The COVID-19 pandemic has highlighted the importance of making decisions that will make it easier for others to carry out your wishes should you become physically or mentally capacitated or when you pass on. At the very least, you should assign someone you trust to serve as your health care proxy should you no longer be able to make healthcare decisions on your own. You should also formalize a living will that documents whether you want or don’t want life-prolonging treatments at the end of your life. Also consider assigning durable financial power of attorney to someone you trust to manage your finances if you’re no longer able to.

To help ensure that you, rather than a court, determines how your assets in your estate will be distributed to your heirs, make sure that you’ve completed a will that states your wishes and names an executor. Review and update your will if circumstances change. To avoid probate, consider setting up a revocable living trust and funding it with high-value assets such as your home and taxable investment accounts. You’ll need to retitle these assets in the name of the Trust. You won’t, however, need to retitle your IRA accounts and life insurance policies, since these assets will go directly to your assigned beneficiaries.

It’s highly recommended that you hire an experienced attorney to legally formalize these decisions. Since attorneys are expensive, consider working with a fee-only financial planner who can turn your decisions into an estate planning action plan at a relatively lower cost. You can then give this plan to your attorney to execute the legal requirements.

For further research:

• Next Avenue, Estate Planning 101
• TerrySavage.com, Preparing for Your Own Mortality

With the U.S. presidential election results finally settled, many investors are wondering how a Biden presidency may affect their portfolios next year and beyond. If the special elections in Georgia in January restore control of the Senate to the Democrats, there is a possibility that President Biden may fulfill his campaign promise to raise capital gains taxes and income and estate taxes on wealthy Americans. But the chances of all Democrats falling in line to support these hikes is unlikely while the economy is still struggling. Of far greater importance is the timing and extent of the next round of economic stimulus. Congress and the new president will need to quickly agree on a package that provides relief for the millions of Americans still out of work and for small businesses that are struggling to survive. Wall Street is already betting that the widespread availability of COVID-19 vaccinations by spring, in combination with stimulus and low interest rates, will accelerate economic growth and job creation in the second half of 2021, which is why the stock market has hit record highs recently. Yet, with so much uncertainty in the air, you should think carefully before making any major end-of-year investment decisions or discuss your concerns with an experienced fiduciary financial advisor before you act. 

For years, many financial professionals have suggested that most retirees can afford to withdraw up to 4% of their retirement assets each year with very low risk of their money running out in less than 25-30 years. But this “4% rule” was created at a time when interest rates were much higher than they are today. Back then, many investors with conservative portfolios could depend more on bond income to replenish these withdrawals. Now, retirees have to allocate more money to stocks to help make up for today’s historically low bond yields. In any case, there is no “hard and fast” rule on how much money you can or should withdraw. The actual amount needs to be based on your retirement age, life expectancy, lifestyle and other sources of income. Other factors, such as whether you have long-term care insurance or whether you’re hoping to leave some of your retirement money to your heirs or favorite charities also need to be considered. If you’re struggling to deal with these complex issues, consider seeking the advice of a fee-only fiduciary financial planner, who can help you understand different retirement cashflow scenarios and recommend a strategy that may increase the chances of your retirement nest egg lasting as long as you want it to.

It’s important for your grandchildren to start building their “money-awareness” at an early age. Since schools generally don’t teach financial literacy and parents often don’t have the time or energy to discuss these matters with their kids, you can play a key role in helping your grandchildren become smarter about money. With younger children, help them understand how much of their parents’ paychecks are spent on food, clothes, mortgage payments and home repairs and taxes. Visit online retailers with them so they can see the costs of the clothes, books and toys they own or want for the holidays. Give them odd jobs that put extra money in their pockets and help them figure out how much of their earnings to reserve for saving, spending, investing and charity. For teenagers and college students, help them learn how to keep debit card spending from spiraling out of control and avoid getting trapped in credit card debt. This is also a good time to teach them the basics of investing by offering inexpensive ways for them to enter the stock market.

A variety of online tools are available to help your grandchildren become smarter money managers. They include:

• Acorns.com lets you set up investment accounts for your grandchildren that can be partially funded with spare change from family purchases.
• Stockpile.com offers an inexpensive way for your grandchildren to learn about investing by letting them purchase fractional shares of stocks and ETFs.
• Visa Buxx debit cards allow parents and grandparents to load money onto prepaid debit cards for their high school and college kids and monitor their spending activities.
• Moneysavvy.com offers a variety of piggy banks with separate “save,” “invest,” “spend” and “donate” chambers.

Why are you seeing an endless stream of commercials for Medicare providers? Because right now it’s the annual Medicare enrollment period, which ends on December 7. If you haven’t signed up for Medicare yet, you can do so several months before you turn 65 so your coverage starts on your birthday. If you’re 65 or older and have been laid off from your job and no longer have healthcare coverage, you can sign up for Medicare right away. Once you’ve enrolled, you can change your coverage during this annual fall enrollment period. The most common and puzzling decision Medicare enrollees face is what kind of coverage to get. They can enroll in standard Medicare (Part A and B) and add prescription drug (Part D) and supplemental coverage (known as Medigap). Or they can choose a comprehensive Medicare Advantage plan offered by private insurers that covers Medicare services and prescriptions. While Medicare Advantage plans often have cheaper monthly premiums, they can incur higher out-of-pocket costs and limit your choice of physicians and hospitals. Confused? Fortunately, there are resources you can use to use to compare your options and get human assistance. These include:

• Shiptacenter.org can help you find a local, free State Health Insurance Program (SHIP) representative who can guide you through the Medicare decision-making process.
• Medicare.gov, the official Medicare web site, lets you compare costs and coverage for standard Medicare, Medigap and Medicare Advantage options.
• Ehealth.medicare.com can provide a list of Medicare Advantage providers in your area.
• Askclaire.com, is a popular a free, unbiased Medicare education resource.