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Invest in Long-Term Care Insurance

One effect of the coronavirus pandemic is that more people have been thinking about living in the moment and taking advantage of opportunities in a carpe diem sort of way. There is nothing wrong with this, especially with so much uncertainty. However, it would not do to forget that you can still make some long-term plans. As one Marketwatch article observes: 

“The coronavirus pandemic has highlighted numerous potential catastrophes for the elderly and their loved ones, including unexpected illnesses, risks associated with underlying health issues and general lifestyle and risks in nursing homes.”

While there were always risks associated with nursing homes, some people who might have otherwise planned to live in one are reconsidering because they’ve seen the way COVID-19 spread through some of these facilities.

MarketWatch’s “This is one task everyone in their 50s should consider before it’s too late” advises people to consider purchasing a long-term care insurance plan. They are saying that your fifties is an ideal time; it is cost-efficient to get long-term care insurance then although some people do purchase plans before they reach that age. You can still also purchase a plan after your fifties.

You can speak with your Fee-Only financial advisor about what type of long-term care insurance plan would be best for you.  Some people opt for a hybrid plan: one that combines life insurance with a long-term care rider.  You can also buy a standalone policy. The policy you choose will depend on a number of variables.

If you think you can rely on Medicare to assist if you need long-term care, you should know that Medicare does not offer a lot of long-term care coverage. The costs of long-term care are high and if you can have money set aside for it already, you will be helping yourself and your family.

A Comic Strip Looks at Estate Planning

Articles and lectures inform us while stories speak to us in a way that these more straightforward sources cannot. It is interesting to see financial planning in pop culture because a narrative can get some  people to think and take action when a seminar may not.

Between July 27 and August 1 of this year the Big Nate comic strip by  Lincoln Peirce spent a week looking at estate planning, in comic form. The older daughter read an advice column where she sees that people write in with disputes over their parents’ estates weekly. So, she and her younger brother decide that they will get ahead of the game by divvying up their father’s belongings themselves. They felt they were being “proactive.” In a sense they were, although their father wasn’t cheered to learn they were planning for his death and thought he could “go at any time.”

After sighing a little, the father told his children that while it was good of them to think ahead, he had already  made provision for them in his will. Not only that, he also told them that he updates his will “every couple of years.”  

This is a key point because as much as people may hesitate to create a will, once they do, some never return to update that will. There are so many things that can change after a will is created so it is important to update your will. Even when you create one, your heirs may still end up writing into an advice column with their disputes if you did not update it to reflect life events and changes to your financial situation.

Next, Nate asks a very important question: he wants to know who will raise them if their father dies and they are still underage. All along the comic throws in a few laughs while broaching this important topic. So, when the father tells his children that their uncle would raise them, they are alarmed because their uncle isn’t the most responsible person they know. The father tells them that the grandfather (his father) is too advanced in age to raise them. The story arc ends with the children taking extra good care of their father because they are not thrilled with the idea of being raised by Uncle Ted.

Stay Positive While Adjusting Your Financial Planning

This past Sunday (September 13) was National Positive Thinking Day. With all that is happening in the world, it can be difficult to continue to think positive but it is important to do so.

There are a lot of people who are suffering and a lot of people who do not have enough. If you are scraping by but still worried, try to focus on what you do have and how you can use all of your resources efficiently.

Many people reached a point of fatigue with the pandemic long before now. They miss the things they used to do. They are tired of the precautions that we have been told are necessary. And, in contrast to the people who are in a financial crunch, people who have enough are sometimes spending more because they don’t feel hopeful about the future. They are deciding to just spend on temporary ways to boost their mood with little regard for the future.

What matters is finding the balance between being despondent and being overly optimistic. If you are feeling down, look at what parts of your financial life you can control:

  • You cannot prevent an employer from letting you go. You can, however, control your spending and save more in the event that you lose your job. 
  • You still have to repay debts, even during a pandemic. But if money is tight, you can make minimum payments (even when you’d prefer to pay down the debt faster).
  • If you are reluctant to use your savings, remember that you put aside money for difficult times and this time qualifies. Don’t worry that you’ll need it later, if you actually need what is in your savings right now to stay housed and fed.
  • Try not to focus on what you have lost, be it work, or investment gains. Focus your financial planning on working with what you have now.

