Holland Column

Retirement & Financial Planning Blog

Holland Financial

What the Heck Is Bitcoin?

I was watching the news the other night and was surprised to hear that one of our Florida tax collection offices is now accepting Bitcoin for the payment of auto tags and licenses. Predictably, the reporter asked some everyday people what Bitcoin was and they didn’t have a clue!

Honestly, it’s a hard concept to grasp. Bitcoin isn’t a physical, tangible item. It is a form of electronic cash – specifically, “cryptocurrency” – created on the Internet. There are other cryptocurrencies, like Ethereum and Litecoin, but Bitcoin is probably the most recognized. It’s actually been around for several years now. You can buy, sell or trade Bitcoin, and, of course, in some situations, you can use it to make purchases. Bitcoin’s “value” has fluctuated wildly since its inception. At the time I am writing this column, the cost of one Bitcoin is $8,261!

Another important concept to understand when talking about cryptocurrencies is what’s called “blockchain.” I’m going to rely on Wikipedia for a little help on the definition. “A blockchain . . . is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data. By design, a blockchain is inherently resistant to modification of the data.” Simply stated, the blockchain is like a high-tech computer-based ledger that records all transactions with no bank involvement. What are the benefits? Supposedly, unalterable information that can be transparent or restricted in accessibility, better security, and much faster transaction times. (An example: a check might take 3 days to clear at a bank, but only seconds to clear using Blockchain technology.)

Cryptocurrency has its proponents and opponents. Personally, I remain skeptical. Because it’s still in its infancy, there are inherent dangers. I mentioned that there are several cryptocurrencies that have been created. This opens the door to fraudsters who could create, and market, a new type of currency only to close shop and “take the ‘real’ money and run.” Volatility is something we mentioned earlier, also. The value of a cryptocurrency could be $1,000 at purchase, but $600 when you go to use, sell or trade it. Lastly, there are security issues to consider. People who have purchased cryptocurrency need to “store” it somewhere. That “somewhere,” of course, is online. It is certainly possible for hackers to compromise accounts and steal a person’s cryptocurrency; in fact, it has already happened.

Because all of this is so new, governments, financial institutions, regulators and taxing authorities are still scrambling to adjust their processes and procedures. Regulators, of course, do not want the public to be taken advantage of, and taxing authorities, as you would expect, want to assure that they get their fair share when the values of cryptocurrencies surge and profits are realized.

Will Bitcoin thrive and become the only currency used globally? It’s anyone’s guess. I doubt it. Blockchain, however, once fully trusted and integrated by the business community, could be “a keeper.” That being said, its integration is probably still several years away.


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Holland Financial

Too Much Rain Is Not Good for a Pool or a Portfolio

I had an inground pool installed in my backyard last summer. We also added a heater so we can swim most of the year. Since I really don’t understand pool chemistry (and have no desire to learn it), I was quite happy to hire a pool company to keep “my investment” in good shape. If a problem arises, they fix it. I like that. So, aside from the weekly badgering required to get my teenage son to brush the tile and scoop out the leaves, the pool takes up very little of my time.  I already have enough responsibilities. I just want to enjoy it.

The deluge of rain we’ve had in the last three weeks has thrown my pool chemicals off balance. The heater is also running more frequently to warm the cold rain water, and I’ve had to drain the pool several times to keep it from overflowing. Don’t get me wrong, I’m not complaining about the rain; my yard has never looked greener. But, here’s my point – all the rain would have been a much bigger problem if I hadn’t been prepared ahead of time with a: 1. pool service company, 2. heater, and 3. drainage system.

As you have probably already figured out, I am a setting up an analogy. Just like my backyard pool, we need to be prepared for too much “rainfall” – or even potential flooding – in our investment portfolios. When there is a lot of economic “rain,” the stock market doesn’t grow evenly. Some areas grow fast, while others shrink. Technology, demographics, government policies, taxes, inflation – there is a long list of things that can potentially affect a portfolio. Because higher-than-average “rainfall amounts” can throw a portfolio's "chemicals" off balance, it needs to be checked and adjusted on a regular basis, preferably by someone who understands the science of keeping a portfolio healthy. Sometimes, a portfolio will even need to be “drained” so the extra water can be funneled somewhere else.

As I have guided investors over the last twenty-five years, I’ve noted an interesting (and sometimes counterproductive) tendency . . . when the stock market is going up, investors say, “Yay! Don’t touch anything; it is working!” Then, when the stock market is falling, they change their tunes to, “What’s happening?! Hurry, do something!” What’s ironic is that the job of a professional investment manager/adviser is essentially the same, whether the market is up 10% or down 10%. Rain or shine, a portfolio needs to be kept in balance and diversified. If you have the time, like the process, and know how to do this job, that’s great; you can balance and maintain your portfolio yourself. Alternatively, if you are lacking in the time, interest, or skill, then consider hiring an adviser to maintain your investments. Let them do the worrying for you, while you enjoy the benefits of your investments and focus on other things that are important to you.


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Holland Financial

What Should I Do about My
401(k)s?

As many of you know, I have a weekly public television show on WDSC Channel 15. One of the best things about doing the television program is working with the “crew” who helps put the broadcast together each week. Even for a “smaller-budget” program like ours, the TV production team includes several people: a production manager, an assistant producer, a director, a floor director, a technical director, an audio person, 3 camera operators and a make-up artist! Several members of the crew are in their twenties, and here’s what’s great – they are all inquisitive and eager to learn about their finances! Not only is the group highly skilled in their individual roles, but they are always anxious to interact with me and my guests between segments. I truly enjoy sharing my financial knowledge and advice with them. So, one morning, one of the camera operators asked me this question, and I thought it was a relevant topic for this week’s column. I’ll paraphrase her thoughts:

“I’ve got 401(k)s and IRAs from previous employers and they are just floating around in ‘limbo’ in a couple of different locations. What should I do? Should I leave them alone or is there something better I should be doing with them?”

Personally, I like the idea of consolidating those “orphaned” 401(k) accounts (or other pre-tax, employer-sponsored retirement plans) into one IRA. The reason is twofold: 1. A single IRA account will be much easier to manage. 2. More money in one account (instead of several) can open up additional investment choices to you. What do I mean by that? Well, if you are investing in mutual funds, for example, there is usually a minimum investment to buy into the fund. Some have greater minimum investment requirements than others. More money means you have a larger pool of investment funds to choose from. You can think of it like a casino, where there are $5 tables, $10 tables, $50 tables and $100 tables. You can’t play at a $100 table if you only have $5. I think it’s better to be able to “play” at more tables, not fewer.

And, here is another suggestion. Should there be a year when you earn less money, and you have already consolidated your IRA, you might consider converting some of the IRA into a ROTH IRA. You will have to pay taxes on the money you roll over into the ROTH (since no taxes have been paid thus far), so you might not want do it when your salary is at its peak. One of the benefits of a ROTH IRA is that, once you pay taxes, future growth and withdrawals are tax free, as long as you meet and comply with the IRS’s rules.

That was a great question from the PlanStronger™ crew, and I’m sure there will be many more when we start our fifth season of production this summer! If you have an opportunity to watch, please tune in!


