Posted by Sheri Samotin on Wed, Jan 18, 2012
By the end of January most of you will be inundated with envelopes in the mail that scream “Important Tax Document” or the like. Many of you will open them and review them as they arrive. Still others will throw them in a shopping bag and avoid looking at them until April 14th. A few of you will let them pile up on the kitchen counter, in the car, and on the washing machine and you may or may not be able to locate them all when it’s time to sit down to do your taxes. There is a better way!
I suggest to my clients that each January they establish one place to throw any paper that MIGHT be helpful for preparing their income taxes. This can be a bag, a basket, or a box. The vessel doesn’t matter. The important thing is that you are meticulous about getting every last item to that place. Once the flow of tax related mail seems to have ended, by late February for most people, it’s time to sit down and organize the mess. Open everything and sort by the type of document. For example, clip all of the 1099-INT documents together. These are the forms that financial institutions have used to tell the IRS how much interest you were paid last year. Repeat this for each document type.
Once you have sorted through everything it’s time to see if you are missing any. The easiest way to do this is to start by pulling out the prior year’s tax return and looking for the schedules that show interest, dividends, mortgage interest paid, etc. Match each entry on the prior year’s return to a document in your stash. If you don’t have one, then it is time to figure out why not. It may be that you closed an account and no longer receive interest from the institution. Or maybe you refinanced your mortgage and have a different lender. It is also helpful to look through statements for all accounts that you have currently open and make sure that you have documents for each of these if you had income, gains, or losses from them. The idea is to cross check to see that you have what you need.
Many tax preparers will provide you with a tax guide or tax organizer. Sometimes these are preprinted with your information from last year. If you receive one of these, it is very important to take the time to review it , complete it especially as related to any changes in your family or situation, and make sure you have the documents you will need to support your return.
If this all seems overwhelming you might want to enlist the help of a daily money manager (DMM). The cost will minor compared with the potential of forgetting significant deductions and your tax preparer will certainly thank you for coming to them so organized.
Posted by Sheri Samotin on Wed, Jan 04, 2012
It’s hard for many who are on a fixed income to navigate the holidays. There are opportunities to spend at every turn. Maybe you sent checks to your grandchildren. Or maybe you bought gifts for your favorite caregivers. Perhaps you simply ate out more or bought some new outfits for the many parties you attended. It’s not unusual for those on fixed incomes to wake up in January not knowing how they will manage their bills for the next few months given previous overspending.
If you find yourself it this situation it’s time to do some serious planning. First, you need to take a careful look at your cash flow and determine if there are some items you can do without for the next few months while you pay off those credit card bills. In addition, now would be a great time to dust off your budget and make a plan for putting some money aside each month into a “holiday fund” so that you don’t wind up in the same boat next year. If you have never operated with a budget, maybe this is the year to start.
If you have charged your holidays on your credit cards, it is very important to be sure to pay at least the minimum amount due each month to avoid late fees. In addition, you will want to be strategic about paying off the accounts with the highest interest rates first.
In addition to digging yourself out of post-holiday debt and committing to avoid this in the future, the New Year is a wonderful time to evaluate your spending priorities and come up with a plan to stay on track. If you’re not sure how to begin, you might want to consider finding a daily money manager (DMM) to help. DMMs are professionals who specialize in assisting with the day-to-day business of life. They can help you create a budget and then stick with it. They can help you analyze which bills to pay off first. They can also handle your mail and arrange for payment of your bills. Your DMM is equipped to take care of all of those things that have a tendency to “fall through the cracks” – preparing your documents for your tax preparer, shopping for insurance at renewal time, reviewing your medical claims to make sure they are processed correctly, and even reconciling your bank and credit card statements.
Those who are trying to make sure they don’t outlive their resources and who try to live within their fixed income need all the help they can get. Carefully managing your finances is the best way to accomplish this and there is plenty of help out there.
