Category: Retirement

My Husband Bought a Retirement Property, but Only Put His Name on the Deed. Will His Adult Children Inherit This Home?

Posted on by Miriam Martinez

Marketwatch's The MoneyistMarketWatch

Dear Moneyist,

My husband and I have been married for 25 years. We do not have children together, but he has children from a previous marriage.

We are retired now, and he bought property in Florida for us to live in. My name is not on the deed of the property, and he has not made a will yet. I keep complaining to him about it.

If he should die without a will, will his adult children and grandchildren be entitled to the property and house? Hopefully, you will be able to answer this question and set my mind at ease.

Carla

Dear Carla,

Your husband appears to have control issues at worst or, at best, problems with being direct and transparent. This is not the way to deal with a family property, especially after 25 years of marriage. If your husband wants his children to inherit his estate when he is gone, he should discuss it with you like a man (or woman), face to face, and you should outline a plan for your future together. But this game of cat and mouse, where he makes unilateral decisions about your future, is not a respectful or helpful way to conduct a 25-year marriage.

Not knowing if you’re going to have a place to live after your husband dies, assuming he predeceases you, creates a constant feeling of unease. The whole point of saving for retirement and being fortunate enough to retire comfortably is that you can see out your final years together with the knowledge that you will both be financially secure. Only one person in this relationship knows what that feels like — and, given that you have raised this issue with him, he is aware that you do not enjoy that same peace of mind.

Florida is an equitable distribution state and, for the most part, divides property 50/50. Here’s the legal interpretation from Schnauss Naugle Law in Jacksonville, Fla.: “If the decedent’s homestead property was titled in the decedent’s name alone, and if the decedent was survived by a spouse and descendants, the surviving spouse will have the use of the homestead property for his or her lifetime only (or a life estate), with the decedent’s descendants to receive the decedents’ homestead property only after the surviving spouse dies.”

You will have the right to live in this property for the remainder of your life. If you divorce, however, anything purchased during your marriage is considered marital property, and even though this home was purchased in your husband’s name only, it would be divided 50/50. In Florida, “equitable distribution” is mostly treated as “equal distribution.” According to this interpretation of family law in Florida by Arwani Law: “Even if he purchases the car with his own money and puts the car title in his wife’s name, it is still considered marital property.”

And as most lawyers will tell you, a lack of communication is one way of buying a ticket to divorce.

The post My Husband Bought a Retirement Property, but Only Put His Name on the Deed. Will His Adult Children Inherit This Home? appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

Dear Penny: Will Social Security Be Broke by the Time I Retire?

Posted on by Miriam Martinez
Dear Penny,

I’m a 34-year-old man who just started saving for retirement last year after getting married. My husband is 39 and has been saving for some time. My question is about Social Security. Should someone in our age group expect to receive it at all? I’m always hearing about how Social Security is going broke. 

We’re both somewhat behind on where we should be on retirement. If we can’t rely on getting Social Security checks when we’re older, how much more should we be saving? We don’t want to live on rice and beans in retirement, but we also want to have enough money to enjoy life now.

-R.

Dear R.,

Of all the things that keep me up at night, Social Security’s solvency isn’t one of them. At 37, I’m just a tad older than you. I expect to get benefits someday, and you and your husband should, too.

There’s a kernel of truth to the stories you hear about Social Security running dry. It’s starting to pay out more than it takes in, thanks mostly to people living longer and having fewer children who eventually pay in. Widespread job losses due to the pandemic probably accelerated things a bit.

But we’re still funding Social Security with our payroll taxes. It’s just that if Social Security’s reserves were completely depleted, our payroll taxes would only fund about 79% of obligations through 2090. That’s in the event that Congress takes zero action to shore up more money, which is highly unlikely given that Social Security is the most sacred of all social programs.

My bigger worry for young-ish workers like us is that our benefits won’t go very far. Even for our parents and grandparents who currently receive benefits, Social Security by itself makes for a meager retirement. The average retiree benefit in January 2021 is just $1,543 per month, or $18,516 annually. Social Security estimates that current benefits cover about 40% of an average worker’s pre-retirement income.

