06/26/17

If you build it, they’ll stay; Boomers remodel their homes

By Joyce Rosenberg, April 5, 2017, AP.com

The small businesses that dominate the home remodeling industry are expecting robust growth in the next few years, thanks partly to baby boomers who want to remain in their homes.

Home remodelers say they’ve had a pickup in projects from boomers who are in or approaching retirement and are seeking to modify their houses. It’s a trend known as “aging in place,” an alternative to moving to smaller quarters or a warmer climate. Many of these homeowners are hoping to make their surroundings easier to manage and safer in case they have health problems.

They’re replacing bathtubs with walk-in showers, installing safety rails, widening doorways and building ramps — features known as “universal design” since they can be used by anyone, regardless of physical ability. Boomers are also redoing their kitchens and sprucing up other areas — since they’re staying put, they want to enjoy their surroundings.

Zach Tyson estimates that 30 to 40 percent of his revenue is now coming from boomer renovations, up from 15 to 20 percent five years ago. Most of the projects come from homeowners who are healthy and mobile now, but want to be prepared if illness or injury hits.

Besides making bathrooms safer, they’re enlarging rooms so wheelchairs or walkers can be used more easily, and also to give the rooms a more open feel. “It’s trending up, for sure,” says Tyson, co-owner of Tyson Construction in Destrehan, Louisiana.

The oldest of the 76.4 million boomers, the U.S. generation born after World War II, are turning 71 this year. As more of them retire and make decisions about where they want to live, there will be a great need for accessible housing, according to a report released in February by Harvard University’s Joint Center for Housing Studies.

“A large share of these households live in older homes in the Northeast and Midwest, where the housing stocks have few if any universal design features,” the study said.

The report predicts home improvement spending by homeowners 65 and older will account for nearly a third of the total amount of remodeling dollars by 2025, more than twice the portion that group spent in 1995-2005. Owners age 55 and over already account for just over half of all home improvement spending.”The boomer activity seems to be driving the market,” says Abbe Will, a research analyst at the Harvard center.

That’s a change from the past, when older homeowners generally handled maintenance, repairs and landscaping but tended not to renovate. And some of the boomer-driven remodeling is coming from younger homeowners who expect their parents might later come to live with them and want to be ready, Tyson says.

The requests Tiffany and Bryan Peters get from boomer customers include replacing traditional turning doorknobs with lever handles that can be pushed down. Homeowners want motion-sensor light switches and faucets, and non-slip flooring.

In bathrooms, they’re replacing fixtures with models that are designed for people with disabilities — showers than can accommodate wheelchairs, and toilets at the same height as wheelchairs, Tiffany Peters says.”We’ve definitely experienced an increase in requests for aging-in-place work,” says Peters, who with her husband owns a Handyman Connection franchise business in Winchester, Virginia. “We get several requests a month.”

Home remodeling companies began seeing an increase in boomer spending about 18 months ago and expect it to contribute to their growth in the next few years, says Fred Ulreich, CEO of the National Association of the Remodeling Industry, a trade group.

“We see this as something that is dramatically affecting the marketplace,” Ulreich says.

Boomers typically live in homes that are several decades old, prime targets for remodeling, Ulreich says. Unless they move to a brand-new home that’s designed for aging in place, their decision is likely to mean remodeling.

Sal Ferro says boomers are his biggest group of customers, but he’s not getting many requests for aging-in-place projects. It’s more renovations to make their homes more enjoyable.”They’re finally getting the projects done that they always wanted. They’re getting that kitchen or bathroom,” says Ferro, owner of Alure Home Improvements, based in East Meadow, New York.

Some remodeling companies are specifically marketing to boomers, sending salespeople to trade expos and events those customers are likely to attend.

Miracle Method, a franchise business that refinishes kitchens and bathrooms, has increased its outreach to boomers, says Erin Gilliam, the company’s marketing manager. Franchise owners say much of the 11 percent growth in the franchise’s overall business in the past year was driven by boomers, she says.

Gilliam’s husband, Gabriel, sees the trend in the franchise he owns in Salt Lake City. He estimates that revenue from boomers has risen between 10 and 20 percent, and the growth is prompting him to hire more workers. He has five staffers now, having added one per month the past three months, and expects to reach 10 in the next year.