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Holland Financial

Consider These 5 Things When Meeting with a Financial Adviser

As you well know, I often encourage my readers to meet with an experienced adviser if they need financial products or services. But, what are some of the things you should consider before, and during, that first appointment? Here is a short list:

  1. Think about what you want. Give some serious thought to why you are going to see the adviser. Are you looking for “growth,” or “protection,” of your money? Do you need income? Do you want an estate plan? Are you concerned about long-term care?
    Let me tell you a quick story. Several years ago, my wife, Toni, and I stopped at a music store. One of us had decided to learn an instrument – specifically – the guitar. We strolled around the store and talked extensively with the salesperson. An hour later, when we finally walked out of the music store, guess what we had purchased? A PIANO! You can avoid this same fate when you meet with an adviser. Listen to suggestions, recommendations and options, but make sure you leave with the product, service, or solution you went in for!
  2. No office? Personally, I’d be skeptical of an adviser who asks to meet at your home and doesn’t have a brick-and-mortar office. How committed (or successful) is the person who has no physical business location? How secure will your personal information be . . . in his/her car!?
  3. Keep your guard up. It doesn’t matter how you found out about the adviser, even if he/she was highly recommended by a close friend or relative; remain skeptical and treat the encounter like the person was picked randomly online or from the phone book.
  4. Bring a friend. When you go to the adviser’s office, make sure to bring your spouse, or, if you are single, bring a relative or good friend. It’s helpful to have another set of eyes and ears to catch any details you might miss. Also, an objective third-party can critique the adviser, and be a valuable sounding board for proposed products and recommendations.
  5. Ask questions. There are literally dozens of questions to ask during an initial meeting. Here, however, I’ll narrow it down to the top five: 1. Which licenses and credentials do you hold? 2. Who is your supervisor and regulator? 3. How long have you been in the business and how long do you plan to continue? 4. Will your recommendations be in writing (including fees, expenses and what you’re paid)? 5. Will you act as my fiduciary/advocate?

I know that meeting with an adviser for the first time can be bit intimidating. You’re entrusting this person with your financial information, as well as your goals for the future. Just be cautious. Don’t be afraid to ask questions. Bring another person with you. And, lastly, know exactly what you want to accomplish before your scheduled appointment . . . that way, you’ll walk out of the office with the products and services you really want – and not a piano!


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Holland Financial

Will the “Real” Financial Planner Please Stand Up?

Sharing helpful financial information is why I host a weekly public television show and write these columns. My grandmother and parents were educators, so I think teaching must be in my blood. Just like a teacher, I am “hooked” on turning “the lightbulbs” on for my “pupils.” It is very rewarding when clients “get it” and they understand the steps they need to take to achieve their financial goals. That’s what financial planning is all about. With that said, I’m going to let you in on a little-known fact about financial planners:  There are no requirements to be a financial planner.Most people are surprised to learn this. Accountants, insurance agents and securities brokers might call themselves “financial planners” without any specialized financial training or any credentials. Of course, this has created a lot of confusion for investors.

The BIG distinction comes when a “planner” uses a credential after his/her name. There are a variety of financial designations. Some are harder to obtain than others. For example, the CERTIFIED FINANCIAL PLANNER™ (CFP®) certification is often recognized as a top-level financial planning credential. Just 70,000 or so professionals hold it, nationally. It requires a tremendous amount of studying, a long and rigorous final exam, and continuing education. I know, because we have four CFP® practitioners in my office. Other widely-respected “financial planning” designations include the Personal Financial Specialist and the Chartered Financial Consultant®. Of course, there are caveats: 1. These are not the only financial credentials; you can learn more about financial credentials at www.finra.org/investors/professional-designations. 2. Working with a planner who has credentials doesn’t guarantee a good experience or success; you’ll need to screen and interview them. Go to CFP.net if you’d like to find a CERTIFIED FINANCIAL PLANNER™ professional in your area. 3. Some very knowledgeable and capable advisers never obtain professional credentials. They should not be dismissed out of hand. It is important, therefore, to consider other factors when selecting advisers, such as, where they work, their experience, and whether they’ve had regulatory problems or customer complaints; you can check this information at www.brokercheck.org for securities brokers and www.sec.gov/reportspubs/investor-publications/investor-brokershtm.html for investment advisers.

If you are considering a new financial relationship, you are not alone. It happens frequently. Investors change advisers for a variety of reasons, including when they have: a loss of confidence in the adviser, a loss of money, a change in geographic location, or a change in their financial needs. A new relationship might also be considered when the adviser you work with changes geographic location or employer affiliation, retires or dies. Before hiring a new adviser, ask around; do some research; and think about what you are looking for from an adviser. Do you want most of your services “under one roof,” or do you want to work with multiple advisers? Most importantly, take the time to interview a few advisers before making a decision. And, if someone tells you that they are a “financial planner,” you can say, “Oh, that’s great! Which credentials do you hold?” Then, go look them up!


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Holland Financial

Buying a Home with a Reverse Mortgage Loan

As many of my regular readers know, my financial services company added reverse mortgage loan (HECM) origination a few years back. Clients had asked for it, so we investigated this “financial instrument” thoroughly before adding it to our services. Since that time, we’ve helped dozens of people leverage Home Equity Conversion Mortgage (HECM) loans to meet their needs. I recently sat down with Mike Peerless (NMLS #1073735), Director of Reverse Mortgages at Holland Mortgage Services, Inc. (NMLS #1432962), to discuss our firm’s progress and industry trends.

While these loans have been typically used to access home equity for cash, or to refinance an existing mortgage to eliminate required mortgage payments, Mike shared that an increasingly popular use of reverse mortgage loans is the HECM for Purchase. Instead of using it to get cash or refinance an existing home mortgage, the transaction order is, ironically, “reversed.” The loan is taken out and used, along with the borrower’s down payment, to purchase a new home.

Here’s an example: A 68-year-old woman has $200,000 cash available to purchase a new home, but does not want an ongoing mortgage payment in retirement. She shops around, but doesn’t find anything she likes for $200,000. Then, she finds exactly what she is looking for . . . but the price tag is $330,000. She realizes she wants a nicer home than she could afford with her $200,000 cash. With the HECM for Purchase, our 68-year-old could buy the $330,000 home and not have an ongoing mortgage payment. However, she would still be required to pay property taxes, insurance, homeowner’s association dues, and maintenance expenses. She would borrow $152,000 from the reverse mortgage lender and write a check at closing for $196,000. (My numbers are rounded to the nearest $1,000). When the HECM for Purchase transaction is complete, she has the home she wants, a loan, and no required mortgage payments. As with any loan, there are fees and expenses that would add to her purchase price. There is also interest on the loan and an ongoing Mortgage Insurance Premium that will grow unless she opts to make payments – which she can do at any time. And, just like a traditional home mortgage, she can sell the home and pay off the loan.

Part of the job of a loan originator, of course, is to walk the borrower through the process of getting a reverse mortgage loan, compare lenders, and explain all the fees and expenses involved. For anyone who is interested in a reverse mortgage loan, it is important to remember that there are different kinds and uses. Fees will vary among lenders and originators. These loans are not for everyone, but we can say the same for just about every financial product available: mutual funds, annuities, Long-term Care insurance, REITs, hedge funds, bonds . . . none of them are appropriate for every person and situation.


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Holland Financial

This Tax Question on Stocks Gave Me a Workout!

“I’ve got a stock that has grown from $10 a share to $50 a share. I don’t need the money. Is it better to sell it, give it to my kids now, or leave it to them when I die?”

This excellent question was posed to me by “Jack” between dumbbell curls at the gym. It provides a great example of how taxes and investing can be interrelated. The “correct” answer will depend on each person’s individual situation, but here are some options for Jack to consider:

#1 – Sell it. There’d be a $40 per share capital gain. I don’t know the specifics of the stock transaction, but let’s assume Jack purchased 1,000 shares, at $10 a share, five years ago. That would mean a $40,000 long-term capital gain to report on the sale. The amount of tax due would depend on a variety of factors, including: Jack’s other income, his marital status, and whether he has any capital losses to offset the gain. For example, if Jack is married, has no losses to offset the gain, and has at least $77,201 of taxable income for 2018, he’d owe 15% tax ($6,000) on the $40,000 of capital gain.