Posted by Sheri Samotin on Mon, Dec 19, 2011
It is not unusual for families to try to make the most of holiday visits by having “important” discussions while far flung family members are together. While the intent is good, all too often such attempts backfire and even damage relationships. Whether you are the matriarch or patriarch of the family or the adult children “youngsters”, a bit of thoughtful planning can go a long way toward a smooth family meeting. Here are some tips to guide your family meeting.
The meeting convener must clearly articulate the time and place when the meeting will be held, the expected length of the meeting, and the meeting’s objective. Start by sending an invitation to those who will attend. This invitation can be transmitted in a phone conversation, via email and even by snail mail. For example, you might say something like, “Mom and I would like for all you kids and your spouses to sit down with us over brunch on Saturday so that we can share what we’ve been thinking about where and how we’d like to age.” A family meeting is best held at a time other than at the holiday meal! It is also preferable not to spring such a meeting on your family.
Next, create an agenda. What do you want to cover at the meeting? How long do you plan to spend in the meeting? Do you plan to send the agenda ahead of time for review by the participants or will you distribute it at the meeting? Try to limit your agenda to no more than three major topics and no more than two hours. If you have more material to cover use the initial meeting to set the stage and provide a framework for future discussions. Arrange for future meetings (either in person or virtual) to delve into various topics more deeply. Depending on the family dynamics, you might consider sharing the agenda with the participants ahead of time or you might to decide to wait until the beginning of the meeting.
Make sure that you define clear endpoints. For example, is your goal to share information with your family about your end of life wishes? Or is the objective to brainstorm with your siblings about Mom’s increasing cognitive impairment and reach a conclusion regarding what will happen if she can no longer care for herself? It is important for the participants to understand whether they are attending a presentation or a discussion. Likewise, they must know if the objective is to reach consensus about a topic or simply to allow each person the opportunity to voice his or her opinion.
It is helpful for the meeting’s convener to lay some ground rules at the very beginning of the meeting. For example, if confidential matters will be discussed, you might ask everyone to agree to keep the discussion within the group. If you have a boisterous family, you might have to ask for each person to allow others to finish and not to talk over one another. Some families even have an object that they pass around and the only person who is allowed to talk at a given moment is the person holding the object. Don’t forget to ask everyone to turn off their electronic devices, and make sure that any family members who are not involved with the meeting are occupied and have appropriate supervision. Remember that family meetings can often become emotional and tense, so plan some humor that you can pull out of your back pocket and be prepared for anything.
Give some careful thought to who will serve as the facilitator for the meeting. It does not necessarily have to be the person who initiates the meeting. In fact, you might consider having an objective third party who doesn’t have a stake in the game act in this critical role. The facilitator is the person who will keep the meeting on schedule by managing the agenda and make sure that the ground rules are followed. Depending upon the subject matter for your meeting and your family dynamics, using an outside facilitator may be the only way to accomplish a successful meeting.
Finally, be sure to discuss next steps before you adjourn the meeting and make assignments and set deadlines if appropriate. It is also very helpful to circulate a brief meeting summary to all participants within a few days of the meeting noting any follow up commitments or the date of the next meeting if you’ve set one.
If you need help crafting your plan for an upcoming family meeting, feel free to contact me at sheri@LifeBridgeSolutions.com.
Posted by Sheri Samotin on Wed, Oct 19, 2011
From time to time, Sheri answers reader’s questions in this space.
Dear Sheri,
I am retired and live on a fixed income which should last me through my final years. I see my kids struggling and want to help them, but I don’t want to give up my financial security. What can I do to help without hurting myself?
This is a very common dilemma. Most parents hate to see their children struggle, even when they are adults with families of their own. It’s only natural that we want to help our kids. However as this reader wisely asks, how can we do this without creating a tricky situation for ourselves?
