Longevity & Aging

No doubt about it: at some point we’re neither semi-retired, findependent or fully retired. We’re out there in a retirement community or retirement home, and maybe for a few years near the end of this incarnation, some time to reflect on it all in a nursing home. Our Longevity & Aging category features our own unique blog posts, as well as blog feeds from Mark Venning’s ChangeRangers.com and other experts.

Top 7 things to know about Social Security

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By Michael Morelli

Special to the Financial Independence Hub

When you are thinking about early retirement to fully enjoy retirement living, or thinking of postponing retirement, you need to know how and when it is best to take your Social Security benefits. When dealing with something as important as Social Security, you must make sure that you are receiving as much as possible. Comprehending the program will help to secure your future to a great extent. In this article, we have mentioned several essential things regarding Social Security that you ought to know.

What is Social Security?

Social Security happens to be the foundation of numerous Americans’ financial security, including disabled individuals, retirees, and families of the retired. Approximately 170 million Americans pay Social Security taxes at present, while 61 million individuals collect monthly benefits. Approximately one household in every 4 gets income from Social Security.

One can consider Social Security to be a pay-as-you-go scheme. This implies that today’s workers pay Social Security taxes into the program, and cash flows back out to the beneficiaries as monthly income. Social Security is not the same as company pensions, which happen to be “pre-funded” out there. The money will be accumulated beforehand in pre-funded programs such that it can be paid out to the workers of today once they retire. It is essential to fund the private plans beforehand to safeguard the employees provided the company shuts down or becomes bankrupt.

1.) Full Retirement Age (FRA)

The following paragraph mentions the full retirement age when you might be eligible to get full Social Security retirement benefits.

Here we have mentioned the year in which you were born and what will be the Full Retirement Age in that case.

1937 or before – 65

1938 – 65 + 2 months

1939 – 65 + 4 months

1940 – 65 + 6 months

1941 – 65 + 8 months

1942 – 65 + 10 months

1943 – 1954 – 66

1955 – 66 + 2 months

1956 – 66 + 4 months

1957 – 66 + 6 months

1958 – 66 + 8 months

1959 – 66 + 10 months

1960 or later – 67

2.) You can work while getting Social Security

You will have the option of taking Social Security so long as you happen to be 62 years of age. Yearly earning limitations have been set by the SSA – in case you have been getting Social Security benefits prior to your full retirement age, and you are earning in excess of the limit, there will be a reduction in your benefit payments temporarily depending on how much you are earning. Suppose you are earning $8,000 over the limit, your benefits will be minimized by $4,000. In case you can earn $12,000 over the limit, it will be reduced by $6,000.

However, the good thing is that you will not lose your benefits permanently in case they are reduced. On the other hand, your payment account will be calculated once again, such that you will get the withheld cash as soon as you reach your full retirement age)

3.) Social Security benefits may be Taxable

As per the SSA, several Social Security beneficiaries are going to pay taxes on their Social Security benefits. It will depend on how much you make listed on the income tax return. In case you file with an excess of $25,000 as an individual (or $32,000 jointly), it will be imperative for you to pay the federal income taxes on the benefits. However, the regulations for state income taxes differ from one state to another.

4.) Your payments can help your family

Let us suppose the monthly benefits, according to your Social Security card, happen to be more than that of your spouse. Continue Reading…

8 ways to protect Seniors from Financial Fraud

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By Mikayla St. Clair

Special to the Financial Independence Hub

There are tons of financial scams aimed at taking advantage of senior citizens. One of the key reasons the elderly are targeted for scams is that many of them grew up when deals were made and based on a person’s word and character. A handshake, many years ago, was enough to trust someone. Many elderly and senior citizens grew up in an era when people were more trustworthy, and scams like financial fraud were not as prevalent as today. There are other reasons why the elderly are targets for financial fraud, and understanding how thieves go about stealing from senior citizens will go a long way in prevention. Here are eight ways to protect seniors from financial fraud.

1.) Shred sensitive documents

A good shredder can go a long way in preventing financial fraud, but it only works if you use it. Many people fail to shred sensitive documents and simply throw them in the trash. Thieves aren’t above going through your trash in hopes of gaining your social security number and other information they can use to open fraudulent accounts or gain access to accounts already open. Shredding the personal documents of seniors helps to prevent others from gaining access to their sensitive information and creating fraudulent accounts in the senior’s name.

2.) Check Credit reports regularly

It’s essential to check the credit reports of older adults under your care. Credit reports should be reviewed twice a year or annually at a minimum. Look for any errors, suspicious charges, or accounts that you don’t recognize. Correct these errors immediately and close any unauthorized accounts. Using a professional credit monitoring service to monitor a senior loved one’s credit is also an excellent way to protect the elderly from financial fraud.

3.) Be cautious of new relationships, friends, and family

Seniors can be more trusting than younger people, especially if they are lonely. Many thieves and fraudsters use loneliness as an entry-point into senior’s life to gain access to financial information or trick them into giving them money. It’s also important to be cautious of friends and family members who may have an addiction or severe financial problems. Sadly, many cases of financial fraud against the elderly are committed by a family member or friend.

4.) Use a Power of Attorney if necessary

In some instances, it may be necessary to take full control of a senior’s finances through a financial power of attorney. A financial power of attorney may be necessary when a person has a mental condition such as dementia or Alzheimer’s. Seniors with these disabilities are often targets because of their health.

