Senior Women and Financial Insecurity

Many older Americans worry about whether they will have enough money to live on when they retire. A variety of factors can impact how much money a person will have to pay for housing, food, utilities, medical expenses and other costs of living in retirement. Gender is one of those factors. Here are some of the reasons why women have more financial insecurity than men as they age.

Women have the deck stacked against them in three ways:

  • Thanks to several factors, like the gender pay gap and women shouldering many of the duties that come with raising families, women often earn less than men throughout their employment years. As a result, women tend to go into retirement with fewer assets, less home equity, lower retirement account balances and a higher debt load than men.
  • Because many women earn less than men, their Social Security retirement check will be smaller than the typical man’s, causing women to have less monthly income than men after they retire.
  • Women tend to live longer than men, so they have to make their limited income and assets last longer than men usually do.

A Study in Numbers

The issue of gender pay inequality and financial insecurity in retirement comes with some interesting statistics. Here are a few:

  • More than half of American women age 60 or more worry about running out of money in retirement.
  • The median annual household income for men age 60 or older is $55,000. In contrast, the median household income for women age 60 or older is $39,600 per year.
  • Older women of color have even more extreme financial insecurity.
  • About 20 percent of women age 60 or older with black, African American, indigenous American, or native Alaskan heritage live below the poverty level, with a household income of $12,490 a year.

Thankfully, there are public benefits programs that can help aging Americans make ends meet.

Public Benefits Programs for Low-Income Older Americans

The National Council on Aging (NCOA) can guide seniors on how to get the food, housing, medical assistance, and other forms of help they need from public benefits programs. Many older Americans miss out on valuable benefits that could ease their financial struggles because they do not know about the programs or how to access the resources. The NCOA has offices in every state, with many local offices.

Some of the public benefits for which many lower-income Americans could be eligible include:

  • Getting food through Medicaid’s Supplemental Nutrition Assistance Program (SNAP)
  • Help with paying Medicare premiums from the Medicare Savings Programs
  • Assistance with getting prescription drugs at lower or no cost through the Medicare Part D Extra Help/Low Income Subsidy
  • Help with paying heating and cooling bills from the Low-Income Home Energy Assistance Program.

Around 3 million older American women connected with benefits programs after completing a screening through the NCOA. You might also qualify for assistance if you or a spouse served in the military or worked for the federal government or a railroad.

Most of the older adults who participated in the NCOA survey said they are satisfied with their lives, so there are positive aspects to growing old in America.

Your state might have different regulations than the general law of this article. You might want to talk with an elder law attorney in your area.

References: National Council on Aging. “The Pay Gap is an Aging Issue.” (accessed October 17, 2019) https://www.ncoa.org/blog/the-pay-gap-is-an-aging-issue/

Find Money in Forgotten Accounts

Many people who retire find it hard to live on a reduced income, so any windfall is a delight. Bank accounts, life insurance, utility company security deposits, and retirement accounts are all places you might have anywhere from a few bucks to hundreds or thousands of dollars sitting around gathering dust. The trick is to know where to look, since you might not remember all the possible companies that still have some of your money. Here are some tips for seniors on how to find money in forgotten accounts.

Where to Look for Old Bank or Investment Accounts

If you had money in a bank or brokerage account you did not use for several years, the bank probably sent the funds to the state of your last known address. Your last known address usually means the last address the bank had for you, when you actively banked with them.

Let’s say you went to college out of state. You opened a checking account at a local bank for convenience while in school. After graduation, you forgot about the account. Eventually, the bank will send the remaining balance to that state or the state from the permanent address you gave when you opened the account.

You can try to track down obsolete accounts online. Go to unclaimed.org and check every state where you have lived. If you do find something, you will have to fill out and send in a form, either online or by mail, to request the funds. The website contains funds that other types of companies, like utilities, have also surrendered to the state.

This type of search can be time-consuming, but the rewards can make your efforts worthwhile. If you have ever gone by another name, be sure to check under all the names you have used. If you use a nickname, check under all possible combinations of last names, legal first name and nickname.