“I’m hiring as quickly as I can,” he says.

 To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

06/12/17

Prepare Now For These 3 Retirement Risks

By Jim Sandager, April 10, 2017, DesmoinesRegister.com

Navigating retirement is difficult. What makes retirement planning so challenging is that there are so many unknowns that you need to prepare for, including the length of retirement, your spending needs and the performance of your portfolio.

These myriad of unknowns produce specific risks that can jeopardize your financial future. Fortunately, the chances these risks sabotage your retirement can be lessened with a bit of proactive planning. Today, I want to focus on three risks that can jeopardize your ability to sustainably spend in retirement, and what you can do today to prepare for them.

Sequence Risk

If your retirement happens to last 20+ years, there’s a good chance you’ll experience a market downturn at some point. Sequence risk is the risk that there’s a market downturn early in retirement rather than later in retirement. Imagine you’re retiring with $500,000 in savings and need to withdraw $100,000 living expenses after the first year and $0 after the second year. If the markets have a great first year and return 50%, you’d have $650,000 after your spending needs. If the markets drop 33% the second year, you’d wind up with $435,500.

Now let’s flip those results and assume a 33% drop after the first year and then a 50% gain the second year. In this scenario, you’d have $352,500 remaining. In other words, because you were unlucky to retire in a bear market, you have about $80,000 less than the person retiring in a bull market. That’s why you need to have an adequate amount of money in less volatile investments to weather a rocky market.

Longevity Risk

No one knows how long retirement will last. Because of this uncertainty, it’s better to take a more conservative approach and plan for a retirement that could last into your mid-90s (or maybe even longer!). As we continue to live longer and longer, it’s important to continue to have a portion of your portfolio allocated in stocks. Historically, equities have been great at outpacing inflation, and it’s these long-term gains that will be critical in preserving your savings and spending power throughout retirement.

Risk of Unexpected Expenses

Unexpected expenses may not be unique to retirement, but how they impact you is. When you retire, your income is relatively fixed. Every time you need to increase the amount you’re withdrawing in order to pay for a large unanticipated expense further endangers your long-term financial security. When thinking about your retirement spending plan, make sure you have an outlet to tap into so that it doesn’t wreak too much havoc on your overall financial plan.

There are key retirement risks outside of the realm of spending that you need to be ready for (I’ll touch on those in my next column). That said, preparing for these spending risks is a fundamental tenet of financial planning. Having a plan to better ensure sustainable spending is a key to accomplishing the goals you have for your retirement.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

05/30/17

Try Mental Accounting To Make Your Retirement Dreams Come True

By Robert Powell, April 5, 2017, USA Today

You might not know what it’s called, but odds are high you do it – you craft systems that enable you to make countless decisions about money without breaking into a sweat. Or at least so writes Diane Garnick, the chief income strategist at TIAA and the author of a just-published white paper, Income Insights: Mental Accounting in Retirement.

According to her paper, this system – more formally referred to as mental accounting in the world of behavioral finance – “is an economic concept that suggests people code, categorize and evaluate activities based on a variety of subjective criteria, ignoring that funds are transferable.”

Others share that point of view. “Mental accounting is essentially the household equivalent of financial accounting, but it is often done without conscious thought,” says Richard Thaler, a professor at the University of Chicago Booth School of Business and author of Misbehaving: The Making of Behavioral Economics. “A primary insight is that people treat various mental ‘buckets’ of money as non-fungible, meaning that there are implicit rules against taking money from one account – the children’s college savings account – and spending it on something else, like a new TV.

And this system, according to Garnick’s paper, holds the possibility of delivering tremendous benefits. “With the right architecture, it can save us precious time, economize our thinking and increase our self-control,” wrote Garnick, who is also a board member at CFA Institute Research Foundation.

How so? Well, to understand ‘how so’ requires a bit of background. Prior to retirement, people routinely allocate some portion of their money to many buckets, and often over commit ourselves — 25% to housing, 25% to food, 25% to loans, and of course, another 50% to entertainment. “We don’t necessarily make the best decisions, but if we make a mistake we have time on our side,” Garnick wrote.

