It is tax-free. It is intended to be spent, and it should be spent, in any way the recipient would like (subject to the conditions above).

This is one time when spending is unquestionably a good thing – for buyers and sellers.

If you have questions or would like to discuss your situation in a confidential setting, please don’t hesitate to reach out. Please contact our Reno office by calling us at (775) 853-5700.

Elder Law, Elder Living, Estate Planning, Healthcare

American Nursing Homes Face a Dilemma

Our country’s nursing facilities are home to the most vulnerable to the COVID-19 pandemic. When the novel coronavirus did hit, these nursing homes became its ground zero as many residents and workers did not receive testing, and staff found obtaining personal protective equipment a struggle. Some facilities tended to downplay the severity of the outbreaks. Couple these issues with some state governments mandating the reintroduction of recovering COVID-19 patients back into nursing home facilities, and the perfect storm came into being. The Washington Post reports that according to the best estimates, about half of COVID-19 deaths have been nursing home residents. Currently, that half represents more than 52,500 of our senior population.

The Wall Street Journal is reporting that according to two studies, nursing home residents who are dying from COVID-19 on average could have expected to live for another decade. Even the more senior residents, 90 and older, with multiple ailments, are losing more than one year of life. These studies challenge the perception that the coronavirus tends to kill elderly people who were likely to die soon anyhow.

A New Perspective on Elder Care

The coronavirus pandemic is forcing us to take a hard look at where our loved one should receive care if care at home is not a safe option. As the number of nursing home deaths continues to increase, the news media is finding it harder than ever to gloss over the unpalatable reality of these deaths.

Now more than ever it is important for families to come together when a decision must be made about a loved one’s care. We help families discuss options for care and how to plan to pay for appropriate care. If you’d like to discuss your particular situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700 with any questions.

Estate Planning, Healthcare

You got the COVID-19 Vaccine, Now What?

Eligibility to receive the COVID-19 vaccine is becoming more and more widespread. According to the medical community, vaccinated individuals are significantly less likely to contract COVID-19; however, they may pose a health risk to others. What then is appropriate behavior for vaccinated Americans when considering the health of others? For the moment, not much has changed.

First of all, experts have told us that the COVID-19 vaccines take at least two weeks from receiving the second dose (or the single dose of Johnson and Johnson) to build up your immune response. The Pfizer vaccine offers 95 percent efficacy, while the Moderna vaccine provides 94 percent efficacy, so you are highly resistant to COVID-19 but not completely immune. According to MarketWatch, Dr. Gregory Poland, infectious disease expert and director of the Mayo Clinic’s Vaccine Research Group in Rochester, Minnesota, the .9 percent difference in efficacy rates is “meaningless.” However, according to preliminary data, those who are vaccinated may still contract coronavirus though, they are more likely to be asymptomatic. In the same MarketWatch post, Dr. Thomas Russo, chief of infectious disease, University at Buffalo in New York, says, “… it’s not clear whether those vaccinated people would be able to pass it to others.” We are still in a time of great uncertainty regarding this pandemic.

There is a low risk of infection when socializing with other fully vaccinated individuals; however, most experts believe it will take months to achieve herd immunity as a nation. Herd immunity occurs when a large enough percentage of the population develops long-lasting immunity through naturally occurring infection resistance or vaccinations to a particular virus or disease.

Should you visit your local grandparent or other older relative now that you have the vaccine? Dr. Russo told MarketWatch if both you and your loved one are fully vaccinated, “the benefits of the visit will outweigh these small risks that they could have of developing a severe case of coronavirus.” The unprecedented rates of social isolation of the American elderly have taken a huge toll on their physical, mental, and emotional well-being. If you and your loved one have been fully vaccinated, make arrangements to meet safely.

The medical community speculates that a vaccination rate of 70 to 80 percent can bring about herd immunity in the US, but we are just beginning the nation’s vaccination journey. The advent of open borders and easing air travel restrictions from other countries continues to provide challenges. In the future, you might need to present a negative COVID-19 test to cross international borders. Currently, those Americans returning from Mexico must now meet this requirement before entering the US. The “slow the spread” protocols remain in place even though you are fully vaccinated.

