Slides for webinar for River Vale (NJ) Public Library, 1/14/21

1. Barbara O’Neill, Ph.D., CFP®, AFC®, CPFFE
Financial
Planning for
Later Life

2. * When to claim Social Security
* Taxation of Social Security
* Required minimum distributions
* Estimated taxes (pension, SS, RMDs)
* Medicare and health insurance
* Long-term care planning
* Housing decisions
* Other?
Older Adults
Have Many
Financial
Challenges and
Decisions

3. * Think about past achievements
* Think about what you still want to
do
* Increased interest in “giving back”
and leaving a legacy
* Many people want to simplify
and/or downsize
Changes in
Aspirations
and Mindsets

4. New Book
About
Later Life
Transitions
https://www.amazon.com/
Flipping-Switch-Happiness-
Financial-
Security/dp/1620236869

5. * Changing investment strategy
drastically for a certain age or
event (e.g., age 65, widowhood)
*”Forgetting” about the effects of
inflation
* Relying too heavily on financial
salespeople
* Assuming that estate planning
is for “the rich”
Common Later
Life Financial
Errors

6. * Retiring without planning
out health care coverage
* Not developing a long-
term care plan
* Improper asset
withdrawals
* Lack of communication
about finances with loved
ones
More
Common Later
Life Financial
Errors

7. Questions So Far?
Let’s Get to the 20
Financial Tips
(in no particular order)
20 Financial
Planning Tips
for Later Life

8. * Cash flow statement
*Net worth statement
* Specific financial goals
* Emergency fund
See
https://njaes.rutgers.edu/
money/ for online tools
1. Don’t Forget
“the Basics”

9. * Life insurance
* Health insurance (Medicare and
supplemental policy)
* Long-term care insurance
* Property and umbrella liability
insurance
2. Assess Current
and Future
Insurance Needs

10. * Don’t invest if don’t understand
* Diversify asset classes and types
* Invest for long-term goals (5+ years)
* Have reasonable expectations
* Buy low-cost investments
* Don’t pay attention to market
“noise”
3. Follow
Recommended
Investment
Strategies

11. Try to simulate a regular income
stream (like a paycheck):
* Annual cash withdrawals (1/12 of
annual amount per month)
* Automated mutual fund withdrawals
* “Laddered” bonds or CDs
* Managed payout mutual funds
* Annuities, pension, Social Security
* Continued employment
4. Create a
Retirement
“Paycheck”

12. * Applies to Traditional IRAs, 401(k)s,
403(b)s, TSP, SEP-IRAs
*Must begin first distribution no later
than April 1 of the year after the year
you turn 72
* Employer plans: can delay to April 1
of year after one retires
* Withdrawal based on Dec. 31
account balance (in previous year)
and an age-based divisor
Failure to take RMD: 50% of amount
that should have been withdrawn
5. Take Required
Minimum
Distributions
(RMDs) From
Tax-Deferred
Accounts

13. Reduce income tax to lowest legal
amount possible under tax law
* Tax-deferred investments (e.g.,
employer plans such as 403(b)s)
* Age 50+ catch-up savings
* Long-term capital gains
* “Bunching” itemized tax
deductions
6. Practice Tax
Avoidance
(Minimization)

14. Who Gets Grandma’s Yellow
Pie Plate?
https://www.youtube.com/wat
ch?v=z3NNoVRQpI8
* Consider interests of family members
* Make a written list of property/ heirs
*Share list with family and executor
* Consider lifetime gifting ($15k per person)
7. Make Plans
for Untitled
Personal
Property

15. * CPA (e.g., lump sum distribution)
* CFP® (e.g., one-time or ongoing
financial advice or asset management):
www.letsmakeaplan.org/
www.napfa.org
https://www.plannersearch.org/
* Attorney
Go prepared to reduce wasted time
and extra fees
* SHIP, VITA, Area Agency on Aging
8. Get Help
When Needed

16. There are many ways to leave a
legacy and give back:
* Children and grandchildren
* Creative works (art, music, books)
* Volunteering to help others
* Charitable gifting (outright gifts,
will and trusts, donor advised
funds, QCDs from traditional IRAs)
9. Leave a
Legacy and
Give Back

17. * Ask executor and a “Plan B”
* Prepare/share a “financial
notebook” and Letter of Last
Instructions
* Discuss/list burial and memorial
wishes (write obituary?)
* Prepare/share a “What to
Do/Who to Contact” List
* Discuss living will issues and
personal property bequests
10.
Communicate,
Communicate,
Communicate

18. * Financial statements (see #1)
* Digital assets:
https://njaes.rutgers.edu/money/
pdfs/Digital-Assets-Worksheet.pdf
* Consolidated list of beneficiaries:
https://njaes.rutgers.edu/money/pdfs/
beneficiary-designations.pdf
* Consolidated list of individual/family
personal finance data:
https://njaes.rutgers.edu/money/pdfs/i
mportant-papers.pdf
11. Keep
Organized
Financial
Records

19. * See www.medicare.gov
* Contact SHIP/SHINE for assistance
* Stay abreast of changes in retiree
health plan coverage
* Budget for health care costs in
retirement (e.g., Part B premiums,
health plan premiums, copays, etc.)
Healthier people spend MORE on
lifetime health care costs !
12. Learn “The
Fine Print”
About
Medicare

20. * Modify the 4% rule:
Withdraw < 4% of assets if a very
conservative investor
Withdraw > 4% of assets for older
retirees (70s+)
* Try some Monte Carlo
calculators
* Consider hiring a CFP® to assist
you
13. Make
Prudent Asset
Withdrawals to
Avoid Outliving
Income

21. * Many taxable income sources:
pension, Social Security, RMD
withdrawals, job or self-
employment earnings, capital gains
* Check the IRS Tax Withholding
Estimator:
https://www.irs.gov/individuals/tax
-withholding-estimator
* Avoid under-withholding
penalties (safe harbor: 100%/110%
of previous year’s taxes)
14. Estimate
Tax
Withholding
Accurately

22. * Learn one new thing every day
about personal finance
*Methods:
Blogs, social media, Wall Street
Journal, other newspapers,
classes, webinars, podcasts, etc.
15. Increase
Your Personal
Finance
Knowledge

23. * Stagger maturity dates on a
series of bonds and CDs
* Hedges your bets” about
changing interest rates
* Provides liquidity at more
frequent time intervals
*Helps to provide a “paycheck”
16. “Ladder”
Fixed Income
Securities
(e.g., Bonds
and CDs)

24. * Senior discounts abound:
national parks, movies, theme
parks and attractions, restaurants
* Extra federal income tax
standard deduction for taxpayers
age 65+
* Age 65+ discounts on property
taxes in some locations
* Reduced fees for club or
association dues, flu shots
17. Play the
“Age Card”

25. * Older adults are PRIME targets: more
wealth, more easily reached, less
technologically savvy, and diminished
capacity risk
*Four common scams: tech support
scams, imposter scams, lottery scams,
and romance scams
* “Red Flags”: requests to wire money
immediately, requests for payment with
prepaid gift cards, requests for advance
payment for services, and secrecy (e.g.,
“don’t tell anyone)
18. Avoid
Elder Fraud
Scams

26. * Assess your personal resiliency
resources:
https://njaes.rutgers.edu/money
/assessment-tools/personal-
resiliency-resources-assessment-
quiz.pdf
* Build strong social capital
* Relationships are a key factor
in retirement happiness
19. Build
Strong
Resiliency
Resources

27. 20. “Flip
Switches”
Purposefully

28. Questions?
Comments?
Experiences?
https://www.moneytalkbmo.com/