Retirement Fund Withdrawals Can Affect Social Security Benefits

Coordinating Adjusted Gross Income in retirement takes a bit more thought than just collecting a paycheck. Take too much from Peter, you’ll end up paying Paul. Some retirees end up owing taxes on their Social Security benefits. If you want to avoid this scenario, master the details as explained in the article “Will My Retirement Fund Withdrawals Affect My Social Security Benefits?” from The Motley Fool.

It all depends upon your income. This is defined as your adjusted gross income, or AGI, plus nontaxable interest plus half of your annual Social Security benefits. The Adjusted Gross Income is a person’s income for the year, minus certain tax deductions, like self-employment taxes and contributions to tax-deferred retirement accounts. Withdrawals taken from traditional IRAs or most 401(k)s, which are tax-deferred retirement accounts, do count towards the Adjusted Gross Income. However, Roth retirement account withdrawals do not. The only nontaxable interest in your combined income calculation would be tax-exempt bond funds.

For example, a single person with an Adjusted Gross Income of $20,000 with $1,000 in non-taxable interest and a $12,000 annual Social Security benefit would have a combined income of $27,000 ($20,000 plus $1,000 plus $6,000 totals $27,000).

Single taxpayers with a combined income of more than $25,000 and married couples filing jointly with a combined income of more than $32,000 could pay taxes on as much as 50% of their Social Security benefits. Single adults with a combined income greater than $24,000 and married couples filing jointly with a combined income greater than $44,000 could owe taxes on as much as 85% of their benefits.

But wait—here’s a detail you need to know. Because you could owe taxes on 50% or 85% of your benefits does not mean you’ll actually pay this much. There’s a Social Security benefit tax formula that will help you understand how this works. Your estate planning attorney or your accountant can help you figure out how this might impact your retirement finances.

Can you avoid these taxes? With the right plan, maybe. Most retiree’s sole source of income is Social Security and withdrawals from retirement accounts. Being smart with those withdrawals, can reduce the likelihood of owing taxes on Social Security benefits.

If you know that you are approaching one of the Social Security threshholds, try to avoid withdrawing more money from tax-deferred retirement accounts. If you have Roth accounts, try to live from them, because they don’t impact your tax status. Another alternative is to pinch pennies for a while, or simply take the plunge and pay the taxes.

Delaying Social Security benefits as long as you can, up to age 70, is another way to reduce the likelihood of owning taxes on benefits. Yes, you can start taking Social Security at age 62, but you must wait to claim your full benefits until you reach your full retirement age. If you start taking benefits early, you’ll get less than your full benefit, and that smaller amount will be permanent.

You can’t pay taxes on benefits that you’re not receiving. Delaying benefits will increase their size, which will reduce the amount to be withdrawn from tax-deferred accounts. This will lower your Adjusted Gross Income.

It’s possible that you may not be able to avoid paying taxes on Social Security benefits. However, knowing your unique situation in advance and planning accordingly, will be better than living with a reduced budget because you didn’t know and didn’t plan.

Reference: The Motley Fool (Jan. 17, 2020) “Will My Retirement Fund Withdrawals Affect My Social Security Benefits?”

 

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What IRA deadllines Does a Retiree Need to Circle?

Kiplinger’s recent article entitled “A Retiree’s Guide to Key Dates in 2020” explains that the calendar below has the significant IRA deadlines and dates of importance to pre-retirees and retirees. It will give you a head start on getting organized.

January 1:

Now that we are officially into a new tax year, and as you find your documents to prepare for filing your 2019 tax return, look for ways to lessen your 2020 tax tab.

If you’re still working, you can deposit more into your 401(k)s for 2020. You can put up to $19,500 into your employer plan—$500 more than 2019. If you’re 50 or older anytime in the calendar year, your maximum contribution jumps to $26,000. You can also put funds in a traditional or Roth IRA, or a combination of both. The maximum total IRA contribution for 2020 is $6,000, plus an extra $1,000 if you’re 50 or older. Once you turn 70½, you can no longer contribute to a traditional IRA. However, you can contribute to a Roth IRA, if you’re still working. If you’ve retired but your spouse is still working, the working spouse can make the maximum contribution to a spousal IRA for you, provided the worker’s earnings cover the contribution and his or her own IRA contribution.

