Should Elder Care Benefits Be Part of Employees’ Compensation?
“Our aging population has led to a rise in demand for elder care benefits. There are a variety of options that businesses can offer.”
As employees’ parents and family members grow older, many are asked to be caregivers. More than one in six Americans working full-time or part-time report assisting with the care of an elderly or disabled family member, relative or friend. Of this group, nearly 50% say they have no choice about taking on these responsibilities. That’s why many struggle in silence, deciding not to share their situation with employers out of fear for the impact on their career or a desire for privacy.
Benefits Pro reports in the article “Elder care benefits: A growing need for the U.S. workforce” that under the federal Family and Medical Leave Act (FMLA), “family leave for seriously ill family members” is required by law. However, the law offers unpaid job protection and the definition of family member is restricted to spouse, child or parent. This has resulted in an increase in demand for elder care benefits. There are a variety of options that businesses can offer.
Many employers now offer an employee assistance program (EAP), which provides employees and household members with educational and referral services for elder care. These services often include free and confidential assessments, short-term counseling, referrals and follow-up services. These EAPs also address a broad body of mental and emotional well-being issues, like alcohol and substance abuse, stress, grief, family problems and psychological disorders.
In addition, some employers also have Dependent Care Assistance Plans (DCAP), commonly referred to as the “day care benefit,” allowing employees to set aside tax-free dollars for qualified elder care. While DCAPs don’t cover the entire cost of elder care, they can provide up to $5,000 per calendar year in assistance and lessen employees’ federal tax burden.
Respite care provides short-term relief for primary caregivers and can be arranged for just an afternoon or for several days.
Caregiving has shown to reduce employee work productivity by 18.5% and increase the likelihood of employees leaving the workplace. Offering elder care benefits to employees can help with retention and efficiency, as well as with businesses’ bottom line. A study by the Center for American Progress found that turnover costs are often estimated to be 100 to 300% of the base salary of the replaced employee.
As the demand for these benefits continues to increase, employers are recognizing the diverse needs of their workforce and are creating programs that have benefits to help at all stages of life.
Reference: Benefits Pro (April 30, 2019) “Elder care benefits: A growing need for the U.S. workforce”
How Do I Avoid Life Insurance Mistakes?
“Life insurance may play a vital role in an estate plan, because insurance proceeds can be counted on to provide liquidity when it’s needed. With proper planning, insurance money can pay expenses, such as the estate tax and keep other assets intact.”
Let’s say that Howie passes away and leaves a big estate to his daughter Eva, and there’s an equally large estate tax due. However, most of Howie’s assets are tied up in real estate and in his IRA.
With that scenario, Eva might not want to immediately force a sale of the real estate. However, if she accesses the inherited IRA to raise money, she’ll have to pay income tax on the withdrawal and lose a terrific opportunity for extended tax deferral.
FedWeek’s recent article, “Common Mistakes in Life Insurance Designations,” explains that considering this type of scenario, Howie could purchase insurance on himself.
The proceeds from Howie’s life insurance policy would then be used to pay the estate tax bill. With that taken care of, Eva could keep the real estate, while taking only minimum required distributions from the inherited IRA.
If the insurance policy is owned by Eva or by a trust, the proceeds probably will not be included in Howie’s estate and will not increase the estate tax obligation.
That’s a smart way to plan it out. However, some life insurance errors can wreak havoc with an estate plan. Let’s look at some common mistakes:
Naming your estate as beneficiary. This puts the proceeds in your estate—and the money will be exposed to estate tax and your creditors. Your executor will also have more paperwork, if your estate is the beneficiary. Instead, designate the appropriate people or charities.
Designating a single beneficiary. Always name at least two contingent or “backup” beneficiaries, which will decrease or eliminate any confusion, if the primary beneficiary predeceases you.
Filing and forgetting the policy. Review your policies every three years. If the beneficiary is an ex-spouse or someone who’s died, make the appropriate change and get a confirmation, in writing, from the insurance company.
Not having adequate coverage. If you have young children, it will take a small fortune to pay for their expenses, including college, in case of your untimely death. Be wise with enough coverage for your children and for whoever will take care of them. It may not or may not be a spouse, but children don’t raise themselves and you don’t want a bargain basement mom for your kids.
Reference: FedWeek (February 14, 2019) “Common Mistakes in Life Insurance Designations”
Can I Draft My Own Will?
A common question among people is “Can I write my own will?” or “Do I really need a lawyer to do my estate planning?”
The Frisky‘s recent article, “Why You Should Hire A Lawyer to Write Your Estate Plan,” says that writing your own estate plan can be a complicated thing—and one that a non-attorney may find very difficult.
It’s More Than a Will. Many people believe that a will and an estate plan are the same. This is not true. An estate plan is a legal strategy that prepares you for potential incapacity and eventual death. A will is a legal document that’s part of the estate plan.
Money, Time and Energy Savings. Creating your own estate plan will be more time-consuming than you may have thought. Hiring a lawyer to do this will cost you—but it will cost you more, if you decide to do it on your own. Hiring a lawyer for your estate plan will save you time, because he or she is trained in the law to do it the right way.
If you do finish your own estate plan and you realize that it really is a mess, you can hire a lawyer to do it over for you. However, calculate how much time, energy, and resources you’ve spent on making on your quick DIY estate plan. Work with an experienced estate planning attorney and create a sound estate plan.