Those benefits buy less and less every year. Health care costs, which eat up a huge chunk of retirees’ budgets, rise way faster than Social Security benefits.

The 2021 cost-of-living adjustment was just 1.3%. Ask any retiree whether that’s adequate to cover their rising living costs. The younger you are, the less of your income you should expect your benefits to replace.

So while I think you should expect to receive Social Security someday, I don’t think it should factor into how much you save today. Knowing nothing about your budget or spending, I’ll give you the standard recommendation: Aim to save 15% of your pre-tax income for retirement. If you get an employer 401(k) match, make sure you contribute to enough to get your company’s full contribution. Once you’ve done that, make sure you have at least three months’ worth of emergency savings before you invest more for retirement. That protects your retirement funds so you don’t have to tap them when times are tough.

If you can comfortably save more, great. If 15% isn’t doable right now, figure out what’s manageable and work your way up. For example, you could commit to putting half of your next raise toward your retirement account.

Unfortunately, there’s no level of savings that guarantees you won’t have a rice and beans retirement. The younger you are, the more guesswork goes into retirement planning.

My life plans, at least as told to my Roth IRA brokerage, are as follows: work until age 67, delay Social Security until 70, die at 92. If everything goes as planned, I’ll die with millions. But really all of the above is just wishful thinking on my part. The picture changes drastically if I’m forced to retire early, take Social Security sooner and stretch my savings over more years than I expected. Or if a prolonged bear market hits right as I’m starting to withdraw my retirement money.

All that certainly supports the argument that you should save as much as you can muster as early as possible. But too often in personal finance, we only focus on the retirement years, assuming that they’re guaranteed. The truth is, life can be snatched from us at any moment. So I also want you to have enough room to spend so that you can enjoy life now.

That doesn’t mean you get free rein to spend. But if you focus on what really matters to you, I think you can strike that balance.

You’re 34. You don’t have to figure out your entire retirement plan right now. Focus on making saving a regular habit, and you can figure out the specific pieces as retirement gets closer.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How the Sandwich Generation Can Protect Their Retirement

Posted on by Miriam Martinez
Woman part of the sandwich generation

For those who are caring for their aging parents and raising kids at the same time, it can often seem like there’s never enough time, money, or energy to provide for all the family members who need you. In particular, handling finances when two different generations are relying on you can feel like an impossible balancing act — not to mention an exercise in feeling guilty no matter what you do.

But being the caregiver sandwiched between two generations makes it even more important for you to prioritize your own financial needs, especially when it comes to retirement planning. By protecting your retirement during this difficult season of your life, you’ll be in a better place to remain independent as you age, launch your kids into a more secure adulthood, and offer ongoing support to your parents.

Sound impossible? It’s not. Here’s how you can protect your retirement if you’re a member of the sandwich generation.

Retirement savings comes first

Retirement savings should get priority ahead of putting money into your kids’ college funds. You know that already. Your kids can take on loans for college, but there are no loans available to pay for your retirement.

The more difficult decision is prioritizing retirement savings ahead of paying for long-term care for your parents. That can feel like a heartless choice, but it is a necessary one to keep from passing money problems from one generation to the next. Forgoing your retirement savings during your 40s and 50s means you’ll miss out on long-term growth and the benefits of compound interest. By making sure that you continue to set aside money for retirement, you can make sure your kids won’t feel financially squeezed as you get older.

Instead of personally bankrolling your parents’ care, use their assets for as long as they last. That will not only allow you to make the best use of programs like Medicaid (which requires long-term care recipients to have exhausted their own assets before it kicks in), but it will also protect your future.

Communication is key

Part of the stress of being in the sandwich generation is feeling like the financial burdens of two generations (as well as your own) are resting entirely on your shoulders. You feel like you’ll be letting down the vulnerable people you love if you can’t do it all. But the truth is that you can’t do it all. And you shouldn’t expect that of yourself, nor should your family expect it of you. So communicating with your loved ones about what they can expect can help you draw important boundaries around what you’re able to offer them.

This conversation will be somewhat simpler with your children. You can let them know what kind of financial help they can expect from you for college and beyond, and simply leave it at that.