In an email, Garnick noted that mental accounting enables people to immediately discover which retirement goals they will be able to achieve. “This framework enables a 30-year-old to quickly see if they are saving enough to enjoy hobbies in retirement or if they will be just scraping by, ” she wrote. “The insight offered by mental accounting can be powerful since it gives people time to adjust their savings to meet their needs.”

Mental accounting in retirement

But come retirement, your mental accounting requires a change in mindset, wrote Garnick. Among other things, you no longer have time on your side should you make a mistake with your money.

So, rather than allocate some funds to many buckets all at once, Garnick proposes fully funding one bucket before moving on to the next. “This framework offers transparency into the age-old question of how much guaranteed lifetime income each household needs while simultaneously offering savers insight into which goals they are on track to meet,” she wrote.

For instance, instead of allocating 25% to housing, allocate a portion of your retirement income to funding necessities (housing, transportation, personal items, entertainment and taxes), then fund health care expenses, then emergencies, then fun or what some call discretionary, and lastly bequest.

And this change in mindset won’t be easy. “I think the most difficult aspect of mental accounting and retirement savings is when households switch over from saving up for retirement to spending down,” says Thaler. “This requires an entirely new mindset. Most of our lives we live on a budget: Spend less then you earn, and put some aside for later. Then they are confronted with the much more difficult task of taking a pile of money and making it last over an uncertain lifetime. Hard!”

Would a budget be better than mental accounting?

On the surface, it might seem a budget would be better than mental accounting. But that’s not necessarily the case. “While creating a detailed budget is ideal, many of us don’t invest the time necessary to start one, let alone maintain it with all of life’s unexpected expenses,” wrote Garnick. “Mental accounting provides a framework that enables people to make decisions at the margin without placing their economic future at risk.”

The four-box approach

To be fair, mental accounting resembles what some call the four-box strategy whereby you use guaranteed sources of income (such as Social Security, a traditional defined benefit plan, a guaranteed lifetime income annuity) to fund essential expenses, including recurring health care expenses, and risky assets (your retirement accounts) to fund discretionary expenses and bequests.

And that approach has merit too. “When it comes to retirement there are two kinds of people in the world,” wrote Garnick. Those with old-fashioned pension plans and those in the YOYO generation, which stands for ‘you’re on your own.’”

And both kinds of people, Garnick said, can be well served by securing guaranteed income that covers their necessities. This includes social security, a pension if you have one, and guaranteed lifetime income for the YOYO generation.

As for matching risky assets with discretionary expenses an expert said it’s a good strategy too. “If (investors) treat retirement accounts as long-term investments that should remain untouched, they are more likely to reach their financial objectives,” said Victor Ricciardi, a finance professor at Goucher College and co-editor Investor Behavior: The Psychology of Financial Planning and Investing.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

05/23/17

Who Holds The Purse Strings For Couples?

By Karen Demasters, April 7, 2017, FinancialAdvisor.com

LIMRA, a research organization for the insurance and financial services industries, set out more than 50 years ago to find out who makes the financial decisions for young couples.

The firm has now completed its survey three times since 1965 and found that the person making the decisions, or whether the couple makes decisions jointly, has shifted over the years. The latest survey of 1,043 households of 25 to 44-year-olds with at least $35,000 in annual income shows decision-making is somewhat evenly split among the three categories considered by LIMRA: men, women and joint decisions.

Men are the financial decision-makers in 30 percent of the households and women in 34 percent. The couples in the report made joint decisions in 36 percent of the households.

In the first study in 1965, men were the decision-makers in a much smaller percentage of the households. In only 27 percent did men make the financial decisions, while in 39 percent it was the woman and in 34 percent it was both of them.

By 1990, the numbers had shifted. Men made the decisions 34 percent of the time, women 38 percent of the time, and couples together only 28 percent of the time. The financial decision-maker is defined by LIMRA as the person who pays the bills, keeps the budget and tracks expenses.

