Financial Planning for the Second Half of Life
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The webinar focuses on financial planning for older adults, addressing common financial decisions, errors, and planning topics relevant to later life. It features Dr. Barbara O’Neill from Rutgers Cooperative Extension, who emphasizes the importance of understanding financial risks and preparing for future healthcare and retirement expenses. Participants are encouraged to engage, provide feedback, and connect for resources and further information.
Financial Planning for the Second Half of Life
- 1. Welcome to the Military Families Learning Network Webinar Financial Planning for the Second Half of Life Please share your email address with us! We’d like to send you a link to this webinar’s recording and resources, and notifications for future webinars. Provide feedback and earn CEU Credit with one link: We will provide this link at the end of the webinar This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
- 2. Financial Planning for the Second Half of Life https://learn.extension.org/events/1653#.U9-iT010yM8 Barbara O’Neill, Ph.D., CFP®, AFC, CHC Rutgers Cooperative Extension [email protected]
- 3. Welcome to the Military Families Learning Network Research and evidenced-based professional development through engaged online communities. eXtension.org/militaryfamilies This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
- 4. Connect with the Personal Finance Team Facebook: PersonalFinance4PFMs Twitter: #MFLNPF
- 5. For Resources, Recording, and More Information: https://learn.extension.org/events/1653
- 6. Dr. Barbara O’Neill Dr. Barbara O’Neill, financial resource management specialist for Rutgers Cooperative Extension, has been a professor, financial educator, and author for 35 years. She has written over 1,500 consumer newspaper articles and over 125 articles for academic journals, conference proceedings, and other professional publications. She is a certified financial planner (CFP®), chartered retirement planning counselor (CRPC®), accredited financial counselor (AFC), certified housing counselor (CHC), and certified financial educator (CFEd).
- 7. Webinar Objectives • Discuss common later life financial decisions • Discuss common later life financial errors • Discuss 15 later life financial planning topics • Discuss relevant research findings • Discuss personal finance resources for older adults and financial practitioners
- 8. “Street Cred” Extension Specialist in Financial Resource Management (former county FCS Agent) •Financial educator and author •Certified Financial Planner® •In the second half of my financial life
- 9. Question #1: What are Some Major Financial Concerns in Later Life ?
- 10. Why Focus on Later Life When 80% of PFMP Clientele are 18-34? • New topic….haven’t explored much before • You make better decisions if you “see” your senior self (Hal Hershfield research: http://hbr.org/2013/06/you-make-better-decisions- if-you-see-your-senior-self/ar/1) • Can inform cautions and warnings to young adults (e.g., save statements for future capital gains) • Information may be helpful personally
- 11. Question #2: What financial advice would your current self give your younger self earlier in life if you could have done so?
- 12. Age 50 (+/- 5 to 10 Years) • Financial “halftime” or “intermission” • Think about past accomplishments • Think about what you still want to do • New challenges and decisions • Increased interest in “giving something back” to family, community, charities • Many people want to simplify/downsize
- 13. No More Excuses !!! • I don’t have enough knowledge • I don’t have enough time • I don’t have enough money • I don’t have anyone to help me • I don’t want to make a mistake
- 14. Common Financial Errors of Older Adults: • Changing investment strategy drastically on a specific date (e.g., 65th birthday) • “Forgetting” about effects of inflation – 3.5% inflation will double costs in 20 years • Relying too heavily on financial salespeople • Assuming that estate planning is for “the rich” • Retiring without considering health coverage • Not planning for long-term care expenses • Improper asset withdrawals
- 15. Increased Financial Complexity and Major Decisions • When to start Social Security benefits • When to retire: how much money is “enough”? • Where to live in retirement • Taxation of SS and pension benefits; estimated tax payments • Purchase of health insurance • Long-term care planning • Required minimum distributions (RMDs) • Estate planning documents
- 16. A Tale of Three Retirees • http://www.njherald.com/story/26005492/2014/07/13/a-tale-of-three- retirees-how-to-maximize-your-nest-egg • Case #1- 80 and 78, just retiring, $10 million portfolio, $5 million in tax-deferred plans, no RMDs yet taken • Case #2- Early 70s couple, just retiring, $600k saved, even with 6% withdrawal, will take 40% income cut • Case #3- Mid 60s single parent, $10k saved and not saving, expects to never retire or move in with adult child
- 17. Question #3: What are Some of Your Later Life Financial Planning Stories (Good or Bad)?