The first is also the start date for Medicare’s general enrollment period. It goes until March 31, and coverage begins July 1. If you miss enrolling for Medicare at age 65 and don’t qualify for a “special enrollment period” (for people who had group coverage beyond age 65), you can enroll in Parts A and B during this period. In the same time frame, Medicare Advantage beneficiaries can move to a different Advantage plan or to traditional Medicare.

January 15:

This is the deadline for the fourth quarter estimated tax payment for 2019 taxes. You can forgo this deadline, if you file your 2019 taxes by January 31 and pay the remaining balance at that point.

March 31:

This is the deadline for traditional Medicare general enrollment and Medicare Advantage open enrollment.

April 1:

If you turned 70½ in 2019, April 1 is the deadline for taking your first required minimum distribution (RMD) from your tax-deferred retirement accounts. All subsequent RMDs must be taken by December 31. To figure out a first RMD due by April 1, 2020, take the 2018 year-end account balance and divide it by a life expectancy factor based on your birthday in 2019. You can find the factor in IRS Publication 590-B. you’ll still need to take your second RMD this year, if you waited on the first RMD.

If you’re still working past 70½, you can skip the RMD from your current employer’s 401(k) if you don’t own 5% or more of the company. However, you must take RMDs from traditional IRAs and 401(k)s from previous employers.

April 15:

The federal tax filing deadline for 2019 returns is on the regular date in 2020.

You can make 2019 IRA contributions up until April 15, which is up to $7,000, if you are 50 and older.

This is the deadline for the first estimated tax payment for 2020.

June 15:

This is the deadline for the second quarter estimated tax payment for 2020.

July 1:

Here’s when you can gauge a midyear estimate of your 2020 tax bill. Be sure withholding or estimated tax payments are on track to avoid underpayment penalties. You can avoid those penalties by paying at least 90% of the current year tax tab or 100% of the prior year tax tab (110% if you have a high income).

Look for tax-saving moves to trim your 2020 tab.

September 15:

This is the deadline for the third quarter estimated tax payment for 2020. If you are off track with estimated tax payments, or just don’t want to bother, you can withhold tax from your RMD. Withholding is to be evenly paid over the year, even if you withhold tax on an RMD taken in December and it can help cover the tax on all your income for the year.

September 30:

Your “annual notice of change” from your Medicare Advantage or Part D prescription-drug plan should be delivered to your mailbox by today.

October 15:

If you filed for an extension on April 15 for your 2019 tax return, today is the deadline to turn it in.

Medicare open enrollment begins. From now until December 7, you can switch between traditional Medicare and Medicare Advantage, or choose new Advantage and Part D plans, with coverage effective 2021.

November 1:

Early retirees in most states can purchase 2021 health coverage offered on exchanges under the Affordable Care Act from now until December 15.

December 7:

This is the deadline for Medicare’s open enrollment.

December 15:

This is the deadline for the ACA’s open enrollment.

December 31:

This is the IRA deadline for your RMD to be out of your account.

While you are at it, consider maxing out contributions to your employer retirement account, harvesting portfolio losses, making a Roth conversion, making charitable gifts and using up your annual gift exclusion of $15,000 for 2020 to give gifts to as many people as you choose.

Reference: Kiplinger (Dec. 24, 2019) “A Retiree’s Guide to Key Dates in 2020”

 

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Planning Retirement with a Cognitive Decline

The Director of Volunteer Programs at the Alzheimer’s Association, Stephanie Rohlfs-Young, explains that families shouldn’t let a diagnosis disrupt proper financial, estate and retirement planning. She recommends several proactive and tactical steps that individuals and families can undertake to address issues related to cognitive decline.

Barron’s recent article entitled “Cognitive Decline Shouldn’t Derail Retirement Planning. Here Are Some Tips to Prepare Your Finances” provides some tips on navigating the financial aspects of cognitive decline. Let’s look at some of them:

Inventory. For budgeting and estate planning purposes, families should conduct a thorough inventory of the individual’s property and debts to create a list of those who have access to each account. Ask about and include online checking, savings, credit-card and investment accounts. These can be neglected, if they aren’t in paper form. Try to work with the individual in cognitive decline to ascertain this information, when they can still be helpful. You don’t want to lose all those assets. This task can be challenging, when children aren’t aware of their parents’ financial dealings. This can include savings, insurance, retirement benefits, government assistance, veterans’ benefits and more. Families should also pick a lead person to be in charge of financial or legal matters.

