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Monday, September 30, 2013

Do you travel? If so, you need to read this

Click on this link to find 11 Tips to prevent Identity Theft while you travel

Tuesday, June 25, 2013

Available Resources To Reduce Your Cost Of Living In A Retirement Or Assisted Living Community

There are ways you can reduce your cost of living in a retirement or assisted living community. Some of them depend on where you live, but others are generally available throughout the U.S., or in California where I am located. The following are a sampling of available programs, tax based aid, or long term planning tools that may help you or your loved ones.

VA Aid & Attendance Benefits:

Applying for VA Aid & Attendance is a time consuming process, and the program has a number of qualification issues that each veteran has to work through. I am not certified to provide application services to veterans for Aid & Attendance, nor any other VA benefits. The information I am providing here is readily available to the public through a variety of VA sources, and I am only restating it in outline form so that veterans and their families can have a thumbnail explanation before seeking benefits. If it is time for you to apply for VA Aid & Attendance, contact your local VA Office for more complete information and the forms required. If you live in California, you can get free help from your local County Veterans Service Office.

Aid & Attendance is for applicants who need financial help for in-home care, to pay for an assisted living facility, or to pay for a nursing home. It is a non-service connected disability benefit. The disability does not have to be a result of service, and you cannot receive non-service and service-connected compensation at the same time. This means that if you are receiving service-connected compensation, but can also demonstrate a need for Aid & Attendance, you will not be allowed to double dip the system. Because you cannot receive both types of compensation at the same time, you must seek the advice of an expert before applying for Aid & Attendance if you are currently receiving service connected compensation, to determine if you will receive more total compensation under one system than the other.

VA Aid & Attendance is only available to veterans or their surviving spouses who meet the following criteria:

1. An Honorable Discharge of the Veteran from a branch of the U.S.A. Armed Forces (including guard);
2. At least 90 days of active duty military service;
3. At least 1 day of the 90 days must be during one of the following periods:
     World War I:  4/6/1917 through 11/11/1918
     World War II:  12/7/1941 through 12/31/1946
     Korea:              6/25/1950 through 1/31/1955
     Vietnam:          8/5/1964 through 5/7/1975
     Lebanon:          8/25/1982 through (Still Being Determined)
     Grenada:          10/25/1983 through 12/15/1983
     Panama:           12/20/1989 through 1/31/1990
     Persian Gulf:    8/2/1990 through (Still Being Determined)


1. The Veteran must be 65 years old or older, or under 65 and permanently or completely disabled;

2. Service in the Merchant Marine during World War II counts the same as Naval service providing that there was service of 90 days at sea;

3. Women in the World War II military, including nurses, qualify as veterans;

4. Reserves and National Guard are not qualified unless they served 90 days active Federal duty service with 1 day during a period of conflict. (Training does not count as active duty.);

5. The 90 day rule is excepted for those who served less than 90 days but were awarded the Purple Heart, suffered a service connected disability, or were killed in the line of duty;

6. Aid & Attendance is a needs based system, so the veteran or surviving spouse has to satisfy both the physical needs based criteria, and the financial qualifications consisting of their level of countable family income, and their total asset level component;

VA Aid & Attendance Maximum Monthly Pension Rates are increased periodically, but the recent rates I have seen are:

A Veteran who is Single:                    $1,703.00
A Veteran With a Spouse:                   $2,019.00
Both Husband & Wife are Veterans:   $2,631.00
Surviving Spouse of a Veteran:           $1,094.00
Surviving Spouse with 1 Dependent:  $1,306.00

VA Disability Benefits:

VA Disability Benefits are also available to veterans with service-connected disabilities and their surviving spouses. However, the application process and rating system are too complicated for me to provide a rational synopsis in this article. If you have a service-connected disability, or you are the surviving spouse of a veteran who was receiving service-connected disability compensation, contact the Veterans Service Office near you and start the application process through them. Depending on the disability rating and the number of dependents, the disability payments can range from a few hundred dollars to over $3,000 per month. In addition, veterans with a spouse, children, and dependent parents may also be able to obtain increases in their monthly benefits.

Tax Deductions For Care:

The following has been excerpted from IRS informational documentation, and is only a general description provided to allow you to understand the basic concepts of deductibility of medical expenses in the assisted living area. If you are a resident of an assisted living facility, or the child of such a resident, you should seek the advice of a qualified tax expert for detailed analysis of your particular tax circumstances.

In general, medical expenses, including some long term care expenses, are deductible if the expenses are greater than 7.5% of your adjusted gross income. To deduct assisted living expenses, you must be considered chronically ill. This means that a doctor or nurse must certify that you are either (1) unable to perform at least two activities of daily living (transferring, bathing, dressing, eating on your own, toileting, or you are incontinent), or (2) you require supervision because of cognitive impairment, such as Alzheimer's desease or other form of dementia.

