New York Estate Planning & Elder Law

Should You Cut Retirement Savings Efforts During the Pandemic? / White Plains, NY & Greenwich, CT

“Take the money you’d normally save for retirement and put it into an account for emergencies.”

As the coronavirus spreads across the US, most of our lives have come to a halt. Some Americans are already out of work and millions may end up losing their jobs during a potential recession, says CNBC in the article “Financial planner: Here’s when you should temporarily stop saving for retirement during the pandemic.” What’s the best course of action for these uncertain times?

Financial advisors typically set a goal of a small portion of household income, usually 10-15%, to be set aside for retirement. Based on your situation, now might be a time to scale that back or stop contributing to retirement accounts, if you don’t have cash savings to fall back on in the short term.

If you don’t have three to six months of emergency funds available—which most Americans do not—then now is one of the only times that the financial professionals are advising putting a temporary halt on contributing to retirement accounts.

What to do with that money? Take the money you would normally be putting aside for retirement and put it in an account for emergencies, if you are able to do so. This is not an ideal time, but hopefully it is a short-term change. Make a commitment to yourself and your retirement to start contributing once you are back on normal financial footing.

Having an emergency fund right now is critical. Legislation to help is being passed, but how much help will be available for individuals, and when it will be available, is anyone’s guess. If you or the family’s main breadwinner becomes ill and can’t work, or if your job is among those lost because of the coronavirus, having a cash cushion of any kind will be important.

Every news cycle brings more things to worry about, so having an emergency fund also can provide some peace of mind. When we are worried on a chronic basis about paying for unexpected expenses, the stress can take a toll on our physical well-being.

In addition to moving retirement funds to an emergency fund, now is the time to back off of non-essentials, like subscriptions or memberships that are not being used. Make a list of everything you are paying for that is not essential—recognizing what you and your family really need, versus what you want—and send those savings to your emergency fund. The cuts may be temporary, but they will add up faster than you expect.

The charges you are not adding to credit cards now for things like dining out, going to the movies, etc., may start showing up as smaller credit card bills. However, don’t rush to spend any discretionary income. Rather than apply that money somewhere else, like increased online shopping because you are bored, also put that extra money into your emergency fund.

These are unprecedented times, when the margin for careless spending has become very slim. Be proactive about protecting your financial well-being, so you are able to weather this storm.

Reference: CNBC (March 18, 2020) “Financial planner: Here’s when you should temporarily stop saving for retirement during the pandemic”

For more information on asset preservation, retirement planning and estate planning, please visit my estate planning website.

Avoid the Pitfalls when Planning Your Retirement / Greenwich, CT & New York, NY

Not enough savings and too much spending?

You move along through life and perhaps think about retirement, but some people do not plan retirement, until they are in their mid 50s. The result? Mistakes have already been made, according to The Street in “Avoid These Big Mistakes in Your Retirement Planning.”

The biggest, most obvious and perhaps least followed lesson: do as much of the planning in advance as possible. Don’t wait until you wake up on your first day of retirement to figure it out.

Here are the top four mistakes people make:

Overlooking the impact of Health Care costs. Inflation in Health Care is more than three times the Consumer Price Index’s annual increase. Medical inflation hit an average of 6.8% in 2018, and it’s not likely going down any time soon. Medicare covers hospitalization (Part A) and doctor visits (Part B) but it does not cover many other critical costs. You’ll need to pay for long-term care, vision, dental, co-pays and deductibles.

As we age, our Health Care costs go up. When you are in the early stages of retirement, active, busy and healthy, it rises around 5%. However, as you age, if you are lucky enough to do so, your health insurance costs could leap by 15% annually.

Planning for Medicare options is very important. It is where many retirees make big mistakes. You’ll need Medigap insurance to cover areas that Medicare does not. You’ll also want Part D to cover prescriptions.

The bigger Medicare mistake is failing to enroll at age 65. If you miss it, you’ll have to pay a penalty just to get enrolled in the program. It’s not easy to figure it out, and the instruction book is 130 pages long. The website is also confusing. However, you have to do it and do it right.