A financial power of attorney can give you full control of a person’s finances. If the senior is a family member, discuss the matter with others in the family to determine the best choice for managing the person’s financing.

5.) Watch for changes in Spending

Keep an eye on the spending habits of any older adult in your care. Continue Reading…

Buying a home in Retirement? You’ll need these Resources

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Photo Credit: Rawpixel

By Sharon Wagner

Special to the Financial Independence Hub

Buying a home and preparing for retirement can be stressful enough on their own, so when the two intersect it can be easy to feel like you’re in over your head. With some careful planning, you can avoid a lot of the headaches that often go with buying a new home. These resources can assist with making informed choices when it comes to budgeting for your new home and your move.

Planning & paying for your new home

Money can be tight in retirement, so it’s important for you to think carefully about all of the potential expenses that can come with purchasing a new home.

Address retirement finance concerns before diving in; you can access reliable information through Financial Independence Hub.

Preparing for the costs of Aging in Place

Aging in place features are important for seniors, so make sure you know which features to look for and what costs to expect.

Decluttering & downsizing your current home

Cut stress and expense by decluttering and budgeting for help.
Continue Reading…

Retired Money: You can still count on 4% Rule but there are alternatives to settling for less

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MoneySense.ca; Photo created by senivpetro – www.freepik.com

My latest MoneySense Retired Money column looks at that perpetually useful guideline known as the 4% Rule. Click on the highlighted headline to access the full article online: Is the 4% Rule Obsolete?

As originally postulated by CFP and author William Bengen, that’s the Rule of Thumb that retirees can safely withdraw 4% of the value of their portfolio each year without fear of running out of money in retirement, with adjustments for inflation.

But does the Rule still hold when interest rates are approaching zero? Personally I still find it useful, even though I mentally take it down to 3% to adjust for my personal pessimism about rates and optimism that I will live a long healthy life. The column polls several experts, some of whom still find it a useful starting point, while others believe several adjustments may be necessary.

Fee-only planner Robb Engen, the blogger behind Boomer & Echo, is “not a fan of the 4% rule.” For one, he says Canadians are forced to withdraw increasingly higher amounts once we convert our RRSPs into RRIFs so the 4% Rule is “not particularly useful either … We’re also living longer, and there’s a movement to want to retire earlier. So shouldn’t that mean a safe withdrawal rate of much less than 4%?”

It’s best to be flexible. It may be intuitively obvious but if your portfolio is way down, you should withdraw less than 4% a year. If and when it recovers, you can make up for it by taking out more than 4%. “This might still average 4% over the long term but you are going to give your portfolio a much higher likelihood of being sustainable.”

Still, some experts are still enthusiastic about the rule.  On his site earlier this year, republished here on the Hub, Robb Engen cited U.S. financial planning expert Michael Kitces, who believes there’s a highly probable chance retirees using the 4% rule over 30 years will end up with even more money than they started with, and a very low chance they’ll spend their entire nest egg.

Retirees may need to consider more aggressive asset allocation

Other advisors think retirees need to get more comfortable with risk and tilt their portfolios a little more in favor of equities. Adrian Mastracci, fiduciary portfolio manager with Vancouver-based Lycos Asset Management Inc., views 4% as “likely the safe upper limit for many of today’s portfolios.” Like me, he sees 3% as offering more flexibility for an uncertain future. Continue Reading…

We can no longer ignore our Financial Health

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By Tanya Oliva

Special to the Financial Independence Hub

Prior to the pandemic, the financial health of Canadians was of great concern to the Bank of Canada, who often cited the record level of household debt as a serious threat to our economy. In 2019, the average Canadian household was carrying $1.76 in debt for every $1.00 of disposable income.

Other statistics related to the financial health of the average working Canadian were just as alarming: 52% were living pay-cheque to pay-cheque, 44% say it would be difficult to meet financial obligations if their pay was late, 40% were overwhelmed by their level of debt, and 48% were losing sleep because of financial worries.

We all know now that the COVID-19 Pandemic of 2020 is the gravest economic and financial shock anyone could have imagined. With no time to prepare, millions of Canadians and countless businesses are facing extreme financial stress and a global economic recession has taken hold. Now, more than ever, Canadians must focus on their financial health.

We need to think of health as a three-legged stool

Our overall health is connected on three levels: physical health, mental health, and our financial health. Financial challenges and difficulties are experienced by individuals across all income levels and age groups. Financial stress is the most obvious symptom and proves that financial health is strongly linked to our mental health.

Poor financial health can lead to more serious mental health issues such as anxiety and depression and can also negatively impact our physical health, from fatigue, poor nutrition, to substance abuse and dangerous conditions like high-blood pressure and heart disease.

A state of being in good financial health is when an individual:

  1. has control over their day-to-day, month-to-month expenses,
  2. has the capacity to absorb a financial shock,
  3. is on track to meet financial goals – short, medium and long term, and
  4. has the financial ability to make choices that allow them to enjoy life and seize opportunity.

Just like our physical and mental health, we need to put in the time, effort and commitment, and apply proven strategies, to maintain and improve our financial health. The Financial Health Network has created a measure of financial health called the FinHealth Score™.  An individual’s score is based on four financial behaviours: how you Spend, Save, Borrow and Plan for the unexpected and your future.  Your overall score will change with your circumstances and ranges on a spectrum from financially healthy to financially coping to financially vulnerable. Continue Reading…