The conversation is a little tougher with your parents, in part because you need to ask them about nitty-gritty details about their finances. Whether or not money is a taboo subject in your family, it can be tough for your parents to let you in on important financial conversations — to them it feels like they were changing your diapers only a few short years ago.

Being in the loop on what your parents have saved, where it is, what plans they have for the future, and who they trust as their financial adviser, will help protect their money and yours. You’ll be better able to make decisions for them in case of an emergency, and being included in financial decisions means you can help protect them from scams. (See also: 5 Money Strategies for the Sandwich Generation)

Insurance is a necessity

Having adequate disability insurance in place is an important fail-safe for any worker, but it’s especially important for those who are caring for aging parents and young children. The Council for Disability Awareness reports that nearly one in four workers will be out of work for at least a year because of a disabling condition. With parents and children counting on your income, even a short-term disability could spell disaster, and force you to dip into your retirement savings to keep things going. Making sure you have sufficient disability income insurance coverage can help make sure you protect your family and your retirement if you become disabled.

Life insurance is another area where you don’t want to skimp. With two generations counting on you, it’s important to have enough life insurance to make sure your family will be okay if something happens to you. This is true even if you’re a full-time unpaid caregiver for either your parents or your children, since your family will need to pay for the care you provide even if they aren’t counting on your income.

It’s also a good idea to talk to your parents about life insurance for them, if they’re able to qualify. For aging parents who know they will draw down their assets for long-term care, a life insurance policy can be a savvy way to ensure they leave some kind of inheritance. If your parents are anxious about their ability to leave an inheritance, a life insurance policy can help to relieve that money stress and potentially make it emotionally easier for them to draw down their own assets.

Become a Social Security and Medicare expert

Spending time reading up on Social Security, Medicare, and other programs can help you to make better financial decisions for your parents and yourself. There are a number of misconceptions, myths, and misunderstandings masquerading as facts about these programs, and knowing exactly what your parents (and eventually you) will be entitled to can help make sure you don’t leave money on the table or make decisions based on bad information.

The eligibility questionnaires at benefits.gov can help you determine what benefits are available and whether your parents qualify. In addition, it’s a good idea to sign up for a my Social Security account for yourself. This site will provide you with personalized estimates of future benefits based on your lifetime earnings, which can better help you prepare for your own retirement.

Don’t be afraid to ask for help

Caring for children and parents at the same time is exhausting. Don’t compound the problem by thinking you have to make financial decisions all by yourself. Consider interviewing and hiring a financial adviser to help you make sense of the tough choices. He or she can help you figure out the best way to preserve your assets, help your parents enjoy their twilight years with dignity, and plan for your children’s future.

Even if a traditional financial adviser isn’t in the cards for you, don’t forget that you can ask for help among your extended family and network of friends. There’s no need to pretend that juggling it all is easy. Family can potentially offer financial or caregiving support. Knowledgeable friends can steer you toward the best resources to help you make decisions. Relying on your network means you’re less likely to burn out and make disordered financial decisions. (See also: 9 Simple Acts of Self-Care for the Sandwich Generation)

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Are you part of the sandwich generation? When you are a caregiver to children as well as aging parents, it can seem like theres not enough time, money or energy to provide for all the family members. Here are the tips and ideas on how you can protect your retirement finances. | #sandwichgeneration #personalfinance #moneymatters


Source: feeds.killeraces.com

3 Credit Cards for Retirement Investing

Posted on by Miriam Martinez

The age of the pension has swiftly declined since the 1980s, and more Americans than ever before must invest in their own retirement. Retirement planning and investing is crucial, as it can help you get through your golden years comfortably.

When you have many other financial obligations, it can be difficult to set aside funds for retirement. But some credit cards can help by earning rewards that can be redeemed directly into an investment account.

Here are three credit cards with retirement or investing rewards.

  1. Fidelity Rewards Visa Signature Credit Card

Rewards: Two points per dollar spent on all purchases.

Sign-Up Bonus: None

Annual Fee: $0

Annual Percentage Rate (APR): Variable 15.24% APR on purchases and balance transfers.

