Because nobody has a crystal ball and one cannot see over the horizon with perfect clarity, Atlanta retirement planning involves some educated conjectures. The word “educated” is the operative one in the preceding sentence because it is indeed very important to keep your finger on the pulse of all matters that are relevant to seniors when you are serious about planning for the future. You have to be able to project your expenses and sources of income to the best of your ability, and for this reason it is important to understand what to expect from Social Security, Medicare, and Medicaid.

Words can be powerful with underlying implications, and you often hear Social Security, Medicare and Medicaid being referred to as “entitlement” programs. The word “entitlement” rubs a lot of people the wrong way, but in fact it is really not accurate when used to describe Social Security and Medicare.

The reality is that you really are not “entitled” to Social Security–you have to pay into it to get anything out of it, and you must also meet earning requirements to qualify for Medicare. In fact, if you were to get your first job at 16 and pay into these programs every paycheck through your 64th year (48 years of contributions) and pass away on the day before your 65th birthday you would have received nothing at all for your vast contributions. That’s certainly some “entitlement.”

Recently, we have heard about politicians in Washington rolling out plans to cut these programs. In a poll conducted by the Kaiser Family Foundation, approximately 60% of Americans do not want to see any cuts at all to Social Security and Medicare, and half of Americans don’t want to see any cuts to the Medicaid program.

If you are planning for retirement, look for this matter to be debated further as the upcoming election season unfolds.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

The vast majority of people who are engaged in Atlanta retirement planning are going to to be depending heavily on Social Security as a foundation, especially those that have specific legacy goals they would like to accomplish. The more you can maximize Social Security benefits, that you will finally begin to receive after paying into the program for 40 or 50 years, the more robust your estate will be when you pass it along to your loved ones.

A record number of people are reaching retirement age right now so there are a lot of questions circulating with regard to the Social Security program and how you can make the most of your benefits. The short answer would be that you can increase the amount of your monthly benefit considerably by working beyond your full retirement age.

To explain in some detail, the full retirement age for people who were born between 1943 and 1954 is 66 years of age. The full retirement age increases by two months per year until 1960; for those born in 1960 and after the full retirement age is 67.

But, you do not have to retire and apply for Social Security when you reach the full retirement age. You can continue working and receive delayed retirement credits until you reach the age of 70. For those born in 1943 and after, your benefit would increase by 8% for every year that you work beyond your full retirement age. You cannot earn delayed retirement credits after you reach the age of 70 if you choose to continue working.

Aside from the delayed retirement credits there is another way that you can increase your benefit by working past full retirement age. The amount of your Social Security benefit is based on your top 35 earning years. So if you earn more during these additional years working after your full retirement age than you did during any three years previous to them your benefit would increase as a result.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Many Atlanta estate planning attorneys will tell you that the rising costs associated with long-term care are one of the primary challenges that senior citizens are facing during the current era.

According to the United States Department of Health and Human Services, 70% of Americans will someday require long-term care if you include in-home care. The national average for a year in a private room in a nursing home in 2010 was over $83,000, and a year in an assisted-living community would have run you nearly $40,000. When you combine these two statistics it becomes clear that the odds would indicate that it is likely that you will incur long-term care costs during the latter portion of your life, and those costs will be quite significant. This leads many people wondering how they’re going to address them, and the following are a few of the possibilities.

Long-Term Care Insurance

It is possible to purchase a long-term care insurance policy that will cover the costs, but this type of coverage is quite expensive. The younger you are when you purchase it the more affordable it is, but if you pay premiums for 40 years and never use it or ultimately require limited long-term care it could result in a net loss. On the other hand, if you wait until you reach an advanced age, if you can purchase it at all, the coverage is a lot more expensive.

Medicaid

Though Medicaid is technically considered to be a program that provides health care for the poor, many older Americans use it to pay for long-term care. Though eligibility requirements include a $2,000 asset ceiling many types of property are not “countable,” including your home, your car, and valuable personal possessions.

Veterans A & A Pension

If you served in the military for at least ninety days with a minimum of one day taking place during wartime and you need assistance with your day-to-day personal needs, you may be eligible for the Veterans Aid and Attendance Pension. Single veterans who are eligible can receive more than $1,600 per month that they can use for long-term care expenses.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

If you’re like most of us in Atlanta, you are anxiously anticipating your retirement years as the portion of your life when you will be able to do all the things that you always wanted to do as soon as your time became your own. The majority of individuals have to do some focused long-term planning to be certain that they’ll have the resources to make the most of their retirement years while still feeling comfortable with the legacy that they will have to leave to their loved ones after they pass away.

There are a number of ways to go about doing this and they will vary depending on the nature of your resources and the specificity of your wishes. But the one foundational element that is central to most retirement plans is that of Social Security.