If your name is a common name, you might have to sift through many possible accounts to find yours. You might also be surprised at how many other people have the same name as you.

Pensions and Retirement Accounts

You have several options to try to dig up an old employer-sponsored retirement account, including pensions. You need to find the current administrator of that employer’s plan. You might be able to find the contact information for the plan administrator on freeERISA.com or by calling the personnel office of that employer.

Sometimes a 401(k) plan gets terminated. In that situation, you can look for contact information on the Employee Benefits Security Administration’s website. Additional options include the Pension Benefit Guaranty Corporation, or the nonprofit Pension Rights Center.

How to Search for Life Insurance Policies

You can look for an old life insurance policy you owned, or that of a deceased relative, by using the Life Insurance Policy Locator. Some life insurance policies show up on unclaimed.org, but for others, you might have to find the name of the insurance company at naic.org and then contact the insurer.

Scammer Alert

Be aware before you hire someone to help with finding hidden money. Some companies defrauded people by charging exorbitant fees to conduct searches for them, but do not deliver the promised service. If a company charges a fee upfront before they find your lost funds, that is a red flag the firm is fraudulent. If you want someone else to do the search for you, only agree to pay a percentage of the money that is actually recovered. The search firm’s cut should not exceed 10 to 20 percent of the recovered funds.

References:

AARP. “How to Find “Forgotten” Cash.” (accessed October 2, 2019) https://www.aarp.org/money/budgeting-saving/info-2019/find-unclaimed-cash.html

How to Help Your Elderly Parent Without Ruining Your Relationship

If you have elderly parents, you might have to step in at some point and provide caregiving services. Whether that concept means hands-on personal assistance with things like bathing, dressing, grooming, and feeding, or handling their finances and making decisions for them, this change in your roles can be challenging for you and your parent. Here are some issues to consider about how to help your elderly parent without ruining your relationship.

It’s Usually Not “Leave It to Beaver”

Acknowledge and accept your family dynamics as they are. Many people grow up seeing fictional families on television and wish their parents and siblings got along better. Very few families measure up to the imaginary ones of fiction. You and your parent probably did not have the kind of relationship in which you would regularly get together for coffee or shopping. Quite a few people have strained interactions with their parents.

Relationships carry the baggage of the past. It is not helpful for people to tell you to forget about the past. Your parent is the same person with whom you have had conflict, which means they will continue to do things that upset you. If your parent was extremely authoritarian or independent, it will be difficult for them to accept someone telling them what to do – especially one of their children.

Patience versus Doormat

You should try to be understanding of what your parent is going through, such as losing independence and feeling less valuable or powerful. They might get confused and forget you already did things they now accuse you of not doing. They might also be dealing with chronic pain and other health issues.

You should, however, set boundaries. Getting old does not give your parent a right to be physically, verbally, or emotionally abusive. Be firm with your parent if any of these things happen. Being a dutiful and caring son or daughter does not include being a doormat. Calmly inform your parent of the behavior that is not acceptable. You might need to have someone in social services arrange for counseling to help your parent adjust to the reality of aging and the need for assistance.

The Silver Lining

For some people, this stage of life is a time to deal with unfinished business. For those that have had challenging relationships with your parents, now could be the opportunity where you can talk out problems or questions. You might be able to resolve conflicts that could have caused you regrets down the road. The best approach for this goal to tread lightly. Just because your parent is frail, you do not have the right to beat them up verbally with a long list of criticisms and complaints.

Address only one piece of a small issue in a visit, and do not dredge up unpleasant topics in every visit. You do not want your parent to dread seeing you. Be the kind of person you might wish your parent had been when you were a child – kind, compassionate and nurturing.

Those of you who have enjoyed a happy, healthy relationship with your parents can deepen your mutual affection and interaction. Since your parent is no longer rushing around to work and raise a family, you can have uninterrupted conversations and create memories to treasure. Even people who have had strained relationships might get to reach the point where they have pleasant times with their elderly parents.