- 18. Research: Wealth Declines • Overall U.S. median net worth fell 38.8% between 2007 and 2010 Survey of Consumer Finances (SCF) • $126,400 in 2007 and $77,300 in 2010 • Median household income fell 7.7% • $49,600 in 2007 to $45,800 in 2010 • Major stock indexes fell almost 50% between 9/07- 3/09 • Yields fell dramatically on liquid and time deposits • 3-Month CD: 5.46% in 9/07 and 0.28% in 09/10 Federal Reserve Study: http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf
- 19. Research: Median Net Worth • Americans' median wealth is $44,900 per adult -- half have more, half have less (average of $301,000 per adult) • U.S. median net worth is 19th place worldwide below Japan, Canada, Australia and much of Western Europe (4th for average net worth) http://money.cnn.com/2014/06/11/news/econom y/middle-class-wealth/
- 20. Research: Lower Retirement Confidence • Americans’ confidence in their ability to retire comfortably is at a low level • Only 18% of workers are “very confident” • 64% of workers say they or spouse have saved for retirement • 60% of workers have savings and investments (excluding home & DB pension) < $25,000 • 33% of workers expect to retire after age 65; 49% of surveyed retirees left workforce unexpectedly 2014 Retirement Confidence Survey (RCS): http://www.ebri.org/surveys/rcs/2014/
- 21. Research: Increased Life Expectancy • More than half of people >45 underestimate how long they will live • Can result in inadequate provision for retirement savings needs Reference (Financial Advisor): http://www.fa-mag.com/news/society-of-actuaries- say-people-underestimate-their-life-spans--11480.html • Average life expectancy for man reaching age 65 today: Age 83 • Average life expectancy for woman reaching age 65 today: Age 85 Reference (Social Security): http://www.ssa.gov/planners/lifeexpectancy.htm BEST to use life expectancy calculators with lifestyle questions: http://www.msrs.state.mn.us/info/Age_Cal.htmls http://gosset.wharton.upenn.edu/mortality/perl/CalcForm.html
- 22. Research: Health Care Costs • Even with Medicare benefits, a 65-year old couple retiring in 2012 will spend at least $240,000 on health care costs during their retirement Reference (Wall Street Journal/Fidelity Investments): http://online.wsj.com/article/SB10001424052702304543904577 394543896250220.html • A man needs $187,000 and a woman $213,000 to have a 90% chance of having enough money to cover health care expenses in retirement Reference (EBRI): http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&conten t_id=4711
- 23. Research: Long-Term Care Needs • Americans spent $207.9 billion in LTC services in 2010 • 12% of Americans turning 65 will spend between $25,000 and $100,000 on LTC expenses and 6% will spend > $100,000 • 7 million LTC policies in force vs. 45 million Medicare enrollees Reference (Journal of Financial Planning): http://www.fpanet.org/journal/SeekingAlternativestoLongTermCareInsurance/ • Assisted living expenses vary considerably across the U.S. • $4,794 per month in New Jersey versus $2,617 in North Dakota Reference (Wall Street Journal/MetLife): http://online.wsj.com/article/SB10001424052970203937004578079184108523 030.html
- 24. Other Interesting Research Findings • People with wealth and health are more likely to delay retiring than poor and sick people Reference (CRR, Boston College): http://fsp.bc.edu/healthy-wealthy-and-not-retiring/ • Couples lack communication on retirement goals • 62% on when to retire • 47% on whether to continue working • 33% on where to retire Reference (AAII Journal/Fidelity Couples Retirement Study): http://www.aaii.com/journal/article/couples-lack-communication-on-retirement- goals
- 25. Question #4: What Research Findings About Older Adults Have You Read Recently?
