According to a recent UBS poll, 60% of women surveyed let their spouses and partners handle their finances. This is not uncommon, even among wealthy couples. The gradual shifting of financial responsibility and knowledge to one person often begins early in the relationship. But if the couple goes through divorce or the family financial manager dies or becomes physically or mentally incapacitated, their spouse or partner will have to scramble to figure out where their money is, how it’s being invested, and how debts are being paid while they’re also dealing with a legal or healthcare crisis. That’s why it’s important for couples to discuss these issues candidly and transparently, especially before retirement, so that either spouse or partner gains the knowledge they need to step in and manage their finances should a crisis occur. If this task is too challenging or contentious for a couple to do on their own, they should consider hiring a fee-only fiduciary financial planner to help organize and document their income, debts, savings and investments and serve as their impartial educator and mediator. 

For further information: 

• Next Avenue, Money and Your Honey: How to Schedule Personal Finance Dates 
• Terrysavage.com, Personal Financial Organizer

Right now, millions of high school seniors are receiving acceptance letters and financial aid offers from colleges and universities. These offers usually include a combination of merit-based scholarships and grants, student loans, work study grants, and private parent loans. In past years, it was challenging to convince many schools to increase this aid. But according to author and college planning expert Ron Lieber, with the COVID-19 crisis reducing the number of applicants to most schools, parents are now in a better position to diplomatically ask for better offers. But this can be a confusing process. Parents need to negotiate scholarships and grants with the Admissions office, and loans and work study grants with the Financial Aid office. When meeting with these officials, parents should feel free to ask them to match or exceed the more generous financial aid offers their children have received from other schools. Even after students have accepted an offer, they should seek additional money by applying online for a share of the billions of dollars available through thousands of private grants and scholarships. Even with all this aid, parents’ share of their children’s annual college costs will still be significant. They should try to borrow as little as possible, particularly through private parent loans whose payback periods could last a decade or more. This is particularly important for parents who are approaching retirement age, since some of their Social Security benefits may be garnished if they’re unable to make monthly payments on their own. For parents with younger children, contributing to a 529 College Savings Plan as early as possible can give them a head start on building a reserve to help pay for future educational costs. Grandparents, too, can help by contributing to these plans or giving up to $15,000 a year per child without gift tax implications. The most important thing is to not let your fear about your children’s future or your guilt about what you’re able to afford keep you from making the right financial decisions.

For further research: 

• Terrysavage.com, College Money Negotiations
• Next Avenue, How Grandparents Can Help Pay for College
• Scholarships.com: Search over three million scholarship and grants.
• Scholarsnapp.org: This free service makes it easy for students to populate scholarship applications with information from their College Board account.
• Payingforcollegeresources.com: Use this worksheet to enter, track and compare financial offers from different schools.
• SwiftStudent: This free online service can help you write a financial aid appeal letter.
• Ron Lieber, The Price You Pay for College

As Richard says, “It’s a doozy of a tax year.” The IRS will be way behind in issuing refunds, yet the deadline for filing your 2020 federal tax returns is still April 15. For most people, it will be filing as usual, but there are situations where special attention may be required. If you earned $75,000 or less ($150,000 as a couple) in 2020 and should have received a $1,200 government stimulus payment last year and a $600 payment in January but didn’t, you can claim these missing payments when you file your 2020 federal tax return. Even if you made no income last year, you still need to file if you want to claim these missing payments. If you donated to charity last year, you can deduct up to $300 in cash contributions even if you can’t normally itemize deductions. If you’re under age 59½ and took advantage of the CARES Act provision to take up to $100,000 out of your Traditional IRA or 401(k) account without early withdrawal penalties, you’ll still have to pay taxes on this withdrawal. But if you fully reinvest the amount you withdrew within the next three years, you’ll be able to request a refund for the taxes you paid. If you were one of the millions of Americans who received state unemployment benefits last year, you’ll have to pay taxes on those benefits. Unfortunately, if you were working for your employer at home last year, you won’t be able to deduct any money you paid for furniture, equipment or other job-related expenses. However, if your income declined significantly from previous years, you may qualify for tax relief. And if you’re expecting a refund or your missing stimulus payments, make sure you file electronically and allow the IRS to deposit this money into your bank account. Otherwise, you may have to wait months to receive the money you’re owed.

