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The Holidays – A Great Time for a Family Board Meeting

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If your family is like most, the holidays are one of the few times during the year that the entire family gets together in the same place at the same time.  If you happen to be an adult child serving as a caregiver for an elderly parent (or parents), now is the perfect time to take charge as CEO of your “family care corporation” and schedule your annual board meeting.

Typically, if children are caring for aging parents, one of the children shoulders the burden more than the others.  If you are in this position, do what any corporate CEO would do…schedule a board meeting and do some strategic planning.  Manage the business of family caregiving by working with other members of the board (your siblings and your parents, if they are able) to make sure all parts of the business are being managed efficiently and that all parties are contributing to its success. 

Make sure the following job duties are covered by members of the board:

  • Managing the finances.  Making sure that someone is overseeing the finances and making sure that bills are being paid.  With online bill pay and access to bank accounts from remote locations, this may be the perfect job for the out-of-town sibling that is demographically unable to handle other duties. 
  • Managing the care.  If you are working with a Geriatric Care Manager or in-home care company, someone needs to be the primary contact for these services and communicate any developments to the rest of the family.
  • Managing the day-to-day operations.  This is likely the job for the sibling that lives nearest. It includes running errands and accompanying elderly parents to medical appointments and getting groceries, amongst other things.

Once duties have been delegated, be sure that each sibling has the tools he or she needs to do their job.  Make sure necessary authorizations are in place, which may include legal documents including Durable Powers of Attorney for General/Financial and Durable Powers of Attorney for Health Care.  Schedule frequent reporting sessions so everyone can stay on the same page.  And make it a point to schedule family meetings with your parents’ professional advisors – financial planner, CPA, estate planning attorney, etc.  This group of professionals can serve as a crucial advisory board for you and your family.

A business cannot be successful if one person is trying to fill every position.  As the sibling who has chosen to take charge, make sure you empower your siblings to contribute to the success of your family care corporation.

The Newest Retirement Roadblock…KIPPERS

You have likely heard about some of the most common roadblocks to a successful retirement -- inflation, longevity, income taxes, and long term care expenses.  But have you heard about the newest addition to the list?  The newest threat to successful retirement is KIPPERS -- Kids Invading Parental Pockets and Eroding Retirement Savings. While not mainstream just yet, Tom Sedoric, a financial advisor in Portsmouth, N.H. has apparently coined the acronym KIPPERS in his Financial Planning magazine article titled “Full-Nest Syndrome”. 

The article refers to data that suggests, “A stunning 85% of this year's college graduates were planning to head back to live with mom and dad for at least a while.  A study in 2010 by researchers at Columbia University using the U.S. Current Population Survey found that 52.8% of 18- to 24-year-olds were living at home, up from 47.3% in 1970.” 

Is there a cure for KIPPERS?  The first step is to acknowledge that this might just have an affect on your own retirement plans.  Financial support of a child, right or wrong, may prevent those still working from saving as much as they otherwise could.  Or, worse yet, force a retired parent to increase their investment withdrawals to higher levels.  

The best advice: Talk with your little KIPPER and set financial boundaries as soon as they step foot into the childhood bedroom.  Help them develop sound financial habits so that their financial dependence does not threaten your retirement success.

A Time to Give Thanks!

                  

Dear Clients and Friends,

By the time you receive this note of gratitude, Thanksgiving may have come and gone.  We trust that you paused, at least for a moment, to reflect on all there is to be grateful for too.   While this message is not in the form of a traditional Thanksgiving Day card, we are thankful for the opportunity to work on your behalf.  After celebrating 25 years recently, we couldn’t be more grateful to all of you who have contributed to making The Center the special place it is today.

Simply put, we love what we do and your continued confidence and trust inspires us to show our gratitude each and every day.   We hope our enthusiasm has shone through over the years and will continue to shine bright for many years to come. 

Best Wishes from The Center family to your family . . .  Happy Holiday Season!

Jennie Bauder, Jennifer Hackmann, Marilynn Levin, Amanda Toia, Jaclyn Jackson, Melissa Joy, Angela Palacios, Gregg Bloomfield, Gerri Harmer, Betsey Schrock, Brenda Spencer , Sandy Adams, Dan Boyce, Matt Chope, Marilyn Gunther, Julie Hall, Laurie Renchik, Troy Wyman, Tim Wyman

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A Holiday Shopping Three-Step Challenge

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If you’re like millions of Americans, one of your after Thanksgiving dinner activities tomorrow will be making your holiday shopping list and browsing the Black Friday savings deals that are published in advance.  Your excitement will build as you anticipate the first store door opening on Friday morning.  You will prepare to feel the adrenaline rush as you dash in for the best buys of the season.  You are ready to save!  Or are you?