- 26. 15 Key Financial Second Half Issues • Financial basics • Investing decisions & asset allocation • Avoiding financial fraud • Creating a retirement “paycheck” • Required minimum distributions • Tax-planning strategies • Transferring untitled personal property • Communication issues about money • Getting help and hiring advisors • Social Security decisions • Health insurance • Long-term care insurance • Estate planning • Health-wealth connections • Leaving a legacy
- 27. 1. Don’t Forget “The Basics” • Net Worth Statement – Summary of assets and debts: http://njaes.rutgers.edu/money/pdfs/networthcalcworksheet.pdf • Specific financial goals – Include a date and cost: http://njaes.rutgers.edu/money/pdfs/goalsettingworksheet.pdf • Cash flow statement – Summary of income and expenses • Emergency reserve • Financial Fitness Quiz (Check-up): http://njaes.rutgers.edu/money/ffquiz/
- 28. BRAND NEW: Personal Health and Finance Quiz http://njaes.rutgers.edu/money/health-finance-quiz/ • Believed to be FIRST combined online health and personal finance behavioral practice assessment tool; IRB approved at Rutgers • Provides an assessment of daily actions taken to improve health and personal finances
- 29. Assess Current/Future Insurance Needs • Life insurance • Disability insurance (if employed) • Health insurance (e.g., Medigap, work) • Long-term care insurance • Property insurance • Umbrella liability
- 30. 2. Follow Recommended Investment Strategies • Don’t invest if you don’t understand • Diversify (different asset classes and types) • Invest for long term goals: 5+ years • Have reasonable expectations • Buy low-cost investments • Don’t pay attention to daily market “noise” • Balance risk and reward – All investments have some type of risk
- 31. Ownership Versus Loanership Investments • Ownership Investments: – Variable Annuities – Stocks – Real Estate – REITs – Growth mutual funds • Loanership Investments: – Fixed Annuities – Corporate Bonds – Government Bonds – Ginny Maes – Money Market Mutual Funds – CDs – U.S. Savings Bonds
- 32. Later Life Investing Need-to-Knows • Historically, stocks have provided the highest return of any asset class over the long term • The trade-off is a higher chance of loss – Risk-Reward Relationship (pyramid graphic) • May want to gradually ramp-down stock % of portfolio asset allocation during retirement – Traditional guideline: 100 to 115 – age = Percentage in stock – New research: rising equity glidepath: http://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement- or-is-a-rising-equity-glidepath-actually-better/ • Rebalance portfolio regularly
- 33. More Later Life Investing Need-to-Knows • Maximize catch-up contributions if age 50+ – + $5,500 ($23,000 total)- employer plans – + 1,000 ($6,500 total)- IRAs • Maximize employer plan matched savings • Assess your investment risk tolerance – See www.rce.rutgers.edu/money/riskquiz/ • Must complete plan rollovers in 60 days
- 34. Later Life Investing Action Steps • Consider hiring a professional adviser – See www.fpanet.org, www.cfp-board.org, and www.napfa.org for names of local advisers • Consolidate scattered retirement plans for easier minimum distribution calculations • Absent health issues, plan on living at least to early 90s • Take advantage of all savings opportunities before retirement
- 35. Question #5: What Other Investing Advice Do You Have for Older Adults?