#2 – Gift it. Now, if you give an appreciated asset to someone else during your lifetime, the recipient will use your basis (what you paid for it) when it comes time to figure what they owe in income taxes (like in option #1). So, if Jack gives the stock to his son, who later sells it for $100 a share, the son will have a $90 capital gain per share. He’d still use the initial purchase price of $10 per share when he figures his gain and how much tax he owes.

#3 – Leave it. An interesting “wrinkle” in the U.S. tax code is that, if you die owning an asset (like stock, per this example), the basis gets “stepped-up” to the value of the stock on the date of your death, not what you paid for it. So, if Jack kept the stock, died, left it to his son, and then the son sold it, the son would only pay tax on the gain above what the stock was worth on the day Jack died. In effect, both Jack and his son escape the capital gains tax.

Please note that federal income taxes and federal gift and estate taxes are two separate taxes. Some people pay one or the other or both. However, most people are no longer affected by gift and estate taxes since the exemption for 2018 is now $11,200,000 per person. That means you can either give $11,200,000 to someone during your lifetime, or leave him/her that amount at your death, and there’d be no gift or estate taxes (also known as “death” and “inheritance” taxes).

Good to know, right? Got a financial question you’d like answered here? Just drop me a note . . . or, you can always try to catch me at the gym!

                                   


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Holland Financial

Q and A on Bonds . . . Savings Bonds

I received a very good question recently from a PlanStrongerTV™ viewer. It’s a subject we haven’t spent much time talking about, but if you own savings bonds, you might be wondering about this topic, just like “Theodore Wood” (name changed). Theodore’s question is summarized below:

Question: I am age 77, and my wife is age 81. We have $85,000 in savings bonds, most of which have matured. Should I cash these in and pay the taxes, or just leave them alone?

First, for readers who are unfamiliar with savings bonds, they are securities issued by the U.S. Treasury. Some of the most commonly held bonds are E Bonds, EE Bonds and I Bonds. Introduced in 1941, E Bonds have stopped earning interest as of 2010. They were issued at 75% of their face value, which means, if you bought a $100 E Bond, you only paid $75 at the time of purchase. EE Bonds are currently sold at their face value, and as of May 2005, earn a fixed rate of return. I Bonds are issued at face value and earn a combined rate, made up of a “fixed rate” (at purchase) and an “inflation rate” based on the CPI-U. Both EE Bonds and I Bonds earn interest for up to 30 years, at which point they “mature.”

So, back to the question. The answer is, “Theodore, it all depends.” Do you need the money, or do you think you may leave it as an inheritance to your heir(s)? If you need the money, the interest will be taxable (i.e. federal income taxes, but not state or local) when you cash in the bonds. Now, nothing requires you to cash in all your bonds at one time. You can certainly spread out the process over a few years (or more). If you plan to leave the money to your heir(s), you might want to contemplate the tax implications even more carefully. Who will have the lower tax rate when the bonds are cashed in, you or your heir(s)? To make sure the most money is retained, the person with the lower tax rate should probably be the one to cash in the bonds.

With up to 30 years to accumulate interest, bonds make a great gift for a newborn baby or young child. Some of the “perks” of bonds, include: 1. They are a conservative investment; 2. They are easy to purchase; and 3. You don’t pay tax on them until you cash them in. Remember, though, “risk and reward” travel together. Because EE and I Bonds are low-risk, their interest rates are also low, relative to other investment choices.

My source for some of the information here was savingsbonds.gov. The website offers a plethora of interesting information, and, if you own savings bonds, there is even a calculator to estimate their current worth. Thank you, “Theodore” for the question!

                                   


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Holland Financial

Bridging the Gap When Retiring Early

Ready to retire? Many people can hardly wait! Maybe you are in your late 50s and know that retirement is just around the corner. If you’ve been a good “saver” and/or investor, you could be asking yourself if retiring at age 62, instead of waiting until your full retirement age, is a possibility. (The earliest you can take Social Security (SS) is age 62, but if you wait, your monthly benefit will continue to increase through age 70). If you’ve already made the decision to retire early, there is an important thing to keep in mind: health insurance is a major expense and rates continue to rise. So, how do you bridge the health-insurance-gap between an early retirement and applying for Medicare at age 65? There are several strategies; here are just a few:

Spouse’s Plan: If your spouse is still working, you may be able to obtain health coverage as a dependent under his/her employer-sponsored plan. Make sure to find out the details and cost ahead of time. Depending on the plan, the size of the group, and other factors, this could still be an expensive option.

Look to the ACA: Regardless of your opinion of “Obamacare,” the Affordable Care Act is still in effect and it could provide the answer to your short-term health insurance needs. You can log on to healthcare.gov to compare rates and plans.

Semi-retire: Many people equate receiving Social Security benefits with a total discontinuation of employment. But you don’t have to quit completely! If you take SS benefits at age 62, you could opt to work just enough hours to qualify for a company’s health insurance plan. Then, at age 65, you could file for Medicare and move into retirement. This could be a great transitional step between full-time work and full-time retirement. The only catch, however, is that if you are younger than your full retirement age, and earn more than $17,040 (in 2018), your SS benefit will be reduced by $1 for every $2 you earn over that annual limit. (Beginning in the month you reach full retirement age, there will no longer be a reduction in SS benefits.)

Line of Credit: If you are age 62, or older, and own a home, you could consider a reverse mortgage line of credit loan (HECM). The borrower must continue to pay homeowners insurance, property taxes and home maintenance, but a HECM could provide the money to pay for expenses, like health insurance, prior to applying for Medicare at age 65. You could also use it to meet your cash flow needs in order to delay taking Social Security payments. (Again, the longer you wait to take Social Security, the larger your monthly benefit will be.)

Whether you decide to retire in your 50s, at 62, at your full retirement age, or beyond, it’s important to have a sound financial strategy. Sit down with an experienced financial planner. With careful planning, he or she can help you achieve your goal of an early retirement.


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Holland Financial

Do You Need an Umbrella?

A married couple, “Bob” and “Betty” (names changed), sent me a question recently about “Umbrella Policies,” so, for those of you who are unfamiliar with this insurance product, here’s the scoop.

An Umbrella Policy, also known as a PUP (Personal Umbrella Policy), is used to protect your assets from a lawsuit or substantial liability claim. As the term implies, umbrella insurance is an added layer of protection over and above homeowners and automobile insurance products. Therefore, to be eligible for a PUP, you must already have a certain amount of auto and homeowners insurance in place.

Here’s a simple scenario. Let’s say Bob’s auto policy covers him for $300,000 in personal liability, and someone brings a lawsuit against him for an accident that was his fault. If the claimant is awarded $500,000, Bob’s auto insurance would pay $300,000 and his Umbrella Policy would kick in the additional $200,000. With the PUP, he would not be out-of-pocket the amount (in this case, $200,000) over and above the auto insurance policy’s limit.

Umbrella Policies can be purchased from a property and casualty insurance agent or from a personal line insurance agent. Coverage limits are usually quite high – one million dollars is the low end of the spectrum and, generally, coverage amounts go up in million dollar increments. The premium cost increases with the coverage amount, as you would expect.

If you don’t have an automobile, or any property, this type of insurance probably isn’t a fit for you. However, if you do have a home and vehicle, and you were to lose a large liability lawsuit, it is always possible that your wages could be garnished, if you don’t have enough money to cover the judgment. Umbrella insurance can also pay for legal defense. Keep in mind that some of your assets can have a level of protection inherently “built in.” An IRA account or a life insurance policy can have greater protection from a claim than cash in a bank account. Protection varies by state, too. In Florida, for example, homesteaded property carries a greater level of protection from claims.

