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Are You Enrolled?

October is open enrollment for most employee benefit plan for employers. Here are some things to think about as you choose your options:

• Health insurance: Does your plan offer a High Deductible with HSA option? These can be a great deal if you are generally healthy and don’t expect to need surgery or high-ticket testing in 2018. The premiums will be lower and you can deposit up to $6,920 into the Health Savings Account (family) for 2018. (plus $1,000 for those over 55). This gives you an adjustment against income on your tax return and you can take withdrawals from the account to pay for your medical and dental expenses. For more information on the tax benefits of these accounts see IRS Publication 969.

o Insurance for your children under age 26 – run the numbers to see if your plan may be cheaper for your adult child than what they can get on their own. ACA increased the age for adult children to remain on their parents’ policies. They can pay you monthly for the cost, and they should begin to build that into their budgets, but save money if you can save money.

• Life insurance: Do you and your spouse have enough life insurance to pay off debt, fund your kids’ education, and provide for your spouse until retirement? Check your existing policies and see if you might need to add some additional insurance. It is usually pretty reasonably priced through the group plan.
• Disability: Do you have the maximum amount of disability insurance?

• 401k plan: Are you at least contributing enough to get the employer match? Are you maximizing your contributions? If not, try to do a 1% increase per year until you are getting the full $18,500/year saved plus the catch-up of $6,000 for those over 55.

• Long-term care: Is this an option in your benefit plan? If so, take a close look at it and see if you can participate. If you are in your 50’s, take a close look at the plan and see if it is something you can afford. Traditional policies can be very expensive so see if the group insurance might meet a need.
This year take a close look at your options rather than just doing “same as last year.” You may find that you can save some money.
As a part of your evaluation, pull out the life insurance policies and note the dates so you are clear on whether you are getting close to the end of the term. We all thought we’d be rich by this point but maybe we still really need that insurance. Be sure you know what you need and for how long so you can take action if needed.

To your financial success!
Tana

You Just Never Know!

Someone that I know died last week. She wasn’t a friend, but was someone I have known for a long time, and most shocking, she was my age. Death is the one thing just about guaranteed to rock our worlds even if it is peripheral to our day-to-day lives. She has a daughter the same age as my son and my heart breaks for the family to lose someone from their immediate family. It is a hole that can never be filled and my prayers are with them especially today for her funeral.

That brings me to the awful topic of being prepared for such an event. With my clients, this is always a topic of conversation as we get new clients integrated so I want to share some of the important things that we discuss with them. You just never when “your day” might be and it is so much easier on those you leave behind if you take a few unpleasant steps to be ready. It is especially important if you are married to make sure your spouse has done these things as well. Death is hard enough without having to wrangle with legal things that could have been handled and were not.

So, the list:

  • Do you have current wills, properly executed in your current state of residence?
  • If so, do you know what they say?
    • Who is the executor, trustee and guardian for minor children?
    • Do you still want those people in those roles and are they still capable of fulfilling them?
    • If you have children in their late teens, even 18 or 19, is the plan specified in the will going to work? Moving them to your sister’s in Iowa may have seemed fine when they were 2 and 3, but now at 17 and 18, it just may not work.
      • My son just turned 18 and is still in high school. He may be legally of age but yikes, I would not want him on his own if something happened to both my husband and me!
    • Does the will still refer to a “credit shelter trust?” If so, you may want to consider updating it because the estate tax exclusion is much larger now than it was prior to 2010. This doesn’t mean your will isn’t valid, it just means that you need to understand what assets may end up in such a trust.
  • Do you have a Health Care Directive, valid in your current state of residence, and has it been updated within the last couple of years? This isn’t something you need if you die, but it is important if you are in an accident or have a catastrophic event. You can update these without an attorney if you so choose. Go to caringinfo.org for the form and good information about completing it. Again, it needs to conform to your state’s requirements so be sure to pick your state of residence. If you are updating your will, attorneys typically update both powers of attorney as part of the package.
    • Are the people you have named in your directive still the appropriate people?
  • Do you have a Durable Financial Power of Attorney? Again, this is not helpful if you die but is critical if you are in an accident or are otherwise incapacitated. If you have divorced, you may want to update both powers of attorney if you have not already.
  • Do you know who the beneficiaries are on your insurance policy (both the policy through your employer and any individual policies that you have) and your retirement accounts? This includes IRAs, Roth IRAs, and employer-provided plans. Again, if you have divorced, you should update as those plans typically name the spouse.
    • Consider if your children are over 18 if it is appropriate to have them as contingent beneficiaries (or primary if you are not married). There are many considerations here so talk to a financial advisor or an estate attorney to fully understand your options and the impact. There are a lot of tax considerations as you look at retirement and other tax-deferred plans so be sure you are clear on that aspect as well.
  • Passwords: Does your spouse or your executor know where all of your passwords are? There are certainly workarounds, especially if you are married, but do you want your grieving spouse to be fumbling around trying to get access to your computer in order to pay the mortgage right after you died? This is a biggie as more and more of our lives are lived in the virtual world.
    • I believe that Facebook now has an authorization form that you can process online so that you can leave them access in the event of your death.
  • Letters to your children or other family members: Have you left anything for your kids that they can hold onto in the event of your death? When my dad died suddenly at my age 12, I would have given anything to have a note from him. I left letters with my will so that my kids will know what hopes and dreams I have for them. They were not so easy to write, and I hope they don’t get to read them for a long time, but it is important to me that they have something from me to them to hold onto when the time comes.
  • What is important to you? There may be specific things that you want specific people to have now that you are older. Your china, jewelry, scrapbooks and photo albums are all important items. If it is important to you that certain people get them (or don’t!) then you need a provision in your will to recognize that or at least to refer to such a list that you may prepare. Talk to your attorney about these things.
  • Special circumstances: As our kids grow, marry, divorce, have kids, get sick, get rich or poor, or have troubles, we may find that the plan we made when they were kids is not appropriate any longer. Step back and think about who will be your beneficiaries, how much money they will ultimately receive and how old they are. Are they mature and responsible or likely to blow through money quickly? There are a lot of estate planning tools available to address just about any situation so if you have some concerns about how your death will impact your heirs, talk to an estate planning attorney so that you can have a plan you feel good about.