- 36. 3. Avoid Investment Fraud 2011 AARP Study: 4 Behaviors that increase seniors’ risk of being a fraud victim: 1.Attending “free lunch” seminars 2.Entering drawings and contests for free prizes 3.Reading and accepting junk mail offers 4.Sitting through sales pitches References: http://assets.aarp.org/rgcenter/econ/fraud-victims-11.pdf http://www.givemebackmycredit.com/blog/2011/06/aarps-fraud-study-key- behaviors-that-make-seniors-more-likely-to-fall-victim-to-scams.html
- 37. Is It Too Good to Be True? • High yield often means high risk • Watch out for buzz-words: “guaranteed,” “limited offer,” “safe as a CD,” or “risk-free” • Beware of exotic, unusual products Warning: If it sounds too good to be true, it probably is! Get the facts in writing OR hang up/delete http://www.usa.gov/topics/consumer/scams-fraud/investment.shtml
- 38. Elder Investment Fraud Resources • Video: http://www.youtube.com/watch?v=2WfJfxajucM • Publications: – http://www.nasaa.org/1733/eiffe/ – http://www.kiplinger.com/columns/ask/archive/how-to-protect- parents-from-elder-investment-fraud.html
- 39. 4. Create a Retirement “Paycheck” (Income Stream) • Try to simulate regular income stream – Annual cash withdrawals (1/12 per month) – Automated monthly fund withdrawals – “Laddered” bonds or CDs – Post-retirement employment • Earnings limit under FRA: $15,480 (2014) • Keep tax-deferred investments and Roth IRAs growing as long as possible
- 40. How Much Money Can You Take Out of Savings? • Draft a budget before you start spending • Keep an eye on inflation • Two key factors determine how long savings will last: – Your withdrawal rate – The rate of return on your investments
- 41. Withdrawal Rate Consensus • Between 4% of principal, if 50% + in stock – $4,000 a year if $100,000 saved ($333 per month) • Lower (e.g., 3%) if conservative investor; also recent cautions (2.5% withdrawal?) due to low interest rates – http://www.onefpa.org/journal/Pages/The%204%20Percent %20Rule%20Is%20Not%20Safe%20in%20a%20Low- Yield%20World.aspx – Consider hiring a certified financial planner for 2-3 hours (go prepared with net worth and budget) • Do a Monte Carlo analysis for probability of not outliving money
- 42. You Need $300,000 Saved for Every $1,000 of Monthly Income $300,000 x .04 = $12,000 ÷ 12 = $1,000 of monthly income $600,000 for $2,000 per month $900,000 for $3,000 per month $1.2 million for $4,000 per month $1.5 million for $5,000 per month
- 43. That’s Why You Convert Percentages Into Dollar Figures • Dollar figures provide a much better “benchmark” than percentages (too vague) • More likely to get people’s attention • People often gasp (at classes) when they see this illustration • Did YOU gasp?
- 44. Retirement “Paycheck” Need-to-Knows • Possible income sources include: Social Security, defined benefit pension plan, defined contribution plan (e.g., 401(k) and 403(b) plans), individual retirement accounts (IRAs), annuities, taxable account investments, post-retirement earnings, home sale proceeds, rental real estate, reverse mortgage • When making withdrawals, generally tap taxable and tax-free investments first, then tax-deferred employer plans and traditional IRAs (must start RMDs at age 70 ½), and then Roth IRAs)
- 45. Retirement “Paycheck”- More Need-to-Knows • Long-term capital gain rates if assets held > 1 year – 0% (10% and 15% tax brackets); 15% (25%, 28%, 33%, and 35% tax brackets); 20% (39.6% tax bracket) • Mandatory withdrawals required at age 70½ • No withdrawal penalty after age 59½ • Roth IRA withdrawals are tax free after age 59½ and if account is open at least 5 years
- 46. Suggested Investment Strategy for Older Adults • Set aside enough $$$ to pay uncovered excess expenses for 3-5 years in a money market fund or short-term CD – (e.g., $30k income - $15k from SS and/or pension = $15k uncovered expenses x 3-5 years = $45k to $75k in cash) • Remainder grows in stock & bond funds. Sell stock shares periodically and add to cash assets • If stock market tumbles -- hang tough. Tap cash and bonds and dividends first.