Why We Picked It: You can redeem your rewards directly into Fidelity retirement accounts.
For Your Retirement: Every purchase earns two rewards points on the dollar. Points can be redeemed as deposits into eligible Fidelity retirement accounts, including a Traditional IRA, Roth IRA, Rollover IRA, or SEP IRA. Every $2,500 you spend is worth a $50 rewards deposit.
Drawbacks: If you aren’t a Fidelity member, you won’t see much value from this card.

  1. Bank Americard Cash Rewards Credit Card

Rewards: 3% cash back on gas and 2% cash back at grocery stores and wholesale clubs on up to $2,500 in purchases each quarter; 1% back on all other purchases.

Signup Bonus: $150 bonus cash if you spend $500 in the first 90 days.
Annual Fee: None

APR: 0% APR for 12 months on purchases and balance transfers, then variable 14.24% to 24.24% APR.

Why We Picked It: Merrill Lynch investors can use this card to boost their investments.
For Your Retirement: If you use a Merrill Lynch Cash Management Account to invest in your retirement, this card can help you increase your contributions. Cash back can be redeemed for an electronic deposit into an eligible Cash Management Account, and those redemption types earn an extra 10% bonus every time you redeem.
Drawbacks: If you don’t have an eligible Bank of America or Merrill Lynch account, you’ll lose out on the 10% redemption bonus.

  1. Edward Jones World Card

Rewards: One point per dollar spent on all purchases.

Signup Bonus: $100 account deposit if you spend $500 in the first 90 days.
Annual Fee: None

APR: Variable 14.24% APR on purchases; 0% APR for 12 months on balance transfers, then variable 14.24% APR.

Why We Picked It: Edward Jones members can redeem rewards for account deposits.
For Your Retirement: Every purchase you make earns one point on the dollar. Your points can be redeemed for cash deposits into an eligible Edward Jones account, including IRAs.
Drawbacks: You can only access this card if you’re an Edward Jones customer.

Choosing a Credit Card to Help You Save for Retirement

There are many ways to save for retirement: 401(k) plans, IRAs, and more. If you aren’t saving for retirement yet (or you think you need to save more), the time to start is now. The earlier you begin, the better shot you have of reaching your retirement goals. Until you decide on the best investment strategy, credit cards should be a secondary concern at best.

When you set up an investment account, you should understand all the different ways you can contribute, and find out if credit card rewards are an option (some investment accounts are more flexible than others).

Credit cards that let you directly redeem your rewards for an investment deposit are convenient, but they’re not the only way to contribute rewards to retirement. If you have a retirement account that accepts cash contributions, you can simply redeem any credit card’s cash back rewards for a check or bank deposit, then turn around and put that money in your account.

Whether you choose a rewards card with investment redemptions or not, try to find one that fits your spending habits. If you spend the most money at one or two merchant types, you should try to find a card that rewards those purchases. If your spending is unpredictable, you should find a card with a flat rewards rate on every purchase.

What Is Required to Get a Credit Card for Retirement Investing?

The best rewards cards require good or excellent credit. Before you apply, you should check your credit score to see if you’ll make the cut. You can check your credit score for free at Credit.com.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.

Image: iStock

The post 3 Credit Cards for Retirement Investing appeared first on Credit.com.

Source: credit.com

As Markets Wobble, Will We See a Wave of Reverse Mortgages?

Posted on by Miriam Martinez

Reverse Mortgages -- Are we Seeing a Boom?Kameleon007/Getty Images

Over the past three months, the stock market has been on a roller coaster. Investment portfolios have followed suit, which could be particularly concerning for those who are counting on those funds for retirement.

For those close to retirement, a lack of savings may mean monthly expenses go unpaid. As a result, retirees may be considering a reverse mortgage to bring in much-needed cash.

“Retirement accounts have been suffering under the macroeconomic conditions that we see out there today. People are looking at the use of home equity to absorb some of those shocks in their retirement plans,” says Steve Irwin, president of the National Reverse Mortgage Lenders Association.

Because there’s a long lead time for a reverse mortgage, Irwin says it’s too early to tell if the numbers are up. However, a leading indicator shows we might be on the edge of a wave of reverse mortgages.