The decision-maker is 32 percent more likely to be extremely concerned about financial worries, including saving for retirement and maintaining the current standard of living should a wage earner become disabled or die. The study also found that 60 percent of couples do not strongly agree on their financial goals. In those cases, financial advisors must talk with both spouses, LIMRA says.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

05/1/17

The 7 Elements of a Successful Retirement

By Nick Ventura, April 12, 2017, Marketwatch.com

Start with well-defined goals, and revisit them at least annually. The closer you get to retirement, the more often you should sit down and think about your overall retirement strategy. In Ernie Zelinski’s “How to Retire Wild, Happy and Free,” the author makes the argument that setting your retirement goals expands far beyond managing your finances. Retirement planning should encompass all areas of your lifestyle, from where you live and where you travel to how you spend your day and what truly are your income requirements. Cookie cutter percentages and rules of thumb serve merely as benchmarks. Successful retirement planning requires flexibility and the willingness to look at all aspects of your life.

Many people get great satisfaction from work. So, if you are retired, and you like to work, pick something you like to do and gain emotional satisfaction from that activity. This includes working for charitable causes, hobbies, family involvement, etc. These “jobs” may or may not come with financial remuneration. But that’s not the point; many people derive emotional satisfaction and self-worth from working.

Another aspect of retirement is lifetime learning. Staying relevant in today’s technology economy requires a willingness to learn and adapt. Consider this: most medical professionals would agree that 20% to 30% of medical knowledge becomes outdated after just three years. Keeping current on technology and medicine will certainly enhance your retirement success.

Budgeting is more than setting a top-line spending number based on a pre-arranged percentage. Often times, we work from the bottom up, exploring what a client actually spends, instead of what they think they spend. It is not uncommon for individuals to drastically underestimate their spending on non-essential items. How much is your cell phone bill? Cable bill? Groceries? Starbucks?! We encourage clients to look at these as recurring payments. Not $140 a month, but $1,680 a year. Big difference, right? Getting as granular as possible is liberating when planning your retirement income.

While many planners suggest that a client will need two-thirds of their working salary to live comfortably in retirement, our experience shows that they may need anywhere from 50% to 150%. That’s a big range. Only by taking the time to define your goals, and the expenses that accompany them, can we put an accurate “spend” and “income” figure on a retirement portfolio. Even the best crafted budget has to be flexible. Emergencies happen. Grandkids happen. Sadly, health concerns happen. For both positive and negative circumstances, budgets can, and will, expand and contract. Build contingencies into your budget and income plan for a successful retirement.

Let’s consider income. Retirement income can come from many sources. Social security, pensions, retirement accounts, annuities, dividends, even earned income. As financial planners, we often hear stories from clients who “forgot” that they had earned an pension from an employer that they had left decades ago.

Take the time to go through your employment history and discover what benefits you may have forgotten. The impact could be meaningful from a cash-flow perspective. Inheritances can also create retirement income. Again, we often see clients receive an inheritance and immediately spend it. We’d rather go with the gift that keeps on giving – by investing the inheritance along the same lines of a retirement asset and creating a lifetime income stream.

Invest for your whole life. Just as your budget is not going to be static during your retirement years, the idea that your investment portfolio should never change is obsolete as well. We live in a world of massive disruption and change. Years ago, retirees would abide by the rule taking 100%, subtracting their age, giving them the “appropriate” allocation to the equity market (blue chips only!). Today’s world does not permit such simplicity of thought.

This philosophy created an asset allocation for retirees that was heavily dependent upon the fixed income markets. Risk in today’s fixed income markets is considerably less predictable. When creating income in a portfolio, investors should examine many different sources of income. Is it time for fixed or variable rate income sources? Are dividend producing stocks inexpensive or overvalued? Is real estate a proper asset to produce income? In finding these answers, a successful retirement income stream can become multifaceted and flexible.

Some investors have opted for “all-in-one” strategies, where a glide path mutual fund encompasses their entire retirement portfolio composition. These funds become gradually more conservative the closer an investor gets to retirement. Some funds manage “to” the retirement date, while others manage “through” the retirement date. If you own one of these vehicles, do you know what the fund is designed to accomplish? These funds use historical data to project out into the future the ideal asset allocation. We don’t know what the future holds, and advocate investments that have the ability to be flexible.

Successful retirement comes down flexibility. Flexibility of goals. Flexibility of income streams. Flexibility of spending. Flexibility of retirement investments. Flexibility of the overall plan. As you design your retirement plan, take the time to build in flexibility. It will help build peace of mind, and lead to a more successful retirement.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

04/17/17

Worried you’ll run out of money in retirement? Then don’t make these rookie mistakes

By Katie Young & Sharon Epperson, April 13, 2017, CNBC.com

Being newly retired is definitely a reason to celebrate — and spend — some of the hard-earned money you’ve saved over the years.