For most of us, we feel a great sense of accomplishment in finding great deals during the holidays.  In fact, many of us will buy an item that isn’t even on our list because the deal is just too good to pass up.  So, are we actually saving or just spending?  Wouldn’t it be a better strategy to find good deals on those items actually on our list, and save the rest?

My three step challenge for you this Black Friday (and the entire holiday shopping season) is this:

  1. Make a list of those items you wish to buy for each person on your shopping list – before you leave home – and set a limit on what you can afford to spend.
  2. Find the best deals you can find on those items you have listed, but avoid buying additional items just because the deal is too good to pass up.
  3. If you find that you have money left over in your budget after your shopping list is completed, invest in yourself.  Put the extra dollars towards either a short-term savings goal (like a car) or a long-term savings goal (like retirement).  Add the cash to a savings account, investment account, or to your IRA or ROTH IRA (if you haven’t already contributed the maximum amount allowable this year).

Meeting the three step challenge will help you to cross of all of the items on your gift list, feel the accomplishment of finding great deals, and invest in yourself all at the same time!  So get ready, get set, and SAVE!

Medicare Costs and Social Security

In a previous post I shared that the Social Security Administration recently announced a Cost of Living Adjustment for 2012 in the amount of 3.6%. Those covered by Medicare will be interested in knowing that the Centers for Medicare and Medicaid Services (“CMS”) also announced that Medicare Part B premiums in 2012 will be $15.50 per month LESS than in 2011 ($99.90 in 2012). However, many folks (estimated at 75%) have been paying $96.40 since 2008, so this is really an increase of $3.50/month more for most. 

So, assuming this is an increase for most can it be good news?  I think so.  (Easy for me to say,  I know - I am not a recipient). Even assuming a $3.50 increase seems like good news with the extreme northward direction of medical costs in general over the past few years. Many had feared that Medicare premiums were going to escalate at a rate that would essentially offset the expected average Social Security increase of $43 completely. 

Further good news includes estimates by the CMS that the average Medicare Part D prescription drug plan premium will be near $30 and Medicare Advantage premiums will be lower for 2012. 

Additional information regarding the Medicare announcements can be found at: www.cms.gov 

Have a Social Security or Medicare question?  Send me an email – the tougher the question the better.  And remember, there’s no such thing as a dumb question when dealing with government agency’s policies (or the tax code).

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The Key to Planning for Your Lifestyle in Retirement

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After working with retirement clients for nearly 30 years, I have learned many things.  One of the most important lessons I have learned is that we all need to have the answer to one very simple question before we begin the planning process -- “what does it cost for me to live per month”?   As planners we can develop scenarios to help achieve retirement goals, but if we start with the wrong premise, we may be forming strategies to meet the wrong goal. 

Why is it so difficult to come up with a figure for our income needs? The general tendency is to underestimate expenditures and overestimate income. We also think about what we should be spending, not what we do spend.  Not knowing our expenditures comes about because we forget a few things:

  • Food, shelter, transportation and clothing are only the beginning of expenses. They are the ones we see each month.
  • We need to add insurances, taxes, gifts, car replacements, vacations, travel, family visits, and hobby and entertainment expenses. 
  • If you have children, your educational expenses may drop off by the time you retire but you need to determine how much you might need for weddings and launching (yes—getting your darlings out of the parental home)
  • If you plan to change your living arrangements, you need to factor in not only the additional cost of making a change but also the change in monthly expenditures related to the move.

There are circumstances that are out of our control, such as the rising cost of health care and insurance, declining markets and inflation.  To guard against these events we need to factor in percentage increases over time and to have a savings cushion of at least six months to help us weather the storm.

When I have gone through this analysis with clients, I often find a dramatic difference between projected income needs and actual income needs.  Can you imagine trying to reach your destination with only half a tank of gas?  It doesn’t work. Using the wrong expenditure figure can ruin the lifestyle you anticipated.

Talk to your financial advisor about tools to help you track your monthly income needs.

 

Laurie Renchik Supports “Women of Words” Fundraising Event

Michigan Women’s Media recently hosted a “Women of Words” fundraiser to kick-start its annual Women and Journalism Internship.  Three Michigan authors headlined the evening by talking about their work and passion for writing. 

The historic Masonic Hall in downtown Farmington provided a wonderful venue for the event.  Guests enjoyed tea service, petit sandwiches and a cupcake dessert bar.  The Center for Financial Planning proudly sponsored the event.

Laurie serves as an active board member for Michigan Women’s Media, Inc. where she joins an equally dedicated group of women supporting this newly formed non-profit organization.  Their primary mission is to fund and maintain a robust internship program that will offer student journalists the opportunity to write about women’s interests.

Contact Laurie for additional information or volunteer opportunities.

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