If you are concerned that a liability claim could ravage your life’s savings, added PUP insurance might be a good solution. Or, you may want to work with an attorney and financial planner to restructure your assets to afford the most protection possible. Of course, nothing is bulletproof, but Umbrella insurance, along with good planning, can certainly make you feel less vulnerable, should the threat of rain turn into a downpour or even hail!

 

                                   


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Holland Financial

Who’s the Captain of Your Financial Boat?

Your husband loves boating. You aren’t really interested in it, so you haven’t taken the time to learn the fundamentals of operating the boat. Nevertheless, you go along for the ride. Late one afternoon, the two of you are out on the ocean when tragedy strikes! A sudden wind gust catches your husband off guard. He loses his balance, slips and hits his head on the deck. You try talking to him, but he’s out cold. You fumble for the marine radio handset, trying to remember how it works. You’re not sure if anyone can hear your cries for help. Nervously, you grab the boat’s steering wheel and throttle, and stare at all the instruments and buttons. In desperation, you yell out, “West! Which way is West?!” That’s got to be the way back to the dock. The floating compass seems like a toy and only spins and bounces around with the ocean swells. You’re lost, alone, and have no idea what you are going to do. You start to feel faint. Cold. Dizzy. You sit down, but then everything goes black.

Voices and bright, blurry lights wake you. Someone is asking if you can get up. It is your husband! He’s got a bandage around his head, but you can only see the terror in his eyes. Slowly, you stand. It’s night and a Coast Guard boat is tied to yours. Within minutes, you’re on the way to a hospital.

In the sterile stillness of the examining room, you mutter, “We both could have died.” The terror that filled your husband’s eyes has been replaced with a blank, distant gaze. “Yes,” he admits, and then thinks to himself, “And, what if I had?”

After returning home, and pondering the seriousness of the recent event, your husband realizes that his death, whether at sea or on dry land, could leave you adrift – not knowing which way to turn or what to do. It’s then that he initiates a very important conversation.“This isn’t just about boating,” he says. “You really don’t know enough about our finances. If I died, how would you manage our investments, insurance policies or IRA accounts? You’ve never even met with our financial adviser!” “That’s true,” you reply. You admit to him that you never really cared to learn about the finances because he always handled everything. “I guess, then, there are TWO things that need to be done immediately,” you declare with new-found determination. “First, we need to make an appointment to meet with our financial adviser – together.” Your husband nods his head in agreement and adds, “From now on, you and I are going to be co-captains of our financial boat. We’re in this together, and it shouldn’t have taken a bump on the head for me to realize it! So, what’s the second thing that needs to be done?” he asks. “Well, tomorrow morning I’m signing up for boating lessons!” you say through a grin.


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Holland Financial

Political Bombardment and Financial Decision-making

I held one of my Financial Forums, recently. A member of the audience raised his hand and asked me if the stock market is being influenced by Russia. My response was, “Which news story are you referring to?” He replied (and I paraphrase), “Well, President Trump, and his campaign’s involvement with …” Respectfully, I had to stop him and explain that I don’t talk politics at my Forums. Are politics important? Yes, of course! Here are my thoughts on the subject.

There is an unending bombardment of political “news” from the media, so you should carefully filter out the noise. Keep in mind that the media sells everyone’s ears and eyes to the advertisers that pay for their TV programs, radio shows, newspapers and magazines. When it comes to politics, in particular, there is just so much we don’t know. It’s kind of like an iceberg. Only 10% of the iceberg is above the water; it’s all we see; the other 90% is below the surface. We don’t have all the facts most of the time.

Let’s say the economy is doing well, the jobs report is good, companies are prospering, inflation is tame, but there’s some sort of political upheaval that concerns you. You get nervous and want to pull your money out of the market. You could be making a big mistake by reacting to the political “news of the day,” instead of using sound, well-thought-out decision-making about your money. I encourage my clients to look at the economic data. What is happening with interest rates? The Fed? The stock market? Small, mid-sized and large corporations? Read financial data, not headlines.

How does this translate to the adviser you choose? Ask yourself, are the political views of my adviser important to me? Is politics something I want to talk about with my adviser? Is it something he/she wants to discuss? You probably don’t want an adviser who is oblivious or apathetic to politics, right? But, on the other hand, do you want a zealot? Will current political news cloud the adviser’s judgement or logical thought processes? I’ll be happy to sit down with any of my clients to discuss my views on politics, if that is, indeed, something they want to know. I won’t, however, bring a divisive topic into a public discussion because it can quickly derail the subject at hand.

To sum up, take care when listening to the 24/7 news machine. Be aware of what the media is “selling.” Know that we, the public, are just seeing the top part of the iceberg, especially when it comes to politics. If you are strongly opinionated, you could choose an adviser whose views align with your own, but make sure he/she can remain clear-headed in his/her decision-making. And, finally, do your due diligence. Take some time to look at the economic data, yourself, so as not to base financial moves on political headlines. If you do that – you guessed it – you’ll plan stronger!

                                   


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Holland Financial

Just One More Reason Women Are Amazing

Many times, it’s the daughter who becomes responsible for the care of parents as they age. Over the years, I’ve seen this scenario play out with many clients, and with several of my employees, as well. Is the daughter’s fate sealed because women are considered more maternal and compassionate? Maybe, maybe not. According to a study by a gerontologist and sociologist (source: New York Times online), the child who will become the caregiver is a mixture of both gender and location. A daughter was more than twice as likely to become a caregiver, and, children who lived within a 2-hour drive were six times more likely to take on the role. Sorry, Mom and Dad, you are stuck with Jason and me (but we’re both local, and Jason is in the medical field, so you luck out after all)!

Caring for a parent, or parents, can be emotionally stressful, physically demanding, and many times, financially burdensome. Of course, the type and extent of assistance required will vary. A spouse is often the primary caregiver, but he/she might require substantial emotional support from a daughter. Or, if one parent has passed, all the care duties and decisions may fall on the daughter. These responsibilities may be less overwhelming for a child who is single, or not employed, but imagine the life of a daughter who works full-time, rushes home to cook and clean for her family, and then drives to her mother and father’s home for daily caregiving.

When a parent becomes physically dependent, a daughter’s chores may include preparing food, housecleaning, washing laundry, running errands (grocery shopping, picking up prescriptions, providing transportation to doctors’ appointments), dressing and personal hygiene needs. And, if the elder has a dog or cat, maintenance of the pet may also be relegated to the daughter. If the parent develops dementia, banking, bill-paying and dispensing of medication could also be added to the daughter’s long list of responsibilities.

For elders with enough savings, or for children with significant income, these tasks may be of little concern. There are many ways to provide assistance when resources are readily available. Aides can be hired to provide part-time or around-the-clock help in the home. Specialized communities are available for assisted living or for a continuum of care. But, for middle-class retirees, added longevity means the dollars they’ve saved need to stretch even farther.

So, what should parents do? First and foremost, talk to your kids! If a daughter lives close by, or is an only child, ask her if she is willing to provide support, if necessary. Or, if you have several children, could you rotate amongst them, living part of the year with each? If you choose to remain in your own home, how will you pay for assistance? Have you considered a reverse mortgage loan, or line of credit, to pay for services? How about Long-term Care insurance? These are just some of the questions that should be asked, and answered, before health care services are ever needed.


