They’re Closing the Loopholes for Retirees

Monday 1/12/2004


Have you planned well for retirement?  The more assets, the more danger.

As I was rereading an issue of Elder Law Attorney – a publication by and for the elder law attorneys in NYS, it struck me:

The average retiring population is in great danger – the most vulnerable are those who are married – usually the wife because she will outlive her husband by an average of 7 years.  The issues I was reading about had two main topics – elder abuse and the current legislation to reduce Medicaid benefits for long-term care in NY.

The government tries to protect us – but there is just so much they can do.  For example, they enacted ERISA in the 1980’s, partially as a response to women being excluded  from a husband’s retirement plan without their knowledge.  Now many are still being excluded – with their knowledge.  The wife who signs a waiver at retirement – who elects not to reserve the right to receive the minimum 50% pension mandated by law – is uninformed, foolish or coerced. 

Some couples buy life insurance to fund the pension for the waiving wife – but many do not.  Wives who choose not to be involved in their financial planning often set themselves up for disaster.  Being uninformed, making wrong choices and so many other problems I can’t begin to tell it all!

Even if there is life insurance, if it is not set up the right way it won’t survive a long nursing home stay or the Medicaid process - if the insured becomes qualified.  It won’t survive not paying premiums because of forgetfulness or because the cost of living eats away at your income.  How much of a cost of living did you plan for?


Tuesday 1/13/2004

What are the dangers confronting well-to-do retirees today?


Lawsuits, healthcare costs, long-term care, tax law changes, divorce, elder abuse, the list goes on.

The rules allowing the well-off to pauperize themselves to qualify for Medicaid will be changing in NY – maybe not this year, but soon.  A bill was introduced last year to drastically reduce benefits.  The budget crunch will see to it that a similar bill is eventually passed. 

Medicaid requires you be institutionalized.  You cannot be taken care of at home.  Is that what you really want?

There are a lot of issues that should be considered in your planning for long-term care.  One of the most important is protecting your spouse.  That requires a fire drill. The planner or attorney you are working with can run you through a scenario of what will happen if (or when) and you will see exactly how well you are – or are not – protected. 

There are a lot of solutions out there – which one is right for you?  How will you know if you are getting comprehensive and competent advice about protecting each other?  Is there a catalyst among your advisors?  Someone who looks at all the sides of the issue – not just the legal, not just the financial, not just the tax angles? 

Did you think it was going to be easy to retire?



Wednesday 1/14/2004

I’ve seen it happen all too often.  A woman ends up having to take a crash course in economics and finance while she is struggling with the emotional trauma of the death or mental incapacity of her husband.


Could that happen to you?  You know we outlive our husbands by an average of 7 years.

I’m watching that happen to two women right now.  One whose husband dropped dead suddenly at 70, leaving her not nearly so well off as he had said she’s be.  The other is watching her loving husband of many years sink into Alzheimer’s.  Neither of these lovely ladies wants to write the book on finances.  One chose not to come in with her husband when he did the planning for the two of them.  We never got her input – and quite frankly – we never got the whole truth about their financial condition while he was alive.  She is struggling now with the emotional aftermath of the sudden death of her life companion – and trying to cut corners to keep her income secure.

The other woman, who took the initiative to seek out a comprehensive planner years ago, is simply spending her time with her husband and doing good in the community, secure in the knowledge that she has done everything she can on the financial, legal and tax side to protect herself.

Which one are you? 

Do you think, like the ostrich, that when you put your head in the sand, the world goes away?  Wives, get involved in the planning with your husband.  Husbands, if you love her, you’ll show that by bringing her into the planner with you (not the broker, the planner) for goal setting and to make sure she’s comfortable with the person you’ve selected.  Then if you’re not around, she’ll be OK.






Thursday 1/15/2004

When my Dad died, my sister and I piled into the car and drove for 4 hours in the dead of the night to get to Mom.


When we got there, Mom was sitting in a chair in the living room.  The body was gone.  I had the distinct impression that Dad was still there.  There were visible signs of an energy field by the arm of the chair where Mom was sitting.  I stood there for a moment thinking _ “It’s OK, Dad, we’re here now” and the shimmering air stilled.

I’m convinced he was there watching over her.  Maybe that’s why I like the movie “Ghost” so much with Patrick Swazie and Demi Moore.  If you haven’t seen it, please do.   It’s a wonderful love story with some Whoopie Goldberg humor thrown in.

Swazie stayed on for awhile after death to physically protect his wife.  It’s a lovely story.

For most of us, protecting our loved ones means financially.  Through, insurance, estate planning, income planning and finding good advisors they can feel safe and comfortable with after we are gone. 

Could you make this your New Year’s resolution? - But only if you love her, of course.




Friday 1/16/2004

Medicaid can be avoided with the purchase of adequate long-term care insurance – unfortunately, many retirees do not have long-term care insurance. 




Why not, you ask?  Or I don’t have any either, why should I pay for that, you ask? 

Many retirees and near retirees are not budget for the cost of long-term care insurance.  Many retirees are also not budgeting for the cost of long-term care itself – currently over $80,000 a year here in Central NY.  Why not?  The statistics tell us that one retiree out of two will need long-term care.  Even if the statistic were one in 4 – would you take those odds? 


If you said “yes” let me try to change your mind from the perspective of someone who has done extensive analysis of the problem.  Three years of long-term care costs $250,000 today.  That’s $7000 per month – the current cost in this area – times a three-year stay.  Maybe you can afford that. 


But you are 60.  You don’t need long-term care now and with any luck you won’t for about 20 years or more.  So do you just forget about it and hope it doesn’t happen?  NYS requires its Partnership policies to increase by a compounded 5% per year.  That’s because that is the anticipated cost of living increase for long-term care.  So that $250,000 price tag we just discussed – taken out over the next 20 years when you will need the care – I could do it on a calculator or use the rule of 72 to see how many times the costs will double at 5%.  Either way the answer – at your age 85 - is a whopping  $846,000 . . . . each.  If you bought the insurance five years ago, at 55, it would have cost $800 a year . . .each.  Hummm.

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Monday 04/19/2004 Attorney Selection, Personal Education and Divorce Agreements

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Monday 03/01/2004 Statistics

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