- 47. Retirement “Paycheck” Action Steps • Calculate when you can afford to retire and how much can be safely withdrawn annually – Check several online calculators – Use the “4% rule” as a benchmark – Seek assistance from a financial advisor • Save as long as possible in tax-advantaged investments – Roth or traditional IRAs – Tax-deferred employer accounts
- 48. 5. Take Required Minimum Distributions (RMDs) • Applies to distributions from: – Traditional IRAs (Roth IRAs are tax-free) – 401(k)s, 403(b)s, 457 plans, SEPs, TSP • Must begin distributions by April 1 of year following year one turns 70 1/2 – 70th birthday: 1/3/14; Age 70 1/2: 7/3/14 – Begin distributions by 4/1/15 (drawback: must take two taxable 2015 payouts if delay) • Employer plans: must start RMD in the year you stop working but can delay first RMD to April 1 of year after one retires (same drawback): http://www.theslottreport.com/2010/07/im-still-working-whats-my-rmd.html
- 49. How Much to Take Out • Required Minimum Distribution (RMD)= – Balance on Dec. 31 of prior year /Life expectancy (use factor in IRS uniform distribution table) – See http://njaes.rutgers.edu/money/ira-table.asp – Uniform table automatically recalculates life expectancy (1.9 years if you live to 115!) – Separate table if spouse > 10 years younger (joint life expectancy) • Failure to take RMD: Tax penalty of 50% of the required distribution (must match or exceed RMD) • Plan custodian will report account balance numbers to the IRS
- 50. Some RMD Examples • Retiring 80 year old, first RMD due to “Still Working Exception,” $5 million in tax-deferred employer plans: RMD divisor of 18.7: – $5,000,000 ÷ 18.7 = $267,379 taxable RMD • 70 ½ year old, already retired, taking first RMD, $1 million in tax-deferred plans: RMD divisor of 27.4: – $1,000,000 ÷ 27.4 = $36,496 taxable RMD • Be sure to have taxes withheld or make quarterly estimated payments to the IRS!!!
- 51. 6. Practice Tax Avoidance (Minimization) • Tax-deferred investments – Employer salary reduction plans – IRAs – Annuities (look for low expense providers) • Age 50+ catch-up contribution • Long-term capital gain on investment profits • Good financial records (deductions, capital gains) • Tax preparer for a “good template”
- 52. 7. Consider Untitled Property Transfers • “Who gets grandma’s yellow pie plate?” – http://www.extension.umn.edu/family/financial-security/ who-gets-grandmas-pie-plate/ • Consider interests of family members – Examples: coin collection, antique car • Make a written list of property and heirs • Share list with family and executor • Consider lifetime gifting of property • Annual gift tax exclusion: $14k per donee (2014) • Can transfer unlimited amount of property (or cash) to charity without gift/estate tax liability
- 53. 8. Communicate With Others • Ask executor, contingent executor, power of attorney designee, etc. to serve • Prepare/share a “financial notebook” • Share location of key documents • Discuss burial wishes with family • Discuss living will issues with proxy • Prepare letter of last instructions • Discuss/list personal property bequests • Discuss disposition of digital assets
- 54. 9. Get Help When Needed • CPA for complicated taxes • Financial planners: – 888-FEE-ONLY or www.napfa.org (NAPFA) – 800-282-PLAN or www.fpanet.org (FPA) – 888-CFP-MARK or www.cfp-board.org (CFP® Board) – http://garrettplanningnetwork.com/ (Garrett Network) • Go prepared to reduce time and fees – Bring financial statements, list of goals, questions
- 55. Question #6: What Other Financial Resources are Available for Older Adults ?