The first advice I give in this situation is to take a realistic and close look at your budget and determine if you have any discretionary spending that can be redirected to helping you child, at least for a period of time. If you do, it is relatively easy to redeploy these funds. For example, let’s say you have a satellite television subscription and you hardly ever watch the extra channels you have been paying for. If these extras cost you $50 per month, you can cancel the services and instead send your son $50 each month. Alternatively, perhaps your daughter can do something that you currently pay someone else to do. You might decide to pay her to do it for you instead of having the third party.
If neither of these options is practical, then perhaps there are items that you are no longer using that you can sell, using the proceeds to help your child. Or maybe you can help by provided services like cooking, cleaning, babysitting, or dog walking if you are physically up to it. Another option might be to pool your resources with your child, perhaps living under one roof to save expenses for both of you.
If you own your own home and have equity in it, you might consider taking a home equity loan or getting a mortgage (either forward or reverse) but this is rarely a good idea if it is your only source of funds. You never know if you might need this to pay for your own needs at some point, and if you take the funds now, then this last resort won’t be available in the future.
Yet another possibility if you are in a position to do so would be to offer your child a loan. Ideally, your son or daughter would be able to pay you a fair rate of interest each month, providing you with some cash coming in. However, don’t do this if you can’t afford to lose the principal. While your child might have every intention of paying you back, that might never happen. Will you have enough money to take care of your own needs under that scenario?
The most important thing to realize is that money that you give away, encumber, or spend on behalf of your children today is money that very likely won’t be available to you in the future if you need it. Be sure that your desire to help doesn’t set you up for turmoil later.
Posted by Sheri Samotin on Wed, Oct 12, 2011
Open enrollment season is almost here, a bit earlier than usual! This year, Medicare beneficiaries can enroll or change their selection for Medicare Advantage and Part D prescription drug plans between October 15 and December 7. This is a full month earlier than in past years. Don’t wait until the last minute to evaluate your options or remind your clients to do so. Every Medicare enrollee should review their options each year. This is because your medical status might have changed, or because the medications you take may be different from last year. Finally, even if everything on your side has stayed exactly the same, the terms and conditions of your plan might have shifted and this could mean that you will have unexpected expenses if you don’t make a modification.
In addition to the new open enrollment timing, there are a few other changes to Medicare for the coming year. The hated “doughnut hole” or “coverage gap” in Part D Rx plans is shrinking, and that’s good news, brought to you as a result of the health care reform legislation passed in 2010.
The shrinkage comes from three places. First, the amount of money beneficiaries must spend on prescriptions before entering the coverage gap goes up by $100 for 2012. Next, the spending inside the gap is shrinking by nearly $1,750 meaning you have to spend less out of pocket before reaching the catastrophic coverage. Finally, participants will receive a 50% discount on brand name drugs while inside the gap and pay 86% of the cost of generics (vs. 93% in 2011).
Additional changes include an annual wellness visit with no patient responsibility portion, a new “special enrollment period” where participants can switch to a “5 star rated plan” at any time during the year, and the Blue Button which will provide online access to Medicare claims and allow beneficiaries to store personal health information if they choose.
While the noted changes are positive, Medicare continues to be confusing and overwhelming to many older adults. They still must decide whether to subscribe to “original” Medicare (Part A and Part B) or to choose Part C, or Medicare Advantage plans. Assuming the choice is original Medicare, further decisions include whether to purchase a Medigap (a/k/a Medicare Supplement) plan or a Part D prescription drug plan. If either of those is desired, then there is a further decision regarding which plan to purchase and through which insurance company.
Medicare beneficiaries can get personalized help to sort this all out by taking advantage of LifeBridge Solution’s “medical plan selection service”. For $129 (or $199 for a couple), we will sit with you or your client one-on-one and determine the options available for your particular situation. Since we don’t sell insurance we are unbiased and able to educate and advise you without regard to external incentives. Be sure to schedule early! Remember, open enrollment season ends on December 7!