A further requirement, is that the personal care services are provided according to a plan of care prescribed by a licensed health care provider. (Doctor, nurse, or social worker.) Most assisted living facilities prepare care plans for their residents as part of their admission policy.

Normally, only the medical care component of assisted living is deductible. However, if the resident is chronically ill and in the facility primarily for medical care, and the care is being performed according to a certified care plan, the room and board may be considered part of the medical care and also be deductible. If, however, you are in the assisted living facility for custodial reasons, not primarily for administration of the medical care, the costs are only deductible to a limited level. None of these costs are deductible if they are reimbursed by insurance policies or other programs.

Even if you are not chronically ill, you may still deduct that portion of your expenses that are attributable to medical care. Adult children of the resident of an assisted living facility may also use the deduction if they can treat the senior as a dependent for tax purposes. The taxpayer must be a U.S. citizen, or a legal resident of the U.S. (or in some cases of Canada, or Mexico), and provide more than half of the senior's total support for the year. There is also a formular for when multiple children supply support to their parent in an assisted living facility to take percentages of the deductions according to a written Multiple Support Declaration. Assisted living facilities are responsible for reporting what portion of the fees received are attributable to medical costs.

Long Term Care Insurance:

Unless you are a wealthy person or a very poor person, you will probably have to pay for your own long term care needs at some point in your later years. The wealthy have enough assets to provide for their assisted living expenses and still leave an estate behind for their family. The poor having nearly nothing saved for long term care and no substantial assets, and will likely qualify quickly for Medicaid/MediCal coverage of their nursing home costs. Those in the middle will not have enough saved to both pay for their long term care and leave something to their heirs.

Some experts say should do what attorneys call Medicaid/MediCal planning, which basically means you give away your assets to family members now, or irrevocably give up control of your assets now, and hope to wait out the 60 month look back period built into the Medicaid/MediCal programs before you require long term care. This is not always a good idea, as the facilities available to you as a Medicaid/MediCal qualified patient are often not nearly as nice as the private pay assisted living you could have afforded if you had long term care insurance as well as retained your assets to help pay for such care. Secondarily, many states are cutting back on the scope of their Medicaid packages, which may negatively impact the amount and type of care you will actually receive in the future.

One way to help pay for your long term care needs, is to purchase long term care insurance while you are still young enough to keep the premiums low over the life of the policy. There are pros and cons to doing so. On the plus side, you can provide for a set minimum number of years of payments at a set amount per day. You can even have an inflation factor included to make sure your daily payments rise with the costs of care. Since skilled nursing already costs over $235 or more per day in California, this may be a good way to protect against inflation and preserve your other assets for future needs or your heirs. On the negative side, long term care insurance is a bet between you and the insurance company that you will use up a high percentage of your coverage for your needs, versus the insurance company hope that you will either pass away without activating your policy, or only need care for a short period, leaving a large percentage of your payments with the company as profits. You can be assured, that the insurance companies have calculated their premium structure to benefit themselves in most situations.

Your personal decision on purchasing long term care insurance may boil down to the piece of mind provided by knowing you can go into private pay assisted living of your choice, versus a nursing home environment which may not be as pleasant an experience. In addition, if you do have to go into a nursing home, and you have long term care insurance, it will pay for a percentage of your care and you will preserve your other assets for your spouse's needs and/or your heirs.

An additional point to remember, is that some life insurance policies include a conversion right to use the paid up value as a source for long term care. If you own such a life policy, you should check into converting it when you need care. It is also possible to sell your insurance policy value, and apply the proceeds to your care. Several states are actually considering legislation that will require you to utilize this option rather than let the policy lapse in order to qualify for medicaid.

Medi-Cal Assisted Living Waiver Program:

The Assisted Living Waiver Program in California, is designed to enable low-income Medi-Cal eligible seniors and persons with disabilities, who would otherwise require nursing facility services, to remain in or relocate to the community. The Assisted Living Waiver Program services Fresno, Los Angeles, Riverside, Sacramento, San Bernardino, San Joaquin and Sonoma counties. Residents of other counties can apply for the program if they are willing to move to a facility located in one of the participating counties.

Participants are allowed to select the facility of their choice. Care Coordination Agencies must inform participants of the available facilities and providers in the county. Residential Care Facilities for the Elderly are allowed to reject a participant at their discretion. However, once a facility admits someone, it must provide necessary services, and adapt services as the participant's needs change. All providers are expected to deliver all four levels of care.