Neglecting to save. Really save. It’s next to impossible if you are twenty-something, have enormous student loans and have not gotten your career on track, to even think about retirement. It’s not easy and it’s not the first thing younger people are thinking about. However, the sooner you start putting money away for retirement, the more time you have for the money to grow. If your company offers a retirement plan, start putting something away, even if it’s a small amount. Over time, that will grow, your income will grow and you will be better positioned for retirement. Automatic deductions will make this more likely to happen. If your parents are nagging you about retirement, make them happy: sign up for the plan at work and go for the auto deductions. It’s one less thing for them — and you — to worry about.

Poor investments. People who take a do-it-yourself approach to their investment portfolio vary in levels of success. Some devote a lot of time to it, including educating themselves about industry sectors and market performance, but others follow the ‘brother-in-law’ school, which unfortunately is less reliable. That’s when your brother-in-law boasts about how much money he made in a particular stock. However, he neglects to tell you about how many losses he’s taken along the way. A team approach of an educated investor with a professional financial advisor is a better way to go.

Thinking you know it all. Overconfidence has sunk many retirements. People who are highly successful in life think that career success will automatically translate into retirement and financial planning. It’s also very hard for these types of people to accept that there’s something they do not know and cannot control. It is even harder for them to ask for help. Don’t make this mistake – ask for help and create a solid retirement plan.

Reference: The Street (April 11, 2019) “Avoid These Big Mistakes in Your Retirement Planning.”

For more information on asset preservation and estate planning, please visit my estate planning website.

Keeping New Year’s Resolutions Can Be a Challenge / New York, NY & Greenwich, CT

Life can get in the way of you meeting your goals. However, embracing some tactics can be helpful.

Making resolutions to accomplish certain goals is never an easy task and New Year’s resolutions are no different. Financial goals are often on the list of resolutions and there are some secrets to follow that can help you stay on target, according to CNBC in “The secret to keeping next year’s financial resolutions.”

Getting more specific, most of the 2,000 people surveyed by Fidelity said they were going to save an extra $200 a month for their long-term 2019 goals, like retirement, college costs and health care. Half said they were going to boost contributions to their retirement savings plans, usually a 401(k) or their IRA. Higher limits for contributions to both are expected to increase the savings rate.

The unexpected ups and downs of life could stand in the way of your resolutions. Rising costs of health care, the volatile stock market and concerns about the trade wars are on most people’s minds. Try to focus on what you can do, rather than what you cannot control.

Like most of us, the people surveyed also admitted to making some spending mistakes they know made their savings lower than they wanted. Chief among them: eating out too often and splurging on things that are way out of their budget.

How can you be sure to make and keep your financial New Year’s resolutions in 2019?

Try a budgeting app. There are several well-known, tried and tested budgeting apps that make keeping an eye on your spending and finding costs to cut easier. Once you’ve identified places you can cut spending and created a surplus, put that money into your savings account. Or, increase your retirement plan contribution. Even a little bit can make a big difference over time.

Can you do better with your savings interest rate? Rising interest rates may make it possible to get a better return in 2019. As the Fed has raised its benchmark rate, yields on savings accounts are on the rise. While many savings accounts are only averaging 0.2%, some high-yield accounts are at 2.25%. Consider switching to a bank that offers at least a 2% return.

Note that the opposite goes for your credit cards: rising interest rates mean you’ll want to pay those off as soon as you can. Today’s average credit card interest rate is more than 17%. Try to pay the balance in full every month to avoid paying any more in fees than necessary.

Take control of your health care costs. If your Health Savings Account permits, increase the amount of money you contribute to your plan. If you didn’t use up all your funds in 2018, make an appointment for mid-year 2019 to schedule appointments or procedures you know you’ll need before the year is out.

Reference: CNBC (Dec. 15, 2018) “The secret to keeping next year’s financial resolutions”

For more information on asset preservation and estate planning, please visit my estate planning website.

Caring for a loved one? A Caregiver Agreement is Essential / Greenwich, CT & Westchester County, NY

A proper Caregiver Agreement is essential when a loved one or friend wants to pay you to provide assistance and care for them.  Here is a link to an article in which Michael J. Amoruso, Esq., Managing Partner of Amoruso & Amoruso LLP in Westchester County, NY and Howard S. Krooks, Esq., Of Counsel to Amoruso & Amoruso LLP are both quoted on key issues involving caregiver agreements -  http://newsle.com/article/0/164143883/#reloaded

For additional information please log on to http://amorusolaw.com

 

 

Helpful Habits To Build Your Nest Egg / Rye Brook, NY & Greenwich, CT

Take advantage of these tips to grow your retirement nest egg this year.