Posted by Sheri Samotin on Wed, Oct 05, 2011
People are living longer these days due to medical and other technological breakthroughs. Because of this, many people wrongly assume that they can put off getting their affairs in order for a few more years. However, exactly the opposite is true. Why?
While living in a time with wonderful medical advances means that many of us can expect to live to a ripe old age, the scary reality is that we often didn’t plan for this. The nest egg that we put away for our retirement years ago was probably designed to last for twenty years or so, taking us from the historical retirement age of 65 to our mid-80’s if we were lucky. The reality is that for many such people, their planning will have them come up short since they may well live into their 90s. Making matters worse, many from this generation assumed that the equity in their homes would cover their final years, but with the collapse of the residential real estate market over the past five years that may no longer by true. And we are all aware of the roller coaster that is the financial marketplace. The best time to start planning is when you are young enough to take steps that can have a positive impact on the outcome.
For example, government statistics tell us that at least 75% of people over 65 years of age will require assistance with activities of daily living at some point during their life, and typically this will continue for three to four years. With the most basic level of home health care costing $20 to $25 per hour in our area, even a relatively modest 4 hours of care three days each week will add up to almost $15,000 per year. Multiply that by three years and you are looking at $45,000 just for this expense. Many people in their 50s and 60s would benefit by exploring purchasing long term care insurance while they are young enough and healthy enough to obtain it for a reasonable premium.
Planning ahead might also help you decide when to stop working and when to begin taking your social security benefits. This is a complicated decision and depends a lot on your income while you’ve been working, the lifestyle you envision in retirement and the assets and insurance you have to draw upon in your later years. Doing a little analysis might help you determine that it is prudent to continue working a bit longer than you might otherwise have planned.
Finally, living longer might mean that you are living without your spouse for many years. If you’ve assumed you will have two social security payments and perhaps two pensions, you might be surprised at how dramatically things change immediately when you lose your spouse. I always advise clients to plan a budget that is comfortable on “one retirement income” to protect the second to die from a significant change in lifestyle following the death of the spouse. Of course, one way to plan to mitigate this is through the use of life insurance or the accumulation of assets that can be liquidated to help pay living expenses.
Planning ahead is always a good idea, but even more now when we have to plan for longer and longer periods of time.
Posted by Sheri Samotin on Wed, Sep 21, 2011
Many of the adult children I work with complain that the senior living communities where their parent lives don’t do a very good job at bookkeeping. I often hear that payments are not properly recorded causing duplicate bills to be sent or late charges to be applied. Since many of these caregivers are working long distance, it is not as simple as walking into the facility to sort things out. How can better communication be implemented with the facility?
I recommend that upon move-in, the person (or people) who will be responsible for overseeing Mom’s care make an appointment and go in to meet with the various department managers at the facility. The person who will handle paying the bills should meet with the person who generates the bills for the facility. The person who will handle medical issues should meet with the Director of Nursing. The purpose of these meetings is to establish open channels of communication. This is usually better done in person than over the phone. We are all more likely to respond positively to someone we know than to a frustrated stranger on the other end of the phone.
Then, keep a close eye on every bill and make sure that the payments are posted properly. If you have a question, take the time to call and ask, and document the date, who you spoke with, and the outcome of the conversation. When necessary, put things in writing. If there are chronic errors, speak with the billing manager and ask if there is a better way for you and she to communicate so that the errors will be reduced, taking less time for both of you.
If you are already well into your relationship with the facility, or you’ve tried the suggestions above to no avail, then you are in a tougher spot. If you can find someone on the other side that seems willing to help then make friends with her. Find out when her birthday is and be sure to send a card. Try to catch her “doing something right” and then say thank you or write a brief thank you note. You might even write a note of praise or thanks to her boss and send her a copy. The idea is to have someone who will be willing to go the extra step to try to solve problems on your behalf. Develop a personal relationship because it’s harder to be rude to someone who has been nice to you in the past.