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Holland Financial

Protecting the Elderly: Everybody’s Responsibility

When I started to write this column, it was going to be about the ways relatives can be instrumental in protecting older family members from online financial abuse. But, the more I thought about it, the more I realized it was the responsibility of each one of us to help protect the elder members of our society from fraud, scams, financial manipulation and deception.

A story told to me by one of my employees comes to mind. Years ago, she worked with an older gentleman; we’ll call him “Vic.” Vic loved expensive things, but, to put it bluntly, he was extraordinarily frugal. A “newbie” to the world of computers, Vic discovered a popular Internet auction site full of potential “deals.” He spent hours combing through the listings, deciding, eventually, that he wanted to buy a luxury-brand watch. He found a merchant selling the timepiece he desired, but the seller would only discount the price if Vic were willing to circumvent the established payment system of the Internet auction site. A red flag should have gone up right then and there. For details on the deal, Vic called the merchant, who said he lived in an eastern European country and who spoke with a strong accent. My employee warned Vic that the transaction sounded “shady,” but her warning fell on deaf ears. Vic’s excitement over the perceived “bargain” made him vulnerable. He had conversed with the seller extensively by telephone, so he was convinced that “he was a really good guy.” (With one phone call, the scammer had earned Vic’s trust.) The smooth-talking stranger instructed Vic to wire him $1,400 cash, which he did. (Red flag! Red flag!) Vic then waited patiently, day after day, for a watch that never arrived. Eventually, he called the seller’s overseas phone number. No surprise. The line had been disconnected.

What’s the takeaway from this story? Speak up! Get involved! Even if you might not be successful, make an effort to save someone from what could be a huge financial misstep. You might encourage older friends and relatives to check with you, or another trusted person, before responding to any offer or entering personal information online. Warn them of the dangers, and tell them not to click on links embedded in emails, and not to open documents that are unsolicited or the least bit suspicious. An unfortunate click could even cause a personal computer to be locked and held for ransom! This can happen to anyone, of course, but the elderly tend to be more vulnerable because they can be less tech-savvy and more trusting. Lastly, if the person has a relationship with a financial adviser, encourage a quick call to him/her before executing any substantial financial transaction, especially those made online.

                                   


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Holland Financial

Reader Question on Continuing Care Retirement Communities

You may remember that a few weeks ago we talked about Continuing Care Retirement Communities (CCRCs). Since then, I’ve received some positive feedback, about the information shared, and this great question:

“I enjoyed your article about CCRCs in Hometown News this week. A question that immediately came to mind was how Long-term Care (LTC) insurance works with CCRCs . . . whether LTC insurance can be applied if you need to move to the assisted living or skilled nursing parts of the CCRC.” – M.D.

For this question, I defer to the website of my friend, Brad Breeding, who has appeared on my PlanStrongerTV™ show a couple of times. Brad is an expert on CCRCs and you can find good information on his site: mylifesite.net (tip: click on the tab “Resources” for helpful videos).

A contract, an “entry fee” and a monthly fee are generally required when moving into a CCRC. It’s very important that you read, and thoroughly understand, the contract. There are three different kinds: Type A, B and C. 1. Type C contract: When a resident moves from independent living to assisted living, or to the skilled nursing residence, his/her monthly fee will increase to reflect the current market rate. 2. Type A contract: The resident will pay a higher monthly fee for independent living from the start, but additional costs for assisted living or health care do not get added to the monthly fee when, and if, those services are required. 3. Modified Type B contract (sort of a hybrid of A and C): When Long-term Care assistance is needed, the costs are usually added to the monthly fee, but at a reduced rate. Alternatively, the resident may get an allotted number of days in the nursing center before having to pay extra fees.

LTC insurance can be quite compatible with a Type C contract, and might also be compatible with Type B. So, if a CCRC resident needs extra help, Long-term Care insurance can be there to offset the cost increase. But, and I stress this, talk to your insurance agent to see exactly what is required to qualify for a claim. Also, speak to someone in the finance department of the CCRC and ask how its residents have utilized Long-term Care insurance. Ask: “Is there a limit on the amount the community will submit to the insurance company to offset additional monthly costs?” If you sign a Type A contract, you might want to call your insurance company to see about scaling back your coverage so you’re not double-paying for the same service.

Holding on to Long-term Care insurance may be a good idea for a couple other reasons. If you choose to hire a caregiver while you are living independently, that expense may be paid partially, or totally, by LTC insurance under “home care” coverage. Also, though entering into a CCRC is supposed to be a final move, if you were to leave the CCRC, you’d want to continue to have your Long-term Care policy in place for care outside of the community.


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Holland Financial

If You’re in This Battle, Tell Your Adviser

There is an epidemic in our country. Maybe the citizens of Volusia and Flagler Counties haven’t experienced it to the same degree as other areas, but we are not immune. You may have heard President Donald Trump mention it during the State of the Union Address. Regrettably, I’m talking about the opioid crisis.

The following drugs are prescription opioids: oxycodone, hydrocodone, morphine and methadone. A synthetic opioid, fentanyl, is much more powerful than the others; it can be prescribed by a physician (often for cancer patients) or can be illegally produced. Heroin is an illegal opioid synthesized from morphine.

I first realized the severity of this problem when I heard the story of a local real estate agent. He had moved to our area from a midwestern, agricultural community. Farming was his life, but he sold all his animals and land. Why? In his town, the drug problem was totally out of control. He recalled trips to the department store where he would see customers plodding slowly through the aisles with glazed eyes – like zombies. Some had tremors or twitched uncontrollably. That sounds like a horror movie but, in that small farm town, it was “real life.”

You’ll be shocked by these statistics from CDC.gov: There were 42,249 opioid deaths in 2016. 42,249! That’s the approximate population of Salem, Massachusetts! 115 people die of overdoses every day (the number of deaths has increased 500% since 1999). The states with the highest rates of death include: West Virginia, Ohio, New Hampshire, Pennsylvania and Kentucky.

The amount of prescription opioids sold to pharmacies, hospitals and doctors’ office nearly quadrupled from 1999-2010. Many addicts aren’t “thugs” or criminals. They can be teachers, accountants, lawyers, and pastors – normal everyday people. They become addicted after being prescribed these drugs for chronic pain, or after injuries or surgeries. If not carefully administered and monitored, addiction can be one of an opioid’s worst side effects.

How does addiction tie in to your money? Consider what retirement looks like for parents who must pay tens of thousands of dollars for treatment and recovery programs for their children (or for themselves). For addicts, the drugs often rob them of their savings (not to mention, their families, friends, jobs, and homes). Some resort to crime to support their addiction. Our tax dollars funnel into government drug programs, and support the users and traffickers who now call jail their “home.”

If there is an addiction problem in your family, please tell your financial planner so he/she can help you take precautions to protect your assets. Obtaining a life insurance policy, for example, could be a smart move. Employing special language in trusts to mandate drug testing of heirs before inheritance distribution, or reserving monies for treatment and recovery, are other options. If you are not open and honest about these issues, however, a trusted adviser can’t be of assistance. There are no easy answers to this crisis, but we can “fight the good fight” with the tools and strategies we have at hand.

                                                                                               

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Holland Financial

Family: The Ties That (Don’t Always) Bind

Family can provide a sense of belonging, as well as joy, comfort, and support . . . but not always.

Let’s take the case of two brothers, “Paul” and “Tony.” As kids, Tony was given “new” clothes, while Paul was forced to wear hand-me-downs. As young adults, Tony accepted “loans” from his parents on a regular basis. He launched a business and purchased a large home in an exclusive neighborhood. Tony was constantly praised by his parents for his entrepreneurship, picture-perfect family and community service – while Paul worked several jobs, simultaneously, “just to scrape by.” Years passed. When the men’s mother was moved to a nursing home, their father went to live with Paul. But, before relocating, the father entrusted Tony with money and valuables that were to be kept in a safe. When the parents died, and the safe was opened, many of the items had mysteriously “disappeared,” causing a feud between the two brothers that would span their lifetimes.