Assisted Living Waiver participants have access to four different waivers:

    1. Assisted Living Services: Services are provided by a Residential Care Facility for the Elderly or Assisted Care, and are provided by a licensed home health agency to residents in public housing. The services that must be provided to Assisted Living Waiver participants include:
    A care plan for each resident;
    Personal care and assistance;
    Laundry services;
    Housekeeping services;
    Maintenance of the facility;
    Intermittent skilled nursing care;
    Meals and snacks;
    Assistance with self-administration of medications;
    Providing or coordinating of transportation;
    Recreational activities;
    Social Services.

    2. Care Coordination: Identifying, organizing, coordinating, and monitoring services needed by clients.

    3. Nursing Facility Transition Care Coordination: Services to help transition participants from a nursing home to the community.

    4. Consumer Education: Helping the client take control and responsibility for their care and services.

Eligibility: Participants must be 21 years old or older, eligible for full-scope or share of cost Medi-Cal benefits, and require a nursing facility level of care. The eligibility key is that the program is designed to serve people who would otherwise need nursing home care, and who can also benefit from placement into, or back into, the community. The client's need for nursing home level of care is determined by contracted Care Coordination Agencies using a standardized assessment tool.

Care Planning: The Department of Health Care Services has established four levels of care, known as tiers, and a payment level for each tier. Care Coordination Agencies determine the level of care each participant needs using the standardized assessment tool, and establish individualized service plans for each participant. Services included are covered by Medi-Cal through the Assisted Living Waiver Program, and/or other services are funded by other sources.

Participating Residential Care Facilities for the Elderly must develop a care plan to implement the service plan for each participating resident. Participants living in public housing sites have their care plans implemented by licensed and Medi-Cal certified home health agencies. Services provided in public housing sites are called Assisted Care under the Assisted Living Waiver Program.

Provider Eligibility: Interested providers must enroll as a Medi-Cal assisted living waiver provider. The basic requirements for the three main care provider types are as follows:

    Residential Care Facilities for the Elderly must be licensed, not on probation or having pending accusations against their license, and be in substantial compliance with licensing requirements. In addition, Residential Care Facilities for the Elderly must also:
    1. Meet the care needs of all participants in accordance with their care plans at all four levels of care;
    2. Have awake staff 24 hours a day (except in facilities of 6 or fewer residents);
    3. Employ, or contract with a nurse or nursing agency, to provide any required nursing services as often as necessary;
    4. Have a hospice waiver and be able to care for cognitively impaired residents;
    5. Have single occupancy rooms for participants, unless the participant chooses to have a roommate;
    6. Have private bathrooms, or bathrooms shared by no more than two participants;
    7. Have a Kitchenette in each participant's room (except in facilities with six or fewer residents, where the requirement is waived if the resident has continuous access to the facility kitchen.

Care Coordination Agencies must have five years of experience in this field, have R.N. and social services care coordinators on staff, and meet other requirements.

Home Health Agencies must be licensed, enter into an operating agreement with the publicly funded housing site where they deliver services, open a branch office at that site, and meet other requirements.

Payment Rates: Participants pay for their own room and board at rates set by the facility. Medi-Cal payments only cover costs of specified care and services. Medi-Cal sets the reimbursement rates for each level of care, they are not negotiable by Residential Care Facilities for the Elderly or Home Health Agencies. The daily rates range from $52 for tier one, to $82 per day for tier four.

Care Coordination Agencies are paid $200 per participant per month, for care coordination services and for the coordination of other waiver benefits and services. In addition to care coordination, up to $2,500 is available to help a nursing home resident move back into a community setting, plus $1,000 may be available for care coordination services for that participant. For participants living in public housing, up to $1,500 per participant is available for environmental accessibility adaptations. Participants can also receive consumer education, interpretation and translation services.

Below Market Rate Assisted Living Packages:

Some assisted living facilities have programs, required by local municipalities at the time of approval of the project, which provide for lower income individuals to qualify for full service assisted living they would otherwise not be able to afford. The common thread for these programs is that they are for individuals that have too much income and/or too many assets to qualify for Medi-Cal or other government program, but not enough income, savings or assets to afford full private pay rates. The criteria for qualification for these programs vary, but it is important to inquire about their availability when contacting any upscale assisted living facility.

Bridge Loans To Help Pay The Initial Costs of Long Term Care:

If your senior loved one has non-liquid assets that are not immediately available to pay for assisted living costs, there are some lenders that specialize in loans to cash strapped families that cannot afford the move into assisted living until those assets are converted to cash. The loans are secured by the assets that are going to be sold in the future, and the funds are transferred directly to the assisted living facility to pay for rent and services. Unsecured loans can also be structured, allowing up to six family members to co-sign on the loan, and have the proceeds wired directly to the assisted living facility for payment.