Another suggestion is to assume the facility is “innocent” until proven otherwise. That is, instead of calling with a huffy tone of voice about the error you are sure they have made, try calling and saying that you are confused by the bill and asking for it to be explained. Even if you know that you are correct, if they other person can see the error, he might simply acknowledge it and make the correction, thereby avoiding an argument.
The key lesson is to keep a close eye on things and act on them immediately if you have a concern. The newer the possible error, the easier it will be to solve.
Posted by Sheri Samotin on Wed, Sep 07, 2011
Very often, older adults empower one of their adult children with the responsibility of handling finances when they can no longer do so. In other cases, one of the children will step forward to take over, sometimes without consulting with his or her siblings. What happens if the other siblings don’t agree with how Mom or Dad’s finances are being handled?
The answer to this question is, as you probably anticipated, “it depends”. It depends on who is legally in charge. It depends on whether the siblings were on the same page before Dad couldn’t handle the finances any longer. It depends on whether there is underlying trust or distrust among the family members. And, it depends upon whether Mom made a plan before she became incapacitated and shared that plan with the kids.
If your parent has made one of his or her children the Power of Attorney (POA) then that person has the responsibility to handle the actions and decisions that are covered by the document. While the POA is not required to consult with her siblings, it might be a good idea to do so, especially if there may be disagreement. While the ultimate decision belongs to the POA, obtaining the input of siblings and discussing the options will help the others feel involved with the decision even if they don’t ultimately agree with it. On the other hand, if one of you stepped in and took over “helping” your parent with his finances without the benefit of having been designated the POA, you’re on shaky ground. The helper doesn’t have the “right” to make the decisions, and it isn’t unusual for the others to feel angry or frustrated.
As with so many things, communication is really the core solution. If you have been named POA by your parent, it’s a good idea to have periodic family meetings in person or by phone or video chat to discuss important decisions or changes. Likewise, sending a budget and periodic accounting of your parent’s finances to your siblings will help them feel like they know what is going on. Yet as POA, there will be times when you simply need to make a decision and act on it, and it is important that your family doesn’t miss out on deadlines or opportunities because of “analysis paralysis”.
If you aren’t the POA but have stepped in to the role of “chief financial officer” for your Mom, then it is even more critical that you communicate with your siblings since you don’t have any legal authority to take action. The last thing any family needs is to be fighting with each other in court. The only winners in this case are the lawyers who represent all of you!
Let’s look at things from the perspective of the sibling who isn’t in charge. Why is she disagreeing with your management of your parents’ affairs? Perhaps it is because she has a different point of view. Or maybe he’s hurt or frustrated that you haven’t asked for his opinion. Could it be as simple as feeling left out or in the dark? Often, the unknown makes us assume that something is being hidden from us. Whatever the motivation, finding a way to act as a team with your siblings will always make things less stressful for all of you.
Planning ahead for the time when you or your parent can no longer handle financial affairs is a multi-step process, one that most people would rather avoid. Yet taking this important step will often mean the difference between family harmony and fireworks.
Posted by Sheri Samotin on Wed, Aug 03, 2011
When it comes time to care for an aging relative, especially a parent, it usually works out best for everyone if family members can set aside their differences. When a family first approaches me in search of caregiver coaching and support, I try to get a handle on where each family member is coming from to better understand points of agreement and disagreement. At first, everyone is on “good behavior” and tries hard to come across as agreeable. However, when I talk with each family member individually, I often learn about underlying tensions that already are, or may soon be, in the way of optimal caregiving and decision-making. Interestingly, when I talk with the care recipient privately, it is not at all atypical for her to bring up this tension that the children think they are doing such a good job of hiding and to point to it as one of the most stressful aspects of her situation.
The one point that everyone can generally agree on is that their objective is to make sure that mom or dad receives the best possible care. However, how to achieve this is where the trouble often starts. For example, what if one sibling believes that hands on care for Dad should only be provided by family members while his sister just as strongly feels that professional caregivers should be employed, thus allowing the family members to be there for the social and emotional support that Dad needs?