- 56. 10. Understand Social Security • Reduced SS benefits available at age 62 • Full SS benefits at Full Retirement Age (FRA) – Age 66 if born between 1943-1954 – Age 67 if born in 1960 or later • Must be “fully insured” with 40 quarters of coverage (a quarter = $1,200 of earnings in 2014) • There is no earnings limit after FRA • Before FRA, $1 of benefits withheld for every $2 over earnings limit ($15,480 in 2014)
- 57. Social Security Need-to-Knows • It is usually wise to postpone SS benefits if: – You have substantial earnings – You are in good health – You do not need the money for current living expenses • Contact SS about 3 months before retiring (online) • See www.ssa.gov for general SS information • See http://www.ssa.gov/myaccount/ for SS benefit estimate
- 58. Social Security Action Steps • Download benefit estimate annually and review for accuracy: http://www.ssa.gov/myaccount/ • Estimate/calculate percentage of retirement income coming from Social Security (if retired) • Do a Ballpark Estimate retirement calculation (if working) See http://www.choosetosave.org/ballpark/ • Factor Social Security into divorce plans – Must be married 10 years to qualify on ex-spouse’s record • Go Direct (direct deposit of SS benefit check)
- 59. 11. Understand Older Adult Health Insurance • Medicare covers people age 65+ • Medicare has 4 parts: A, B, C, and D • Many beneficiaries buy Medigap policies • Retiree health benefits are increasingly scarce • Early retirees must cover health insurance “gaps” (e.g., between a job and Medicare eligibility) • COBRA can extend group benefits for 18 mos. OR those < age 65 can use ACA law exchanges – See http://www.medicare.gov/ and www.healthcare.gov
- 60. Health Insurance Action Steps • Apply for Medicare within 3 months of age +/- age 65 • Pay attention to 60-day COBRA deadlines • Safeguard health insurance documents • Inquire about employer retiree benefits, if any • Contact SHIP (State Health Insurance Assistance Program) for assistance with purchasing state-licensed Medigap (Medicare supplement) policies • www.shiptalk.org
- 61. 12. Understand Long Term Care Insurance • Potential cost of LTC is a big financial risk • Nearly half of Americans will need LTC at some point in their lives • LTC covers a wide range of services – Nursing home, assisted living, in-home care • Best time to buy LTC insurance is generally age 55 to 60 • Adult children help pay premiums?
- 62. Key LTC Insurance Policy Features to Look For • Amount of daily coverage • Length of coverage (e.g., 3 years, 5 years) • Types of benefits provided (e.g., home health care) • Elimination (waiting) period (e.g., 3 months, 6 months) • Number of activities of daily living or ADLs required to trigger benefits (e.g., bathing, toileting, eating, dressing) • Method of making an inflation adjustment, if any Resource: Financing Long-Term Care (eXtension): http://www.extension.umn.edu/family/personal-finance/ planning-for-health-care/long-term-care-resource-center/
- 63. LTC Insurance Action Steps • Contact SHIP for assistance with purchasing LTC policies from licensed state providers • Explore LTC options, including: – LTC insurance – “Self-insurance” – Annuitized income sources (e.g., DB pension, SS, annuity) – Continuing Care Retirement Communities
- 64. LTC Resources • American Association for Long-Term Care Insurance: http://www.aaltci.org/ • U.S. Department of Health & Human Services: www.alzheimers.gov • Medicare: www.medicare.gov • Medicaid: www.medicaid.gov • eXtension/University of Minnesota (Financing Long-Term Care):http://www.extension.umn.edu/family/personal-finance/ planning-for-health-care/long-term-care-resource-center/
- 65. Question #7: How Are You and/or Your Older Clients Preparing for Potential Long-Term Care Expenses?