We all hope that we will die in our sleep at a ripe old age, in perfect health but that is not the case for most. For some, death appears too quickly at the door. It is not fun to think about or talk about but being prepared today is the greatest gift that you can leave your family.

To your financial success (and your family’s)!

 

To Insure or Not, That is the Question

Long-term care insure, that is. For anyone in the tween generation who is caring for both children and aging parents, the answer is a resounding “to” when it comes to having our parents own a long-term care policy. What a help it is! What a difference it makes! My mom came home from an extended stay caring for her father prior to his death and bought a policy without a thought as to cost – “I want one, right now” was her comment. She was mid-60’s, healthy, and could afford to get one. It was a no-brainer.

For those of us younger, or less financially able to swallow the costs of those premiums while we are paying mortgages and college tuition, it is more of a struggle. The guys tend to say something like, “just take me out and shoot me.” Well, I get your motivation there, and I feel the same way if I am incapable of taking care of myself, but those logistic are a bit complicated and more than a little illegal. Yes, if your spouse shoots you, neither of you have to worry about long-term care as the penal system will take care of that! However, for those looking for a more law-abiding (not to mention humane) solution, long-term care insurance is the way to go.

If only we knew exactly when we would die, this planning business would be so much easier! Will I live to 100 and be fit as a fiddle and sharp as a tack or will I be healthy and mentally mush? Which one of us will need care and for how long? Where is that crystal ball?

The reality of long-term care insurance is that it is better to have it than not. After age 76, you cannot get it. After a “bad” diagnosis, you cannot get it. If you have some bad family history, you really need to talk to an agent sooner rather than later if you want to get it at all. The other reality is that the younger you are when you buy it, the lower the initial premiums will be, but you will be paying them for a longer time (hopefully!)

Once you dip your toe into the 50’s, it’s time to start asking the questions and evaluating the answers. I’m 52 and the mere thought that I am old enough to be thinking about this is crazy – 50 is the new 40! I take care of myself! I feel great! I am way too young to talk about “old people” stuff! And yet, it is one of those things I really should do. Not that I need to buy today or a year from now, but I do need to start the conversation with an agent, get some quotes and understand the cost difference at 52 versus 55 versus 60 so that I can plan for when to pull the trigger (not that trigger; the long-term care insurance trigger!)

Now, a quote today for a 60 year-old is probably not going to be the quote when I am actually 60 so I need to keep that in mind in the planning but it is important to start thinking about those premiums and planning for the day that I need to pay them. I do not want my health care to derail my kids’ financial lives, and as much as I want to be a gazillionaire by the time I retire, it is looking like I might come up a little short so insurance is probably the way to go.

How about you? Do your parents have it? Are they still at a point where they can get it? Is it worthwhile for the kids to pitch in to help pay the premiums and make sure they have something? Take a few moments and look at yourself and your parents and really think about the impact a nursing home stay would have on the family assets. Now is the time to plan for that. Once it happens, you are on your own.

If you do take the plunge, the company you choose is one of the most important decisions you can make so do your homework and check the insurance ratings to get a solid company that you will be able to count on in the far away future when you need them.