Companies providing these loans are most often not traditional banks, with loan application and approval processes that are not as complicated or stringent as traditional banks. They also often lend at rates lower than traditional banks. Some of these lenders are also starting to structure home equity loans designed to provide a stream of payments for assisted living costs until the property is sold, and the equity loan paid off from the sale proceeds.

Balances for loans secured to property can reach over $1 million, and unsecured loan balances of up to $50,000 are available. Interest on unsecured loans vary between 8% and 12%. Interest on secured loans currently vary between 3.5% and 6.5%.

Wednesday, May 29, 2013

A Senior Living Marketing Video That Works (And Why) -

A Senior Living Marketing Video That Works (And Why) -

This is a wonderful video that helps take you through many of the difficult issues that face all of us when we are trying to make the best decision about assisted living care. Unfortunately, the facility that produced it does not have a local assisted living facility in the central California area. However, I am affiliated with several high quality assisted living facilities that follow very similar care regimins as those referenced in the video.

Please contact me with any questions you may have regarding assisted living care plans and available facilities in the central California area. I will be happy to help you at no cost to you or your loved one.

Friday, May 17, 2013

What Is The Overall Tax Burden Where You Plan To Retire

The first thing you must be aware of, is that I am not a tax professional. I have taken the time to research the tax issues set forth below, but you should do your own research and consult with qualified tax experts before making any decisions regarding finding a relative tax haven in the U.S.

That being said, the Federal tax rates do not very based on locality. However, each state has its own tax structure, which may be weighted either against retirees interests or treat retirees better tax wise than other states.

The tax structure in each state may include the following types of taxes:

1. Property Taxes;
2. Sales Taxes;
3. Income Taxes;
4. Estate/Inheritance Taxes;
5. Use/Specific Item Taxes;

Property taxes may be the biggest threat to retirees living on a fixed income, because they are based on the value of the property owned and bear no relationship to the annual income the retiree is receiving.  They also are subject to reassessment which over time will increase the burden on a fixed income retiree. One strategy is to rent rather than own your home, but you have to remember that the rents will often reflect the property tax bill that your landlord is facing.

Sales taxes very greatly in the states that impose them, but a few states do not impose them at all. Income taxes also very widely, with some states giving retirees special tax breaks, and others taxing every category of income, including social security income.  The category of estate and inheritance taxes sounds redundant, but some state define them in such a way that excludes either the defined "estate"  taxes but impose "inheritance" taxes on defined categories of property, or visa versa.

Use/Specific Item Taxes are those taxes imposed on certain consumer items. These may include cigarett sales taxes, fuel sales taxes, alcohol sales taxes, and/or automobile registration fees with a vehicle value component. I have not researched or provided any information on these types of taxes, and you should consult your tax expert if any specific item or use applies to you personally.

Using information from the Tax Foundation, several sources have compiled lists of the "10 Most Tax-Friendly States For Retirees", and the "10 Least Tax-Friendly States For Retirees." They all seem to agree that Alaska is the most tax friendly state for retirees. However, they vary on the specific rankings on the top and bottom 10, depending on how they rate each category.  The following is a good general list of top 10 and bottom 10. Each retiree should consult with local tax experts to fill out a list of the pros and cons of choosing each listed state they are considering as a retirement haven.

Top 10 Most Tax-Friendly States For Retirees:

1. Alaska: No State Income Tax; No State Sales Tax (Some cities impose sales taxes); No Estate/Inheritance Taxes; Property Taxes are assessed, however seniors over 65 get an exclusion of the first $150,000 of assessed value; In addition, residents get an annual dividend from the state's oil reserves which is distributed to each permanent resident;

2. Nevada: No State Income Tax; Sales Tax at 6.85% plus some local additional sale taxes; No Estate/Inheritance Taxes; Property taxes are assessed, but are relatively low compared to other states; For the most part, the state relies on income produced from out of state tourists and gamblers rather than taxing its residents;

3. Wyoming: No State Income Tax; Sales Tax is 4% plus some local sales tax additions of up to 2%; No Estate/Inheritance Taxes are imposed; Property taxes are very low, with only 9.5% of market value being subject to tax;

4. Mississippi: State Income Tax is 3% to 5%, but exclusions are given for most retirement income; Sales Taxes are 7%;  No Estate/Inheritance Taxes; Property taxes are relatively low and those 65 and older get an exemption of the first $75,000 of property value;