Families are advised to take inventory. Who can provide what? Is one sister great at organizing a schedule of caregivers and people to drive mom to her appointments? Maybe her brother is a physician and will be on top of the medical issues. Perhaps there is a sibling who lives far away and doesn’t have much time but who will volunteer to be the communications director and set up a system for keeping everyone in the loop. It is important to take stock of other kinds of resources too, namely time and money. If each family member can find some way to contribute to the effort that is within his or her skills, time constraints, and financial ability then things will flow more smoothly.
Money is often at the core of the tension among family caregivers, even though no one likes to admit it. One person may feel that mom or dad’s resources should be used to pay for care, while another may feel that he is “entitled” to that as his inheritance and would prefer that the family provide the care so that there is something left after the parent passes away. One sibling may have more money she can afford to contribute to care and would prefer to do that rather than providing the hands on care herself. However, since no one likes to come right out and admit these things, they are often hidden away under other, often petty, issues.
Sometimes family caregivers simply get stuck in their roles or attitudes and don’t know how to change things. In these cases, it is often important to get someone involved who can serve as the objective third party. This person doesn’t have a stake in the game and isn’t aware of the baggage that accompanies every family. He or she can ask the tough questions right along with the obvious ones. Sometimes, simply having an outsider scratch her head and ask why something is the way it is can be enough to get things unstuck.
Posted by Sheri Samotin on Wed, Jul 27, 2011
My husband of fifty nine years died recently and I’m feeling overwhelmed by day-to-day decisions. I expected to feel the emotions associated with grief but I never expected to feel helpless. My husband took care of our financial life and I’m really at a loss. I don’t want my children to know how much this confuses me and I certainly don’t want their help if that means they take over. I should be perfectly capable of handling my own affairs. How can I get on top of things so that I can manage on my own? These are the words of one of my clients during our first meeting.
It’s not at all unusual for couples to practice a division of labor with one taking care of the finances and the other taking care of the yard, for example. That’s fine as long as both spouses are willing and able to do their “jobs”. However, if because of illness, attitude, capacity, or death one of them can (or will) no longer hold up his or her end of the bargain you’ve got trouble brewing. The very best way to avoid this is through “cross training”. In this way, one partner teaches the other his or her system for accomplishing the job. If that’s not an option, then at least each should document the process and the facts for the other. However, what do you do if the cross training or documentation never happened?
Well, the short answer is that it’s never too late to learn if you want to and don’t suffer from physical or cognitive complaints that make it too difficult. And, if you don’t want to or can’t learn then you can hire someone to take over the task on your behalf. There’s a middle ground too. Maybe it is too overwhelming to step in and figure out how to do something you’ve never had to do before, but you’re not ready to completely outsource it either. In this case, you can bring in a professional who can set up a system for you, teach you how to use It, and then check in with you periodically to make sure that you’re on track and answer any questions that might come up.
That’s exactly what my client did. She had me figure out her late husband’s system, bring it up to date, and then modify it to a system that made sense to her. Once we got to that point, it was easy for her to take over and maintain the process. At first we had a check-in meeting every other week, and then every month. At this point, I feel that she’s ready for a quarterly touch base but she likes the idea that I’m looking over her shoulder, “just in case.”
As the months have passed, new issues have come up. For example, while the bill paying is well under control, when it came time to deal with the annual income tax return my client became overwhelmed again. Then her car lease came to an end and she was having a tough time making a decision about whether to lease a new car, buy out her current car, or purchase a new one. We did the analysis together and I helped her negotiate her new arrangement.
Losing a life partner if tough is so many ways. It adds insult to injury to feel as though you can’t take care of yourself because of your loss. There’s help available, whether from family, friends, or qualified professionals. Don’t be afraid to ask!