Once you are fully vaccinated your way of life may not change for a while. It is still important to reach out to friends and loved ones who may still be suffering from feelings of isolation and/or depression. You may be able to visit a loved one in a care facility once you are fully vaccinated. And if you haven’t already, now is a great time to think about your future health, and to make sure you have the correct legal documents in place in case you are unable to make decisions due to illness or incapacity in the future. We would be happy to speak to you about what documents you should be thinking about, including a health care directive, living will, or other documents specific to your wishes and desires. If the past year has taught us anything, it is to expect the unexpected and plan accordingly. We can help!

If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Estate Planning

Protect Your Finances from Gray Divorce

Gray divorce is become more and more common for Americans aged 50 or more. The term gray divorce generally refers to the baby boomer generation and affects all classes and education levels. Research shows that splitting during middle age is particularly damaging to your financial well being. According to Bloomberg News, the US divorce rate for couples past the age of 50 has doubled since 1990 and occurs most often in people who have married and divorced more than once. The rate of divorce among remarried individuals is 2.5 times higher than those in first marriages. And the financial outlook is usually the bleakest for those who have married and divorced more than once. Losing accumulated wealth for a second or third time can ruin personal finances on an unprecedented scale.

As such, relative wealth can be a protective factor in keeping couples together. Midlife marriages are not always torn apart by empty nest syndrome or a late mid-life crisis. Often, divorcing couples are already experiencing financial problems due to unemployment or job insecurity. These couples may not have the resources to enter into marriage counseling and may not see the point in fighting to remain in an unsuccessful economic partnership. Married couples with more to lose in divorce will often keep a less than perfect marriage viable to protect a lifestyle they are unwilling to forfeit. These couples will often live separate lives but maintain the economic structure within the marriage.

Susan Brown, who is co-director of the National Center for Family & Marriage Research, explains that if you are getting a divorce after the age of 50, expect your wealth to decrease by 50 percent. Brown goes on to state that the depression rate for those experiencing gray divorce is higher than the levels of those who have experienced the death of a spouse. If you are a woman and going through a gray divorce, expect your standard of living to plunge by 45 percent compared to a man’s 21 percent. One of the biggest financial tragedies of gray divorce is there is no appreciable window of time to recover the wealth you lost. The event horizon of your life is shrinking, and there is no time to undo the financial destruction. Even qualified career individuals will find ageism is rife within the corporate hiring sector. The prospects for landing a great new job or winning a lottery are very bleak. Statistics show you will be most unlikely to recoup your previous standard of living. This fact is particularly true in the case of women aged 63 or more who, in part, are experiencing poverty rates of 27 percent because of gray divorce. The Journal of Gerontology projects that by the year 2030, more than 828,000 Americans will be divorcing each year even if the gray divorce rate stays the same.

What to do if you become a gray divorce statistic then? One of the best ways to recover is to re-partner. Many older people are looking to re-couple and the digital age is providing more ways to meet than ever before. Online dating sites for older Americans are popular as are the more traditional senior community centers to make connections to like-aged people. If you choose to remain un-partnered however, you can expect to take about four years to end the depression cycle of gray divorce. However, remarrying or re-partnering will end the depression almost immediately with the stipulation you have chosen your partner wisely. Generally, re-partnering is more successful if you are a man since they tend to look for a partner who is significantly younger than themselves. As women live longer than men and because men do tend to seek younger women, older women are left with a vastly smaller pool of potential partners.

Protect your well being and financial interests from gray divorce. Your best hope is to stay successfully married and continue on the path of building wealth and enjoying retirement years. If you find yourself going through a gray divorce, be sure to seek trusted legal counsel who can best advise you on how to protect your assets and future retirement years. Whether you are on your first, second, or third marriage take a look at how best to protect your financial picture in the event gray divorce happens to you.

If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Estate Planning

How Americans are Retiring Poor

It’s Important to keep your finances well managed so you can enjoy a freedom of lifestyle during your retirement.  Sadly, reports say that less than 5 percent of Americans will be financially free by the age of 65. Changes in the U.S. economy coupled with increased health care costs and lack of personal savings have put millions of American workers at financial risk as they approach their retirement years. According to a study published online at cnbc.com, nearly 40% of America’s middle-class will experience poverty in retirement. Why?

