A lot of people feel challenged to meet all of their responsibilities in the present, so it is easy to understand why they may not want to think about planning for the future. However, this does not make it right. If you do want to retire at some point in time, you have to come up with some type of retirement plan that makes sense. Simply sitting idly by and expecting Social Security and Medicare to take care of everything when you reach the typical retirement age is going to leave you completely unprepared and you may never be able to retire.

As things stand on this day the average monthly Social Security check is not enough for most people to live on comfortably. And, Medicare does cover long-term care at all and there are out-of-pocket costs that must be paid on some of the services that are covered. You also have to consider the fact that we are in the throes of a federal budget crisis and cuts to these programs seem to be forthcoming.

Some people who want to take steps to be prepared for a comfortable retirement choose to serve in the armed forces. Veterans who have served for at least twenty years are entitled to a pension, and if you were to spend your entire career in the military your pension plus your Social Security benefits may be enough to provide you with enough income to live comfortably.

You could also choose to retire after twenty years and then start a new career as a civilian. The pension income could be set aside as a retirement fund and you could also contribute into the 401(k) plan at your new job. In this manner you could really put yourself in an advantageous position by the time you reach full retirement age as recognized by the Social Security Administration.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

When you are making plans for retirement it is important to pay attention to all relevant factors because things are always changing. It is challenging enough to manage your own affairs effectively, but there are also things that take place that are out of the control of the individual that can have an enormous impact on your retirement. For a case in point look no further than the Wall Street debacle of 2008 that derailed many carefully conceived retirement plans.

In addition to market conditions that can be unpredictable, you also have to concern yourself with changes to the tax code and governmental legislation that impacts senior citizens. The federal budget deficit has been a topic that has gotten a lot of attention in recent months, and there has been talk about slashing programs that our elders rely on. It’s been said that the present workforce cannot carry retirees as the baby boomers reach retirement age. Many of these boomers would ask why their initial Social Security checks would be instances of deficit spending when they have paid into the program for perhaps 40 or 50 years without receiving a dime in return, but that is another matter.

In any event, one must stay apprised of current events to plan effectively. As we all know lawmakers can be swayed by public opinion, and with that in mind it would be useful to share the results of a recent Kaiser Family Foundation poll. More than six out of every 10 people polled stated that they are against any cuts at all to Social Security. 57% were against reductions in Medicare spending, and half of the people who responded said that they did not want to see Medicaid spending cut at all.

Polls such as these can have a profound effect on the attitudes of those making the decisions in Washington. The future of these programs is relevant to anyone who is planning for retirement, so these ongoing budget talks are something to keep an eye on going forward as your retirement years draw nearer.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

It is important to be prepared to handle your medical expenses when you reach your retirement years, and of course Medicare is something that many people are going to be relying on. It would be logical to assume that you become eligible for your full Social Security benefit and Medicare simultaneously, but the reality is that this is not the way that the system is set up.

People become eligible for full Social Security benefits at different times based on when they were born. Some would say it is unfair and it makes no sense, but this is how it works. If you were born between 1943 in 1954 you can receive full retirement benefits when you are 66. If you were born after this you have to wait longer. The full retirement age goes up by two months per year after 1954, culminating in 1960. People who were born in 1960 and after receive their full benefit when they turn 67. However, Medicare is more “democratic.” All Americans become eligible for Medicare when they reach the age of 65.

Many people mistakenly believe that they will never have to put out another cent for health care once they begin to receive Medicare coverage, but the reality is that Medicare does not take care of everything. If you have paid into it sufficiently Medicare Part A comes without any out-of-pocket cost, but there are a total of four parts. Medicare Part B costs about $100 a month at this time, and you need this to be able to see a doctor or receive outpatient care. Medicare Part C enables you to become part of a health services network that is in essence subsidized by your Medicare entitlement but you must pay additional monthly premiums and co-payments in some cases. Medicare Part D is a prescription plan that also requires out-of-pocket expenditures.