Yet with Americans living longer, experts say you need to plan for a retirement that could last 30 years or more. Add in ever-rising medical costs, mostly stagnant Social Security checks and all of a sudden that pile of cash doesn’t look so big.

The issue of outliving your money is a real threat. To avoid having that happen don’t make these classic new-retiree mistakes.

Spending too much too soon

Making the transition from earning money to spending money when you first stop working is tricky. Especially if you’re healthy and eager to enjoy all that new free time.

“We get this all the time, where recently retired clients will do a trip to Europe or Asia, then spend four weeks in the Caribbean, saying, ‘When we get older we’ll slow down,’” said Chris Schaefer, who leads MV Financial’s Retirement Plan Practice Group, Bethesda, Maryland. “They’re eating so much of principal in early retirement that they don’t have enough to last.”

Schaefer suggests that working with a financial planner to create a withdrawal strategy for your retirement accounts is key. He says a good starting point is taking out no more than 4 percent of your total nest egg a year.

Overspending on the house

Wanting to be debt free is an admirable goal and one that works for many retirees. However, if you haven’t paid off the mortgage yet, rushing to do so may not be your best move.

As long as you have the cash flow to comfortably make the payments, Schaefer says don’t sacrifice your retirement savings by using a big chunk to pay it down. Instead keep it invested where it should continue to grow.

Plus having a mortgage offers tax benefits you can still claim as a retiree.

Overspending on the kids

Once you retire it’s time to let the 35-year-olds take care of themselves.

“Over the last 10 years we’ve seen this more and more with millennials not able to get out on their own,” Schaefer said.

So, if you’re paying rent for your adult children, or their cellphone bill, car payments or other recurring costs, it’s time to sit down with them and tell them it’s over.

Making smart decisions early on will help stretch your money further so you can retire well.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

03/20/17

How Not To Retire

By The New Zealand Herald, Feb. 3, 2017

Election years are always interesting because the topic of retirement age comes to the fore. We all have a vested interest in who receives what and when. When I think about the retirement age, I often recall a conversation with a client who employed a “re-potting strategy” throughout his life. While he would be at retirement age now, I doubt he has considered retiring.

His strategy has been to “re-pot” every 7-8 years. He retires one aspect of his life and embarks enthusiastically on a different path. For him, re-potting involved making a significant change in his life to refresh and gain a new perspective. His re-potting journey before I met him had extended to a new country, a new career, new friends and associates, a new wife and a new house. He had plenty of ideas to pursue in the years ahead to ensure sufficient re-potting opportunities to keep him interested and interesting.

He was about as far away from the traditional idea of retirement as I could imagine. But, as we are all living longer, retirement for many will simply be a change of some aspects of life but not others. The traditional approach to retirement is relatively straightforward. You save and invest as much as you can for as long as you can, starting as early as possible to accumulate enough retirement savings so you don’t need to work anymore.

For those who can’t save enough, the Government pension provides a retirement safety net. For everyone else, the more and faster they save, the earlier they can retire and the more leisure time can be enjoyed. At retirement, work ends and leisure begins…or so the theory goes.

However, a growing body of research finds the traditional retirement journey is less and less common. Fewer people actually want a retirement of all leisure and no work. Retirement is regarded as boring for many!

Apparently only half of today’s retirees (in the US) state they never intend to work again and only 30 per cent of pre-retirees intend to give up work indefinitely in retirement. Instead, whether it’s part-time work or starting a business, an encore career or some other path, retirement is less about not working at all and more about finding a different kind of engagement. Re-potting, you might call it.

Retirement for some might be semi-retirement, with a period of working part-time and potentially continuing to earn. For others, it might be a series of “temporary retirements” or sabbaticals in between periods of work. The significance of these changes is that it might not take nearly as much to retire as commonly assumed.

Some retirement lifestyles might simply need some savings to provide a buffer for the transitions between work. Some people might be able to retire earlier with a small pot of retirement savings, since that pot will be replenished at odd intervals with earnings from part-time or periodic employment.