When you are dealing with long-term planning on a consistent basis you frequently delve into the realm of statistics. For the most part you see few surprises, but once in a while you come upon a statistical fact that is almost hard to believe. One of these involves just how rapidly the rolls of Social Security are growing.

The baby boomers are reaching retirement age, and they’re doing so in droves. At the present time there are around 10,000 new applicants for Social Security every day, and that in itself is pretty astounding. But the statistic that really gets your attention is the fact that this is expected to continue for the next 20 years.

Because so many people are getting close to retirement age there are a lot of questions about eligibility requirements. When you become eligible is contingent upon the year during which you were born. For those who were born between 1943 in 1954 full retirement age is 66; if you were born in 1960 or later your full retirement age will be 67.

You can choose to take a reduced benefit and apply for Social Security when you are as young as 62. On the other hand you can continue working beyond your full retirement age and earn delayed retirement credits that will increase the amount of your benefit when you do apply.

The best way to find out how to integrate Social Security into your overall retirement plan would be to consult with an experienced elder law attorney. In the meantime you can tap into a lot of great information at SocialSecurity.gov which is the official United States Social Security Administration website.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

When Atlanta residents are looking forward to the latter portions of their life, there are a lot of things to take into account. The average lifespan in the United States at present is 78.4 years, but this number increases as you get older. Once you reach the age of 65 you’re as likely to live beyond the age of 85 as not.

These kinds of things may be uncomfortable to think about but the stark reality of the matter is that added longevity can have a very significant impact on your financial plan. To be truly prepared you need to take all contingencies into account, the one of these is the possibility of a stay in a long-term care facility.

The cost of long-term care is extraordinarily high and growing, with industry analysts predicting continual upward trending. How high are these costs? According to the annual MetLife Mature Market Institute survey, in 2010 the average annual charge for a year-long stay in an assisted living community in the United States reached $39,516, and this is a 5.2% increase over the 2009 number of $37,572.

Nursing home costs rose at a similar rate. In 2009 a year in a private room in a nursing home would run you about $80,000, but in 2010 we saw a 4.6% increase to $83,585.

When you are budgeting for your twilight years it is important to keep these rising costs in mind. If you are planning now for a possible stay in a long-term care facility in 20 or 30 years, and these costs continue to rise at a rate of approximately 5% per year, you’re looking at an extraordinary expense.

Most people will have to plan ahead carefully to be able to address these costs. There are a number of different ways to go about long-term care planning depending on the extent of your resources. So if you’re not sure how you will address these costs, it would be a good idea to make an appointment to discuss the matter with an experienced elder law attorney who will be able to assist you in devising a plan that suits your needs.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

The venerable baseball manager Dusty Baker, who started his career as a player with the Atlanta Braves, was once quoted as saying “The sign of intelligence is the ability to hold two different thoughts in mind at the same time.” When you are planning your estate it is very useful to have this ability because for most people the exercise requires an openness to improvisation as ever-changing circumstances alter the playing field.

Many informative articles on the subject of estate planning proceed from the standpoint that the reader has unlimited resources and there is this untouchable block of assets that will comprise your estate come what may. This is not reality for most people. You have resources allocated for your retirement, and you have expectations regarding what your legacy is probably going to look like, but this is all speculation. Exactly what your expenses are going to be through your active retirement and twilight years are going to impact the anatomy of your estate unless your wealth is extraordinary.

When you look at the statistics, people are living longer than they ever have before and the oldest old, people 85 years of age and up, are the fastest growing segment of our population. The present life expectancy is 78.4 years of age, but of course that includes those of all ages who pass away; that number goes up as you get older.

So when you’re making plans for the latter stages of your life you have to keep multiple scenarios in mind at the same time. If you were to live to the age of 75 or 78, your estate might look a lot different than it would if you were to live to the age of 95 and spend several years in a nursing home at the end of your life.

As estate planning lawyers, we always remind our clients that estate planning is a process. When you consider all the contingencies, it is clear that the ability to improvise is one of the keys to successful estate planning. Keep this in mind as you make your plans and proceed with the understanding that everything is connected and what happens today impacts the future.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

During the month of December we saw a number of changes come down the pike that impacted retirement and estate planning and some have been more publicized than others. Of course the estate tax rate was reduced and the exclusion was raised and much has been made of those alterations, but there was also an interesting change in the Social Security rules that is worth passing along.

The Social Security Administration has designated “full retirement age” as being age 67 for those who were born in 1960 and later. The full retirement age is 66 for those who were born between 1943 and 1954, and then two months are added each year through 1959. So the full retirement age for someone born in 1955 is 66 years and two months, for a person born in 1956 it is 66 years and four months, etc.

