10 tips for end of year planning

We may not be in a position to do #6 (gift up to $30,000 to an individual if married), but we all need to do #10, organize our records for 2019, and shred documents no longer needed for retention.

Also, in 2018, you can contribute up to $18,500 in your employer-sponsored retirement plan (i.e., 401(k), 403(b), most 457 plans, and the Federal government’s Thrift Savings Plan). Employees aged 50 or older who participate in such plans can contribute an additional $6,000 in "catch-up" contributions. #3

https://www.natlawreview.com/article/year-end-estate-and-financial-planning-checklist-make-your-list-and-check-it-twice

Elder abuse high in rural and tribal areas

Office of Justice Programs reports:  "Criminals tend to prey on seniors because of their retirement nest eggs," said Matt M. Dummermuth, OJP's Principal Deputy Assistant Attorney General, "and because seniors are often socially isolated, may have diminished capacity in handling financial matters and don't always know where to seek guidance when they are defrauded. We hope this summit, and federal and local partnerships, will help stop those who seek to steal from seniors and support those who have been stolen from."

Many rural and tribal areas have small police departments or sheriff's offices that cover large areas with few staff and minimal resources, making it difficult for law enforcement to conduct complicated fraud investigations. These cases often have international connections, which require federal jurisdiction and resources.

The Justice Department estimates that financial exploitation, the most common form of elder abuse, afflicts one in ten seniors. According to the "2018 DOJ Report on Elder Abuse and Financial Exploitation," each year an estimated $3 billion is swindled from America's senior citizens through mass-mailing and "grandparent" scams, fake prizes, fraudulent IRS refunds and extortion.

President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act into law on October 18, 2017. Since then, the Justice Department conducted the largest coordinated sweep of elder fraud cases in history. With help from all levels of government and the private sector, the Department charged more than 250 individuals. These cases resulted in the return of more than $220 million to victims."

https://ojp.gov/ojpblog/blogs-2018/2018-blog-rural-elder-abuse.htm

Older Americans are healthier and wealthier

"Though you'd never guess it from our youth-centric culture, older Americans are actually happier than younger folks. Americans 55 and older eat more fresh produce, smoke less, and have less worry and stress than their younger counterparts, a Gallup Survey[1] found. They also have a greater sense of purpose and well-being.

Older Americans also do particularly well when it comes to financial well-being, the study found, thriving at a rate of 53%, compared with 33% for younger people. They are happier with their standard of living, worry less about money, and say they have enough money to do what they want — all at significantly higher rates than those under 55."

http://www.businessinsider.com/sc/why-older-americans-are-happier-2017-7?

Spending patterns of older Americans

This will take a little time to read and study, but I suggest it because you may be in the same boat as we: by 2050, when our children are 80+ there will twice as many seniors as today. So the purpose of the study (BLS) is to figure out how do people over 65 spend money (we’re consumer units). 

The first thing you notice is how income, which peaks in the 50s, drops in the 70s (retirement pensions, savings, investments—which is why we need to elect capitalists). I think the food category is high, but that’s because it probably includes eating out—and we sort of tuck that into entertainment (we don't do much for entertainment). Everyone eats out much more than they need to—food is pretty reasonable, but if you’re paying someone to prepare and serve it, not so much. In 2013, Americans spent 5.6 percent of their disposable personal incomes on food at home and 4.3 percent on food away from home.  

I was surprised that housing costs (as percent of income) were as high as the study shows.

Contributions got lumped into “other” so that’s a pretty sloppy category. I know there are all sorts of categories we could reduce, but really don’t have the will. But I just love shopping for clothes at resale stores and getting brand name jeans for $1.00. I didn’t discover them til after I retired. For nice stuff, I just let my daughter do that for Christmas and birthdays.

http://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm

Tips for your pre-retirement years

• Life tips for my friends and readers who are 45-ish.
• Put away about 15% in your retirement account, above what your employer or government is contributing.
• Take good care of your relationships--they are like gold.
• Ignore all the food fads and scares; eat all the colors, eat less and move more. Just like mom said.
• Everything in moderation; especially alcohol and coffee and just pitch the cigarettes. They've never been found to benefit anything in your body.
• Don't be a pot head even if it is legal--you need every brain cell you have working at full capacity.
• Take care of your ears--turn down the music--and your teeth. Don't become a deaf senior citizen with ugly teeth--it's not pleasant. Take out the ear buds and see a dentist twice a year.
• Go to church. There are thousands of denominations as a result of squabbles that happened years ago. One should meet your needs. The world is actually more religious now than ever before--don't lose out on the benefits.
• Enjoy the many pleasures of owning a pet, but they are not family--don't kid yourself.
• Think about the benefits and responsibilities of being a citizen of the United States. It's not perfect, but it's the only one ever created with idea that the state/monarch/king/president doesn't own the people.