If we’re not all going to retire according to the modelling – and I’ve never bought the concept that suddenly golf courses and cruise boats are going to be teeming with retirees – then the argument about the retirement age becomes easier.

A retirement age band, offering flexibility to those who wish to retire earlier and later, could be palatable for many. But it is election year, so who knows how the debate will unfold?

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

03/6/17

Why Retirement Savings are at an All-Time High

By Paul Davidson, Feb 2, 2017, USA Today

Americans are again socking away money for retirement at record levels. Fidelity Investment’s average 401(k) balance hit an all-time high of $92,500 at the end of last year, up 4,300 from a year ago and above the previous high of $92,100 in early 2015. Fidelity, one of the nation’s largest investment firms, cited both increasing contributions and rising stock prices.

The average contribution rate reached 8.4% in the fourth quarter, highest since the second quarter of 2008. And more than one in four of Fidelity’s 401(K) customers stepped up their savings rate last year, the most ever. “This shows people are taking the right steps towards reaching their retirement savings goals,” says Kevin Barry, Fidelity’s president of workplace investing.

People with retirement plans outside of work are also ratcheting up their contributions. The average balance in Fidelity’s Individual Retirement Accounts (IRA) was $93,700 at the end of 2016, up $3,600 from a year earlier. Nearly 500,000 IRA accounts were added last year, bringing the total on the firm’s platform to a record 8.5 million.

National data reflect similar trends. Total 401(k) plan assets in the U.S. hit a record $4.8 trillion in the third quarter and total IRA assets reached a record $7.8 trillion, according to the Investment Company Institute.

Many Americans scaled back their contributions to retirement accounts during and after the 2008 financial crisis and recession. With the 4.7% unemployment rate near prerecession and stocks at all-time highs, workers are again putting away large sums for their golden years.

An Ipsos/USA Today survey in mid-January found that 65% of 45- to 65-year-olds are very or somewhat likely to put at least $100 toward retirement over the next six months.

Americans are also less likely to borrow from their 401(k)s to pay living expenses. The share of Fidelity account holders with an outstanding 401(k) loan fell to 21% in the fourth quarter, lowest since late 2009.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

02/21/17

Phased Retirement: The Next Big Trend

By Maryalene LaPonsie, Feb. 10, 2017, US News & World Report

For decades, the standard has been for retirees to say goodbye to their jobs and ride off into the sunset. However, some people today are taking a different route to retirement. Rather than clocking out one day and never going back, these seniors are instead phasing into their retirement by moving to a part-time schedule, becoming consultants or even starting small businesses.

“I see the beginning of a trend for people to work past the normal retirement age that is as much related to financial needs as to not feeling ready to fully retire,” says Rob Werner, president and CEO of Ardent Credit Union in Pennsylvania.

Finance professionals say it can be a smart move to slowly enter into retirement. “When you really truly retire, it’s hard to go back,” says Kenny Elkins, a wealth manager at Equity Concepts in Henrico, Virginia. Phasing into retirement can help workers ensure they are ready for this major life change.

Personal fulfillment and financial gains. Some seniors choose partial retirement out of financial necessity. Greg Ghodsi, managing director of investments at 360 Wealth Management Group of Raymond James in Tampa, Florida, says it’s something he sees even with his high-earning clients. His firm often points out to clients that leaving the workforce early might require some lifestyle changes. “That’s usually when you get a frown,” Ghodsi says. Rather than insist workers stay in their current position, he helps them determine what they like and what they loathe about their job. Then, they explore other options for creating income. Many times, consulting work is a good fit because it allows people to continue doing what they love while cutting out many of the more tedious aspects of a job, such as a set schedule and long office meetings.

For years, people were told they’d need $1 million in the bank to retire comfortably. Is that number changing?

By working on a part-time basis or as a consultant, workers can minimize withdrawals from retirement accounts so those balances continue to grow. What’s more, they may be able to delay the start of Social Security, which has additional financial benefits. For every year people wait past their full retirement age, their monthly check gets an 8 percent boost.

However, money isn’t the only reason some people decide to ease into retirement. “There’s an emotional side to it,” says Andrew Rafal, founder of Bayntree Wealth Advisors in Scottsdale, Arizona. “For 30 years, it’s been their main purpose.” For those used to a full work schedule, the idea of immediately having an empty calendar can feel disconcerting.

