Baby Boomers in a "Real Stew"

Legal “Stew” is an unusual name for a blog.
“Stew” - Definition:

1. transitive and intransitive verb cook by simmering: to cook something by long slow simmering, or be cooked in this way
2. intransitive verb be upset: to be deeply troubled or agitated
3. intransitive verb be very hot: to swelter or become uncomfortably hot /
in a stew agitated, anxious, or in a difficult situation (informal)

With the baby boomers there’s been a “pressure cooker” situation simmering since the economical meltdown that began the third quarter of 2007. According to CNBC, the median price of homes declined more than 20 percent and stock prices fell twice as much, some 50 percent, from their peak in October 2007. Without question, 2008 was an eventful year for major financial institutions, with massive losses, questions of solvency and, ultimately, government bailouts now totaling over a trillion dollars.

This unique and sweltering financial firestorm could not have come at a worse time for the baby boomers on the cusp of retirement. Transition from the once reliable company pension programs to reliance on 401K “nest eggs” had just begun in earnest and the inflated housing prices were the baby boomers’ “ticket to paradise” in the posh retirement communities. Now time is running short for baby boomers to rebuild the wealth they once possessed. “We won't be rebuilding wealth so quickly,” says Christian Weller of the American Progress and the University of Massachusetts, who specializes in retirement income security. Weller says the decline in wealth was the greatest on record.

The “ingredients” covered in the “Legal Stew” blog, were topics affected by the financial meltdown and these issues have deeply troubled and agitated the baby boomers:
· Age discrimination in the workplace
· Personal bankruptcies due to medical bills
· Early retirement offers
· The demise of Social Security
· Estate planning
· Dealing with the financial needs of elderly parents and dependent “children”
· Long-term car expense
These difficult situations are reasons why many of the 72 million baby boomers may be seeking legal advice concerning contract reviews, age or medical discrimination law suits, probate issues, bankruptcy, etc. which will "cook up" a “tasty” financial stew for lawyers and many opportunities for paralegals.

DISCLAIMER: The information contained throughout Baby Boomers’ Legal Stew Website is not a substitute for professional advice and does not constitute professional advice nor is conveyed or intended to convey professional advice.

Surprisingly Affordable v. Penniless

Have you noticed the number of nursing homes that have been built during the recent years? Within a ten mile radius from my home, there are eight nusing homes! The reason is that businesses and social service agencies are preparing for the surge of the aging baby boomers. It is estimated that seven out of ten baby boomers are expected to require long-term care at some point after they reach the age of 65 or they will have a parent in need of long term care. But once the baby boomers reach their 80s, the demand for long term care services is expected to surge because there will be a lack of available family caregivers due to the declining family sizes, increasing childlessness, and rising divorce rates.

In a recent study by America's Health Insurance Plans it was found that many baby boomers have not prepared for their long-term care expenses. The study further found that more than half of the baby boomers mistakenly believe long-term care costs will be covered by Medicare or another form of health insurance. This misconception could be financially devastating because, according to the AARP Public Policy Institute, the average cost of a nursing home stay is more than $67,000 per year.
The truth is:
· Most health insurance plans do not cover long-term care expenses.
· Medicare is an insurance program administered by the federal government. You must qualify for Medicare by having paid into the program throughout your life through payroll taxes and by reaching age 65. Medicare does cover long-term care expenses, but the best case scenario may provide for 100 days of care.
· Medicaid is a program available in all states and is funded by federal and state dollars. It, too, provides healthcare benefits, but to qualify, spend-down requirements cause most individuals to deplete their financial assets before their coverage begins. Without long-term care insurance coverage, many middle-class retirees in need of long term care could deplete their financial assets.

Surprisingly, long term care coverage is not as expensive as one would think. According to the Long-Term Care Insurance Price Index from the American Association for Long-Term Care Insurance, a 55-year-old can expect to pay $655 per year if married or $1,075 per year if single. At age 65, a married individual will pay $1,292 per year, while a single individual will pay $1,923. However, there are four dangers concerning long-term care insurance coverage to avoid. To learn these dangers, visit “Moneywatch”.