Do you have a Written Income Plan (WIP) by guest blogger Jeff Gorton

“Age 85 is a bad time to go broke,” says expert retirement planner Jeff Gorton. Personal savings, various investments and, yes, Social Security may prove to be short of what you’d expected.

“Budgeting how you spend money before retirement can often be a misleading measurement of how you’ll actually spend it during retirement,” says Gorton, a veteran Certified Public Accountant and Certified Financial Planner™, and head of Gorton Financial Group (www.gortonfinancialgroup.com).

“Spending 40 hours a week at work not only earns you a paycheck, it also keeps you from spending money on more vacations, matinee screenings at the movie theater, extra trips to the mall or shopping online. You need to be exceedingly realistic in your planning, and the five years before retirement are actually the most crucial in solidifying post-employment stability.”

To prevent a rude awakening during retirement, Gorton makes certain his clients start with a written income plan (WIP). He reviews the benefits and importance of this “living document”:

• A comprehensive list of life expenses paints a clearer picture. For a 65-year-old married couple today, there is a 72 percent chance that at least one spouse will live to age 85; a 45 percent chance that one will live to age 90, and an 18 percent chance that one will reach age 95, according a recent study from the CDC National Center for Health Statistics. You may not think of listing things like pet care, yard maintenance, and regular visits to salons or spas. But if you enjoy those services now, you may want them during retirement, and you might find that you underestimated the real cost of maintaining your desired lifestyle. And, that’s not including gifts to children and grandchildren!

• The forecast of a two-legged stool. A WIP helps you appreciate the reliability of retirement income. What sources of income do you anticipate having? Traditionally, retirement funding has been viewed as a “three-legged stool,” implying a balance between Social Security, retirement plans and savings/investments. As the baby boom generation ages, Social Security benefits may decrease — and the age at which an individual can collect benefits may increase. Changes in employment may affect retirement plans. As a result, the third leg of the stool, savings/investments, may become even more important.

• Who is authoring your WIP? As with all written documents, you must always consider the source. What you may not realize is that a financial planner is liable to have a stake in selling you a financial product. Just like a retailer may have an incentive to move certain brands of products, many planners are incentivized to have you invest in specific financial vehicles from major institutions. What plan works best for you? Seek advice from an expert who isn’t trying to sell you something, such as an independent firm.

“If you don’t have a written income plan, then you’re just hoping things will work out,” Gorton says.

About Jeff Gorton, CPA, CFP®

Jeff Gorton is a Certified Public Accountant and a Certified Financial Planner™ specializing in individual tax and retirement planning. He is also an Investment Advisor Representative under Alphastar Capital Management, an SEC Registered Investment Advisor, and has a life and health insurance license. Gorton works with individuals and their families to create and protect their financial legacies. He specializes in working with retirees in the areas of tax planning, benefits, retirement planning, estate planning and safe money techniques. He received his BBA in Accounting from the University of Oklahoma. Gorton previously worked for 10 years as the Chief Financial Officer for a large retail organization, overseeing their accounting, benefits and 401(k) retirement plans.

Your Retirement Checklist for Your 70s and Beyond

Take a look at this check-list, you might need to reevaluate. Includes a link to long term care.

Unbelievably good deals

This is a terrific little reference book. "Unbelievably good deals and great adventures that you absolutely can't get unless you're over 50" by Joan Rattner Heilman, 2007-2008 edition, McGraw Hill, 2007, will set you to dreaming about what you're going to do with all that free time when you are retired. There are 19 chapters on travel, education, sports, shopping, etc. Chapters 2-12 actually deal in some way with travel--lodging or airfares, tours, cutting costs, etc. This author doesn't want you to pay sticker price for anything. Always ask about a senior discount.

If you are a single man over age 45 and a great dancer, consider being a "host". You can cruise for (almost) free, working 3-4 hours a day. All you have to do is not get romantically involved with any of the passengers.

This summer at Lakeside I met a kite-flying teacher who was wildly enthusiastic about the Evergreen bed and breakfast club, which is featured in this book. It's for people over 50, has 3,500 members and 2,000 host locations. A couple pays $15 for each overnight stay. The club dues are $60 (single) and $75 (couple). Check www.evergreenclub.com.