5. Georgia: State Income Taxes 1% to 6%, with good exemption for retirees; State Sales Taxes are 4%, with local increases of up to another 4%; No Estate/Inheritance Taxes; Property Taxes are at about the national average;

6. Alabama: State Income Taxes are 2% to 5%, with generous exemptions for seniors; Sales Taxes start at 4%, however local cities and counties can impose their own sales taxes, and can reach 10%; No Estate/Inheritance Taxes; Very Low Property Taxes with no state level property taxes for those over 65, however, some cities do assess property taxes on their own;

7. South Carolina: State Income Taxes are 3% to 7%, with good senior exemptions; State Sales Taxes 6%; No State Estate/Inheritance Tax; Property Taxes are very low, with additional exemptions for seniors; Sales Taxes However, are pretty high, 6% to start, with local governments adding up to 3%. Prescription drugs are exempted from sales taxes, but significantly, food sales are taxed;

8. Louisiana: State Income Taxes 2% to 6% with generous senior exemptions; Sales Taxes are 4% at the state level and local governments can add substantial amounts, with the statewide average being 8.86%; No Estate/Inheritance taxes; Property taxes are among the lowest in the country.

9. Delaware: Income taxes are 2.2% to 6.75% with good senior exemptions; No state sales taxes; Estate taxes are imposed, but no inheritance taxes; Property taxes are very low;

10. Pennsylvania: Income taxes are at a flat rate of 3.07%, and all retirement income is exempted; Sales Taxes are 6% with exemptions for food, clothing and medicine; No Estate Taxes, but Inheritance Tax is imposed against the heirs, and it can be a significant percentage of the inheritance; Property taxes are relatively high, especially near the larger cities.

The 10 Least Tax-Friendly Sates For Retirees Are:

1. Connecticut: Income Taxes 3% to 6.7% with only breaks for lower income seniors, and most retirement income is subject to taxation; Sale Taxes are 6.35% to 7 % for luxury items; There are Estate Taxes, but no Inheritance Taxes; Property Taxes are the second highest in the U.S., but 65 year olds and older can apply for tax credits and rent rebates;

2. Vermont: Income Taxes3.55% to 8.95% with almost no exemptions for retirees; Sales Tax 6%, with separate categories for prepared foods and restaurant meals at 9%, and alcohol served in restaurants at 10%; Estate Taxes are imposed, but there is no Inheritance Tax; Property Taxes rank in the highest 10 among the 50 states;

3. Rhode Island: Income Taxes are 3.75% to 5.99%, and retirees are not given any breaks as investment income is taxed at the full income tax rate with no preferential treatment for capital gains and dividends; Sales Taxes are 7%, with exemptions for food, prescriptions, nonprescription drugs, and some clothing; Property Taxes are high, being in the top 5 highest rates in the country, with only low income seniors being eligible for a small amount of relief;

4. Montana: Income Taxes are 1% to 6.9%, with the 6.9% rate being imposed on anyone or couple earning more than $16,000, with very little in the way of exemptions for retirees; Sales Taxes are the only bright spot, as Montana has not instituted a sales tax system; No Estate or Inheritance Taxes are imposed; Property Taxes are relatively high, with a modest tax credit being allowed to 62 year and older person with incomes less than $45,000 annually;

5. Minnesota: Income Taxes are 5.35% to 7.85% with no exemptions for retirees; Sales Tax is 6.875% plus local additions getting it up to as high as 9.53%, with food, clothing, prescription & nonprescription drugs exempt; Estate Taxes are imposed, but no Inheritance Taxes; Property Taxes are among the 20 highest in the country, with some newly enacted breaks and a "property tax deferral program" for lower income seniors who can defer paying a portion of their property tax bill which is then treated as a low-interest loan which eventually has to be paid off;

6. Nebraska: Income Taxes are 2.56% to 6.84% with no exemptions for social security income or out of state government pensions, and the top rate starts at the $27,000 level for individuals and $54,000 level for married couples; Sales Taxes are 5.5% with exemptions for food and prescription drugs; No Estate Taxes, but an Inheritance tax is imposed on transfers of property and annuities; Property taxes are assessed on 100% of fair market value with a senior exemption set at the state homestead exemption level;

7. Oregon: Income Taxes are 5% to 9.9%, the second highest in the nation, and most citizens are taxed at the highest rate, which is applied to all income over $7,950 for individuals and $15,900 for married couples. Social Security benefits are exempted, but other forms of retirement income are taxed, with a partial credit for those 62 and older with incomes below $22,500 for individuals and $45,000 for married couples; No Sales Taxes imposed; Estate Taxes are imposed on estates over $1,000,000, but no Inheritance Taxes;

