02/27/17

Why You Should Challenge Yourself in Retirement

By Abby Hayes, Feb. 8, 2017, US News & World Report

We tend to have a mental image of retirement as relaxing. You might spend your days fishing in a quiet lake at dawn, taking a casual stroll down the boulevard or maybe traveling a bit. But avoiding everything that is too strenuous or straining could actually be bad for your mental health.

Mental effort might actually help keep your brain healthier and improve your memory. But it requires some serious mental effort beyond a weekly crossword puzzle. The mental strain you exert to solve a complicated mathematical problem or learn a new language could help keep your brain sharp.

Physical exertion might help too. Research from the University of British Columbia suggests that regular aerobic exercise might increase the size of the area of your brain involved in verbal memory and learning. Regular moderate exercise could increase your brain volume in as little as six months or a year.

However, with both mental and physical exercise, you need to push yourself. Learning more about history from a documentary may be interesting, but it doesn’t provide much of a challenge. And taking a slow walk around the block can be great for stopping to smell the roses, but it might not change your brain the way slightly more strenuous exercise could.

If you’re ready to stay in peak mental condition during retirement, step away from the remote and try these ideas instead:

1. Learn something brand new. Learning new things forces your brain to make new connections. You could learn something completely new, such as an instrument if you’ve never been musical before. Or you could translate an old skill into a new one. For instance, you could take up playing the guitar if you’ve played piano in the past. Trying to speak a new language is another way to challenge yourself. Learning a new skill, especially a difficult one, is a good way to keep your brain engaged and growing.

2. Play difficult games. Some “brain games” marketed to keep your brain young are challenging and interesting, but some aren’t strenuous enough. If something is too easy, it’s probably not growing your brain. But you can definitely find board games and online games that take real mental effort, and playing those can help keep your mind active.

3. Meet new people. Meeting new people is another way to force your brain to make new connections, both literally and figuratively. It’s even better if you can form new friendships and learn new skills at the same time. You could take a class at a local college and make new friends in the process.

4. Brush up on old skills. If it has been a while since you’ve spoken French or done a calculus problem, take the time to brush up on those skills. Relearning these things can be almost as challenging as learning them for the first time.

5. Travel. Being somewhere new makes your brain work harder. You can’t follow your old ruts and rhythms. You’ll have to consult the map, and maybe even speak a different language to get your basic needs met. Even if you stay close to home, but go to a new city, navigating a new area can be a challenge.

6. Take up a new sport. Learning a new sport serves several purposes at the same time. Not only will you work up a sweat physically, but learning the rules and regulations of a new sport gives your brain work to do. And if it’s a team or competitive sport, you might also meet some new people.

7. Set exercise goals. Instead of being content with a walk around the block, set some difficult exercise goals. Run a 5K or join your grandkids in an adventure trek. Meeting tough physical goals takes mental grit, and the physical exercise is great for your overall health.

Don’t let your retirement be boring. Doing difficult things during retirement helps your brain stay more agile, so you can better enjoy your golden years.

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®