Posts Tagged ‘senior’

Baby Boomers’ next steps

January 15, 2010

“Retirement at sixty-five is ridiculous.  When I was sixty-five I still had pimples.” – George Burns

For those of you who are younger, I promise to move on to other things shortly but I first want to complete my thoughts about the current challenges to baby boomers. We have been called the “Me” generation that lives for “now.” What we see in our law practice bears out the conclusions of studies stating baby boomers are not in good shape financially. The recent (current?) recession has made this even worse.

I mentioned previously that one strategy is to continue working past your normal retirement age. This plan has two weaknesses – the availability of good paying jobs and the need for good health. Addressing them will require flexibility.

On the jobs front, we will need to change. Jobs may not be available where we live (or want to live) so we may have to move to where they are located. Probably more important, though, is a willingness to get new training and try new jobs. I recall that when I was in college (a long time ago – my 40th reunion is this June), a labor economist was fond of emphasizing that big changes were coming. Unlike our parents who may have had only one employer for their entire lives, we were going to face having three to five employers in our lifetimes.  And this was true, but most of us stayed within the same job type or profession. About a decade ago I accompanied my kids to meetings at the high school for vocational counseling. These counselors informed us that the kids would change employers more than five times, and at least half of those employers would be hiring them for jobs that do not even exist now. The meaning of this aside? We need to be aware of the changed economy and get the necessary training to get and keep good paying jobs.

Of course you can only do the job if you are healthy. A report released Wednesday by the Centers of Disease Control and Prevention confirms that 68 percent of adults are too heavy and 34 percent are obese. Being overweight strongly correlates to health problems, but health (and weight) is something we can do something about. It’s hard. It involves lifestyle changes; changes in eating and exercise habits.

I know if I am going to practice law as I have planned (forever if possible), I need to be in good health. I belong to the YMCA and have a personal trainer. Call me in a year. I intend to be a fraction of my current self.

Next time I am going to address some of the financial lessons from the last couple of years that can help – not only baby boomers but everyone.

Continued Travails of a Baby Boomer

January 13, 2010

Like many, I get my health insurance through my spouse’s employer. It’s great coverage, but things really change when I turn 65 and am eligible for Medicare. I will no longer get coverage. That is not necessarily the result for all employer plans. You need to check the actual policy to be sure.

In any event, I have to make sure I have alternative insurance in place when I turn 65. I don’t want to be like a client I once had who also lost coverage at 65 and assumed that he was automatically enrolled in Medicare. He continued to work and did not apply for Social Security. About three months after turning 65, he had a major medical problem that cost tens of thousands of dollars. That’s when he found out that he did not have insurance and did not have Medicare. He was on the hook for all of it. Needless to say, it put a dent in his retirement plans.

Medicare has four components: Part A is hospital insurance, Part B is medical insurance (physicians, outpatient services, medical supplies and home health care), Part C is the alternative option of managed care, and Part D is the prescription drug benefit.

People are automatically enrolled in Part A when they apply for Social Security. For people like me who are not going to apply for Social Security until later, there is a separate Medicare application. I intend to get started on that application at least 90 days before I turn 65.

I am also going to get Part B. It’s not hard because everyone who gets Part A is automatically enrolled in Part B. You have to decline enrollment if you don’t want it. I am going to enroll in Part B (regardless of whether or not there is coverage under my wife’s insurance at that time) because there is a 10 percent penalty tacked on to the premiums for each 12 months of delay after age 65. I don’t want that additional cost later.

Besides Medicare, I am going to get long-term care insurance and a medigap policy. A medigap policy is health insurance sold by private insurance companies to fill the gaps in Medicare plan coverage. Medicare does not have any really effective benefits for long-term care, whether in the home, assisted living, or a nursing home. Medicare has gaps in coverage (some great names for them… donut holes). These policies will address those gaps.

We are all waiting anxiously for the outcome of the continuing healthcare debate in this country. It’s likely to go on for quite some time. But these are my conclusions for handling the baby boom problem, especially if you are not retiring at 65.

“It takes as much energy to wish as it does to plan.” – Eleanor Roosevelt

Travails of a Baby Boomer

January 11, 2010

I admit, begrudgingly, that I am a baby boomer and will turn 62 this year. Like many of my generation, I have no intention of retiring. Some are making that decision as a matter of necessity. Others, like me, are continuing to work because they like what they do.

In any case, age 62 (and then 65) requires some real important decisions.

The first decision is whether to start taking Social Security. This decision is laden with fear about the financial soundness of Social Security. You can start at 62. Right out of the box, many will say, “I am going to take Social Security now because Social Security is bankrupt and I want to get as much of my hard-earned money back as I can.” Understandable, but for some this may not make sense. There are other things to consider. If you take Social Security at 62, you get less. How much less? About 20 percent as compared to the amount received if you wait until your full retirement age.

Social Security earning limitsAnd this reduction affects more than just you. If your spouse will receive Social Security based on your account at your death, then your spouse will also get less.

Social Security benefitsIf you continue working like me, there is another consideration. There is an earnings penalty. If you earn more than a certain amount (It changes, but in 2009 it was $14,160), you lose $1 of every $2 above that amount. There is a different penalty in the year you would have been entitled to get full Social Security benefits. Once you reach full retirement age (66 for me), you can earn any amount without penalty. Besides the penalty, Social Security may be taxable to you. It’s complicated but it depends on your income.
I’ve decided to hold off on Social Security until age 69. The amount I will be entitled to will grow by eight percent between now and then. Plus, my income would wipe out my getting Social Security before the year I turn 68 anyway. And, taking it earlier would hurt my wife in terms of the amount she might receive after my death.

Next topic… Medicare.