In another instance, “Janice” (a beloved daughter, sister, aunt and cousin), chose to cut ties with her entire family after her mother died. Without explanation, she simply ended all communication – would not attend family gatherings – stopped answering the telephone. Though many family members tried to reconnect with Janice, she refused all interaction.

Does either story sound familiar? Has something similar happened in your family?

Of course, there are dozens of reasons for estrangement amongst family members. A child might make a choice between a parent and a partner. There can be incompatibilities because of differences in religion, lifestyle or moral values. Shattered relationships can be the result of physical or mental abuse, or dependence on drugs or alcohol. Issues between the children of first and second marriages can cause tension and discord.

With such a prevalence of torn and segmented families, shouldn’t you decide the fate of your money and belongings? I can’t emphasize enough the importance of an estate plan. The death of a loved one is emotional enough, without the added stress of managing assets and liabilities, and dealing with attorneys, accountants, and realtors. Believe me, I’ve seen utter chaos when there has been no planning. In fact, it’s one of the reasons I started providing personal trustee services to my clients.

When you employ a professional to serve as your trustee and/or executor, you alleviate the burden of financial decision-making for your loved ones. Adult children have their own busy lives, and many times can’t handle the added responsibility of estate and trust administration. As we’ve illustrated, there can be conflict, or potential for conflict, within the family; so, putting certain individuals in charge may be a bad idea. With the proper legal documents, and careful selection of an independent trustee, you can reduce the risk of family in-fighting and help ensure your assets go to whom you choose, when you choose. Your advanced planning can make your wishes clear and help hold your family together during their time of grief. Let that be your legacy – not strife, fracturing and isolation.

 

                                                                                               

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Holland Financial

Inside Scoop on Continuing Care Retirement Communities, Part II

Last week, we began a discussion on Continuing Care Retirement Communities (CCRCs), and I called on the father-in-law of one of my employees, Eldon, for his insight on this retirement lifestyle. He has lived in a CCRC in western Pennsylvania for several years. We touched on the three levels of care available – independent living, assisted living and skilled nursing care. Today, we’ll talk about the latter of the three, as well as some of the other “perks” of CCRC living.

At Eldon’s CCRC, the nursing facility is referred to as the “Health Care Center.” Residents who are recovering from a hospital stay, and/or who can’t manage the activities of daily living, can enter the Health Care Center and be cared for in a private or semi-private room. If Eldon were to need these services, he would pay an additional fee (provisions of which should be spelled out in the CCRC’s contract), but he would not lose his living quarters when a temporary Health Care Center stay was necessary.

Eldon, you may remember, had lived in his home alone and, after retirement, sorely missed social interaction. His wish was more than fulfilled with his choice to move to a Continuing Care Retirement Community. In fact, there are times he feels that there is too much interaction with other people! But, he always has a choice either to participate, or to retreat to the solitude of his apartment.

Eldon spends many hours each day in the community’s fully-equipped woodshop. He has even taught other people woodworking! The complex also has a large “art studio,” where residents can draw, paint and do crafts (their artwork adorns the hallways). For those who love to read, there is a library, as well as a game room and gym. Eldon says, “There’s always something going on.” People get together to play cards and, in the warmer months, bocce ball. In addition to woodworking and artistic pursuits, an outdoor gardening facility gives residents the opportunity to sow vegetable or flower seeds! Bus trips to museums, the theater, and sporting events are frequently scheduled.

I don’t know about you, but all this sounds great to me! Eldon even told me that the food prepared at the on-site restaurant is quite good! So, I asked him to list the “negatives” of CCRC living. He said that, in his opinion, “there really aren’t any.” Unfortunately, though, affordability is one downside which can’t be overlooked. The entry fee for CCRC living can be rather substantial and, typically, is only refundable for a short period of time. Also, the monthly fee(s) can easily be twice that of a regular apartment. For these reasons, the choice of a CCRC should be made very carefully and the contract should be meticulously reviewed.

Thank you, Eldon, for your input on the subject of CCRCs! Again, all Continuing Care Retirement Communities are not created equal. Contracts, monetary requirements, amenities and housing options vary widely. If you think a Continuing Care Retirement Community might be a good choice for you, meet with a financial planner to assess your situation and compare your options.

 

                                                                                               


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Holland Financial

Inside Scoop on Continuing Care Retirement Communities, Part I

I thought that this week, and next, we’d take a closer look at Continuing Care Retirement Community (CCRC) living, from the perspective of someone who has resided in such a setting for several years. I called on the experience of Eldon, the father-in-law of one of my longtime employees, for his insight on this retirement lifestyle choice.

For those not familiar with the term CCRC, it is a housing community that provides three levels of care to its residents – independent living, assisted living and skilled nursing care. With these three stages along a “continuum of care,” residents can progress through the different levels as their health warrants. Within the community, there are usually a variety of housing options, depending on a person’s preference and budget. In most cases, this is a resident’s last housing choice. They enter the community living independently and stay within the community for life. Therefore, picking a well-run and financially stable community is imperative.

Before entering a CCRC, Eldon owned a home in western Pennsylvania. As he approached his 80s, the upkeep of his property became increasingly difficult. Outside help had to be hired for what used to be everyday chores, like, mowing the lawn, raking leaves and shoveling snow. But, even more concerning to Eldon than home maintenance, was the amount of time he spent alone. Though he was never a social person, even before retirement, living in total solitude was taking a toll. Eventually, he came to the conclusion that living in a community with people his own age, and with similar interests, would be his best option. Even though it wasn’t his primary reason for the move, Eldon also liked the idea that there was assistance, and facilities available, if he were to become ill or if his health were to decline.

Eldon researched a nearby CCRC which had been in existence for many years. It seemed to be well-run, well-maintained and financially sound. When he felt the time was right, Eldon signed the paperwork (CCRCs require a legal contract), paid an “entry fee,” and moved into a comfortable, 2-bedroom apartment. From that point on, a simple monthly payment would cover Eldon’s residence and its maintenance, one meal a day, and his utilities (note: Various meal plans are available. TV and internet services are extra).

Eldon now had at his disposal, what this particular CCRC calls, “Assistants in Living” – a group of CCRC employees who help with everyday chores or errands. A modest (additional) fee is charged for these services. For Eldon, still a very independent individual, the “Assistants” are only utilized once a week to clean his apartment. Other tasks they can perform include: delivering daily meals, shopping and running errands, washing and ironing laundry, transporting residents for doctors’ appointments, etc.

Keep in mind that all CCRCs are different, and this is just an example of one community. Join me next week when we’ll talk about some more of the “perks” you might find in a Continuing Care Retirement Community.


                                                                                               


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Holland Financial

Need a Lawyer? Here Are Some Tips!

Disclaimer: No, no, I’m not a lawyer, and I don’t play one on TV (sorry, I know . . . it’s an old joke). But, I did have an interview with Daytona Beach attorney, Paul Rice, for PlanStrongerTV™, and, you guessed it; we talked about how to find and choose a good attorney. The financial and legal ramifications of choosing a bad lawyer can be enormous because, once a judgement is made on a case, it’s very hard to get a “do-over” – you can’t go back and “fix it” with another attorney. That’s why this topic is so important.

How Do You Find a Lawyer? Ask around! Question your friends, family, co-workers and members of your church. Ask financial advisers. We often work with attorneys on mutual clients. Compile a list of names from the responses you receive.