It should be noted that Medicare does not pay for long-term care, and this is something else you may want to keep in mind. Negotiating these waters when you’re planning for your retirement can be quite complicated. The laws are changing all the time, and if you’re paying attention there is a lot of talk in Washington about significant alterations. If you want to plan intelligently, the wise course of action would be to do so with the assistance of an experienced retirement planning attorney.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

You are probably going to want to start planning for your retirement years sooner rather than later so you have plenty of time to reach your goals. But when you try to plan for an event that is going to take place perhaps two or more decades in the future it can be quite challenging because there are so many things that are out of your control. Many people found this out during the financial crisis that took place a few years ago, and as a result there are those who are looking for sources of liquidity for their retirement due to losses incurred at that time.

If you own your home outright or have have significant equity in it one option that is available to you is a Home Equity Conversion Mortgage. The HECM is a reverse mortgage that is federally insured and backed by the United States Department of Housing and Urban Development. Instead of you paying the bank in an effort to earn equity in your home, with the HECM the lender makes payments to you and in so doing purchases equity in your property.

Since you are not expected to make any payments there are no credit or income requirements. The only qualifications are that you must indeed have significant equity in the home, be 62 years of age or older, and utilize the house as your primary source of residence.

There is minimal risk involved because you can’t default as there is no expectation of payment on your behalf. The loan becomes due and payable upon your death or when you voluntarily move from the home. Many people will simply sell the house, use the proceeds to satisfy the debt and then pocket any remainder that may exist. Of course, if you or your heirs wanted to keep the house and use some other source of funding to satisfy the debt you are perfectly free to do so.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Retirement planning involves looking ahead and making projections based on the information that is available you in the present. Of course this is an ongoing process and as new information becomes available adjustments are inevitably going to be necessary. There are a lot of things that are out of our control, and the financial meltdown that took place in 2008 certainly demonstrated to all of us that changes can come down the pike in a hurry. But it would seem on the surface as though one thing you can certainly count on when your retirement years roll around is the fact that Social Security and Medicare will be there for you.

Your full retirement age varies depending upon when you were born but if you’re not currently receiving Social Security it will be somewhere between the ages of 66 and 67 as the laws currently stand. However, if you’re paying attention to the mood in Washington with regard to the federal budget deficit you have to wonder about the future of Social Security, Medicare, and Medicaid.

Social Security and Medicare alone accounted for 34% of federal spending in the United States in 2010, and when you add in Medicaid and the CHIP program that provides health insurance for children that chunk rises to 41%. Traditionally any talk of reduction in benefits for retirees has been seen as politically untenable, but these programs do seem to be under a lot of scrutiny at this juncture.

The amazing fact is that there are 10,000 new applicants for Social Security each day and this is going to be taking place for the next 20 years. If the people on Capitol Hill think that these costs are unsustainable now, what will the situation look like going forward with so many people joining the rolls as the baby boomers reach retirement age?

Balancing the budget seems like a sound idea in principle, but the truth is that this objective clashes with reality. If you’re planning for your retirement it would probably be a good idea to pay close attention to discussions regarding the federal budget that are taking place in Washington.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

IRS Warns of E-mail Fraud

The IRS is currently warning taxpayers of an active e-mail scam in the Midwest. The scam involves e-mails supposedly sent from the IRS that bear copycat logos and the names of real IRS officials. The recipients are told that their payment for taxes due has been rejected. They are then asked to click on a link in order to fill out an attached form and thereby resolve the payment rejection issue. However, the attachment actually contains a virus. This virus allows the scammer to gather personal and financial information from the recipient’s computer.

IRS spokesperson Michael Devine says that the IRS will never send an e-mail asking for personal information to any taxpayer. All correspondence regarding any problem with your tax return will be through the U.S. Mail. This official IRS letter will describe the problem and contain contact information for the person or agency who can help you resolve the issue.

