Monday, December 23, 2019

Personal Finance After 50 for Dummies

Book: Personal Finance After 50 for Dummies
Basic Information : Synopsis : Thoughts : Evaluation : Book References : Good Quotes : Table of Contents : References

Basic Information:
Author: Eric Tyson
Edition: ePub on Overdrive from the Fresno County Public Library
Publisher: Wiley, published 2018, 2nd edition
ISBN: 0470548762 (ISBN13: 9780470548769)
Start Date: December 2, 2019
Read Date: December 23, 2019
433 pages
Genre:  Personal Growth
Language Warning:  None
Rated Overall: 3½  out of 5


Synopsis:
This book is divided into four parts.
  1. Working and getting ready for retirement, covering planning for the future, having a retirement plan, health considerations, investments, and understanding how retirement accounts work.
  2. Money and retirement. This includes budgeting/expenses, where to live, and long-term care needs.
  3. Dealing with the Government. This includes Social Security, Medicare, and other state programs
  4. Estate planning. This went over wills, advanced health care, trusts, and power of attorney. Also how to deal with estate taxes.
There is also some guidelines covering working in retirement, some common mistakes, and caring for aging parents.


Thoughts:
I suspect this book is the re-titled, second edition to another book called Personal Finance for Seniors.

Part I: Working toward Retirement
Most of this part I did not have a personal interest in.


Chapter 1: Looking Ahead to Your Future
Chapter 2: Protecting Your Employment Income and Your Health
Chapter 3: Developing a Retirement Plan
The authors likes the retirement calculators from T. Rowe Price.
One of the things to consider is what to do in your retirement. Volunteering is a good thing to do. They like VolunteerMatch. See chapter 18 for more resources on volunteering


Chapter 4: Identifying Retirement Investments and Strategies
Advice about investing outside of a retirement account. Look for things which will delay taxes, if that is a concern. Such as growth stocks-things which can give long-term capital gains rather than immediate income. I think this is more oriented towards those still working rather than those relying on the investment for retirement income.

One fund they like is the Vanguard Star fund.

Not all target date funds are created equally. One of the drawbacks is that they have a tendency to need to time the market which is not always appropriate. The ones the author’s suggest are: Fidelity Freedom Funds, T. Rowe Price Retirement Funds, and Vanguard Target Retirement funds.

Exchange-traded Funds(ETF). They are index related funds which sell on major stock exchanges. They have the potential for lower costs than index funds, but some/plenty have higher costs or are in a narrow industry or focus. The ones they like are iShares Core US Bond Aggregate(AGG), Vanguard Total Bond Market Index(VBMFX), Vanguard Inflation-Protection Securities(VIPSX), Vanguard Small Cap Value ETFF (VBR), iShares Russell 2000 Value Index(IWN), iShares Russell 1000 Index (IWB), iShares Russell 1000 Value Index (IWD), Vanguard Total Stock Market EFT (VTI), Vanguard REIT EFT (VNQ), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard Total International Stock Index (VGTSX) and iShares MSCI EAFE Index (EFA).

The author’s advice: evaluate your portfolio. See what is underperforming or doing badly over time, examine why. Just don’t dump because of a temporary slump. Their definition of temporary is 1-2 years.


Chapter 5: Grasping Retirement Accounts and Their Rules


Part II: Making Money Decisions in Retirement
Chapter 6: Managing Budgets and Expenses
Seven most frequently asked questions about retirement from Dr Frank Luntz (only five are listed)
  • Affordable health care
  • Social Security-will it be there?
  • Can I afford prescription drugs
  • Will I run out of money before I die?
  • WIll I be a financial burden to someone as I grow older?


Chapter 7: Guiding Investments and Distributions in Retirement
Consider annuitizing assets-this converts a static asset into something income producing.


Chapter 8: Making Important Housing Decisions
Moving is expensive-so consider all the costs and effects. Such as the neighborhood you will move to/from, the ease of living there, transportation,...


Chapter 9: Considering Your Long‐Term Care Insurance Needs and Options
69% of those above 65 will need long-term care (LTC) because of one need of ADL. 37% will need for no more than 2 years of ADL, while 8% for more than 5 years or more-which ruins people financially.

There are five categories of Assisted Daily Living(ADL):dressing, bathing, eating, walking and using the bathroom.

On average, a patient in an ADL situation will need about 20% more than the basic cost of care in an ADL facility. You can find average costs of ADL by state at Genworth and John Hancock

Basic long-term care needs:
  1. Dementia care needs to be explicitly states
  2. .Coverage begins even if a hospital stay is not needed
  3. LTC covered even if in-home
  4. Adult day care covered
Choose a financially stable insurer over the lowest premium. How do you know who are financially stable? See the major ratings firms: AM Best, Fitch IBCA, Moody’s Investor Service, Standard and Poor Insurance Ratings. Also look at their screening policies-do they do a thorough medical screening?(Hint: Better to have screening for stability of insurer) Also look at the premiums-are they in the ball park or totally low or high?

There are risks in waiting to obtain Long-Term Care insurance. Advisor Insurance Resource has quantified these risks already on a spreadsheet. Look for Long-Term Care Cost of waiting.

There are a couple type of long-term car: tax-qualified and nonqualified. Need to look into the tax implications if we go for insurance along these lines.


Part III: Dealing with Government Programs
Chapter 10: Making Your Best Choices under Social Security
I am well above the minimum qualifications for Social Security. But there is a minimum number of quarters needing to be earned-40 - a minimum earnings. These earnings are adjusted for inflation.