It’s Complicated. If you don’t fully understand what you’re doing, estate planning can drive you nuts. That’s because every word you write is crucial. Everything you write counts and may be interpreted differently. The law in this area also changes all the time. Agencies in the federal government, the IRS and the courts are always creating new regulations and decisions. Your estate planning attorney monitors all of this, makes sure your estate plan is in compliance and takes the best advantage of the current law.
Objectivity. Another thing your attorney adds to the mix—in addition to legal expertise—is objectivity. Your estate planning attorney will give you a clean, unbiased view of your current situation, along with a fair and honest assessment of your options.
Reference: The Frisky (February 6, 2019) “Why You Should Hire A Lawyer to Write Your Estate Plan”
How Do I Know When It’s Time to Retire?
“After years of hard work, you are certainly entitled to a happy retirement. You may have already started daydreaming about it, at least a little. Will you travel the world, volunteer for your favorite charity, go fishing every day, or just spend more time with the grandkids? The post-retirement possibilities are practically endless.”
Many senior workers are actually a little afraid of retirement, because they’ve heard too many horror stories about people who retire too soon and wind up outliving their nest eggs. This is reflected in a 2016 survey from the Transamerica Center for Retirement Studies, which found that 51% of American workers say their top retirement worry is outliving their investments and savings.
Here are the key indicators that you’re probably ready to retire, according to this recent article from Investopedia’s, “6 Signs That You Are OK to Retire.”
- Hit Your Full Retirement Age. If you were born between 1943 and 1954, your full retirement age is 66. If you were born after 1959, it’s 67. You can start claiming Social Security benefits as early as 62, but your benefits will be much higher, if you wait until your full retirement age.
- Retire Debt-Free. If you have a ton of credit card debt or still owe a lot on your home or car, you may want to wait to retire because when you’re on a fixed income, a big mortgage or car payment can put a major dent in your finances. Before you retire, pay off all your debts, if possible, and get on a budget.
- Not Financially Supporting Your Kids (or Parents). If your kids still live with you–or you’re paying for their college education–you probably should wait with your retirement plans. Likewise, it might be smart to delay retirement, if you’re financially responsible for your elderly parents. If that’s you, retirement probably isn’t an option until your situation changes.
- Make a Retirement Budget. Prior to retiring, calculate whether you can live comfortably on your post-retirement income. Add up your mandatory monthly costs, like a mortgage or rent, groceries and utilities. Next, add in your 'wants,' like travel, entertainment shopping and eating out. You can then determine whether you’ll have enough retirement savings to cover all of this. Add your Social Security payments, pension, retirement account distributions and any other sources of income. Your retirement budget (if you retire in your mid-60s) shouldn’t be more than 4% of your investments, plus Social Security and pension payments.
- Review Your Portfolio. You’re going to depend a lot on your investment portfolio in retirement. If you haven’t had a portfolio review in a while, do it soon. Reassess your portfolio and determine if you need to make any modifications. As you get close to retirement, you may want to move to lower-risk investment strategies to protect your wealth.
- Plan with Your Spouse. Unless you live alone, retirement will have a major effect on your spouse or partner. Retirement should be reviewed together. Look at how the reduction in income will affect your lifestyle and future care needs. Consider what changes may need to occur to make it enjoyable for you both.
These are just the basic elements to determine when you’re ready for retirement. You should also think about how you’ll spend your days, where you want to live and whether most of your friends will still be working. All of these things could have a big effect on your general enjoyment of retirement.
Reference: Investopedia (June 1, 2018) “6 Signs That You Are OK to Retire”
Why Is Everyone Retiring to Florida?
A recent report by WalletHub ranks Florida as the best place to retire in terms of affordability, health-related factors and overall quality of life. According to the U.S. Census’ 2017 Population Estimates Program, roughly a half-million Miami-Dade County residents are over the age of 65, and by 2040, 1 in 5 Americans will be over the age of 65, according to the annual report produced by the Administration for Community Living.
Advances in medicine are helping with longevity, but various improvements in diet and lifestyle have also helped, says The Miami Herald in the article “Plan now on ways to take care of yourself through a long retirement.”
It’s important to keep your lifestyle through retirement, and it’s an essential part of any financial plan. You’ll need to budget for plans or services that help you in your later years, such as everyday tasks, medical care, or even where you live.
Take some time to consider how you want your later years to look, like where you would want to live—whether that’s at home (possibly with live-in help) or in an assisted-living facility. With our longer life spans, we encounter more significant health risks, like cognitive issues. According to research, 37% of people over the age of 85 have some mild impairment and about one-third have dementia. The Alzheimer’s Association says that 540,000 people aged 65 and older reported living with Alzheimer’s in Florida in 2018. Roughly 15% of those in Florida hospice care had a diagnosis of dementia in 2015. Therefore, you can see why it is critical to think about this now and communicate your long-term needs to your family.
As we get older, the ability to maintain a lifestyle we like, can become a financial challenge. This is especially true, if we also face an unexpected health condition. Making wise decisions now, can have a dramatic impact on what those later years will look like. Saving for a lengthy retirement can help you prepare to face any potential issues that may arise.
Making provisions for your family and leaving a legacy, isn’t always an easy task. However, the financial security of your family may depend not only on how you manage your wealth today, but also on how you protect and preserve it for the future. Your estate plan can help you prepare now to provide for your loved ones in the future.
Talk to your family and your estate planning attorney about these issues and ensure that your legacy planning is up to date, by regularly updating your will, trust, or advanced medical directives.
Reference: Miami Herald (February 1, 2019) “Plan now on ways to take care of yourself through a long retirement”