December 11,2016
the staff of the Ridgewood blog
Ridgewood NJ, Americans are living longer than ever, which means retirement could last 20 to 30 years for some people – maybe even longer.
That’s great for those who remain in reasonably good health and retire with plenty of financial stability.
But lengthy life spans also increase the odds that many seniors will deplete their savings, face debilitating health problems and need to turn to their children for financial help or caregiving.
That’s a far cry from the kind of retirement they dreamt of over the years.
“I’ve done focus groups where one of the chief concerns that comes up is people don’t want to become a burden on their kids,” says Jeannette Bajalia, a retirement-income planner, president of Woman’s Worth® (www.womans-worth.com) and author of Retirement Done Right and Wi$e Up Women.
It’s really too late to do much, though, when you’re 80 and your life starts unraveling. That’s why it’s important to plan ahead to get your finances and health in the best shape possible, she says. Among some of the points worth thinking about:
• Unanticipated health care costs. It’s estimated that the average married couple will need to pay up to $250,000 in out-of-pocket expenses for healthcare during their retirement, beyond what Medicare and most Medicare Supplements will pay. “We’re beginning to see a lot of cost shifting out of both Medicare programs and private health plans, which means more out-of-pocket healthcare costs,” Bajalia says. “It’s entirely possible that the savings you thought would allow you to travel or to at least pay all the bills could be gobbled up by medical expenses. As you plan for retirement, you should make it a priority to discuss this concern with your adviser so the two of you can look at what options you might have to try to keep that from happening.”
• Long-term care planning. When it comes to aging, consider the possibility you might have to receive home healthcare or live in a nursing home or an assisted-living facility. The costs of such care can be daunting. For example, studies have shown that home healthcare can cost $50,000 or more per year, and nursing home care can run as high as 90,000 per year. “You don’t want your kids to have to pay for that,” Bajalia says. There are ways to prepare, such as buying a long-term care insurance policy or checking with a financial professional to help you develop a strategy for protecting your assets from nursing-home claims, she says.
• Self-care. Not every financial professional may do this, but Bajalia says she believes it’s important to integrate health education and a lot of self-care into a retirement plan. Spending money on preventive health routines to take care of yourself now can help you avoid significant health problems that lead to even costlier expenses later on, she says. Research is now telling us that longevity is over 70 percent lifestyle.
“I know it’s important to older people that they be able to remain independent as long as possible and not have to turn to their children to help,” Bajalia says. “They just need to remember that careful planning is the route to accomplishing that.”
And one of the planning tools would be to help fund long term care insurance for your aging parents to keep assets in their estates, she says, so long term care is not simply for yourself but for your aging parents.
About Jeannette Bajalia
Jeannette Bajalia, author of Retirement Done Right and Wi$e Up Women, is president and principal advisor of Petros Estate & Retirement Planning, where she has designed and implemented innovate estate-planning solutions for clients and their families. She also is founder and president of Woman’s Worth® (www.womans-worth.com), which specializes in the unique needs facing women as they plan for their retirement.
President-elect Donald Trump campaigned on the promise of dismantling Dodd-Frank, and now Senate Democrats are pretty much the only thing that can derail that promise.
This week, key Democrats on the Senate Banking Committee indicated they want little to do with dismantling the 2010 law. But in their rush to save Dodd-Frank, they’ve shown just how badly they misread what bills like Dodd-Frank actually do.
For instance, Sherrod Brown, D-Ohio, the committee’s ranking member, doesn’t believe that dismantling Dodd-Frank fits the president-elect’s anti-establishment message.
Brown told reporters: “If Donald Trump starts doing the bidding of Wall Street, then the voters in Ohio who voted for him will realize that he’s joined the Republican establishment here in advocating the billionaire’s agenda.”
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That’s completely backward because Dodd-Frank does not in fact rein in the forces of Wall Street and protect everyone else.
Dodd-Frank does impose large volumes of complex rules on financial companies, but the largest (and best-funded) of those firms have the easiest time complying with the regulations, while smaller firms and consumers are hit the hardest.
Dodd-Frank does not empower “those who don’t have a voice in Washington, D.C.” It empowers an army of lobbyists and lawyers, since they’re the ones who get paid to secure the best possible deals for their clients. Naturally, it also empowers the senators and congressmen that these lobbyists call upon.
Under Dodd-Frank, the people on Main Street pay higher prices for loans, have a harder time getting loans, and get stuck paying for bailouts and federal guarantees.
Democrats have perpetuated the myth that deregulation caused the 2008 financial crisis, but that is absurd on its face. The claim looks even more baseless to anyone who bothers to check the details, since there has never been any substantial deregulation of financial markets in the U.S.
Even a mild investigation into the post-1999 world, when the Gramm-Leach-Bliley Act supposedly deregulated the big banks, clearly shows that the volume of regulation only increased. (Figure 1)
A deregulated financial system is not what imploded in 2008. Financial markets—not just banks—were full of minimum capital rules, liquidity rules, disclosure rules, leverage rules, bankruptcy exemptions for derivatives, and the constant threat that regulators would make up new rules.
The nation’s largest banks had federal regulators literally embedded in their headquarters on a daily basis.
Worse, everyone expected the federal government to step in and pick up the pieces if something went wrong. At the very least, people expected an expansion of FDIC deposit insurance coverage (well beyond what anyone on Main Street needs), and some kind of “emergency” funds from the Federal Reserve.
The large financial firms’ creditors had every reason to expect what most of them ended up with: special loans and taxpayer guarantees. When federal policies are chiefly geared toward “keeping the system going,” the market knows bailouts are coming. And that’s a major problem with the regulatory system that Dodd-Frank worsened.
People on Main Street understand, though, that this kind of system—one that is highly regulated and uses taxpayer money to cover losses—will never provide financial security for anyone other than the largest financial firms.
They can see what’s going on in Washington.
They know that bailing out the titans of finance actually costs them money, and they’re not buying the notion that adding yet more rules in the name of protecting Main Street will actually work. And they’re right to be so skeptical.
If the Democrats on the Senate Banking Committee really want to improve financial security for Americans, they’ll convince their colleagues to go back to the drawing board.
That means they’ll start with dismantling Dodd-Frank.
Then, they can get to work fixing the system the way they should have after the 2008 crash. They can get rid of the ridiculous rules that let regulators micromanage financial companies, and they can put safeguards in place to make bailouts less likely.
That means financial firms’ owners and creditors will have to absorb financial losses, and they won’t like that. And that’s proof that truly fixing financial regulations is anything but establishment-friendly.