NRMLA data shows an uptick in consumers who’ve taken the initial step and completed the financial counseling needed to proceed with a reverse mortgage. Irwin says counseling sessions in the month of March were up 25% compared with the year before.

Before homeowners can apply for a reverse mortgage or complete a final application, they must complete independent third-party counseling, he notes, adding that those counseling sessions are up significantly in the first quarter.

Historically, those counseling sessions had to be done in-person, but because of the COVID-19 pandemic, some states have allowed online sessions.

Reverse mortgage basics

Since the first reverse mortgage in 1990, over a million have been issued and currently about 550,000 are outstanding, according to the NRMLA. Unlike a forward mortgage, in which you pay down a loan to live in your home, a reverse mortgage draws from the equity you’ve built up in your home.

To qualify for a reverse mortgage you must meet the following criteria:

  • Be aged 62 or older
  • Own your property outright or owe a small amount on a traditional mortgage
  • Live in the home as your primary residence
  • Not be delinquent on any federal debt
  • Meet with an approved counselor

Most reverse mortgages are backed by the Federal Housing Administration as part of the Home Equity Conversion Mortgage program. Once approved, a borrower can withdraw funds as a lump sum, a fixed monthly amount, a line of credit, or a combination of these options. The loan comes due when the borrower either moves out or dies.

And although the instant hit of cash may be a welcome development, the homeowner is still responsible for other monthly payments.

“Keep in mind with reverse mortgages … you still have to have the financial resources to live in the house,” says Mary Bell Carlson, the accredited financial counselor behind the Chief Financial Mom. “You’re going to be living in the house, you still owe the property taxes, you still owe the insurance, the HOA, and all the maintenance on the home while you’re living there.”

One other note: As with a traditional mortgage, there are fees and upfront costs.

Is now a good time for a reverse mortgage?

Keep in mind, a reverse mortgage will hand you money, but the lender uses the equity in your home to give you that money.

“The amount of funds available through a reverse mortgage are calculated based on the age of the borrower, or in the case of a couple, the youngest person’s age, the home’s value, and the interest rates in effect at the time,” Irwin explains. “The lower the interest rate, the greater percentage of equity that can be made available.”

Currently, interest rates are at historic lows.

“We understand a lot of people have been looking at the reverse mortgage and just haven’t decided whether or not to move forward. But they understand that responsible use of home equity can absorb different shocks to people’s income streams,” Irwin says.

Another pandemic-related factor in play? Nursing homes and assisted-care facilities aren’t exactly an appealing option in the current climate. This may partly be why some seniors are opting to stay put in their own homes.

“We know that people want to age in place, and I think many senior homeowners who may have been considering moving or moving to a care facility are almost hesitant and reluctant to go anywhere right now,” says Irwin.

Before contemplating a reverse mortgage in the current environment, you must consider if you can still pay the expenses that come with owning a home. Lower interest rates will mean more cash in your hand, but if you don’t have funds set aside to cover needed repairs, maintenance, and other expenses of homeownership, pause for a moment to suss out your best option.

“A [reverse mortgage] doesn’t mean that [borrowers] just live scot-free in the home. They still have to have some kind of cash flow to keep up the home, and they can’t let the home fall into complete disrepair. That is a violation of the contract, and they could lose the house for that,” Carlson says.

Irwin says the answer depends on each homeowner’s situation.

“This is an individual case-by-case decision, and we want to ensure that it is a decision that’s carefully considered and discussed with trusted advisers and family members. But from strictly the available amount of proceeds given the current interest rate, yes, it is a good time.”

The future of reverse mortgages

Irwin says he expects more seniors to look at reverse mortgages as the pandemic-fueled financial crisis continues.

“It’s a needs-based transaction. They need to augment their financial stability,” Irwin explains. “They need to augment whatever retirement funding they have in place, or they need to relieve themselves of the burden of monthly principal and interest payments of a regular mortgage. I think that we will see more and more the use of the reverse mortgage as part of a more comprehensive financial plan in retirement.”

The post As Markets Wobble, Will We See a Wave of Reverse Mortgages? appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com