8. California: Income Taxes are 1% to 10.3%, with only Social Security income being exempt for seniors but other forms of retirement income are not exempted, and the top rate starts for individuals at $48,942 and at $97,884 for married couples. Millionaires pay an additional 1% tax on income. Californians pay some of the highest income tax rates in the country; Sales Taxes are 7.25% and can reach 9.25% in some cities; No Estate or Inheritance Taxes; Property Taxes are assessed on 100% of market values, but are capped at 1% of assessed value with reassessment usually only on sale of the property or new construction;

9. New Jersey: Income Taxes are 1.4% to 8.97% with local taxes also imposed raising the rate to as high as 12% when property taxes are added in, the highest in the nation. The state ranks number 1 in both amount of property taxes paid and percentage of home value assessed. Social Security benefits and military pensions are exempted, and 62 or older residents with income under $100,000 get to exclude up to $15,00 for individuals and $20,000 for married couples; Sales Taxes are 7%, with groceries, medicines, and clothing exempted;

10. New York: Income Taxes are 4% to 8.82% for millionaires, with generous exemptions for retirees. even so, New Yorkers pay over 12% of their income in state and local taxes according to the Tax Foundation; Sales Taxes are 4%, but balloon to as high as 9% when local taxes are included. However, food and prescription & nonprescription drugs are exempted; Estate Taxes are imposed, but no Inheritance Taxes; Property Taxes are near the highest in the nation, but seniors 65 and older can qualify for reduced property taxes subject to overall income restrictions.

The morale of this story is: if you wish to move to reduce your overall cost of living, focus on the top 10 most tax friendly states listed above depending on your individual retirement fund structure, and always consult with tax professionals to make sure you are going to a tax friendly state under your personal circumstances.

Wednesday, May 8, 2013

Buying A Retirement Home vs. Renting

Once you make the decision to retire, one important issue becomes retirement housing. This decision requires a look at your monthly cash flow and budget to determine where your money is best spent in the retirement context. The options include:

 1. Remaining in your current city in your current home;

 2. Downsizing either into a newly purchased smaller home or rented apartment in your current city;

 3. Moving into a retirement community within your current city;

 4. Moving to a new community and either buying a new home, renting a home or apartment, or moving into a retirement community;

The issue becomes how your probably fixed retirement income can best be put to work for you. Many people believe that just staying in their current home is the best solution. This may or may not be true depending on a number of factors. The way to get to the truth of the matter is to prepare a budget on your current home expenses and compare it to the alternatives of downsizing by purchase or rental, or moving into a retirement/assisted living community. The point of doing this is to get past the general assumption that aging in place in your current home is cheaper and better for your health than any other alternative. Often the reality is shown in the numbers, and remember, numbers do not lie.

There are at least four types of home expenses. Those directly associated with ownership of your home, those that you choose to pay as a result of owning your home, those that you cannot realistically avoid as you age in place in your home, and outside services and activities you choose to participate in off premises. Taken together, these expenses often far exceed what you believe off the top of your head. A calm, cool, and direct evaluation of these numbers often surprises those who take the time to thoroughly evaluate them. After all, the goal is to reduce your monthly retirement expenses to a sustainable level for what may be an extended period of time. We are all living longer than our ancestors did, and we therefore need to rethink our retirement planning to allow us to live comfortably for an extended period of time on our now fixed income.

Here is a budgeting tool to get you started on this evaluation. The point is to include everything home ownership entails, compare it to what reductions in budget we can expect from renting, and/or compare it to the reductions we can expect if we choose to move into a retirement/assisted living community. We start with a living at home expense budget column, followed by a renter's budget column, which is followed by a retirement/assisted living community budget column. The list of expense responsibilities shrinks as we progress down this line of inquiry.



1. Mortgage Payment:
2. Condo/Association Fees:
3. Property Taxes:
4. Property Insurance:
5. Utilities: Gas:
                  Garbage Collection:
6. Household Maintenance:                       _______________
TOTAL:                                                  $_______________


1. 24-Hour Security System:
2. Lawn Care:
3. Housekeeping/Maid Services:
4. Cable TV:
5. Telephone Service:
6. Meals/Food/Beverages:
7. General Transportation Costs:                 _______________
TOTAL:                                                    $_______________


1. Emergency Call System:
2. Caregiving Fees:
3. Transportation Services Due To Aging:  _______________
TOTAL:                                                    $_______________


1. Health Club/Exercise Classes:
2. Social/Cultural/Recreational Events:
3. Restaurant Meals:                                   _______________
TOTAL:                                                   $_______________