However you do not have to wait until you reach full retirement age to apply for benefits. You can begin receiving reduced benefits at age 62, and just how much your lifetime benefit would be reduced once again depends on when you were born; if you were born between 1943 and 1954 your benefit would be reduced by 25%. On the other side of the spectrum if you were to delay applying for benefits until after your full retirement age you could receive delayed retirement credits that increase your maximum benefit by 8% per year.

In the past you could choose to accept reduced benefits when you were 62 years old and receive them until you were 70 and then withdraw your application and pay back the monies that you had received. You could then reapply for Social Security and receive the maximum possible benefit after having invested the reduced benefit for eight years before paying it back, using it as an interest-free loan. Under the new regulations that went into effect on December 8, 2010 this is no longer allowable. You can now withdraw your application only within a 12 month period do so just once during your lifetime.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

The process of retirement planning involves freeing up the financial resources that you need to enjoy the free time that you have been looking forward to throughout your working years. But once you have the time and the ability to do what you want to do with that time, how do you want to spend it? There is no doubt that you have a lot of ideas in mind, and as you live life to the fullest with an open agenda you will undoubtedly find yourself looking back on your life reminiscing about all of the experiences that made you who you are.

In days gone by, people used word of mouth storytelling to pass on oral traditions, and families continue to do this in their own way rather organically without even knowing it sometimes. But as time goes on there may be just one or two stories that anyone remembers about certain family members, and when those elders who knew them pass on this ancestor may be literally forgotten. Future generations of the family will then be scouring the Internet researching their genealogy, grateful for any shred of information they may be able to find out about their own roots.

When you retire you have things you want to do, but why not spend some of that free time writing your autobiography? The value of doing so is incalculable on so many different levels. First, you are connecting your grandchildren and great-grandchildren with your own childhood memories, which will keep the ancestors that only you had a chance to meet alive forever. Plus, those who knew you will gain a better understanding of your formative experiences and get a chance to see the world as it appeared through your eyes. And finally, the times within which you lived will be chronicled from an objective perspective, and this type of eye witness account of the events of the day over perhaps a half a century or more is something that your family will cherish and learn from for generations to come.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Taking money out of a retirement account early should only be done in extreme circumstances. There are several major reasons you should avoid early withdraws.

Penalties

At age 59 ½ you are eligible to take money from your IRA or 401K. If you remove money before you reach this age you may be assessed a ten percent penalty. This penalty is on top of taxes you must pay.

Income Taxes

For accounts where you placed pre-tax money, you will owe income taxes on that year’s tax return. Withdrawing money provides you with extra income, which means your taxable income for that year will be higher. If you wait to take your funds until you are retired, your income may be lower, which means these funds may not be taxed as heavily.

Affect Retirement Income

Withdrawing retirement funds early will affect your later years. You may need those funds for medical bills and daily living expenses. If you take money out of your account early, you may have to delay your retirement age and continue working to rebuild your nest egg.

Exceptions

Sometimes prematurely using your retirement funds is necessary. There are times when an early withdraw will not be met with a ten percent penalty. These situations include if you become disabled, if you die, or if you have a hardship case that meets the hardship standards of your financial institution.

Alternatives

If you have an IRA you can withdraw funds any time you like, but you should wait until retirement. If you have a 401K, you may not be able to remove your money until you have left the job that offered the account. Many people withdraw their 401Ks when they change jobs. Avoid this, and consider using a rollover IRA to house your previous 401K funds.

As an alternative to withdrawing early for financial circumstances, you should consider a loan from your account if your account holder offers such an option. You will, however, have a limited amount of time, such as five years, to pay those funds back with interest.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Saving for your retirement is an activity that should happen early and often. So, how do you know if you have enough saved to last you for the undetermined number of years you will have left after you leave your job?

How Much Do You Need

It’s hard to predict the future, but the best way to determine if you have enough for your retirement is to estimate 80% of your pre-retirement expenses. This percentage is based upon the assumption that your children will be grown and in homes of their own, that you will have your home paid off and that you will no longer need to save for retirement since you will be retired.

Another way to determine your retirement monetary needs is to create a detailed budget of your current expenses. From this, subtract what you know you will not need later and add any other expenses you foresee such as more traveling…many retired individuals love to travel!

What If You Won’t Have Enough

What if once you estimate how much you need for retirement, you realize that you will not have enough? If this is the case, you will need to reevaluate your current habits.

The best place to start is by putting more money into your retirement account. To do so you may need to cut back on your present expenses and pay off high interest debts. If your children are already in college or have started their own families, you may be able to save money by downgrading to a smaller home.

As you increase your retirement account contributions, it is also a good idea to focus on solid investments. A financial planner may be able to help you find ways to save money on your living expenses now and in retirement and provide you with great investment opportunities.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.