Suze Orman Says This Is the Age You Should Retire—Not a Month or Year Before (and Here’s What She Misses)

If you’re middle aged or older, it’s likely that one of your most pressing concerns is not having enough money for retirement. And there’s good reason. According to the National Institute on Retirement Security, a full third of Americans between 55 and 65 have nothing saved for retirement.

And even if you’ve diligently saved, it’s difficult to predict if your savings will be enough. Today, many people are living into their late-80s, 90s, and even 100s. Because most Baby Boomers have lived comparatively healthier lives and had access to better healthcare than their parents, you may live even longer.

In light of these facts, a recent article in Money by renowned financial guru Suze Orman declares that the new retirement age for the majority of us is now 70.

While most plan to retire in their 60s, Orman believes this simply isn’t realistic anymore, not only because of increased lifespan, but also due to rising healthcare costs and the increased need to care for aging parents for longer periods.

Today’s eligibility age for full Social Security benefits is between 65 and 67. Of course, you can retire as early as 62 and receive partial benefits, but Orman says that claiming such partial benefits is “one of the biggest mistakes you’ll ever make.”

By waiting until 70, your annual benefit will be 76% higher, which will be hugely beneficial in the long run. Orman notes that for married couples it might be okay for the spouse earning less to retire at age 67, but the higher earner must wait until 70. The only exception is if one of you has a medical condition that prevents you from working or makes it unlikely you’ll live into your late-80s or 90s.

But delaying retirement doesn’t necessarily mean working full-time until 70. You might be able to work part-time or receive a reduction in your current job responsibilities. Orman says to start talking with employers about the possibility of part-time work or reduced duties at least two years before your planned downshift.

You also might consider switching jobs to something that requires less time and energy. Start looking now for educational and training opportunities to prepare for such a new position.

Another option (and one Orman misses) is to launch a freelance gig, or “side hustle,” which is probably your best bet for a secure retirement anyway.

Instead of thinking about retirement as a time to retire from life and work, start thinking about it as the time you can finally do what you’ve always wanted to do. Create a service offering around the passion project you didn’t think you could indulge during your working years.

Dreaming into—and even taking steps toward this side hustle—now is the place to start, no matter how close or far you are from retirement.

Your life experiences were given to you so you can give them back. Begin to consider who needs to hear what you’ve learned throughout your life, especially during the hard times, as that’s likely to be the source of your side hustle.

While this all may initially add to your retirement anxiety, rather than reducing it, you don’t have to go it alone. With us , we’ll be in your corner the whole way, offering guidance and support, while helping with any legal, insurance, financial, and tax issues that might arise. Schedule a Family Success Session today to see where your retirement planning currently stands.

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4 Cryptocurrency Risks and Scams and How to Navigate Them — Part 2

 

Last week, we shared the first part of our series on cryptocurrency risks and scams, and if you haven’t read it yet, you can do so here. In part two, we discuss two more common traps to be wary of when investing in digital currency.

If you are considering using cryptocurrency as an investment vehicle, talk with us first.

3. Pyramid/Ponzi Schemes That Will Trade For You

Because dealing with cryptocurrency can be a complex affair, online scammers have developed complicated cons similar to traditional pyramid and ponzi schemes. People have lost a lot of money in such scams, and unless you’re well-versed in the technology, they can be difficult to spot.

One giant red flag to watch for is giving your money to others who invest/trade for you, or if you only get paid when you recruit new members.

Also avoid buying upfront “packages” (The Gold Package) promising varying returns. And if you see the words “This isn’t a pyramid scheme” in the marketing materials, you may want to look a little more closely!

Unless you get to hold the keys to your private wallet containing your crypto directly or trade via a reputable exchange like Coinbase, you very well could be dealing with a scammer. And while plenty of people will make money in cryptocurrency pyramid/ponzi schemes, many will lose. That could include you or people you care about, if you get involved in crypto this way.

 4. Fake ICOs (Initial Coin Offerings)

While new cryptocurrency can be created without any public investment or offering, many use an Initial Coin Offering (ICO) to fund their startup initiative. ICOs are basically IPOs (Initial Public Offerings) for cryptocurrency and a highly effective way to crowdfund vast sums of money extremely quickly. In fact, recent ICOs have raised millions of dollars in mere minutes.

This speed comes from the fact that ICOs are barely regulated—a good thing if you’re looking to raise money quickly and avoid the rigorous and time-consuming regulations involved with traditional capital raising. But it can bad, too, as the lack of regulation is a big neon welcome sign to scammers.

 

The lack of legal oversight has resulted in numerous fake ICOs being created by crypto con men, who go to great lengths to convince potential investors of their fake coin’s legitimacy. If you’re just getting started with cryptocurrency, it’s probably best to avoid ICOs until you really understand what you are investing in. In fact, that’s a good rule of thumb with any crypto investment, if you don’t understand the technology beneath it, start by learning that—and understand “what this crypto actually does”—before you invest. Contact us if you’d like help with that.

Of course, not all ICOs are fake, and if you’re tech-savvy, they can be quite lucrative. In fact, many tout  ICOs as the future of venture capitalism and fundraising.

But no venture capitalist would ever fund a startup without proper vetting, and the same applies to altcoins. Check the background of the people directly involved with the project and those serving as advisors. Use Google and social media like LinkedIn to verify these are real people with stellar reputations, and their advertised skills and knowledge match those found on online resumes and CVs. And make sure you understand what the cryptocurrency proposes to do and that you believe the team behind it can accomplish that goal, as with any business investment you would make.