Average indexed earnings-this is what the benefits are based upon from Social Security. See www.ssa.gov


Chapter 11: Getting the Most Out of Medicare
Chapter 12: The State Health Care System Backup: Medicaid

Part IV: Estate Planning: It’s More than Just Dead People and Lawyers
Probably because of the place in life I am at as well as my most pressing needs, this part is what I really paid attention to.


Chapter 13: The Basics on Estate Planning’
Definition of estate planning: process of planning for the transfer of ownership of your assets to the recipients of your choice in the most efficient way possible. Features should include what goes to your family, friends and charity. It should insure bills are paid, including ongoing expenses and that assets are managed until they are dispersed. Also you should be taken care of if there is that need.

Steps:
  1. List assets and debts
  2. Prepare an income statement (cash flow) Expected expenses and income during the next year. Similar to a budget
  3. How do you want your assets distributed
  4. What restrictions do you want on the use of your assets
  5. When to give away your assets
  6. Who you want to work on your estate-family, friends, professionals
  7. Understand your estate plan
  8. Implement the plan
  9. Explain to your heirs what you are doing.
  10. Review and update the plan as needed. Review every two or three years
Imperative: Finish your plan, no matter what. Some impedances:
  • Spouse and you cannot agree on certain things
  • Unsure how to distribute the assets
  • Undecided on strategies
Complete the plan in steps, if need be.

Keep track of assets:
  • Account names and numbers
  • Balances as of a date
  • Contact information
  • Internet passwords and usernames
Resolve the following questions before meeting with your estate planner:
  • Who is in charge? )of the estate or your current situation)
  • How much should I give now?
  • Should I apply controls and incentives?
  • Should heirs get equal shares?
  • Should I exclude someone?
  • Should I leave only money?
  • Should my wealth stay in the family?
Are taxes going to be an issue? See either www.erictyson.com or www.retirementwatch.com .

If using a web based product to do your estate planning, the authors recommend www.nolo.com


Chapter 14: Eyeing Wills and Other Legal Documents
An Advanced Health Care Directive can have all sorts of things in there concerning your care. It is not just a document about how you die, but how you want to be treated, what comfort measures should be taken or even how you want to be dressed, music preferences and your living environment. A sample document can be found at www.agingwithdignity.org .


Chapter 15: Tackling the Federal Estate Tax When You Have Too Much Money
Chapter 16: Focusing on Estate Taxes and the Many Types of Trusts


Part V: The Part of Tens
Chapter 17: Ten Common Retirement and Estate Planning Mistakes
Chapter 18: Ten Things to Know about Working in Retirement
Volunteering is a good outlet. There are several places which will assist you in getting connected


Chapter 19: Ten (or So) Tips to Know about Caring for Your Aging Parents



Evaluation:
My reasons for reading this book is that I am over 50, actually am retired and in search of making sure my finances are in order. As a Dummies book, it is a beginners guide, not meant to replace expert help, but to give you ideas about what is appropriate to either get you into shape for retirement or make sure everything is in order having reached that stage.

The most helpful for me was the primer on estate planning. It lays out what needs to be done whether you intend to do it yourself or to hire a professional. While I pretty much had been through this in another situation, it was good to see it laid out in an understandable manner.

If you are looking for a simple to understand, general book on what is needed to know to get ready for retirement, this would be a good choice.


Book References:
  • The Beardstown Ladies Common Sense Investment Guide: How We Beat the Stock Market--and How You Can Too by Leslie Whitaker - caution there is some important inaccuracies in the book
  • Investing for Dummies by Eric Tyson
  • What Americans Really Want … Really by Frank Luntz

Good Quotes:
    • First Line: We’re all getting older, together.
    • Last Line: This advice makes sense because you’ll be better able to help others when you’re stronger.
      Table of Contents:
      • Table of contents
      • Introduction
      • Part I: Working toward Retirement
      • Chapter 1: Looking Ahead to Your Future
      • Chapter 2: Protecting Your Employment Income and Your Health
      • Chapter 3: Developing a Retirement Plan
      • Chapter 4: Identifying Retirement Investments and Strategies
      • Chapter 5: Grasping Retirement Accounts and Their Rules
      • Part II: Making Money Decisions in Retirement
        • Chapter 6: Managing Budgets and Expenses
        • Chapter 7: Guiding Investments and Distributions in Retirement
        • Chapter 8: Making Important Housing Decisions
        • Chapter 9: Considering Your Long‐Term Care Insurance Needs and Options
      • Part III: Dealing with Government Programs
        • Chapter 10: Making Your Best Choices under Social Security
        • Chapter 11: Getting the Most Out of Medicare
        • Chapter 12: The State Health Care System Backup: Medicaid
      • Part IV: Estate Planning: It’s More than Just Dead People and Lawyers
        • Chapter 13: The Basics on Estate Planning
        • Chapter 14: Eyeing Wills and Other Legal Documents
        • Chapter 15: Tackling the Federal Estate Tax When You Have Too Much Money
        • Chapter 16: Focusing on Estate Taxes and the Many Types of Trusts
      • Part V: The Part of Tens
        • Chapter 17: Ten Common Retirement and Estate Planning Mistakes
        • Chapter 18: Ten Things to Know about Working in Retirement
        • Chapter 19: Ten (or So) Tips to Know about Caring for Your Aging Parents
      • Index


      References:


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