Permanent Value Inc. - Registered Investment Advisor

Developing a Living Plan for Late Retirement

A difficult but necessary subject for retirees to discuss is their living plan late into retirement.  With the fastest growing age group in the U.S. being those age 85 or older, most adults have or will have some experience developing a late retirement living plan, either for themselves or a loved one.  Some factors to take into account when planning for living late into retirement are financial, emotional, relational, and logistical considerations.  Most retirement living plans include one of the following options: living in your home, living with family, or moving into a retirement community.

Staying at Home

As the old saying goes, Home is Where the Heart Is.  One of the most preferred places for retirees to live is in their comfortable and familiar home, which is usually paid for.  However, factoring in the cost of vital services like health care and transportation, and more emotional factors like having a spouse or family member serve as a primary caregiver can make this one of the most challenging options.  In recent years products, such as reverse mortgages, have made living at home a little more affordable for retirees on a fixed income sources like pensions, social security and personal savings.

All in the Family

According to recent statistics, the typical caregiver is a 46 year old Baby Boomer woman with a college education who works and spends more than 20 hours per week caring for her aging mother.  The average length of caregiving last 4.3 years and typically lowers the caregiver’s life expectancy by 3 to 10 years.  There are many emotional and relational considerations when discussing this option, most likely resulting in compromises and coordination by both the elder and the caregiver.  Adult daycare and other community services can help ease these pressures.  One idea that can provide support to both the elder and the caregiver would be to rent out the elder’s home.  This strategy can provide tax benefits while preserving the value of the home for future needs or planned giving.

Retirement Communities

An increasingly popular option, retirement communities can provide independence, a sense of community with other seniors, and in some cases a total solution for future assisted and nursing care needs.  Costs for retirement communities can vary from a few hundred dollars to a few thousand per month depending on the type of community (non-profit, board and care, assisted-living, continuing-care, etc.), amenities, and experience of the staff.  In the case of continuing-care retirement communities (CCRCs), everything a senior could need is located under one roof, including a private room, various amenities and specialized health care.  CCRC’s operate more as a private senior club with entry fees ranging from $20,000 to $500,000 and caring monthly fees averaging $1,600 per month.

There are many different solutions to having the most fulfilling retirement imaginable.  The key, like any financial decision, is to have your goal clear in your mind and do the proper planning.  Let us help you develop your living plan that will endure throughout your retirement.

Key Findings from Caregiving in the U.S.  National Alliance for Caregiving and AARP, April 2004.

California Property Titling for Married Couples

Community vs. Joint with Right of Survivorship?

As the legal debate rages on in California about the right to marry, I wanted to address a common question in regards to titling of property, specifically the homes of married couples in California.  Ask an attorney, accountant or financial professional how to title your home, and you’ll likely get the dreaded, “It depends.”  While it truly does depend on your objectives and you should consult with an attorney prior to making any titling decisions, in California there are some potentially large tax differences between the two most common forms of ownership for married couples: community property with right of survivorship or joint tenants with right of survivorship.

While both forms of ownership transfer the decedent’s ownership share directly to the surviving spouse as an operation of the law thus avoiding costly probate, the similarities end at how they are treated for tax purposes.  The main difference lies in how the property’s tax basis is affect at the passing of a spouse.  When titling your home as community property with right of survivorship the surviving spouse receives a full step-up in basis on the property, while just the decedent’s share (50%) under joint with right of survivorship receives a step-up in basis.  This can be especially costly for couples owning highly appreciated property or older couples that have lived in their home for many years.

Please consult with your tax and legal advisor prior to making any titling decisions.  If you would like to review how your estate plan affects your overall financial plan, please call us and we’ll be happy to schedule a review.

Money Makeover in the UT

Have you heard of the “Money Makeover” section in the Union-Tribune?

Our Nathaniel Ritchison, Certified Financial Planner™, recently collaborated on an article in the San Diego UT!

Carol Kenney, a local San Diegan, volunteered for a “Money Makeover”, sponsored by the newspaper and the San Diego chapter of the Financial Planning Association.  Nate was then chosen by the FPA to analyze Kenney’s financial situation and make recommendations.

If you missed this article published Sunday, August 8th, you can read it at the link below:

http://www.signonsandiego.com/news/2010/aug/07/newly-divorced-woman-is-planning-retirement/