- 66. 13. Solidify Estate Planning • Spelling out your wishes (e.g., property transfers) is a gift that you give to others • Dying intestate (without a will) may result in unnecessary hassles and expenses • Three recommended documents: – Will for bequests to people and charities and to name executor(s) and guardian(s) – Living will for health care decisions with a designated health care representative – Durable power of attorney to handle financial affairs while you are alive
- 67. Estate Planning Need-to-Knows • The principal goal of estate planning is to make sure that assets are distributed as you desire with the least amount of taxes • Permanent $5 million inflation-adjusted federal gift and estate tax exclusion ($5.34 million in 2014) as of 1/13 tax law • Beneficiary and contingent beneficiary designations should be reviewed periodically • See http://njaes.rutgers.edu/money/pdfs/beneficiary-designations.pdf – Wills and trusts – Life insurance policies – Retirement accounts – U.S. savings bonds
- 68. Estate Planning Action Steps • Keep property information in one place • Let trusted persons know where estate planning documents are kept – Worksheet: A Record of Important Family Papers http://njaes.rutgers.edu/money/pdfs/importantpapers.pdf • See an attorney to draft or revise documents • Revise documents as life events require • Remember, peak decision-making age is 53: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=973790
- 69. 14. Appreciate Health and Wealth Cost Linkages • The “price” of good health is the need for more wealth: Good health raises (NOT lowers) a person’s lifetime care costs • Center for Retirement Research (CRR) projections of remaining lifetime health care costs of couples who reached indicated ages in 2009: Age Healthy Unhealthy 65 $260,000 $220,000 70 $266,000 $241,000 75 $265,000 $236,000 80 $259,000 $220,000 85 $244,000 $202,000 • More years of out-of-pocket medical bills and an increased risk of chronic disease (e.g., diabetes) and need for LTC Reference (CRR, Boston College): http://money.usnews.com/money/blogs/the-best-life/2010/05/12/good-health- raises-lifetime-care-costs
- 70. Take Care of Yourself! “The greatest wealth is health” Virgil See www.njaes.rutgers.edu/sshw for information about health and wealth connections SSHW webinar: https://learn.extension.org/events/1625#.U9_6GE10yM8
- 71. 15. Leave a Legacy- Give Something Back Many ways to “leave a legacy” – Children and grandchildren – Creative works (art, books, music) – Volunteer time helping others – Charitable gifting • Testamentary gifts via one’s will (less than 6% of Americans leave money to charities when they die; 20% of those who die with wills) • Outright gifts of cash, property, securities • Charitable trusts (see an attorney)
- 72. Helpful Online Resources • Rutgers Cooperative Extension – www.njaes.rutgers.edu/money – www.investing.rutgers.edu • Social Security Administration – www.ssa.gov • State Health Insurance Assistance Program (SHIP) – www.shiptalk.org • Planning for a Secure Retirement (Purdue Extension) – www.ces.purdue.edu/retirement
- 73. More Helpful Online Resources • Choose to Save Ballpark Estimate – http://www.choosetosave.org/ballpark/ • Financial Security in Later Life (USDA) – www.csrees.usda.gov/fsll • Retire Well (University of Illinois) – http://web.extension.illinois.edu/cfiv/eb141/ • Retirement Living Information Center – http://www.retirementliving.com/taxes-by-state
- 74. Still More Helpful Online Resources • Center for Retirement Research at Boston College • http://crr.bc.edu/ • Retirement Readiness Rating • http://www.ebri.org/pdf/surveys/rcs/2000/fact8-r3quiz.pdf • My Retirement Paycheck (NEFE) • http://www.myretirementpaycheck.org
- 75. Question #8: What Are Some Others Good Financial Planning Resources For Older Adults?
- 76. Don’t Make Assumptions! Puts people on the defensive; they will feel that others don’t understand them and tune out
- 77. Prevention Tips for Millennials and “Militaryennials” • Don’t forget the basics (cash flow, net worth, goals) • Contribute to tax-deferred employer retirement savings plans NOW (TSP, 403(b), SEP, etc.) • Select investments for the long term • Avoid frauds and predatory loans • Practice tax avoidance/minimization • Get help when needed (PFMPs, VITA, etc.) • Prepare basic estate planning documents
- 78. Prevention Resources for Millennials and “Militaryennials” Web Sites • NEFE-On Your Own: http://www.onyourown.org/ • PBS- Your Life, Your Money: http://www.pbs.org/your-life-your-money/ • Military Saves: http://www.militarysaves.org/ • Wi$eUp: http://wiseupwomen.tamu.edu/ • Books • Personal Finance in Your 20s for Dummies (Tyson) • Get a Financial Life (Kobliner)
- 80. Next Personal Finance Webinar How to Read a Mutual Fund Prospectus •Tuesday, October 21, 11 a.m. ET •1.5 CEUs for AFC-credentialed participants. •Speaker: Dr. Michael Gutter •More information:learn.extension.org/events/1674
- 81. Military Families Learning Network Find all upcoming and recorded webinars covering: Family Development Military Caregiving Personal Finance Network Literacy http://www.extension.org/62581 This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.