References: A Place for Mom. “Parenting the Parent: Caring for Elderly Parents.” (accessed August 21, 2019 ) https://www.aplaceformom.com/planning-and-advice/articles/caring-for-elderly-parents

Who Can You Really Trust for Your Financial Accounts?

Dramatically increased instances of elder financial abuse are behind a new question asked of seniors by their advisors these days: do you want to name a trusted contact on your account?

The financial industry’s regulatory authority now requires that member firms make an effort to have clients name a trusted contact person. It is not required that they do so, says Hometown Life in the article “Use a trusted contact to protect seniors from financial abuse,” but the question must be asked.

The older you are, the more seriously you should consider taking this step.

Let’s start by defining what a trusted contact is, and equally important, what a trusted contact is not. A trusted contact is not someone who can access or make financial decisions on your behalf. That is a person who has been named a Power of Attorney or POA. A trusted contact is a person that your financial advisor, brokerage house, or the financial company that holds your accounts can contact if they see signs that indicate that you are being financially exploited.

The trusted contact can also be a person who can confirm your mental or physical health status, a legal guardian, trustee, or your POA. Unless the trusted contact person is also the POA, the trusted contact person cannot see your account information or make trades for you.

Typically, people name a family member. However, research has sadly shown that family members are actually the ones most likely to be the abusers. Naming a trusted contact may call for you to think out of the box and consider someone who is not a family member. A trusted professional or a dear friend, preferably one who is younger than you, may be the best person for this task. You can also select two trusted contacts.

This is not a perfect solution to financial elder abuse. However, it is one more layer of protection. There is no 100% solution to a problem that affects seniors in every social and economic class. Nevertheless, naming a trusted contact is something that can be done to reduce the risk and is worth doing.

Other safeguards include having an estate plan, including a will, power of attorney, health care power of attorney and trusts. Your estate planning attorney will be able to explain the many different types of trusts and how they can be used to ensure that you remain in control of your assets while protecting you from financial abuse.

Reference: Hometown Life ( August 15, 2019) “Use a trusted contact to protect seniors from financial abuse”

How to Locate or Get Copies of Your Aging Relative’s Important Documents

If you are serving as a caregiver for an aging relative, you know the job involves more paperwork than you ever imagined before taking on the responsibility. The task of caregiving is even more challenging when your loved one cannot find their essential documents. You might need a copy of your parents’ wedding license from 1950 so your mom can get her spousal retirement benefits. Your dad might need his military service records to enroll in veterans’ benefits programs.

Before you start pulling out your hair trying to find these papers, it is good to have a plan. For example, the first three places in the house you will check, people you can call who might have useful information about where the documents might be stored, and a list of the banks where your parents might have rented a safe deposit box. It also helps to know how you will go about getting replacement copies of the documents you cannot find. Here are some tips on how to locate or get copies of your aging relative’s important documents.

Let the Scavenger Hunt Begin

Before you rifle through all of their personal belongings, ask your loved one where they keep their important papers. You might be amazed at some of the bizarre places that people put their documents. It would take you a month of Sundays to find the papers if the person had not told you where to look. A hollowed-out book, a cigar box, or a coffee can often hold treasure troves of paperwork. Some people keep valuable documents in the freezer, hidden in a closet, under a floorboard, or under the bed.

Make it easy on yourself and ask your relative where they keep their papers. Explain why you need a particular document, and that you would like to organize the rest of their papers so you can easily find things you need to help take care of them.

If they cannot remember or the papers are no longer where they thought they were, check the desk drawers, the family bible, a file cabinet, the attic, the basement, and shelves. If they put the documents in a safe deposit box, you will have to take them and the key, along with their government-issued photo identification, to the bank. After you inventory the contents of the box, keep the list and have them add you to the safe deposit box so you can access the documents in the event of their death. Never leave funeral instructions or documents in the box.

When You Cannot Find It, Get a Replacement Copy

It can take weeks or longer to get replacement documents, and it is best to start this process well before you need the papers. You can contact the applicable state’s or county’s vital records office to get certified copies of certificates of birth, death, marriage, and divorce. Make sure you have your loved one’s Social Security card, driver’s license or state identification card, Medicare and Medicaid cards, and military records. If any of these are missing, contact the appropriate government agency to get replacement copies.