Next: Web-based Research. Use an Internet search engine to look up the recommendations you’ve accumulated. Read reviews, but remain skeptical. It is not unheard of for some firms to pay their employees’ friends for favorable reviews. Be cautious, and, just like everything posted on the Internet, take what you read with a grain of salt.

Be Careful of the Word “Free.” Though the best things in life are free, consultations with a seasoned lawyer usually aren’t. Paul Rice warns that if a lawyer is giving away his time, the demand for his services might be low. In many cases, top attorneys charge a consultation fee.

What’s Important? Consider education and credentials. Does the lawyer specialize in one area? Is he/she board certified in the specific discipline you need (example: Board Certified in Divorce and Family Law)? How long has the attorney been in practice?  

What Comes Next? By now, you should have narrowed your list down to 2-3 top picks. It’s time for interviews! As mentioned above, this may be an out-of-pocket expense, but consider it an investment. When you arrive at the law firm, what is your impression? Is the office clean, orderly, and professional? Is the receptionist or assistant courteous and pleasant, or stressed and irritated? When the phone rings, how are the callers treated? When you sit down with the attorney, make sure you “like, trust and believe” in him/her. Do you have good “chemistry”? You will be working together as a team, so you need to be able to get along and communicate well. Once you have conducted two or three interviews, you will probably know which person to choose.

Coincidentally, several of the tips Paul shared on interviewing an attorney, can also be applied to choosing a financial adviser. In either case, you want to find a good “fit” for your personality, situation, needs, and goals. Please ask questions and be picky! Good luck!

                                                                                               


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Holland Financial

Where’s the Postcard?!

Hello. I’m Steve Tacinelli, CPA and Vice President of Tax Services for Holland Financial. David asked me if I would share a few words with his PlanStronger™ readers regarding the federal income tax overhaul.

I’m sure you know by now that the Tax Cuts and Jobs Act of 2017 passed when it was signed into law by President Trump on December 22, 2017, drastically changing a big chunk of the tax code. I am not going to debate the pros and cons of these changes. Unless you’ve lived in a cave for the last few weeks, you’ve seen enough of that already! It seems, based on numerous reports from non-partisan think tanks (again, we are not here to debate), that the Act will benefit a large portion of the tax-paying public. Many Americans will see their tax bills decrease due to the passage of this law – at least for the foreseeable future.

However, it bears mentioning that one of the original and chief purposes of the push for tax reform was to simplify the tax code and eliminate the complexities encountered when preparing tax returns. In short, taxes were supposed to be easier to understand and complete. I’ve had more than a few clients ask me in the last year, “When are we going to start using postcards” (instead of lengthy and complicated tax forms)? No doubt, they saw politicians waving “tax return postcards” in front of the media’s cameras and shouting about the need for simplified taxes. Although the Tax Cuts and Jobs Act may lower your taxes, does the Act accomplish the goal of simpler taxes? In this respect, there can be no debate; it does not.

One of the more popular ideas to reduce complexity was to decrease the number of tax brackets. For individuals, the old system had seven tax brackets. The new system? Seven tax brackets. It must be noted that these new rates represent an almost across-the-board reduction, but they do not accomplish the goal of simplifying the tax code. Another major change is the doubling of the standard deduction and the elimination of the personal exemption. This exponentially increases the amount of people taking the standard deduction as opposed to tracking and reporting itemized deductions. Simple, right? Not based on the feedback I’ve gotten from my clients. They have questions about medical expenses, real estate taxes, mortgage interest and charitable contributions. The new law did not eliminate these deductions; it just changed the amounts allowed. That doesn’t simplify the process!

This is not an endorsement or condemnation of the new law, just an observation that, if you thought you would be able to file your taxes on a postcard, you might have to wait a little longer. Ironically, the Tax Cuts and Jobs Act of 2017 is not its official name. The law’s official title is The Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018. The title, alone, would take up half the postcard!

                                                                                               


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Even in a Nursing Home, Caregiving for a Loved One Continues
Part III of III

In the previous two columns, we touched on topics like: what to bring to a nursing facility, the importance of listening and observing when you visit your relative, and how to communicate concerns. Today, we will focus on cleanliness, mealtime, staffing and volunteerism.

Next to Godliness. Cleanliness is of the utmost importance! When you enter a nursing home, there should be no unpleasant smells. If you detect an odor in your relative’s room, make a thorough check of his/her skin for any open areas or sores. An infection can cause a foul odor. Take special note of the pressure points on the body, including the heels, elbows and back. (There are special mattresses that can help alleviate the breakdown of skin. You can request that one be ordered.) Keep in mind that infections and viruses can happen in the cleanest of nursing homes. When there is an outbreak in the surrounding community, influenza can be transmitted to the home’s residents. Shingles, yeast infections, and pneumonia are just a few conditions that can also develop. If an outbreak occurs, ask the facility what they are doing to reduce the spread.

Mealtime and Staffing. If your loved one is on a special diet, ask to assist at mealtime. Generally, there is a flurry of activity during serving and feeding. This is a good time to observe the interaction between the staff and residents. Is there an adequate staff to feed everyone while the food is still hot, or are trays left sitting for long periods? Are the nursing assistants feeding two people at once? Do they speak to the residents with animated tones and have pleasant expressions, or are they quiet and simply going through the motions?

The attitudes of the staff can directly affect the well-being of your loved one! Do they appear to be committed, concerned and compassionate, or uninvolved, distant and uncaring? Nurses, and nursing assistants, undergo intense questioning and background checks before being hired, but, occasionally, an employee has to be dismissed because he/she is not qualified to provide loving care to long-term residents.

Volunteer. I mentioned the wonderful work done by volunteers in Part I of this series. If your schedule permits, volunteering is an excellent way to gather information about a nursing facility: Are medications being delivered in a timely manner? Does the maintenance staff respond to “clean-ups” quickly? You’ll be there, so you will know! If you can’t volunteer, or visit very often, remember, other visitors can be a great source of information on past and present quality of life, and care, at the nursing facility. Strike up a conversation!

Again, my thanks to Joanne Meshinsky for assisting with this series. Joanne spent three decades as an R.N. in long-term care, and assessed medical records for quality of care at nursing homes in Maryland. In the early 1990s, she authored the book, How to Choose a Nursing Home. She is now retired from medicine and resides in Scottsdale, Arizona with her husband, John.

                                                                                               


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Even in a Nursing Home, Caregiving for a Loved One Continues
Part II of III

Last week, we started the conversation about nursing homes, the costs, concerns and what you should, and shouldn’t, bring when you visit a resident. Today, we will discuss some of the things to look out for, and what to do, if you encounter a problem with the care your loved one is receiving.

Listen. When you talk to the nursing home resident, take special note of what is said about the nursing staff and their level of concern about any problems that arise. If the resident doesn’t feel that his/her physical needs are being met, don’t hesitate to direct your concerns to the nurse in charge.

Observe. Sometimes, a resident will experience symptoms unrelated to any medication. He/she may be having a physical problem (like constipation or urinary difficulty) and cannot tell you what is wrong. An increase in thirst, fidgety behavior, listlessness, jerky body movements, unsteady gait, or a change in facial features and expressions are all things to watch out for.

Pain. Do not accept that your loved one is not experiencing pain, even if you are told that by a staff member. Only the individual can relay such information, and sometimes he/she is unable. Pain has become a hot-button topic because of the abuse of opioid medications. Psychotropic drug usage in nursing homes has also declined in prevalence due to the side effects, which included falls. Nurses often know ways to reduce certain types of pain without medication. Discomfort can be caused by poor body alignment. Arthritis is also common amongst the elderly. Sometimes, pain issues can be corrected with neck braces, pressure-relieving mattresses, special pillows, massage or whirlpool therapy, or the use of electrical nerve stimulators. Keep in mind that if a resident is coherent, he/she has the right to accept or refuse any medication or treatment.