Use This Time to Reevaluate Financial Priorities

Perhaps it is time to re-think how you manage your finances. If you are fortunate enough to have steady employment, you do not have to spend as much money you did before. And if you do spend, you can change the way you spend and allocate your money. This is an opportunity to decide what is really important to you. Even if you do not end up making drastic cuts to your budget, you could find ways to make more of your resources differently so you were able to reach more of your goals.

The Washington Post published an article on people who were leaving smaller city homes like townhouses for homes in the suburbs with more space. (People desperate for more space fuel a pandemic real estate boom). The city-dwellers saw that the kind of lives they had led in very connected urban communities had changed with the pandemic. And some of them also felt it was difficult to manage working at home in a small space while their children were also attending school at home. 

Now, obviously, moving and purchasing a home are not usually money-saving ventures. However, if these people find that they are able to feel more relaxed and comfortable with these changes, then these moves will have been worth it.

On the other side of the spectrum are people who perhaps need to consider making fewer purchases, rather than going for a change of lifestyle with a major purchase like a house.  A number of people on social media confess to ordering a lot more items online now they feel their movement and ability to travel have been restricted. Just because you have the spending power doesn’t mean you need to use it all the time. Instead, revisit your budget and spending habits to make use you haven’t started a shopping habit that might jeopardize your financial future.

While you may not know exactly what the future holds, you do have some idea of how you would like to live. This is great time to reevaluate your financial priorities and a Fee-Only financial planner can help.

Feeling Deprived by the Pandemic? Don’t Overdo the Holiday Spending

One of the best ways to avoid the holiday spending regret that sometimes hits us in January when we realize that we have overspent in the months before, is to have a game plan. During this year when many have had so many changes, adjustments, and disappointments, you can save yourself even more anguish by planning your spending for upcoming holidays. If you can set a budget ahead of time, that will keep you from spending too much.

Sometimes when we feel as if we are missing out, we find ways to make up for it; just make sure that you are not jeopardizing you’re finances when you do this. Some people will not be able or not want to travel and this may make you feel that it is okay to overspend on food or gifts while staying at home. Someone else may see that they cannot travel exactly where they want for the holidays but find that they can go elsewhere. But if plane tickets or accommodations are pricier for pandemic-related reasons, is it really worth it? Even when you find a pandemic-related bargain on travel, you may be tempted to spend more in other areas because you are feeling deprived.

Whether you are looking forward to the fall and winter holidays or feel they are a long way off, you should know that retailers have plans to turn a profit.  “From Black Friday to parking lot pop-ups: 5 ways holiday shopping will change,” an article published in The Washington Post offers a glimpse at some of the methods that will be used tempt you to spend more. For one thing, stores plan to offer deals aimed at holiday shoppers earlier this year. This is in part because stores do not want to encourage a lot of people to head to stores at a certain time this year, so they are spreading out the deals.

And it is likely that retailer websites will follow suit and also offer deals earlier. So even if you aren’t tempted to go into a store to browse, they can still tempt you with online bargains.

Learn From the Retirement Planning Regrets of Others

While you can learn a lot from financial experts, there is also plenty to be learned from regular people how have been where you are. In “Retirees Confess What They Wish They’d Done With Their Money” on Yahoo.com, retirees discuss what they wish they had known and done in the years before they stopped working. 

The article quotes a woman who expressed regrets that she hadn’t even put a small amount, such as twenty dollars each pay period, into a 401(k). She  and her spouse were under the impression that saving for retirement required a commitment of hundreds of dollars a month. Since withholding that much from a paycheck while raising four children seemed daunting, there were years when they put nothing into their retirement accounts. And even after their children had left, it wasn’t easy to increase retirement savings. The interviewee said that being obliged to put money into a pension that her employer matched is what helped her in retirement because there was not much in her 401(k).

Another interviewee points out regrets about his spending. He remembers buying sports cars, taking vacations, and buying a sailboat as a young man staring out. He was well paid but as an older man, he now sees that he could have benefited from compound interest over time if he had invested more money into retirement savings instead of spending on what the article terms “depreciating assets.”