Calculating future costs. A diagnosis of this nature is the time to figure out and plan for care costs that may include adult day care, in-home care and full-time medical care. These can costs vary widely, and many times families underestimate the amount they’ll spend on care. Families often fail to factor in out-of-pocket expenses that can add up, like prescriptions not covered by insurance. When budgeting, families should see what insurance may be available and if they might add or amend coverage.

Leverage the skills of an elder-law attorney. Partner with an experienced elder law attorney to help get the family’s financial and legal affairs together. Issues can include the titling of assets, trusts, powers of attorney, advance health care directive and more. For some, there’s also Medicaid planning.

Automate finances. Families should devise a plan for routine financial tasks, like bill paying. These are things that will eventually become too difficult for the loved one experiencing cognitive decline. Consider signing up for online banking. That way, an adult child can have easy access to monitor the parent’s account. Monthly bills, including insurance premiums, can be set up for automatic payment to help minimize the possibility of errors.

Organize your important documents. It’s critical after a diagnosis of cognitive decline to name a health-care representative to allow healthcare decisions to be made by someone of the person’s choosing. You should also have a general durable power of attorney for finances in place. This allows the appointed agent to make financial and legal decisions in the individuals’ stead.

Reference: Barron’s (Jan. 11, 2020) “Cognitive Decline Shouldn’t Derail Retirement Planning. Here Are Some Tips to Prepare Your Finances.”

 

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Tax Planning – I’m Between 55 and 64, How Do I Boost My Retirement Savings?

Tax Planning – It’s never too soon to begin saving. However, the last decade prior to retirement can be crucial. By then you’ll probably have a pretty good idea of when (or if) you want to retire and, even more important, still have some time to make changes, if need be.

If you discover that you need to put more money away, Investopedia’s article “Top Retirement Savings Tips for 55-to-64-Year-Olds” gives you several time-honored retirement savings tips to consider.

  1. Fund Your 401(k) to the Max. If your employer has a 401(k) or a similar plan, and you aren’t already funding yours to the maximum, up your contributions. These plans are an easy and automatic way to invest, plus you’ll defer paying taxes on that income until you withdraw it in retirement. You may be in a higher marginal tax bracket now than you will be during retirement, because you’re in your peak earning years. As a result, you’ll see a smaller tax bill in retirement. This applies to traditional 401(k)s and other plans. If your job offers a Roth 401(k) and you participate, you’ll pay taxes on the income now but be able to make tax-free withdrawals later.
  2. Review Your 401(k) Allocations. Experts tells us that you should invest more conservatively as you get older, with more money in bonds and less in stocks. That’s because if your stocks drop in a prolonged bear market, you won’t have the time needed to recover. As a result, you may have to sell your stocks at a loss. Stocks still have growth potential and are a hedge against inflation, unlike bonds. Therefore, remain diversified in both stocks and bonds, but do this in an age-appropriate manner.
  3. Look into an IRA. If you don’t have a 401(k) plan to join at work—or if you’re already funding yours to the max—another retirement investing option is an IRA. There are two types: traditional and Roth. With a traditional IRA, the money you contribute is generally tax-deductible upfront. With a Roth, you receive a tax break later with tax-free withdrawals. Each has its own set of rules for contributions, so educate yourself on the differences.
  4. Know Your Sources of Income for Retirement. Your level of aggressiveness in saving also depends on the other sources of income you can reasonably expect to have in retirement. When you hit your mid-50s or early 60s, you can get a much better estimate than earlier in your career. After you’ve contributed to Social Security for 10 years or more, you can get a personalized estimate of your future monthly benefits using the Social Security Retirement Estimator. Your benefits are based on your 35 highest years of earnings, so they may increase if you continue working. Your benefits will also vary, based on when you start collecting them. You can start taking benefits as early as age 62, but they’ll be permanently reduced from what you’ll receive if you wait until your “full” retirement age (currently between 66 and 67 for anyone born after 1943). You can also wait and start getting your Social Security up to age 70 and see the largest amount possible.
  5. Don’t Mess with Your Retirement Savings. After age 59½, you can begin making penalty-free withdrawals from your traditional retirement plans and IRAs. With a Roth IRA, you can withdraw your contributions (not their earnings) penalty-free at any time. In addition, the IRS has an exception known as “the Rule of 55.” This waives the early-withdrawal penalty on retirement plan distributions for workers 55 and over (50 and over for some government employees) who lose or leave their jobs. This is a complicated rule, so speak to your estate planning attorney. It is important to understand that just because you can make withdrawals doesn’t mean you should, unless you absolutely need the money. The longer you keep your retirement accounts “in the bank” (up to age 72, when you must begin to take required minimum distributions from some), the better off you’re likely to be.
  6. And Remember the Taxes. When you make withdrawals from a traditional 401(k) plan or traditional IRA, you’ll be taxed at your rate for ordinary income—not the lower capital gains rate.