DISCLAIMER: The information contained throughout Baby Boomers’ Legal Stew Website is not a substitute for professional advice and does not constitute professional advice nor is conveyed or intended to convey professional advice.

Avoiding the "Jarring" Gong

Life expectancy has increased due to advances in pharmaceuticals, medical technology, and quality of life, thus many of today’s baby boomers’ parents are still living. AARP says 44% of Americans aged 45-55 have living parents as well as children under age 21 and that 22% financially support their parents by contributing to housing, home care, medical, pharmaceutical, travel, and clothing costs. In addition, 25 million unmarried adults aged 19 to 39 live with their parents. The changing demographics within families have created a period in which baby boomers are "sandwiched" between the needs of their parents and their children.

Baby boomers should be planning for their own retirement but when providing financial assistance to aging parents and dependent children, this becomes a daunting task. According to a MetLife study, individuals age 55 to 59 are least confident about having money in retirement, with approximately 44 percent worried that they will not be able to live comfortably if they live past 85. In regard to this type of concern, Winston Churchill once said, “Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, and until self-preservation strikes its jarring gong . . . will most act”. These are words “sandwiched” baby boomers should heed to realize that it's necessary for them to prepare for their own financial needs in order to help their loved ones.

To avoid the “jarring gong”, Seniorliving offers the following recommendations to baby boomers:
· Children attending college should take out student loans if necessary and elderly parents should use their own assets to finance their care for as long as possible.
· Project what kind of income will be needed for retirement. There are plenty of financial planners available to assist in this task.
· Look into the viability of long-term care insurance for their aging parents and for themselves. Long-term care insurance could help offset “asset-draining” costs if nursing care is necessary.
· Talk with their parents as early as possible about their assets, how they want to live as they age, what kind of health care and lifesaving measures they do or don't want, and who should make legal and medical decisions for them if they are no longer able to handle their own affairs. This may be a difficult and uncomfortable conversation but Laura T. Coffrey of msnbc recommends the following:
1. Broach the subject of money by sharing a money related story of their own or one of their friend’s parents.
2. Ask the parent for permission and assistance to examine the parent’s checkbook, bank statements, credit card statements, etc. to look for “red flags” such as duplicate payments, lots of payments to home-shopping networks, large charitable donations, unnecessary payments to a “handy man”, etc.
3. If there is a problem, investigate into government programs for older Americans on low or fixed incomes at BenefitsCheckup.org.
4. If the parent lives in a large home, recommend they “downsize” and realize cash from the sale of the home. Or, if the parent is 62 or older, they could get a reverse mortgage. Such loans allow homeowners to convert home equity into cash without having to move or assume extra debt. To learn more, visit http://www.aarp.org/revmort.
5. Arrange for a durable power of attorney, which would allow a parent to appoint a trustworthy person to help them manage their finances; a durable power of attorney for health care (also known as a health-care proxy); a living will, and a will. The financial planner previously recommended can direct the parent to an attorney who specializes in such matters.

By addressing these issues while there is still time to plan ahead, baby boomers can avoid a lot of the “sandwiched generation” problems.

DISCLAIMER: The information contained throughout Baby Boomers’ Legal Stew Website is not a substitute for professional advice and does not constitute professional advice nor is conveyed or intended to convey professional advice.

"Will Their Wishes Be Known?"

This week is National Estate Planning Awareness Week, an educational program sponsored by the National Association of Estate Planners & Councils, making it appropriate that this week's topic concerning baby boomers is the legal advantages of drawing a will. Baby boomers are reaching the age when they are questioning their mortality. Also, baby boomers are quickly approaching retirement age and are realizing that it is important that they protect their assets and minimize their estate tax liabilities. Right now, the United States is undergoing the largest transfer of wealth in the history of the world because of the "War" generation assets being transfered to the "Baby Boomers" generation. There are estimates of billions of dollars to be inherited by baby boomers. On the other hand, not all baby boomers are affluent and think they don't need an estate plan because they don't have very much. For some baby boomers their most common concern is the fear that they will run out of money during retirement and the concern of rising health care costs.