Benefits for employers and workers. Working out an extended retirement plan can be a win-win for all involved. “In our experience, clients who [don't phase-in their retirement] get bored after a few years,” Ghodsi says. Continuing to work even part-time can provide seniors with a sense of purpose as well as financial security.

On the employer side, allowing an older worker to continue on in a part-time or consultant basis also has dual benefits. “They still get to retain the experience and intellectual capital of a veteran worker, but they’re reducing their costs,” Elkins says. Once workers move out of their full-time positions, employers can save money by discontinuing benefits. And the positives for employers don’t end there. Companies can hire a new employee at a rate that is typically less than what was being paid to a long-time worker. The partially retired senior can then train the new worker to get that person up to speed quickly and potentially reduce training costs and time.

Tips for retirees. Regardless of whether they plan to phase into their retirement out of necessity or out of preference, seniors should have a clear understanding of what their financial needs will be like after retirement. “The best advice is to maintain your focus on the income you wish to have to retire and not the age you wish to retire,” Werner says.

Rafal says pre-retirees need to have an open and frank discussion with their boss about if and how to phase out of the workforce. “Talk to your employer about a two- to five-year exit strategy,” he says. Make sure there is a clear understanding of when benefits will end and what happens to profit-sharing or similar aspects of a compensation package. Those who plan to leave work completely and become a consultant or start a business can work with a financial planner to address how best to manage retirement funds and pay for health care after leaving their employee position.

Phasing into retirement seems to be the right choice for many seniors. However, if you try it and discover it’s not for you, you can always quit at any time.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

02/14/17

Older Veterans Often Miss Out on Long-Term-Care Benefits of Up to $2,210 Each Month

By Kevin Richards, January 2017, Kiplinger.com

Many older war-era veterans and surviving spouses over the age of 65 across America are missing out on a major element in securing their retirements: the Aid and Attendance benefit for long-term care.

The Aid and Attendance benefit is available to veterans and their spouses to help offset recurring medical costs and some of the costs for home care and assisted living care. This is a benefit for senior veterans who served during wartime—World War II, the Korean War, Vietnam and the Gulf War—for at least 90 days of active duty and who are 65 or older, as well as their surviving spouses. It doesn’t matter if the veteran served stateside or internationally, saw combat or didn’t, was wounded or wasn’t. If the veteran’s doctor—not a VA doctor—affirms the veteran or spouse needs assistance, then he or she may be eligible for Aid and Attendance, regardless of Social Security, Medicare, pensions or other benefits.

These benefits can be quite substantial, even if they are a variable number. Under Aid and Attendance, a veteran living alone can receive as much as $21,456 annually, or $1,788 a month. A married veteran can receive as much as $26,550 annually, or $2,210 a month. A surviving spouse is eligible for as much as $13,788 annually, or $1,149 a month. These benefits are paid directly to the veteran or surviving spouse and are tax-free. Payments are retroactive to the date of application.

Many veterans and surviving spouses are not aware of the Aid and Attendance benefits they have earned, or they are confused about them. Too many veterans are told they can’t have a certain level of income or assets to apply for Aid and Attendance. That’s simply incorrect. As long as the veterans and surviving spouses meet the criteria, they are eligible for those benefits for the rest of their lives.

Some of this confusion and lack of knowledge is perfectly understandable, since the application process can be complex. The U.S. Department of Veterans Affairs (VA) cannot give veterans legal or financial advice on how to get qualified for the Aid and Attendance benefits. Even worse, if a veteran asks about the benefits, the VA will simply tell them to apply. The VA will not tell veterans the requirements or how a veteran can qualify based on the rules. Only around 20% of veterans who apply on their own for Aid and Attendance benefits ever receive them.

However, if a veteran follows the rules, they are able to receive the benefits. That’s why it’s important to get the facts about Aid and Attendance benefits from credible, unbiased sources with the ability to provide the correct information. The VA cannot and will not do that.

There are billions of dollars already set aside in Aid and Attendance benefits that veterans and surviving spouses have earned. Veterans and their families should not feel guilty about having earned these benefits through their noble efforts and service.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®