References:

AARP. “Find or Replace Your Loved One’s Missing Documents.” (accessed July 22, 2019) https://www.aarp.org/caregiving/financial-legal/info-2018/replacing-important-documents.html?intcmp=AE-CAR-LEG-EOA1

What Do The Letters Mean After My Financial Advisor’s Name?

Finding a financial advisor can be a confusing process, especially since there are different standards of care that financial professionals provide, Forbes explains in the article “What Designations Should Your Financial Advisor Have?”

To make matters more confusing, in addition to the designations, there’s a wide range of job titles used to show their expertise. Titles are unregulated and can’t be treated as verifiable proof of someone’s credibility or authority to serve your financial needs. Instead, look at the professional designations. These (letters behind the advisor’s name) are a more standardized way for these professionals to convey their expertise. However, not all letter combinations require the same degree of knowledge and training. Most financial professionals have some combination of letters on his or her business card. Here are three of the most meaningful designations (listed alphabetically) for financial advisors offering comprehensive wealth management services.

  1. Certified Financial Planner (CFP®). This designation is the most comprehensive designation for financial planning. This certification requires participants to complete a series of financial planning courses and pass a two-day board exam. The course covers general principles of financial planning, education planning, insurance planning, investment planning, tax planning, retirement savings and income planning and estate planning. The CFP Board also mandates that its participants have three years of professional experience related to the financial planning process or two years of apprenticeship experience that meets additional requirements.
  2. Certified Public Accountant (CPA). These financial professionals have highly-sophisticated backgrounds in taxes and accounting. Before taking the CPA exam, candidates must successfully complete a minimum of 150 semester hours of relevant course work. The CPA exam covers auditing and attestation, financial accounting and reporting, regulation and business environment concepts.
  3. Chartered Financial Analyst (CFA). Many financial professionals think that this designation is the toughest credential to earn. CFA candidates must pass three exams, which requires roughly 900 hours of study. The tests have a passing rate of only 44%. The graduate-level curriculum for CFA candidates concentrates on investment and market topics, such as portfolio management, economics, financial analysis, quantitative methods, and corporate finance. Before being permitted to use the designation, these candidates must complete four years of professional work experience in investment decision-making.

All three of these designations require substantial financial knowledge, continuing education, and adherence to a strict code of ethics.

Reference: Forbes (January 29, 2019) “What Designations Should Your Financial Advisor Have?”

Organize Estate Planning Documents, So Family Can Find Them?

Keeping track of and organizing estate planning documents and talking about them with your loved ones, who are likely to live after you pass, can be unsettling. However, they can make their lives easier. Your children and beneficiaries should always know where your estate documents are, says Lancaster Online in the article “The paper trail: Keep important documents in order to make it easy on family and friends.”

A will is just one of several important documents that survivors will need to locate. Having access to all organized estate planning documents will also avoid assets or debts being overlooked. It doesn’t matter if a person owns a single home or has a vast empire of property or multiple investment accounts: being organized matters.

The first mistake people make is not having an estate plan at all. Once assets begin to accumulate, there needs to be a plan to distribute them. An estate planning attorney can work with the person and their family to create the necessary documents and the overall estate plan. The next step is to update that plan, as changes occur in life and in the law.

A growing problem is accessing digital accounts. Now that bills are paid online and statements are issued electronically, having a comprehensive list of bills, investment accounts, property, insurers and contact information for your CPA, financial advisor and estate planning attorney becomes even more important.

Create a list and let executors and heirs know where that list is. If possible, consolidate some accounts to make the process of settling the estate easier. If health is failing, it becomes more important to take care of this sooner rather than later.

Families left without a list of any kind are advised to start with tax returns, as they contain a wealth of information.

One of the most important things about a will is that someone is going to need to find it. If the document is in a fire-safe box at home and can be located, that’s good. If it is in a safe deposit box in a bank, that may present some problems, unless the executor is on the list of those permitted to access the box and they know where the keys are.

