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  • Posts Tagged ‘retirement’

    How To Keep Retirement Savings On Track While Caregiving

    Thursday, November 30th, 2017

    women

    November is National Family Caregivers Month—an annual event celebrated by WISER and partner organizations of family caregivers across the country. It’s a time to raise awareness of family caregiver issues, celebrate their efforts and increase support. This month’s theme “Caregiving Around the Clock” emphasizes that caregiving is a 24 hours a day, 7 days a week job.

    Caregiving is a consuming role—physically, mentally and financially—yet many who take on the work don’t identify with the job or fully realize the toll it takes. Often, it comes on unexpectedly, and sometimes the responsibilities may be shared. For example, caring for an elderly parent might be divided between siblings or a paid worker. Still, even if you are doing the actual work of caregiving part-time or just a few hours a week, the effort affects every part of your life. It becomes something you have to think about and plan for around the clock.

    The financial challenges of caregiving often come as a surprise to caregivers, as the day-to-day costs can really add up. Many smart retirement planners who believe that they have everything properly planned for are still often unprepared for the financial shock that caregiving for a family member can bring.  Even if the role of caregiver comes unexpectedly, there are ways to keep your retirement savings on track while caring for others.

    Create, and stick to, a household budget.

    Caregiving can affect your daily and long term spending in unexpected ways. That’s why it’s important to create and follow a budget. If you already have one, adjust it to consider your new expenditures. You may also have a lower income if you decide to stop working or reduce your hours. While you’re at it, have financial conversations with the person you’re providing care for, too. It’s easy for costs to balloon, and when mental and physical capacities diminish, the elderly can also be at an increased risk for being victimized by financial scammers.

    Try to avoid leaving your job.

    It can be tempting (or in some cases a necessity) to run to a loved one’s side when they need care. Doing so, though, can be extremely harmful to your finances. Leaving your job will mean losing compensation and benefits, and maybe skills and contacts. If at all possible, try to exhaust all other options before leaving your job or see if you can at least work reduced hours instead of quitting entirely.  If you have a retirement plan or pension through your employer, try to work at least as long as needed to be fully vested in your company’s retirement plan. If you are cutting back on hours, see if there is a minimum number of hours you can work to get reduced benefits.

    Be smart about the financial support you provide your loved ones

    Don’t drain your savings to help the person you are caring for financially. Usually, the major expense for older adults is health care. Drug plans run through Medicare and private companies may help cover the rising costs of medicine. Low-income seniors may also be eligible to receive help paying their premiums or for additional uncovered medical costs. Information about getting help paying for Medicare costs is available at Medicare.gov. The Eldercare Locator, a public service of the U.S. Administration on Aging is also a great resource for connecting with trusted resources in your community that can help with caregiving and other services for older adults and their families.  Visit eldercare.gov or call 1-800-677-1116.

    For more information and resources for managing your finances while caregiving, download WISER’s publication: Financial Steps for Caregivers. Included in the booklet is a budget worksheet that includes categories for caregiving costs.

    Why Saving As A Young Person Is Important

    Thursday, March 23rd, 2017

    “Live while you’re young!” “Youth is wasted on the young!” “I’ll sleep when I’m dead!” “Live in the moment!”

    Everywhere they turn, young people are inundated with messages encouraging them to live now, worry later. In financial terms, that translates to “spend now, save later”—and it’s a hard message to ignore. The internal justifications to spend instead of save often sound like this: all of my friends are planning an expensive trip overseas, why shouldn’t I join them? Why not rack up credit card debt—I’ll be able to pay it off later, when I’m older and have a higher paying job! I’m only young once!

    The same mentality leads to young people to taking out large amounts of student loans, beyond what they may be able to afford or what may be worthwhile. According to new research from the National Endowment for Financial Education, more than 70% of millennials (people ages 23 to 35) have at least one long-term debt, which could be student loans or something else, like a car loan. About 34% of millennials have two long-term loans. These numbers alone are troubling, but to make matters even worse, the research also found that about a quarter of millennials with a retirement account took out a loan or hardship withdrawal in the last 12 months. This emphasizes that many young people are prioritizing the present much more than the future when it comes to finances.

