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Recent Blog Posts
Report Finds Americans Are without Retirement Savings Plans or Pensions
The U.S. Census Bureau estimates that as the baby boomer generation ages into retirement, the age 65-and-older population will grow over 50 percent over the next 15 years. However, according to a new report recently released by the U.S. Government Accountability Office (GAO), a good majority of that population will not have the financial resources needed for retirement.
The GAO used data from the 2013 Survey of Consumer Finances, a survey sponsored by the Federal Reserve Board and the Department of the Treasury, to compile their report.
Per the GAO report, more than half of Americans aged 55 years or older do not have any type of retirement savings account, such as a 401(k) or Individual Retirement Accounts (IRA). Approximately 20 percent do have some type of pension which they will be able to draw from during retirement; however, another 30 percent will be left without retirement savings or pension.
Tips to Help Increase 401(k) Account
One of the primary sources of assets utilized in estate plans comes from 401(k) plans that people set up through their employers. The funds that accumulate in these accounts are often the ones used to fund living trusts and other estate planning options later in life.
Many employers offer 401(k) plans as a way for employees to plan for retirement. Typically, an employee decides what percentage of his or her pay he or she wants to put towards an account. An employer automatically deducts that amount from each paycheck and deposits it in the employee's 401(k).
An account is managed by a plan administrator—usually a brokerage firm or mutual fund company. However, an employee decides where he or she wants his or her funds invested. Often, an employer will offer a matching contribution. The more an employee can fund his or her 401(k), the more financially secure he or she will be for retirement.
Illinois Intestate Succession Rules
What happens to your assets and property if you die without a will? Every state's laws have a different answer to that question. In Illinois, the law that covers "intestate succession" is the Probate Act of 1975.
If you die without a will in Illinois, then the law covers any assets that you own which do not come under one of the following:
- Life insurance policy proceeds;
- Retirement accounts;
- Payable-on-Death (POD) bank accounts;
- Securities or stocks which are in a transfer-on-death (TOD) account;
- Property held on a TOD deed;
- Property owned with another individual(s) in a tenancy by the entirety or a joint tenancy; and
Who Wants to be a Millionaire?
"Who Wants to Be a Millionaire?" is a popular television game show where people attempt to answer a series of questions correctly, working their way up the ladder to reach a million dollars.
However, in than 15 years that the program has been on, less than 20 people have actually reached the million dollar prize level. It appears that if you want to be a millionaire, you have a better shot at reaching your goal with hard work and smart investing instead of trying to win your way there. Still, how does one go about getting there?
People who have reached the million dollar level of income have often developed similar strategies to help achieve a high level of income. These strategies include the following:
- Do not expend time and energy on things you wish you had done in the past; instead focus on the now. For example, do not spend time lamenting over your failure to invest in Microsoft two decades ago and how much you could have earned. Experienced financial advisors recommend investing in a diversified portfolio of stocks, allowing it to grow slowly, but steadily.
Questions to Ask When Hiring a Financial Advisor
Estate and retirement planning may involve consulting with a financial advisor. A financial advisor is someone who sits with clients, determines what the client's financial goals are—i.e. retirement—and then directs the client to the appropriate investments which will help the client meet those goals.
Just like when hiring any professional, there are certain criteria you should look for when deciding on an advisor for your financial future. Moreover, key questions should be asked to a potential advisor which will assist you in deciding if this is the person for you.
Are You Ready to Retire?
Most of us work for the majority of our adult lives with the end goal of being able to enjoy a comfortable retirement. It seems that every so many years, the age most people retire at increases. It used to be the age of 65...then 68...then 70 years of age was the target. These days, the age of 72 is one that is brought up in many discussions about finally being able to retire. But no matter how much planning, saving, and investing you do, how do you really know when you are ready to finally stop working?
Financial planners say there are several factors that you should consider when making that determination. First, you should determine how much you will receive in Social Security benefits. The federal agency will provide you a report that shows how much income you have earned and how much your benefit will be at various ages. If you are married, then you will also want to determine what the maximum benefits for you and your spouse will be.
Medicare and Medicaid Differences and Planning for the Future
One of the most confusing decisions and choices that seniors need to make is about their health care insurance. People may have a hard time understanding the differences between Medicaid and Medicare and how those differences affect their future medical needs, including nursing home or rehabilitation facility placement.
Although both Medicaid and Medicare are federal health care programs, Medicaid is actually overseen by each individual state. Medicaid eligibility is geared more towards people who are low-income; however, Medicare qualification is for everyone, regardless of income.
To qualify for Medicare, a person must be 65 years or older, or a beneficiary of the Social Security Disability Insurance (SSDI) program for a minimum of two years. The program pays for physician visits, lab costs, outpatient care and supplies, prescription medicines, and hospital stays. The program will also pay for short-term nursing home stays (i.e. rehabilitative services) for stays up to 100 days. Hospice services are also covered by Medicare for those who have been given less than six months to live.
Pet Trusts in Estate Planning
Pet owners often consider their pets as members of the family. However, owners do not stop and think about what would happen to their beloved pet should something happen to them. Ensuring that your faithful companion is taken care of when you are gone is something that you can address in your estate plan.
A pet owner may choose to address his or her pet's care in a will. It is important to remember, however, that instructions left in a will cannot be carried out until the will has been filed in probate court and the executor of the estate has given permission to carry out those instructions. Moreover, one issue that could arise is a potential heir objecting to funds being spent on a pet and attempting to reject that funding.
Therefore, instead of only relying on a will, one of the best ways to protect your pet's future may be setting up a pet trust. Although some states do not recognize pet trusts, Illinois does.
Inheritance Taxes in Estate Planning
Many people take advantage of the tax savings that estate planning options give them. Utilizing different legal options, such as trusts, will often alleviate how much a person would have to pay to the IRS in taxes for those funds. However, one of the issues to consider is whether or not the plans you are establishing will place a tax burden on your beneficiaries when you pass.
The federal tax exemption statistically affects approximately 1 percent of the country's population. The current exemption is $5.43 million for individuals and $10.86 million for couples. Yet many people fail to consider if the state they live in has required estate tax. There are 16 states, including Illinois, which levy up to a 20 percent estate tax to beneficiaries.
Estate Planning for Twenty-Somethings
There is a great misconception that estate planning is only applicable to older individuals who are nearing retirement or are already retired. The reality is, however, that adults are never too young to put some sort of estate plan in place. Obviously, the more assets and property you acquire may make planning more complicated. Still, even twenty-somethings should have certain documents in place—at the very minimum.
Health Care Advance Directives and Health Care Powers of Attorney
Most young adults do not ever consider what would happen to them if they suddenly became sick or incapacitated. Moreover, they are unaware that no one—not their parents, siblings, or other family members—would be legally able to make medical or health care decisions should they be unable to make those decisions for themselves. Having an advance directive in place could avoid the possible fracture that often occurs in families when they cannot agree on the same course of medical care. This is exactly what happened in the case of Terri Schiavo, who was only 26-years-old when she collapsed and went into coma with irreversible brain damage. A 15 year legal battle between Terri's husband and her parents waged over the course of medical treatment Teri would have wanted.
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