GRAND OWNERSHIP TOTAL:          $_______________



1. Rent:
2. Condo/Association Fees:                    (Included)
3. Property Taxes:                                   (Included)
4. Renter's Insurance:
5. Utilities:  Gas:
                   Garbage Collection:
6. Household Maintenance:                     (Included)                 
TOTAL:                                                   $_______________


1. 24-Hour Security System:
2. Lawn Care:                                          (Included)
3. Housekeeping/Maid Service:
4. Cable TV:
5. Telephone Service:
6. Meals/Food/Beverages:
7. General Transportation:                          _______________
TOTAL:                                                   $_______________


1. Emergency Call System:
2. Caregiving Fees:
3. Transportation Services Due To Aging:   ______________
TOTAL:                                                     $______________


1. Health Club/Exercise Classes:
2. Social/Cultural/Recreational Events:
3. Restaurant Meals:                                    ______________
TOTAL:                                                    $______________

GRAND RENTAL TOTAL:                   $______________



1. Rent:
2. Condo/Association Fees:                      (Included)
3. Property Taxes:                                     (Included)
4. Renters Insurance:
5. Utilities:  Gas:                                       (Included)
                   Water:                                    (Included)
                   Electricity:                              (Included)
                   Garbage Collection:               (Included)
6. Household Maintenance:                       (Included)_______
TOTAL:                                                   $_______________


1. 24-Hour Security System:                     (Included)
2. Lawn Care:                                           (Included)
3. Housekeeping/Maid Services:               (Included)
4. Cable TV:                                             (Included)
5. Telephone Service:                               (Partially Included)
6. Meals/Food/Beverages:                         (Included)
7. General Transportation Costs:                (Included)_______
TOTAL:                                                    $_______________


1. Emergency Call System:                        (Included)
2. Caregiving Fees:                                     (Included)
3. Transportation Services Due To Aging: (Included)_______
TOTAL:                                                    $_______________


1. Health Club/Exercise Classes:                (Included)
2. Social/Cultural/Recreational Events:       (Included)
3. Restaurant Meals:                                    (Included)_______
TOTAL:                                                     $_______________


If you make realistic entries in this budget comparison, you will have a better tool to help you make the money smart choice of how you can best utilize your retirement funds. Most people are surprised to learn just how expensive aging in place can be. This Budgeting exercise can be modified to include the cost of purchasing a new home as part of your retirement plan, as the home ownership column can be used prospectively to compare with the other options.

It is also important to realize that under some circumstances, the medical care component of assisted living costs can be tax deductible to the senior, or to their children if they are able to claim the senior as a dependent and are paying the cost of such care. This can significantly reduce the cost of assisted living when the tax effects are taken into account. This is a complicated area, and requires the help of a tax expert to figure out your best options. I will expand on this issue in later posts to my Blog Site. For our purposes here, keep in mind that depending on the amount of your care plan that is a medical expense may reduce the cost factor for moving into assisted living even further than it appears here on an after tax basis.

All of us facing retirement must also recognize that our health and safety are of paramount importance. The choices we make on whether to age in place rather than move into a retirement or assisted living community can come back to haunt us. When we age in place at home, the chances of being injured and unable to call for immediate medical help are much higher than if we are in an assisted living community. In addition, the probability that we will get injured trying to do our home chores or maintenance are much higher as we age in place. We can gain peace of mind by doing realistic self evaluations, and plan for our best financial as well as health and safety needs now, when we are capable of making our own rational decisions. Waiting for the future to sort itself out will only put us at greater risk.

If you have any question or comments please contact me through the numbers at the top of the Blog Site, or through the social media sites in the right hand column of the Blog Site.

Tuesday, May 7, 2013

Local Area Cost Of Living Comparisons

As a followup to my previous post, when deciding where to live during our retirement, one of the important factors is: What Is The Local Area Cost Of Living?

 There are several sources on cost of living data. Sperling uses food costs, utilities, and a miscellaneous category to arrive at an overall score for each city or metropolitan area. The individual items are weighted to take the proportion of each dollar normally spent on each into account. The national average is expressed as 100, with each location being compared so as to come in with a cost of living under 100 and therefore less expensive to live in than average, or over 100 and therefore more expensive to live in than average.