Are  you saving for retirement? Whether you are or not, it's never too late to start! But the earlier the better. A recent article in US News and World Report titled “5 Steps to Save More for Retirement” offers solid tips on building your nest egg, such as automatic payroll deductions.

Start out with a modest amount and gradually increase it. Most employers and financial institutions are set up to allow you to deposit money into more than one account; if not, set it up to deduct from your checking account the day you get paid.

"You don't miss what you don't have," as the saying goes. Or another way to think of it: "You can't spend what you already put in the bank."

Be sure to take a look at the original article and make an appointment with your financial advisor and estate planning attorney. Together, they can coordinate your retirement plan with your estate plan to help you implement those tips recommended in the article, as well as others that fit your situation. After that planning, you can get your nest egg growing!

Reference: US News and World Report, February 6, 2014:  “5 Steps to Save More for Retirement”

For more information on asset preservation and estate planning, please visit my estate planning website.

A Simple Strategy For Wealth Building / Greenwich, CT & White Plains, NY

Seriously, if you just do this one thing right for an entire lifetime you will end up wealthy. It is literally that simple.

Wealth building can essentially be summed up with one sentence: "Spend less than you earn and invest the difference wisely."

Of course, there's more to it than that. Nevertheless, if you adhere to those eight words as a guiding principle, you will find yourself in good shape down the road. If it worked for Ben Franklin and J.P. Getty, it can work for you.

A recent article in the Huffington Post describes a three-legged stool as a way to conceptualize your strategy. According to the article, titled “Everything You Need To Build Wealth.. In One Sentence,” one of the most important and most difficult of the three ideas is to live a more frugal lifestyle by cutting luxuries and discretionary purchases. For example, think about your car (or cars). Does your monthly car payment look nearly the same as your mortgage? Ask yourself if you really need two expensive models.

Ok, now ask yourself again and this time be honest. Might you survive on just one and perhaps trade the other for something more economical and easier on the budget? Do you buy a new car every two or three years? What if you kept that car for five years and enjoyed some time without a monthly car payment. People do it and they don't appear to be harmed in any way.  In fact, having only a $200/month car payment or no payment at all means more money to invest and save for the future. Try it!

While you will want to read the original article, here are the other two legs to whet your appetite to learn more:

Leg 2 – “Increase your income by improving job skills or changing jobs -- or consider working overtime or starting a new business.”

Leg 3 – “Invest wisely by learning what is necessary.”

Don’t focus on just one or two legs of the three-legged stool. In fact, each is just as important as the others. Follow the advice in the original article with the expert assistance of your financial advisor and you will be building your financial success on a secure foundation.

Reference:   Huffington Post, February 19, 2014: “Everything You Need To Build Wealth.. In One Sentence”

For more information on asset preservation and estate planning, please visit my estate planning website.

Estate Planning For All Of Life's Chapters / Rye Brook, NY

When you really think of it, who is better equipped to serve your interests under such dire circumstances than you yourself?

Estate planning is not meant to be something done solely in the last chapter of life. Think of it as a plan for all the chapters of your life—a plan that you should start now rather than later.

This was the topic of a recent article in The Times of Trenton titled “The best estate planning covers all stages of life.”

For the new college graduate, estate planning can mean setting up a budget, putting away some savings and paying off student loans.

Just married? You should be planning now to provide for your spouse in the event of your death or disability.

When starting a family, it's never too soon to invest in a college savings fund and arrange for guardians (i.e., back-up parents) should your children become orphans.

As the nest empties, you might downsize your home to have more cash for investments and plan for the eventual efficient distribution of your estate. Annual gifting to your “adult” children can be very rewarding and a great way to test their financial maturity. Do they “blow it” or are they “good stewards” with it?

Finally, when retirement is right around the corner, you can feel good that you have planned for many years to stop working full-time and to devote your time to other interests. You've taken care of your spouse and family, and everything is in order. 

Time to relax and enjoy!

Reference: The Times of Trenton, February 23, 2014: “The best estate planning covers all stages of life”  

For more information on asset preservation and estate planning, please visit my estate planning website.