Speak Out. If there is a problem or concern, make sure to speak with a “charge nurse” or supervisor. When the need arises, many nursing homes employ agency nurses who may not be as familiar with your loved one’s particular requirements or condition. If a supervisor is not available, or doesn’t provide the assistance you seek, go directly to the facility administrator. If a problem is not urgent in nature, nursing homes usually have staff/family care planning meetings, and most issues can be addressed at that time. If you have made several attempts to communicate a problem, and your concern is still not being addressed, the ombudsman for your area can act as a liaison between the nursing home staff and family. If all else fails, the problem should be documented with your state’s Office on Aging and the Department of Licensing and Certification.

For our final installment, we will address meals, facility cleanliness and staffing. Once again, I want to thank Joanne Meshinsky for assisting me with this three-part series. Before her retirement, Joanne spent three decades as an R.N. in long-term care and assessed medical records for quality of care at nursing homes in the state of Maryland.

                                                                                               


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Holland Financial

Even in a Nursing Home, Caregiving for a Loved One Continues
Part I of III

The decision to place a family member in a nursing home is a difficult one. The mental and physical demands of around-the-clock care for someone who needs help with the activities of daily living can be enormous. If circumstances make assistance from outside sources (like home or health care providers) impractical or impossible, placement of the individual in a skilled nursing facility becomes the only viable option.

The choice of a nursing home can be a daunting task, and the cost is exorbitant. According to Genworth’s 2015 Cost of Care Survey, the median cost for nursing home care in Florida is over $87,000 annually for a semi-private room. The cost for a private room can top $96,000! So, extensive research, site visits and financial planning are imperative before making this important decision.

Once your loved one is settled in to the new environment, you might think that your work is over. Your husband, wife, father, or mother is now being cared for by health care professionals, and it’s less likely he/she will cause harm to himself/herself, or wander away from home. However, even professionally managed establishments are not perfect, and you should stay vigilant to monitor the care your family member is receiving.

Visiting. When possible, try to place your loved one in a nursing home that is close to your residence, so you can visit frequently. The best time to assess conditions at a facility is during “off hours,” like weekends and evenings. If close proximity to the facility is not possible, take comfort in knowing that volunteers (oriented in providing for the physical and emotional needs of the residents) often visit rehab and nursing facilities. Volunteers can conduct drawing, painting, dancing or singing programs. They may organize choral groups during the holidays and can provide specialty services to individuals, like hair and nail care, which would be too time-consuming for the staff.

What to Bring. Many items can bring a smile to a resident. Everyone loves photos, both recent and long past. Videos of family, too, can be watched (and shared) over and over. Beloved items, like a special blanket or pillow, clothes and personal items are perfectly acceptable, as long as they cannot cause harm to the resident. All items should be marked for identity purposes. Avoid bringing perfumes or fragranced lotions. If your relative’s room is semi-private, ask the staff before sending flowers. It is not acceptable to bring in any type of drugs, even common over-the-counter medications. These could interact with your loved one’s current medications or otherwise interfere with his/her condition.

There’s so much more to talk about! Next time we’ll discuss the things to look out for, and be proactive about, when you visit your loved one. I want to thank Joanne Meshinsky for assisting me with this three-part series. Joanne spent three decades as an R.N. in long-term care, and assessed medical records for quality of care at nursing homes in Maryland. In the early 1990s, she authored the book, How to Choose a Nursing Home.

                                                                                               


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Casinos and Insurance Companies

Just over a year ago, the restoration of water service in the aftermath of Hurricane Matthew caused thousands of dollars in damage to my home. My family and I had gone out to eat, and when we returned, several rooms of the house were flooded. What would we have done without insurance? When we bought our homeowners policy, my wife and I essentially transferred the risk (of major damage to our home) to the insurance company. And that same risk transference is what all of us rely on when we purchase automobile, disability, life, long-term care or similar insurance policies.

How are insurance companies able to bear all that risk? They are able to do so because large numbers of people (the insured) become members of one big pool. Actuaries figure out, through metrics and mathematics, the level of risk the insurance company is able to assume and at what cost. Let’s look at a fictitious example for life insurance. “Marty” had a 20-year term life insurance policy. In year 18, at age 68, Marty passed away, and the insurance company had to pay Marty’s beneficiaries $250,000. For every “Marty,” there may be thousands of “Dans,” “Bills” and “Sams” who pay into the same policy, but who don’t pass away during the 20-year term. Consequently, their beneficiaries don’t collect any money. Dan’s, Bill’s and Sam’s premium payments “fund” the payout for the policyholder who was not so lucky (“Marty”). It’s the job of the actuary to figure out, based on life expectancy projections and a host of other factors, the amount of risk the life insurance company can assume – the “risk” of that risk – and the appropriate premium costs. It’s a little like the Las Vegas casinos. The odds are all figured out ahead of time, so the “House” (the insurance company) always comes out on top. And that’s a good thing because, when you choose an insurance company, you want one that is financially stable and well-rated.

Aside from ratings, you should also consider: 1. the size of the insurance company; 2. how long it has been in business; and 3. how long it has been selling the product you are about to purchase. Don’t be shy about asking questions of your adviser or insurance agent: “If an incident occurs, will you be available to help me? If so, how will we engage with the insurance company? What steps will be taken? How does the insurance company pay out?” Shopping carefully, and knowing the answers to these questions ahead of time, will keep you from making an imprudent “bet” with your insurance premium dollars!


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Technology and the Process of Spending Money

Several weeks ago, we talked about how using cash to purchase – just about anything – has become passé. It’s interesting to note that the process of spending, and even investing, money has also changed dramatically over the years. Of course, technology is the biggest contributor to that change. Who doesn’t have a cell phone, tablet, laptop or social media account? And, who hasn’t made a Black Friday or Cyber Monday purchase from the comfort of their home office?

Where’s the Cashier? Think about what you see when you go to some retail stores and grocers now. Instead of traditional check-out lines, there are stations where you can scan your items and put your money, or card, into machines for payment. These automated cashiers must be a boon to bottom-line profits because, as much as I hear other consumers complain, these self-checkout stations remain in place. On a similar note, I recently noticed that a local fast food restaurant tried to implement ordering by kiosks, exclusively. The process was confusing and took longer! Interestingly enough, the last time I dropped by the restaurant, people were standing in the lobby and ordering from a real person, once again.

Have We Become Lazy or Too Busy?  Maybe it’s a little of both. Tell me, how many of us really need a round, plastic box to perform mundane, everyday tasks? Nevertheless, many people are buying these electronic, table-top “assistants.” We can now turn our lights on and off or order a pizza with nothing more than a voice command! Only time will tell whether this automation is simply a fad, or the wave of the future. There are now services that will select and deliver groceries (including pre-prepared or ready-to-prepare meals) and even mail clothing that can be worn, then returned, on a monthly subscription basis! Where’s the need for sales associates and brick-and-mortar stores?

I think the thing to remember is that no gadget, machine or computer can ever replace a human being. Take the financial services industry, for example. In the last few years, there has been a concerted effort to utilize what are known as “robo-advisers” to assist investors with their investment decision-making. The jury is out on whether this will be an accepted trend. But my opinion has always been that a machine cannot sit down with you, look into your eyes, and relate to your personal situation. Nor can it take into consideration your wants, needs, goals, and dreams. Turning on the lights is one thing, illuminating your financial future is quite another.

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