Using this method, the following representative cities qualify as the least expensive to live in:

Des Moines, Iowa: Overall Score: 84
San Antonio, Texas: Overall Score: 86
Batesville, Arkansas: Overall Score: 86
Wichita, Kansas: Overall Score: 87
Danville, Virginia: Overall Score: 87
Houston, Texas: Overall Score: 89
Rhinelander, Wisconsin: Overall Score: 90
Green Bay, Wisconsin: Overall Score: 90
Elizabeth City, North Carolina: Overall Score: 90
Tucson, Arizona: Overall Score: 91
Savannah, Georgia: Overall Score: 91
Atlanta, Georgia: Overall Score: 94
Las Vegas, Nevada: Overall Score: 94
Kansas City, Missouri: Overall Score: 94
Lawrenceville, Georgia: Overall Score: 94
Champaign, Illinois: Overall Score: 96
Greeley, Colorado: Overall Score: 96
Shacklefords, Virginia: Overall Score: 96
Johnstown, New York: Overall Score: 99

It is possible to find similar data on almost every city in the US. This information gives us a chance to incorporate the cost of living into our analysis on which area we favor to retire to. Although the cost of living gives us an opportunity to review places that we can live in for less, other factors often mean more to us than others. The following list covers areas that are more expensive than the average of 100 to live in. However, some of them also possess characteristics that make them more desirable places to live in, even though more expensive than average. They are also considered by many as ideal places to live:

Pendleton, Oregon: Overall Score: 101
Surry, Virginia: Overall Score: 102
Hampton, Virginia: Overall Score: 102
Wauwatosa, Wisconsin: Overall Score: 104
Vancouver, Washington: Overall Score: 104
Austin, Texas: Overall Score: 105
Chicago, Illinois: Overall Score: 105
Olathe, Kansas: Overall Score: 106
Sacramento, California: Overall Score: 108
Denver, Colorado: Overall Score: 110
Pullman, Washington: Overall Score: 110
Carmel, Indiana: Overall Score: 114
McFarland, Wisconsin: Overall Score: 114
Scottsdale, Arizona: Overall Score: 120
Bellingham, Washington: Overall Score: 125
Hilton Head, South Carolina: Overall Score: 135
Seattle, Washington: Overall Score: 143
Washington, DC: Overall Score: 143
San Diego, California: Overall Score: 145
Cape Cod, Mass: Overall Score 145
Naples, Florida: Overall Score: 160
Walnut Creek, California: Overall Score: 167
South San Francisco, California: Overall Score: 170
New York, New York: Overall Score: 170
Honolulu, Hawaii: Overall Score: 185

In general, the states with the lowest cost of living are not thought of by most as the ideal places to retire to. This is reflective of the fact that they often have less desirable overall climate characteristics, fewer social and entertainment opportunities, and in general less access to health care. The top ten states chosen by Bankrate's as the best to retire to are:
1. Tennessee
2. Louisiana
3. South Dakota
4. Kentucky
5. Mississippi
6. Virginia
7. West Virginia
8. Alabama
9. Nebraska
10. North Dakota

This is a good starting point for your analysis, but many more factors need to be considered, and will be discussed in future articles.

Saturday, April 27, 2013


When we get closer to retirement, it is a good idea to think about where we should live during our retirement. There are a lot of factors to consider when making our plans. You may wish to remain as close as possible to our immediate family members, or in the alternative, live someplace where your family members will enjoy coming for short visits rather than seeing them every day.

No one place can be the best in every category, but depending on which factors we rank the highest, it is possible to narrow the choices down to a short list of possibilities. The list of factors should at least include the following:

What Is The Local Area Cost Of Living?

How Will Buying A Home vs. Renting Affect Your Cash Flow Picture?

What Is The Income Tax Burden Where You Plan To Move, Including Taxes On Social Security and Pension Income, Property Taxes, Sales Taxes, and/or Inheritance Taxes?  

What Resources Are Available That Can Reduce Your Personal Cost Of Living In The Communities You Are Considering?

What Are The Weather Conditions Throughout The Year?

Availability Of Public Transportation?  

Where You Can Live The Longest And Healthiest Life?  

What Is The Overall Safety Levels In The Community You Are Considering?  

Availability Of Medical Services For Seniors?  

Senior Lifestyle Amenities And Choices?  

Whether Access To Travel Opportunities Is A High Priority?  

Where You Can Best Fit In To Provide For Your Mental Wellness?

Where Can You Continue To Do The Things You Currently Like To Do Or Expand On Your Hobbies And Activities?  

Whether You Will Fit In Best In A Large Metropolitan Area Or In A More Suburban or Rural Setting?

For Those Who Wish To Work During Retirement To Supplement Their Income Or Maintain Work Place Relationships, What Are The Job Prospects For Seniors In The Areas You Are Considering?

I will be writing a series of articles in the future on each of the factors set forth above, and hope that you will continue to visit my blog site in order to put each factor into perspective as well as to make your own comments related to each discussion.  For now, please think about how each of these factors would affect your decision and rank them in order of importance to you.  You will then have a factual framework from which to make your determination on the best local and type of community in which you would like to spend your retirement.