    This trend is putting young people at a serious financial disadvantage—making it more difficult to purchase a home, open a business, or pursue other ventures later in life. Here are several additional reasons why saving as a young person is important:

    Financial Habits Are Set When You’re Young

    The same holds true for any habit: the earlier you adopt it and the more often you carry it out, the more likely it is to stick. Being smart with money is no different. If you are careless about money for most of your life, it will be extremely difficult to switch gears and become a scrupulous saver once there is truly something to save for—like a child or a home. The inverse is also true. If you are smart with money from a young age and put in place good habits, like putting a certain amount of your paycheck each month into savings, you are likely to carry those habits later in life.

    Saving a Little Now Equals A Lot Once You Retire

    We often hear about “the power of compound interest.” We,ll that power is only powerful if you start saving young. The more years that go by, the more powerful compound interest becomes. If you save a little bit as a young person, that money will accrue interest and, by the time it’s time to retire 30 or so years later, a little bit of money will have grown into a lot of money. You can only take advantage of this is if you save early.

    Cost of Living Grows As You Age

     It’s easy to assume that because you can support yourself now, you’ll be able to do so later. However, the cost of living grows dramatically as you age. The odds increase that you will become a caregiver, in terms of both finances and time, for an aging parent or a child. Medical costs also increase as you age. Your salary will also likely grow, but it may not grow enough to support these costs, let alone enough to put aside enough for retirement, when your income will decrease dramatically. Saving early helps ensure financial stability throughout your entire life.

    Medicare Open Enrollment is Going on Now! What You Need To Know

    Thursday, October 20th, 2016

    Taxes

    What is Medicare open enrollment?

    Medicare open enrollment is a period of time during which current Medicare users can re-evaluate and adjust their coverage. That may mean switching coverage, adding additional coverage, or dropping coverage. This year, Medicare open enrollment will take place between October 15 and December 7. Any new coverage or changes to coverage will begin January 1, 2017.

    More specifically:

    -If you have Medicare Parts A & B (Original Medicare), you can switch to a Part C plan (Medicare Advantage).

    -If you have Medicare Part C, you can switch back to Parts A & B.

    -If you have Medicare Part C, you can switch to a new Part C plan. If you have Medicare Parts A & B, you can join or drop a Part D prescription plan.

    -If you have a Part D prescription plan, you can join a different Part D prescription plan.

    -It also may be beneficial to re-evaluate your coverage during open enrollment if it would allow you to switch to better prescription care coverage, or allow you to keep the same doctor but spend less.

    It also may be beneficial to re-evaluate your coverage during open enrollment if it would allow you to switch to better prescription care coverage, or allow you to keep the same doctor but spend less.

    Even if you are content with your current level of Medicare coverage, it is worth using the open enrollment period to check the coverage you have and see what other options are available. Your health is always evolving, and so are your Medicare needs.

    What to consider during open enrollment

    -Your Health: Has your health changed since you first signed up for Medicare? It is important that your plan meets your current medical needs. If you are in need of more or less coverage, now is the time to make the change.

    -Your Finances: Over the past year, did you struggle to afford your plan? Did you visit your healthcare provider frequently, leading you to exceed your plan’s coverage and pay high out-of-pocket costs? Think about how well your current plan meets your financial situation.

    -How well has your plan been working for you? Are you happy with the flexibility of your current plan? Medicare Advantage (Part C) tends to limit you to providers near your home, whereas Original Medicare (Parts A & B) offers access to medical care across the country. If you plan to travel more or less than expected, open enrollment is the time to switch.

    Thinking about healthcare isn’t always a priority. It can be easy to just keep things as they are rather than do the research required for selecting a new plan. However, doing so is a worthwhile venture; it may save you money and be beneficial to your overall health.

    How to get help

    If you need more general information on Medicare, check out WISER’s Medicare Basics fact sheet. The National Council on Aging also operates My Medicare Matters, a great resource that can walk you through your different Medicare options, costs, and understanding the enrollment process. The Medicare website similarly offers an online tool for shopping plans called the Medicare Plan Finder. If you would like personal help selecting a plan or have questions, call Medicare’s toll free number (1-800-633-4227) or the Medicare Rights Center (1-800-333-4114). Federally funded State Health Insurance Programs can also provide assistance. Find your local SHIP at www.shiptacenter.org or by visiting or calling the Eldercare Locator  (1-800-677-1116, www.eldercare.gov).

     

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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