A copy of the will does not work. An original, with inked signatures from the testator and two witnesses must be presented to the court. If there are minor children, the will must name a guardian for the children, or the court may determine that the child is vulnerable and place them with care at a foster home, until a guardian can be determined.

One document that is growing in popularity is a letter of intent. It is not a legally binding document, but is a letter written to survivors to explain the decedent’s reasoning for how the estate was divided, or what specific personal items they want to go to which person. People struggling with grief often create storms over minor things, like Aunt Sara’s first toy doll or Uncle Henry’s fishing rod. The letter might be used to uphold the will, if there is an estate contest.

Maintain the documents in an organized manner, whether a binder, folder, or a pile in a specified location. Tell family members where the documents are, so they can find them easily.

Reference: Lancaster Online (May 1, 2019) “The paper trail: Keep important documents in order to make it easy on family and friends”

Here’s How You Know You’re an Adult: 10 Documents

Fifty is a little on the late side to start taking care of these important life matters. However, it is better late than never. It’s easy to put these tasks off, since the busyness of our day-to-day lives gives us a good reason to procrastinate on the larger issues, like death and our own mortality. However, according to Charlotte Five’s article “For ultimate adulting status, have these 10 documents by the time you’re 35,” the time to act is now.

Here are the ten documents you need to get locked down.

A Will. The last will and testament does not have to be complicated. However, it does need to be prepared properly, so that it will be valid. If your family includes minor children, you need to name a guardian. Pick an executor who will be in charge when you pass. If you don’t have a will, the law of your state will determine how your assets are distributed, and a court will name a guardian for your children. It is better to have a will and put your wishes down in writing.

Life insurance. There are two basic kinds: term insurance, which covers about twenty years, and universal or whole, which covers you for your lifetime. You need enough to cover your liabilities: your home mortgage, college funding for your kids and any outstanding debts, like credit cards or a car loan. This way, you aren’t saddling heirs with your debt.

Durable power of attorney. This document lets you designate someone to pay your bills, manage your money and make financial decisions for you, if you become incapacitated. Without it, your relatives will need to go to court to be appointed power of attorney/conservator. Pick a trusted person and have the form done, when you meet with your estate planning attorney.

Twice your annual income in savings. Most Americans don’t do this. However, if you start saving, no matter how small an amount, you’ll be glad you did. You need savings to avoid creating debt, if an emergency occurs. A cash cushion of six months’ worth of monthly expenses in a savings account will give you peace of mind.

Insurance coverage. Make sure that you have the right insurance in place, in addition to life insurance. That means health insurance, auto insurance, and disability insurance.

Credit report. People with better credit reports get better rates on home and auto loans. You can get them free from the big credit reporting services. Make sure everything is correct, from your address to your account history.

A letter of instruction. Where do you keep your estate planning documents? What about your bank statements, taxes and insurance documents? What about your digital assets? Keep a list for easy access for those who might have to figure out your affairs.

Retirement plan. Most people only know they don’t have enough saved for retirement. That’s not good enough. If you aren’t enrolled in your company’s 401(k) or other retirement savings plan, get on that right away. If your company matches contributions, make sure you are saving enough to get every bit of those matching dollars. If your company doesn’t have a retirement plan, then open an IRA or a Roth IRA on your own. You should try to contribute as much as you possibly can.

Updated resume. It also helps to do the same thing with your LinkedIn profile. No matter how long you’ve been in your field, everyone looks at your LinkedIn profile to see who you are and what and who you know. Make sure you have an updated resume, so you can easily send it out, whether it’s a casual conversation about a speaking opportunity or if you’re starting to look for a new position.

A budget. Here’s how you know you’re really an adult. Budgets went out of fashion for a while, but now they are bigger than avocado toast. If you don’t know what’s coming in and what’s going out, you can’t possibly have any kind of control or direction over your financial life. Start tracking your expenses, matching with your income and making any necessary changes.

One last thing—do you have a bucket list? Don’t wait until you’re 70 to consider all the places you’d like to go or the people you’d like to meet. It’s true–you only live once, and we should enjoy the ride.