If you receive an e-mail that claims to be from the IRS, remember the following:
-Do not respond to it.
-Do not open any attachments.
-Do not click on any links in the e-mail.

To assist the IRS in locating and prosecuting the criminals perpetrating this scam, you can do the following:
-Call 1-800-829-1040 to determine if the IRS is indeed trying to contact you regarding your tax return.
-Forward any e-mail claiming to be from the IRS to phishing@irs.gov.

For Additional Information:
Fraud Assistance Hotline: (314) 612-1412
Office Phone: (314) 622-4941
Fax: (314) 622-3369

*If Purcell and Amen, L.L.C. has prepared your tax returns, do not communicate directly with the IRS, have your tax preparer do it.  The IRS does not communicate with tax payers by e-mail. Please call (314) 966-8077 if you have any questions or concerns regarding E-mail Fraud from the IRS. FRAUD ALERT

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

People sometimes talk about retirement, end-of-life, and estate planning as being three distinct different practices, but in a very real sense they’re all branches of the same tree. If you had unlimited wealth you might have a “bundle” of resources set aside that you considered to be your estate that you knew for sure you would never need to touch. If that was the case you could be more compartmentalized in your thinking. However, for most of us, even those of considerable means, how your active retirement and twilight years play out is going to impact the anatomy of your estate.

At the present time the average life expectancy is 78.4 years. Of course this includes people of all ages, so the older you get the more likely it is that you will live beyond this average. The oldest old, people who are at least 85 years of age, are the fastest-growing segment of our society and medical science is making advances each and every day. This expanded life expectancy is fantastic on the one hand, but on the other hand when you live to such an advanced age it becomes more likely that you’ll spend some time in a long-term care facility; indeed, around half of the oldest old suffer from some form of dementia.

So if you’re planning your estate while you’re still engaged in your working years while simultaneously planning for your retirement you should include the possibility of incapacity and long-term care. Taking all this into consideration a clear picture emerges: everything is connected and your legacy is likely to be impacted by factors that are unknown to you as you are making your initial retirement plans.

There can be a wide swing with regard to how much money you need to be prepared for all the eventualities of aging while remaining capable of passing along a suitable legacy to your loved ones. It is important to take all contingencies into account and make prudent plans with full knowledge of all possibilities that may present themselves.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Working people of all ages know that Social Security exists because you can’t help but notice the huge bite that it takes out of your paycheck every couple of weeks. But as your retirement years start to come into clearer focus Social Security becomes much more immediately relevant. While it is true that few people are going to be able to enjoy a robust retirement on Social Security alone it can certainly give you a boost.

Most people are aware of the fact that the amount that you receive is based on the amount that you earned throughout your life and in turn the amount you contributed to the Social Security system. But when you choose to start receiving benefits also impacts the amount that you will receive.

What is considered to be “full retirement age” for the purposes of Social Security varies depending on the year that you were born. If you were born between 1943 and 1954 full retirement comes at age 66. But if you were to put off retirement until age 70 you could receive delayed retirement credits at a rate of 8% per year beyond your full retirement age, so the total increase would be 32%. However, on the other side of the spectrum you could choose to take your Social Security benefits at age 62 and receive a reduced benefit. The percentage that you would lose over your lifetime varies according to the year you were born as well, but using the same 1943 to 1954 example your benefit would be reduced by 25%.

Changes made by the Social Security Administration on December 8th of 2010 put an end to an interesting opportunity that some people were taking advantage of. It was previously possible to accept your reduced benefit at the age of 62, receive payments until you were 70 years of age and then pay them back and reapply for your full benefit. You could invest the reduced payments over that eight year span and use this capital to generate earnings before you paid back the money. The new rule makes this no longer possible as it allows for just a single application withdrawal that must take place within 12 months of the original filing for benefits.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

The recently released MetLife long term care market research study shed a lot of light on how challenging it is to make long term financial plans. The average annual cost for a yearlong stay in a private room in a nursing home went up by 4.6% in 2010 over 2009, reaching a hefty $83,585.