For more information: 

• Terrysavage.com: Free Tax Filing Help 
• IRS.gov/freefile: Provides links to IRS partner sites that let you prepare and file your 2020 returns for free (if you qualify) 
• The IRS VITA program: Offers free tax return preparation for qualified individuals

In January, news from Wall Street was dominated by the GameStop saga. To put it simply, a group of individual investors belonging to a social media forum called WallStreetBets started buying shares of GameStop, a moribund online videogame retailer. This speculation drove the price up from $20 to nearly $500 in three weeks. The WallStreetBets clique pitched a Main Street versus Wall Street story, claiming that they were trying to punish hedge funds, which were making huge bets that the price of GameStop would go down. For a time this worked. Early investors became stock multimillionaires, and some hedge funds were on the verge of bankruptcy before the madness petered out and GameStop lost more half of its value by the first week of February. While the hedge funds ended up okay, individual investors who bought shares right before the bottom fell out were the biggest losers. This saga created a clamoring for regulators to step in and stop this kind of market manipulation, and focused industry ire on Robinhood, a popular, no-cost trading app that many of the WallStreetBets crowd used to buy GameStop shares. While this story is fun to read about, there’s no need for most retirement investors to lose sleep over it. The market is heavily regulated. Over the long term prices reflect what’s going on in the economy, and are rarely impacted by price gyrations among a few small companies. Investors who own a diversified portfolio of stock and bond mutual funds in their retirement accounts have even less to worry about, since these funds hold many different kinds of securities, so if the price of one goes down it will be offset by the rising price of another. If you do want to dabble in individual stocks, research each stock first to see if its current price reflects the company’s real value. If you buy shares, set a target price at which you’ll sell out and stick with it. That way, you won’t get stung when the bubble bursts.

For further information: 

• Next Avenue: What Does the GameStop Madness Mean for Your Retirement Funds?
• Terrysavage.com: GameStop—Revenge of the Nerds

Note: The shownotes for this episode update and clarify some of the statements originally made in the podcast.  

According to the Social Security Administration, the number of retirees who drew Social Security outside the U.S. jumped 40% from 2007 to 2017. While the COVID-19 pandemic has put the brakes on Americans’ plans to more aboard, once the crisis is over there’s likely to be an explosion of retirees choosing to live outside the U.S. part of the year or permanently.

While it’s fun to dream about spending your retirement years in Europe or in a tropical paradise, there are many issues you need to think about before making such a life-changing decision. Your Medicare plan may or may not provide coverage in foreign countries, so it might be necessary to purchase supplementary medical insurance. Even if the nation you’re considering offers free or low-cost government-subsidized healthcare, you may not be eligible for it as a non-citizen. And the quality of physicians and facilities in that country may be inferior to those in the U.S.

If you plan to earn income while living aboard, you may have to pay taxes to both your adopted country and to the U.S. Banks and financial institutions in developing nations may charge higher fees and have lax standards for protecting against fraud.

In terms of protecting your financial interests in the U.S., most countries now allow ex-pats to have dual citizenship, although it could take several years for you to become a citizen in your adopted home. And, if the nation you’re emigrating to requires you to give up your U.S. citizenship, you’ll be taxed on the value of the remaining assets in your estate.

That’s why if you’re still committed to retiring abroad after the pandemic subsides, it’s critical to thoroughly research the financial, healthcare, and lifestyle pros and cons of the countries you’re considering. And even if you find what seems to be the perfect location, consider renting first before you make a permanent investment in your new home.

For further research:

• Next Avenue,  How to Choose Your Ideal Place to Retire Abroad
• Internationaliving.com: Provides rankings of the best places in the world to retire.
• Numbeo.com: A crowdsourcing site providing cost-of-living information for most countries.
• Taxesforexpats.com: Tax preparation services and advice for those living aboard.