According to USA Today, nearly 60% of Americans don't have a basic will. There are all kinds of reasons for this oversight. Some people just haven't gotten around to creating a will and some get overwhelmed when they ponder the ins and outs of estate planning. Another reason for the lack of estate planning is that this large, affluent, baby boomer group is known for its “fun-seeking” reputation and is not renowned for its “planning” prowess.

Without a will, when maturing boomers die, often their sizeable estates are distributed according to state laws and are subject to probate, leaving it up to the government to decide how their estate is divided. Probate does allow for clean titling of their assets to go directly to their next of kin but probate matters are made public and anybody is allowed to make a claim against the descendant’s property. By checking a local paper, anyone can see examples of estates filing for probate.

What most boomers don’t realize is that by drafting a simple will, most of their estate plans will be taken care of and their heirs would be saved from the headache of having to properly distribute their assets. A will does the following:
· It allows the descendant to give away their property (that is in their name) to those they want to have the property.
· It allows the descendant to nominate an executor to take care of all of their last affairs, and
· If necessary, it allows the descendant to nominate a guardian for their minor children.

Obviously, by dying without a will, then these three things won’t be carried out and are three good reasons why baby boomers should seek legal advice, if they haven't already done so, to have their wills drawn.

This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content of this blog may not be construed as legal, medical, business, or personal advice.

Breach of Social Security "Contract"

According to the U.S. Census Bureau, the average life expectancy age in 2020 will be 79.5 years of age. Today, only 20 percent of workers feel they are saving enough for retirement. According to the U.S. Census Bureau, the average retirement age in America is 62, and the average length of retirement is 18 years. How much money is enough to sustain one during these retirement years? It’s difficult to put your finger on an exact amount because expectations of what is considered an acceptable lifestyle and the cost of living varies throughout the country. While researching the answer to this question, 90% of the time one is directed to advertising websites disguised as retirement calculators or calendars, however, according to InCharge Institute of America, Inc., the rule of thumb of how much you'll need to retire is 70-80 percent of your pre-retirement income on an annual basis. That means if you're making $50,000 when you retire, you'll need an income of at least $35,000-$40,000 every year after you retire.

That figure doesn’t seem so bad until you consider the fact that last year’s market meltdown, eroded most the baby boomers’ nest eggs and then there’s the concern if a baby boomer will “out live” social security. According to the statisticians, that day will come sooner than later. Due to the estimated 5.7 million jobs that have been lost since the end of 2007, payroll taxes used to fund Social Security have been drastically reduced. As a result, according to an article in the New York Times, the Social Security trust fund will be exhausted in 2037, four years earlier than predicted.
Regardless if you are baby boomer or not, unless your independently wealthy or are planning on winning the lottery, one obviously needs to save and invest as much as money as possible to prepare for retirement. Pieces of advice are to:
· Get a handle on your expenses. Identify and eliminate unnecessary extras.
· Pay off credit card or other high-interest debt. Pay your credit card bills in full each month.
· Get help if you have poor credit. Consider consolidating some loans or credit cards and negotiating repayment terms with creditors.
· Create a budget that includes money to save and invest.
· Practice good habits such as contributing as much as possible to an employer sponsored retirement plan where you work or have money transferred directly each month from your checking account to one or more savings and investment accounts.

DISCLAIMER: The information contained throughout Baby Boomers’ Legal Stew Website is not a substitute for professional advice and does not constitute professional advice nor is conveyed or intended to convey professional advice.

Decisions, Decisions - Are Early Retirment Options Best?

Demographics indicate that the workforce will age in the years ahead. According to AARP, by 2016, one-third of the U.S. workforce will be age 50 or older, compared with 28% in 2007. However, during these economic tough times, if you're 50 or older you may feel like you're walking around with a "downsize me" sign on your back. In today's corporate environment, cost cutting, restructuring, and downsizing are the norm, and many employers are offering early retirement packages. For workers close to retirement (age 50 and up), often the deal is presented as an opportunity to retire early and start a new "career". The offer is tempting but how do you know if the offer is a good one? Evaluate the package carefully and make sure that the offer will fit your needs. Consider the following:
- Are you being compensated enough for the years you’ve dedicated to the company?
- Are health care benefits a part of the package? (Note the previous week’s blog about the cost of health care.)
- How will early retirement impact your social security and your pension plan (if you have one)?
- Will you be able to afford early retirement?
- Are you ready mentally to handle the spare time and possible loss if identity?