The charge for a year’s residence in an assisted living facility in the United States rose 5.2% from $37,572 to $39,516 on average. Industry analysts expect this upward trending to continue, so if you are making preparation for long term care that you may need some twenty years in the future it is hard to know exactly what to expect.

Many people, even those who have been successful, will need to utilize all resources that are available to them to meet these expenses. With this in mind, those who have served in the United States armed forces who need assistance with their day to day needs may be eligible for some financial help from the government in the form of the Veterans Aid & Attendance Pension.

We are all aware of the retirement pension that members of the military are entitled to after 20 years of service, but the Veterans A & A pension is something different. If you have served at least 90 days on active duty with a minimum of one of these days taking place during wartime you meet the length of service requirement.

Medically you have to provide evidence that you do in fact need living assistance, and there are some financial requirements as well. To be eligible for the Veterans Aid & Attendance pension your total assets can’t exceed $80,000. But, this does not include your home and your motor vehicles, so you have some flexibility to work with.

If you think that you may qualify, the proper course of action would be to contact the Veterans Benefits Administration to obtain detailed application information.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Upon reading the following article, I decided to write Bill McClellan. The message to Mr. McClellan appears below.

http://www.stltoday.com/news/local/columns/bill-mcclellan/article_7be7b2e2-5a78-5b4b-a56e-1141414b6b3c.html

Mr. McClellan:

I read your article entitled, “McClellan: Medicaid won’t pay bills for man whose widow had IRA”, and I wanted to pass on the following thoughts:

I am an attorney for the St. Louis County law firm, Purcell & Amen, L.L.C. We focus our practice on Estate Planning and Elder Law. A good portion of our practice these days is actually spent on helping families qualify for government benefits, such as Medicaid. Unfortunately, the story you shared is one we see many times a year.

There is no doubt in my mind that the hospital had the best interests of the family in mind when they helped her fill out the application for Medicaid. The problem with the approach is that it is not the job of that “Medicaid Specialist” to get families such as the one you described on Medicaid. Their goal, as Ms. June Fowler stated “is to assist patients who qualify to receive the help they need”. This is actually a very important distinction that she made. The patient must ALREADY QUALIFY for Medicaid, as is. This specialist will not tell you that going through this arduous application process is not a guarantee that they will be approved. In fact, they don’t give the patients any indication whether or not they will qualify. Many people in the Ward’s situation do not understand that the help they are receiving may not be much help at all.

There are more than a few law firms in the St. Louis area who specialize, as we do, in helping these families qualify for these benefits. Many of those firms, including ours, offer free consultations where we can determine whether or not we can help them. If we see an opportunity to help the family, they would become our clients. Then our duties are to that person and not to the hospital, or nursing home, or even the state. We regularly help families, such as the Ward’s, re-position their assets so that they no longer count against them, or spend-down their assets on “exempt” assets. For example, you mentioned in your article that you can’t spend the money on the funeral, because the person is not living. Instead, they could have bought a pre-paid funeral or earmarked funds for a funeral which would not count against them in the application process.

Stories like the Ward’s are why many of us in the elder law field got started doing Medicaid eligibility. Helping those families that ‘just miss’ the cut-off without any planning. I wish we had a better way to get the word out to families that opportunities exist for planning which may help them avoid disaster in a crisis. More options exist for families that plan at least 5 years ahead of a need because of the Medicaid “look-back” period, but there are still many, many options available to families like the Ward’s when the crisis arrives.

Thanks for the article. Many people do not know about programs like Medicaid (and don’t see any need to explore plans) until a crisis hits close to home.

Paul Michael Gantner
pgantner@yourestatematters.com
Purcell & Amen, L.L.C.
www.yourestatematters.com
(314) 966-8077

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.