Reference: Investopedia (June 11, 2019) “Top Retirement Savings Tips for 55-to-64-Year-Olds”

Suggested Key Terms: Retirement Planning, Tax Planning, Financial Planning, IRA, 401(k), Pension, Social Security, Stocks, Bonds, Required Minimum Distribution (RMD)

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How Does Social Security Work for a Spousal Benefit ?

Social Security is the main retirement income source for more than 60% of Americans, which is why it is usually the focus of news about retirement income. However, there’s more to Social Security benefits, including how it helps surviving spouses. A Spousal benefits can be a critical part of retirement securities when families lose a loved one, says the article “Understanding the Basics Of Social Security Benefits for Surviving Spouses” from Forbes.

The rules about surviving spousal benefits can be complicated. There are four basic categories of survivor benefits. Here’s a closer look:

Survivor benefits at age 60. At their full retirement age, the surviving spouse can receive full survivor benefits based on the deceased individual retirement benefit. The amount from the survivor benefit is based on the deceased spouse’s earnings. At full retirement age, the survivor receives 100% of the deceased individuals’ benefit or their projected benefit at full retirement age. If they collect benefits before full retirement age, you’ll get between 70% to 99% of the deceased spouse’s benefit.

You cannot receive both your benefit and your deceased spouse’s benefit. In most cases, it makes sense to defer whichever is the higher benefit, taking the lower benefit first while the larger benefit continues to increase.

Lump sum payment. This was originally intended to help survivors with certain funeral and end-of-life costs. However, the amount has never been indexed for inflation. Therefore, it won’t cover much. To get the payment, the surviving spouse must apply for it within the first two years of the deceased individual’s date of death.

Disabled benefit. If you qualify as disabled, you can receive survivor benefits as early as age 50. Divorced spouses can also receive survivor benefits, if the marriage lasted for at least ten years. If you remarry, you cannot receive survivor benefits. However, if you remarry after age 60, or age 50 if disabled, you can continue to receive survivor benefits based on your deceased spouse’s benefit, if you were married for at least ten years. You can even switch over to a spousal benefit based on the new spouses’ work history at age 62, if the new benefit would be higher.

Caring for children under age 16. A surviving spouse of any age caring for a child who is under age 16 may receive 75% of the worker’s benefit amount. The child is also eligible for a survivor benefit of 75% of the deceased parent’s benefits. A divorced spouse taking care of the deceased ex’s child younger than 16 is also entitled to 75% of the deceased spouse’s benefit. In this case, the ex does not need to meet the ten-year marriage rule, and they can be any age to collect benefits.

One thing to consider: the rules surrounding Social Security benefits are complex, especially when it comes to coordinating a spousal benefit with an overall financial plan. Speak with an estate planning attorney to protect the family and the children.

Reference: Forbes (Dec. 30, 2019) “Understanding the Basics Of Social Security Benefits for Surviving Spouses”

 

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What Does the New SECURE Act Mean for My Retirement?

