Tuesday, September 29, 2009

Forgoing a Vacation Could Boost Your Retirement Fund

Can you give up a few days on the beach, a week at the in-laws’ house or a trip to Disney World? If so and you’re willing to stay on the job, you might be able to use those vacation days as contributions to your retirement plan. The Treasury Department now gives companies the option of allowing employees to transfer unused vacation pay into 401(k)s, Keogh and profit-sharing plans. This applies to sick-days and personal days, too. The existing contribution limits still apply … $16,500 … $22,000 if you’re over 50 years old. So as long as you don’t mind disappointing your spouse, your kids, or your mother-in-law, a vacation relinquished today could pay off in spades when you retire! Best wishes, George

Thursday, September 24, 2009

Long-Term Care Gets a Little Attention From Lawmakers

Not everyone in Washington has ignored long-term-care in the Obamacare debacle. Even members of Obama’s party have realized that there are shortfalls in his healthcare plan … Senators Maria Cantwell, D-Wash and Herb Kohl, D-Wis. introduced the Home and Community Balanced Incentives Act of 2009. This act establishes financial incentives for States to expand the provision of long-term care services to Medicaid beneficiaries who do not reside in an institution. Then there’s the late Senator Edward Kennedy’s health care reform bill that includes a public-funding option for long term care. It’ll pay $50 a day minimum in LTC benefits as long as recipients have paid premiums for at least five years. At best, both of these bills would provide a morsel of relief for Americans in need. However, the chances of passage are slim. Reason: They have been sent to committee where majority of bills and resolutions die a slow death. And even if they are passed, the cost is astronomical. According to the Congressional Budget Office, the Kennedy bill is estimated to cost a whopping $1 TRILLION over 10 years … an amount taxpayers can ill afford. This tells me that anyone who is counting on the government to fix the long-term care problem is living in la-la land. The truth is that you’re going to be left fending for yourself. So your best solution is to take responsibility for protecting your wealth and assuring that you’ll receive the best possible care when need. And that means understanding what the government will and will not pay when your health changes. I suggest you take a look at my book, A Boomer’s Guide to Long-term Care. It could very well be the best investment you make this year! Best wishes, George

Thursday, September 17, 2009

Refusing an Inheritance

David T. in Wisconsin asked this question about an article I wrote on refusing an inheritance: If a beneficiary disclaims an inheritance, and would have had to use the inheritance to pay for managed care in a nursing home, is that money subject to a "look back"? Thanks. Click here to read the article. No, David. As long as the beneficiary never received the money, it’s not subject to a “look back” for Medicaid purposes. Best wishes, George

Tuesday, September 15, 2009

Two Reasons Why This is a Good Time to Convert …

Despite the recent run-up, the S&P 500 is down by about 13% from a year ago ... and 33% off its October 2007 high. So as long as you qualify, now could be a good time to convert your traditional IRA to a Roth IRA. You see, when you make the conversion, you’ll have to pay ordinary income taxes on the amount converted. So compared to where the markets were last year, you stand a good chance of paying less tax now than you would have back then. And the beauty of a Roth is that the money will never be taxed again. Plus, there’s the issue of higher income taxes in the near future ... The U.S. is expected to have a $1.58 trillion deficit this year. And Treasury Secretary Geithner said at a recent town hall meeting that getting the nation’s fiscal house in order will require doing “difficult things.” Does that mean higher taxes for Americans? Geithner wouldn’t say. But right now, we have some of the lowest tax rates in history. So there’s a darn good chance that rates will go up to pay for the government’s ambitious spending. So when you combine lower stock values with relatively low tax rates, now could be an excellent to convert that traditional IRA and pay the taxes this year rather than later. Best wishes, George

Friday, September 11, 2009

Does Obamacare Ignore the Biggest Risk You Face?

As the health care reform debate drags on, one area is not getting a lot of attention: Long term care. And several of those who are very close to this issue are concerned. For example, former Majority Leader Tom Daschle, D-S.D., participated in a forum in Washington on the future of health care for seniors. Here’s what he had to say: “… so little attention is being paid to long term care. The repercussions of this explosion are huge.” The forum was sponsored by the Volunteers of America … the third-largest non-profit provider of nursing care in the U.S. and the seventh-largest non-profit operator of nursing homes. Charles Gould, the organization’s national president, said this: “This is the greatest problem they have, that Medicare doesn’t provide long-term care.” Gould added that today, 10 million people are in need of long term care. That number is expected to climb to 15 million in less than 10 years, and 60% of them will be seniors. So don’t cancel those long-term insurance policies just yet. Obamacare might leave you with some expensive gaps. George