Reference: Charlotte Five (April 23, 2019) “For ultimate adulting status, have these 10 documents by the time you’re 35”

What Are the Six Most Frequent Estate Planning Mistakes?

It is a grim topic, but it is an important one. Without a legal will in place, your loved ones may spend years stuck in court proceedings and spend a lot in legal fees to settle your estate. The San Diego Tribune writes in its recent article, 6 estate-planning mistakes to avoid, that without a plan, everything is more stressful and expensive. Let’s look at the top six estate planning mistakes that people need to avoid:

No Plan. Regardless of your age or financial status, it’s critical to have a basic estate plan. This includes crafting powers of attorney for both healthcare and finances and a will.

No Discussion. Once you create your plan, tell your family. Those you’ve named to take care of you, need to know what you’ve decided and where to find your plan.

Focusing Only on Taxes. Estate planning can be much more than just about tax avoidance. There are many other reasons to create an estate plan that have nothing to do with taxes, like charitable giving, special needs planning for a family member, succession planning in the event of incapacity and planning for children of a prior marriage, to name just a few.

Leaving Assets Directly to Children. If you leave assets directly to your children or grandchildren under age 18, it can cause unintended custodian or guardianship issues. Minors can’t own legal property, so a guardian will be appointed by the court to manage the property for them, until they reach age 18. If you don’t name a guardian, the court will appoint one for you and that person may have very different ideas about how the account should be managed and invested.

Making Mistakes with Ownership and Property Titles. With many blended families, you may want to preserve assets from an inheritance as your own separate property or from a prior marriage for your children. There are many tax consequences and control issues in blended families about which you may not be aware.

Messing Up Your Trust. Many people don’t properly fund or update their trusts. An unfunded trust doesn’t do anyone any good. Assets that aren’t titled in the name of the trust don’t avoid probate.

Finally, be sure to review your estate plan regularly, as your circumstances change.

Reference: San Diego Tribune (April 18, 2019) “6 estate-planning mistakes to avoid”

How are Financial Advisors Trying to Prevent Financial Exploitation?

The next time you see your financial adviser, you may be asked to provide a trusted point of contact, such as a relative or friend to call, if the adviser has a reasonable belief that you might be a victim of financial exploitation. Financial advisors are trying to prevent financial exploitation given the increase in these issues.

Kiplinger’s recent article, “New Rules Battle Financial Scams, Elder Abuse” says that your adviser could place a temporary hold on a suspicious disbursement request from you, so your money is protected until the concern is investigated. When money leaves an account, it’s hard to get it back.

Changes include several new laws that protect seniors and their money. For older adults, financial exploitation is a growing problem. One in five older Americans are the victim of financial exploitation each year, resulting in the loss of $3 billion annually.

Mild cognitive impairment can result in older adults not seeing red flags for fraud, says Michael Pieciak, president of the North American Securities Administrators Association (NASAA), which represents state securities regulators. The ability to judge risk may be diminished. He noted that social isolation plays a part, with vulnerable seniors home during the day and apt to answer the phone when a fraudster calls.

Federal and state lawmakers, along with the financial services industry, have initiated new rules to help safeguard seniors and their assets. The idea is that financial institutions and professionals are on the front lines of spotting elder financial abuse. The changes are designed to protect seniors and to shield financial professionals from liability for reporting possible exploitation.

Congress passed the Senior Safe Act in 2018. This law protects financial services professionals from being sued over privacy and other violations for reporting suspected elder financial abuse to law enforcement, provided they’ve been trained. If a bank teller notices that a senior seems confused about withdrawing money or making puzzling transactions, the teller could tell a superior, who could contact authorities, if necessary.

Nineteen states have enacted some version of a NASAA model act that provides registered investment advisers and broker-dealers with guidance on telling a trusted point of contact and putting a temporary hold on a client’s account to investigate financial fraud.

Reference: Kiplinger (April 3, 2019) “New Rules Battle Financial Scams, Elder Abuse”