One reason is that few Americans clearly define what financial freedom means to them. The definition is a wide array of personal opinion, but there is an economic equation that can easily encompass the most basic standard set for financial freedom; P.I ≥ L.E.Translated it means passive income = lifestyle expenses. An individual’s passive incomes from assets need to be equal to or higher than the income you require to afford your chosen lifestyle. Many people retire poor because they did apply this fundamental equation to their financial future. Some individuals are too disinterested to engage in financial planning or too lazy to be proactive and productive. The adage, “failing to plan is planning to fail” sadly applies to many Americans’ retirement strategies. Hoping things will work out is not a strategy any more than planning on winning the lottery is. Individuals must establish their goals and ruthlessly and relentlessly pursue them.

Every American has a different financial reality, and much of it is derived from the mindset they choose to adopt regarding finances. Consciously, as well as subconsciously, rich people think like rich people and poor people think like poor people. What you manifest is what you see and in turn, what you become. This mindset is why so often lottery winners go bankrupt after “hitting it big” and why wealthy people who go bankrupt often go on to develop a new fortune. Keep your mindset focus positive and reinforce your short and long term financial goals daily. Your attitude can determine your altitude.

Many Americans who retire poor chose the “let’s just wing it” path or did not attain sound and conservative financial management help. Do not be influenced by other poor people. Surround yourself with successful friends and family and learn from them. You can model their behavior in your own life. Retain a trusted accountant, banker, or financial advisor who can tailor your individual financial needs into an easy to follow set of steps and apply them. It does not have to be overly complicated and sometimes, the more straightforward the approach, the better. If you learn from successful people and sound financial consultants, you stand a better chance of becoming financially free. 

Some Americans stick their heads in the sand and never confront the facts of their financial reality. These are the people with stacks of unopened bank statements in their homes. While it can be painful to address a bleak economic reality, it is worse to have an inherent aversion to tackling the task at hand. You cannot abdicate your financial situation to anyone. You can receive trusted advice and help but do not avoid facing the truth of your finances. Oversight avoidance is how some famous athletes and performers have made vast fortunes but managed to squander every last cent. No one should care more about your financial freedom than you do.  

Many people who retire poor did not save any money, and those who inherited wealth squander instead of saving in the name of immediate gratification of a new car, or large home. Extravagant expenditures feel great at the moment, but the goal is to live beneath your means. Make saving money your number one habit. People who are successful at saving sometimes make a game of it like shopping online for the best deals or using coupons. Small savings during purchasing not only add up over time, but they also reinforce the habit of saving money. When you save money, you can apply the power of compound growth. Many people who retire poor do not understand how valuable the concept of compound growth is. It can take modest savings and in time, create wealth. Sadly, many Americans understand the concept of compound growth from the wrong side of the equation. Generally speaking, Americans are debt slaves. They rack up credit card debt and pay services charges, which are the bank lending industry’s compound growth money maker. People retire in poverty because they are on the wrong side of the compound growth equation.

Without the saving habit, compound growth equation, living beneath your means, and acquiring as little debt as possible you wind up working for money instead of money working for you. It is essential to assess the three following ways income can manifest itself in your life. There is earned income, which generally is in the form of a paycheck or salary for services or products provided. Then there is portfolio income which represents stocks, investments, and pensions. Finally, there is passive income, which comes in the form of royalties, patents, online services, or rental revenues, to name a few. These multiple streams of income can make retirement far more comfortable than relying on a modest pension and ever declining social security benefits check. People who retire rich have multiple streams of income, giving them a real path to financial freedom. People who retire in poverty continue working for money without the benefit of alternative sources of revenue.

There is little excuse to lack the knowledge and skillsets to become financially solvent in the digital age. Americans who struggle financially in retirement did not take the time to become financially educated. Being ignorant about finances is a sure way to retire poor. Online and for free, you can find many websites that generate articles about financial education. It comes as no surprise that people who retire with financial problems have the worst reading habits. If you don’t enjoy reading try financial literacy games for adults or learn through online seminars to boost your financial understanding. Even with financial knowledge if you lack a plan and the will power to follow it, you will retire without economic freedom. The practical application of your plan is crucial. Most Americans do not make a plan for their retirement, and many that do begin too late to affect a substantial change because compound growth and accrual of wealth take time. However, it is better to start your retirement plan late than not at all.

Ultimately the choice rests with the individual. Most Americans would rather retire with adequate incomes for a comfortable retirement lifestyle. Remember that you are not a product of your circumstances; you are a product of your decisions. Make the right decision today for your financial freedom in retirement.

If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.