Another consideration to be weighed is that, during these uncertain times, if you stay on a job, you can always quit, but if you were to retire, you may not have the option of finding another job. According to the Bureau of Labor Statistics, the jobless rate for adults age 55 to 64 has more than doubled since November 2007 and in July this year, 7.2 percent of workers age 55 to 64 were out of work. If you are over the age of 50, these are troubling statistics when you are considering finding a new “career”.

However, if you refuse the early retirement package and continue to work, you may do well with your employer. You may earn promotions and salary raises that would boost your pension. You may even receive a second early retirement offer that was better than the first offer. On the other hand, your employer may find ways to let you know that you don't fit in with the company's plans for the future. Your company may demote you, lay you off, or eliminate your position altogether. The advice I’ve read is that it’s best to stay if you can, but if the consequences of your saying are hard to predict, seek professional advice and do it quickly. The average time employers give to make a decision to accept or decline their early retirment offer is 60 to 90 days. While considering the options, keep in mind that personal bankruptcy filings continue to rise as well as the age which people declare bankruptcy. A recent study by AARP found that in 2007 more than 1 in 5 debtors were over the age of 55, compared with 1 in 10 in 1991. The study also found that the rate of personal bankruptcy filings among those ages 45 to 54 had jumped by more than 48% from 1991 to 2007. For those ages 55 to 64, the rate rose by 150%—and for those ages 75 to 84 the rate rose 433%. With statistics such as these, the decision is seems clear.

Major Surgery on Boomers' Savings

Walter Cronkite once stated, “America's health care system is neither caring, nor a system. No one knows this more than today’s baby boomers. Between 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6 percent and according to a report released today, Friday, October 2, 2009, by the American Bankruptcy Institute (ABI), there have now been 1.046 million personal bankruptcies since the start of the year. The biggest single cause of personal bankruptcy is medical bills. According to a survey done by Merrill Lynch in 2005, boomers were three times more worried about getting a major illness (48%), their ability to pay for health insurance (53%) or having to go to a nursing home (48%), than they were of dying (17%).

According to Senior Magazine, (http://www.seniorlvgmag.com/), what worries older workers about the current healthcare system, is a lack of confidence in healthcare coverage among older workers and their spouses. Older workers and their spouses with low and moderate incomes are worried about the affordability of healthcare insurance coverage: over half of older workers with incomes below $40,000 and two of five (42%) with incomes between $40,000 and $60,000 said they were “very worried” about being able to afford healthcare insurance and for good reason. Out-of-pocket costs for healthcare and healthcare insurance premiums take a large bite out of the household incomes of older workers. 50 to 55% of older adults in households with incomes under $40,000 spent 5% or more of their income on out-of-pocket healthcare costs and premiums, and more than one-third spent 10% or more. What's worse is that medical expenses are on the rise. According to an annual study by Hewitt Associates, in 2010, the combined average premium and out-of-pocket costs for health care coverage for a worker are projected to climb to $4,023 a year, a 10 percent increase from this year. http://www.chicagotribune.com/business/chi-mon-health-costs-hewitt-0928sep28,0,7654162.story?track=rss

The odds of baby boomers avoiding health issues are not in their favor. Over 60% of adults ages 50 to 64 who are working (or have a working spouse) have been diagnosed with at least one chronic health condition, such as arthritis, cancer, diabetes, heart disease, high cholesterol, or high blood pressure, according to a report from The Commonwealth Fund. The report also says that one-fifth of older workers and their spouses -- 7 million Americans -- either have no healthcare insurance or have been uninsured at some time since age 50. The report raises alarms about the ability of the U.S. healthcare system to cope with the future healthcare needs of the aging, low, and middle income baby boomers, who face increasing healthcare issues, unstable healthcare insurance coverage, high medical costs, and debt problems.