Lawmakers in Washington are providing some essential tools to those trying to put together a financial plan for their retirement, Motley Fool reports, in its recent article entitled “3 Ways the SECURE Act Could Make You Replan Your Retirement.” However, in the process, our legislators can also throw a curve ball into the existing legal system. This may provide new opportunities for savers but also may create pitfalls for the unaware. As a result, it’s important to know the three primary ways that the SECURE Act will change the way you think about retirement.

  1. Delaying RMDs from IRAs and 401(k)s until age 72. Many Americans use IRAs, 401(k)s, and other tax-favored retirement accounts to help them save for retirement. These accounts offer deferral on any taxes generated by the investments within the account,s until the funds are withdrawn in retirement. However, Congress didn’t want people to be able to defer taxes on their retirement savings forever, so they created a system of required minimum distributions (RMDs). Under current law, most people have to start taking withdrawals from IRAs and 401(k)s beginning in the year they turn 70½. The distribution amount is based on the person’s life expectancy, so that they gradually use up the retirement account balances over time.

The SECURE Act changes the age at which people are required to take RMDs to age 72. This allows people some extra time before dealing with RMDs and also eliminates the complication of dealing with a half-birthday. You can withdraw money from your retirement accounts at age 70½ if you want to, but the legislation lets you make the choice.

  1. Allowing IRA contributions after age 70½. Under current law, people can’t make IRA contributions once they reach 70½, despite still working. Congress again didn’t want people to keep adding to their retirement accounts, when they were already past a typical retirement age. However, in reality, many people still work after age 70½. Therefore, allowing them to set money aside in a tax-favored way is only fair. That’s why the SECURE Act’s changed the age to allow further IRA contributions.
  2. Forcing faster withdrawals from inherited IRAs. The third change isn’t as favorable: to help pay for the tax impact of these changes, Congress decided to curtail the rules that let those who inherit retirement accounts to stretch out distributions over their entire lifetimes. The new legislation would still let spouses treat an inherited account as if it belonged to the spouse, but non-spouse beneficiaries would have to take distributions within 10 years.

With this change, you should review your estate planning to see if changes are necessary to reach the best possible outcome. Ask your estate planning attorney to go over these changes and how they may have an impact upon your estate plan.

Reference: Motley Fool (Dec. 19, 2019) “3 Ways the SECURE Act Could Make You Replan Your Retirement”

 

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How Can I Protect My Real Estate Assets?

How can a person protect a real estate asset to ensure its value? That’s what Wealth Advisor’s recent article, “8 Reliable Ways to Protect a Real Estate Asset,” asks. The article suggests that you look at this guide for several ways to keep your investments valuable.

  1. Insurance. This is one of the most popular asset protection strategies in real estate. The protection you select for your property depends on the real estate type. You can protect your home with a homeowner’s policy and your commercial property with a business policy. Insurance will protect you against many catastrophic events.
  2. Limited Liability. An LLC for rental property can protect your personal assets from potential lawsuits. With limited liability, your home is shielded from litigation concerning your business. One strategy is to buy a house with an LLC and rent it to yourself to minimize financial risks. This will limit the odds of personal real estate asset seizure. However, consult with an attorney to avoid charges on fraudulent practices. You should also place your commercial real estate properties in different LLCs, so if one asset faces a risk, the remainder of your property will be protected.
  3. Anonymous Land Trust. You can create an anonymous land trust to avoid legal implications on your real estate property. With a trustee, you don’t need to have your name on records, so putting your house in a trust will protect your investment. This may discourage anyone from attempting to pursue a lawsuit against you.
  4. The Titling of Assets. This can also be a great protection strategy. If your spouse is an equal tenant, it provides you with an indivisible interest, so if your spouse is involved in litigation, creditors can’t claim your house because you have an interest. Ask your estate planning attorney about how this works in your state.
  5. Protection Through Debt. Debt is an affordable way to protect your real estate property because the available equity is insignificant. The low income may also discourage creditors from going after your property.
  6. Eliminating Assets. You can get rid of your real estate asset, if creditors are on your tail. A lawsuit against you can’t affect the property that’s not under your name. Ask your attorney about transferring ownership of the property to irrevocable trusts.
  7. Homestead Exemptions. In some states, the homestead laws provide full or partial protection of home equity. If the exemption is high, think about increasing your mortgage payment to promote fund protection.
  8. Avoid Risky Situations. As a real estate investor, do your due diligence. Be certain that your review contracts carefully and work with an attorney.