One man says he wished he had created a comprehensive financial plan when he was starting to work. There were some advantages to creating one when he was ready to retire but he feels he could have benefitted from having such a plan to guide him throughout his career since: “Your retirement planning should take into account your values and goals, your risk tolerance, your goal retirement age and the lifestyle you want.” You can get help from a Fee-Only financial planner to get perspective and tailor a retirement plan that aligns with your goals.

The CARES Act Offers More Savings with HSAs and FSAs

While a lot has been said about the Coronavirus stimulus checks and the temporary increase to the amount of unemployment  benefits one could receive, the changes to regulations for FSAs (flexible spending accounts) and HSAs (health savings accounts) accounts have not been given as much attention. In “Health Savings Accounts Get Even Better,” Kiplinger.com informs readers of how they can take advantage of these changes which are part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, some of which are permanent.

Photo by Hush Naidoo on Unsplash

This legislation offers more leeway with regards to what items are eligible for purchase with an HSA or FSA. If you bought over-the- counter medication or feminine hygiene produces after January 1, 2020, some of these things may be eligible for reimbursement if you didn’t use health accept funds to purchase them. 

If you don’t know much about HSAs, Kiplinger.com explains, “A health savings account is a powerful tool to cover out-of-pocket medical expenses: Contributions are pretax (or tax-deductible, if your HSA is not employer-sponsored), the funds grow tax-deferred in the account, and withdrawals are tax-free for qualified medical expenses, without a time limit. An HSA is a smart way to save for medical expenses in retirement, too.”

And if you have a high-deductible health plan and an HSA, your telehealth services may be covered.

People who have FSAs and find themselves let got from work may be able to turn in receipts for medical expenses they had while they were on this job ((but only those incurred while they were working, unless they elect to get COBRA coverage.) There is also more flexibility with regards to making changes to benefits: if your employer allows it, you can make the kinds of changes that are usually only allowed during an annual open enrollment period. To clarify, the IRS is permitting these changes to occur in the middle of the year but your employer also has to be on board.

You may be able to change the amount of money you set aside in an FSA mid-year instead of having to wait months for an enrollment period. Things like this will be a difference for people who had money deducted for  child-care or for an operation and found they could not use the money and planned because of closures related to the pandemic.

Online Learning: Budget for the Costs

Some parents in online parenting groups are joking that they bought pajamas in preparation for the upcoming school year because they children will participate in online learning. They laughed over saving on back-to-school clothes since their children will not be in the classroom. But the truth is that learning at home, no matter the setup, may not save money. Parents who already homeschool know that there are costs associated with purchasing certain curriculums as well as buying supplies. If you haven’t done any financial planning for distance learning, here are some expenses to consider and factor in to your budget:

School supplies: Some schools still sent out lists of school supplies. Perhaps some of these lists are shorter than usual but they are still being sent out. Other parents may find their school wants them to get certain items that would normally be supplied by the school but now need to be purchased for use at home. Parents who opt for certain online schools (not traditional public schools offering their classes online) may need to buy or upgrade a computer.

Higher utility costs: Families who have already been spending more time at home may have seen their utility bills increase and this will likely continue of the children are at home and everyone is using more electricity, water, etc.

If your family didn’t already have high-speed internet service, you may need to get it for your children’s online classes. Some school districts are offering assistance to help families in need pay for internet costs.

Tutors: Parents are making arrangements to make sure their children are getting the academic assistance they need: hiring people to teach in-home or paying older students to spend time helping their kids via Zoom.
If you were paying for extracurricular activities, some of that money that isn’t being used can go towards these kinds fo educational expenses.

Lost work time: One of the biggest considerations for parents who will have children attending school at home is how this may affect the parents’ work and productivity. Older children may be able to handle schoolwork on their own by younger children will need supervision.  But the truth is children of all ages will change the dynamics of a parent’s work environment if the parent is also working from home. Some parents who were working outside of the home mayweed to change hours or leave their jobs if they children’s school has gone online and they don’t have other childcare.

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