Consider these property protection strategies to ensure that your real estate assets remain secure. Ask your estate planning attorney

Reference: Wealth Advisor (November 19, 2019) “8 Reliable Ways to Protect a Real Estate Asset”

 

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Social Security Number Scams Evolve Despite Growing Awareness

Security experts are predicting that Social Security phone scams are going to multiply and get worse, according to the article “Don’t Fall For These New Social Security Phone Scams” from Forbes. The Social Security phone scam is the most common phone scam in 2019, with a 23-fold rise in frequencies. A study by BeenVerified says that Social Security numbers accounted for 10% of all fraudulent calls. The FTC says that Social Security scams cost Americans $19 million in 2018.

How are they getting away with it? Scammers know that their potential victims are screening calls, so they’ve shifted their tactics. They’re leaving official sounding voicemails, with a phone number that looks like it just might be legitimate. The area code will appear to be from Washington, D.C. However, the numbers are not even from the United States.

Here are the worst offenders:

“Your Social Security number has been suspended.” A dire sounding threat, especially to seniors who count on their Social Security benefits. The caller says there has been fraudulent or criminal activity and the only way to resolve the problem is to call back. It’s not real. The Social Security Administration does not suspend, block or freeze numbers.

“Your Social Security number has been compromised.” This is a smart scam, as everyone is worried about data breaches. The automated call requests that you enter your Social Security number to verify that it has not been breached, and may also ask you to provide details, like a bank account number. Follow these instructions, and you’ve given your Social Security number to thieves. The SSA does not make these types of calls and would never ask for confirmation of your number by phone.

“A federal case has been brought against your Social Security number.” Seniors are especially vulnerable to the idea that a lawsuit is pending against them. However, the SSA or the government does not alert people to lawsuits by phone.

“You must send money to dismiss the case against you.” The government does not request payment by gift cards. If you really owe the government money, you’ll receive an official tax notice from the IRS.

Scammers are getting more sophisticated and more brazen. Don’t become a victim.

Reference: Forbes (Nov. 24, 2019) “Don’t Fall For These New Social Security Phone Scams”

Suggested Key Terms: Phone Scams, Gift Cards, Social Security Administration, Telephone, Fraud

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Homestead Laws – What Happens If a Spouse Is Not on the Deed?

Homestead Laws = When one spouse has paid for or inherited the family home and the other spouse has not contributed to its purchase or upkeep, the spouse who purchased the home has to take proactive steps. Otherwise, the other spouse will inherit the home and have the right to live in it, lease it, visit once a year or do whatever he or she wishes to.

It’s their home, says a recent article from the Houston Chronicle titled “Navigating inheritance when husband is not on the deed,” and remains so, until they die or abandon the property.

In this case, the woman is the buyer of the home and she wants her son to have the house. The son will eventually own the home, but as long as the husband is alive, the son can’t take possession of the home or use it, unless given permission to do so by the husband.

The husband may remarry, and if so, he and his new wife may live in the home. If she dies before he does, according to Texas’ homesteading laws, the homestead rights don’t transfer to her. At that point, the son would inherit the home and the new wife would have to move out.

The husband doesn’t get to live in the house for free. He is responsible for paying property taxes and maintaining the house. If there is a mortgage, he must pay the interest on the mortgage, but the woman’s son would have to make principal payments. The son would also have to pay for the homeowner’s insurance.

However, there are options:

  • Move to another state, where the laws are more in the woman’s favor.
  • Sell the home.
  • Ask the husband to sign a post-nuptial agreement, where he waives his homestead right.
  • Get divorced.
  • Gift or sell the home to the son now and rent from him.

The last option is risky. If the son owns the home, there is no protection from the son’s creditor’s claims, if any, and the woman would lose her property tax homestead exemptions. If the son needs to declare bankruptcy or sell the home, or dies before his mother, there would be nothing she could do. If the son married, his wife would be an owner of the home. He (or she) could even force his mother out of the home.

Speak with an estate planning lawyer to see if gifting the house to your son is a good idea for your situation.

Reference: Houston Chronicle (Nov. 13, 2019) “Navigating inheritance when husband is not on the deed”

 

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How Long-Term Care Services and Supports Compare Across the United States

Many Americans have little or no retirement savings. When they retire, the hard, cold reality hits them. They cannot afford to live in the community, where they raised their children. They will have to look for a less expensive place to live. One of the most significant expenses for aging adults is long-term care. If you are looking at different options for where to settle for your golden years, you should explore how long-term care services and supports compare across the United States.

The AARP Public Policy Institute compiles a reference book every year, called “Across the States: Profile of Long-Term Services and Supports.” Over the last 25 years, the book has grown to include thousands of data points and valuable analysis to make sense of the numbers.

The 2018 edition of the AARP reference book contains a wealth of information for people wanting to find a state that offers generous services and support to seniors. You can find information by state about things like:

  • The current age demographics and expected numbers for the future
  • How many people in the state are disabled
  • How much care costs in that state
  • Information on the numbers of family caregivers
  • Services available in the home and community
  • Nursing facilities
  • The long-term services and supports which Medicaid provides in that state
  • Demographic data about income, poverty and living arrangements
  • Private long-term care insurance statistics (95 percent of Americans do not carry this insurance)

We do not have a national system that provides Medicaid-funded long-term services and supports (LTSS). Unlike Medicare, Medicaid programs are different in every state. Medicare does not provide long-term care services, so most people rely on Medicaid to pay for some of all of their LTSS. One state might have all the services you need at little or no cost, and a neighboring state might provide much less assistance. Some people improve their quality of life immensely, by moving to a nearby state.

Differences in State LTSS Programs

The 2018 AARP report is 84 pages long, so we cannot cover all the details in this article. Here are a few of the highlights:

  • Some states (including New Mexico) spend 73 percent of their total LTSS funds on home and community-based services (HCBS) for the elderly and disabled, compared to only 13 percent in some other states (Kentucky and New Hampshire). Adequate care services in the home and community can make it possible for a person to continue living at home, rather than having to move into a nursing home.
  • Some states are spending less on LTSS and HCBS now than they did in 2011.
  • Southern states have higher rates of poverty among older adults than other regions of the country. Fewer than 30 percent of the people age 65 and over in Alaska, Hawaii, New Hampshire, and Maryland live below 250 percent of the national poverty level. This compares to 42 percent of older adults living in Mississippi, Louisiana, Tennessee, New Mexico, Kentucky, Alabama, Arkansas, and West Virginia. Since part of the Medicaid funds come from state sources, a poorer state will have more people in need but fewer dollars to fund the services they need.
  • The demographics about people in need encompass more than just poverty. Cognitive difficulties and self-care needs are factors as well as income. These needs vary significantly from one state to the next. Only five percent of older people in Colorado have self-care needs, compared to 11 percent in Mississippi. Only six percent of older people in South Dakota have cognitive challenges, compared to 12 percent in Mississippi.
  • Medicaid spent a total of $75 billion on home and community-based care services for older adults in 2013, compared to family caregivers, who provided services worth $470 billion in that year.
  • Oregon has 121 units in assisted living and residential care communities per 1,000 people age 75 or older. Louisiana only has 20 units per 1,000 people in this age group.
  • Only seven percent of people living in long-term care facilities in Hawaii receive antipsychotic medication, compared to 20 percent in Oklahoma.

You should consider many factors when evaluating where to live when you retire. Get information from multiple sources. Get advice from friends, relatives and social services agencies.

Every state makes its own regulations. Be sure to talk with an elder law attorney near you to find out how your state might differ from the general law of this article.

References:

AARP. “Across the States: Profiles of Long-Term Services and Supports.” (accessed October 31, 2019) https://blog.aarp.org/thinking-policy/across-the-states-profiles-of-long-term-services-and-supports

AARP. “Across the States 2018: Profiles of Long-Term Services and Supports.” (accessed October 31, 2019) https://www.aarp.org/ppi/info-2018/state-long-term-services-supports.html?CMP=RDRCT-PPI-CAREGIVING-082018

 

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