And as with any investment, beware of deals that promise unrealistically high returns and/or just sound way too good to be true—that’s sign they likely are.

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A Will Prevents Probate, Right?

A Last Will and Testament does NOT PREVENT PROBATE!  People often think that if they have a Will, there is not probate.  Nothing is further from the truth.

You Will is not active until you pass.  And then, court (probate) is required to admit and validate the will; take an inventory; and administrate the estate.

Probate will require about 7 to 10 trips to court to settle it out if everybody involved doesn’t waive their rights to notice, inventory, and accounting.  You can expect the entire process to take from 12 to 18 months.  During that time, your family doesn’t have access to the money or property they may desperately need to continue living the lifestyle they deserve.

Even if you have a small estate (defined in Arkansas as under $100,000 not including the homestead), you can expect the probate process to take about 5 months to complete at a minimum.

I hope this brief article helps you understand the importance of doing other things to prevent probate and the importance of avoiding probate.

 

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Blended Family Horror Story

I know a family whose dad passed away last year and left the vast majority of his property to the client’s step-mom by operation of law after 20+ years of marriage.  That is, no Will or Trust required.  When step-mom passed, she left everything of hers (what was his) to only her children.

This story illustrates the problem of blended families.  While what she did is not right, it is not illegal.  She was given the property.  It was hers to decide what to do with.  Dad didn’t have any say in the matter.  Step-mom made sure her children were well taken care of while cutting her step-children out completely.

Even if step-mom hadn’t created a Trust in her last days, leaving everything to only her children, the results would have been the same.  Under Arkansas law, without a Will or Trust, your property will be divided between only your biological and adopted children.

What can stop this from happening?

1. Adopt the children. It becomes more difficult to cut out adopted children.
2. Create a trust and spell out exactly how the property is to be divided

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4 Cryptocurrency Risks and Scams and How to Navigate Them — Part 1

It’s no secret that Bitcoin and other brands of cryptocurrency are one of the hottest new investment opportunities.  And if you’re not already invested, you may be considering how to get in, what exactly is the best way to get in, and you should definitely be considering risks and potential scams that are easy to get caught by if you’re not eyes wide open on the issues surrounding cryptocurrency.

Launched in 2009, Bitcoin was the first cryptocurrency, and since then, it has evolved from something only computer geeks and hackers talked about into a global phenomenon that’s transformed how the entire world views money.

Bitcoin is still the most popular—and valuable—digital currency. As of November 2017, a single Bitcoin was worth more than $10,000, with the currency’s total market capitalization at roughly $158 billion.  Bitcoin’s smashing success spawned a legion of other coins, known as “altcoins,” such as Ethereum, Litecoin, and Ripple, and the global market value for all cryptocurrency is currently more than $300 billion.

The huge amounts of money transitioning into the world of cryptocurrency has attracted equally large numbers of investors, looking to tap into this seemingly boundless source of new money. However, because it’s largely unregulated, involves extremely complex technology, and offers significant anonymity, the cryptocurrency market has also garnered the attention of cyber criminals.

Indeed, cryptocurrency’s brief history is filled with stories of people losing major money through hacking and a variety of other traps and scams. As with any new investment opportunity, the key to safety with cryptocurrency is education. While you should always do your own research before investing, here are a few of the most common scams to watch for and how to know whether investing in or using cryptocurrency is right for you.

1. Shady Exchanges

A cryptocurrency exchange is an online platform for trading one cryptocurrency for another or for fiat currency like the U.S. dollar. These platforms are where you buy in and cash out your cryptocurrency, so they’re essential to the crypto market. Exchanges typically charge a fee for each transaction and are based on current market rates or rates set by sellers/brokers.

 

Bitcoin’s popularity has caused the number of exchanges to explode, but not all exchanges are trustworthy. In the past, major exchanges have disappeared overnight and taken all of the digital currency with them, while others offer horrible customer service, and/or make getting your money out extremely difficult.

Your best bet is to stick with the largest, most popular exchanges like Coinbase, Kraken, and Bittrex. That said, legitimate smaller exchanges are out there and can be used safely, provided you’ve done your research. Indeed, there are numerous websites that rank and review crypto exchanges for quality, security, and customer service. If the reviews are largely negative, note that it’s difficult to cash out your altcoins, or mention the customer service is exceptionally poor and/or slow, steer clear.

2. Picking Your Wallet

In order to store cryptocurrency, you’ll want a digital wallet, as that’s the safest way to hold your cryptocurrency. Exchanges are for buying and selling, but not the safest for storing.

Your cryptocurrency wallet doesn’t actually “store” money like a traditional wallet; rather, it stores passcodes, known as keys, that allow you to send and receive digital currency to and from the wallet. There are many different wallets available, but not all of them are totally secure.

Wallets come in two forms: hot and cold. A “hot” wallet stores your cryptocurrency in a location that’s connected to the internet—exchange-based wallets, desktop wallets, and mobile wallets. Because they’re connected to the internet, hot wallets are the most convenient, but that also makes them vulnerable to hacking. A “cold” wallet, conversely, stores your cryptocurrency in a location that’s completely offline. Ironically, the most secure type of wallet for storing digital currency is a cold “paper” wallet.

Paper wallets involve printing out your keys and storing them in a secure location. While paper wallets are the most secure option, if you lose the codes, it’s the same as losing paper currency—you’re screwed, meaning there is no way to recover your investment. Paper wallets are also inconvenient—you have to send your money back to an exchange to use it—which can be a pain if you’re using cryptocurrency on a daily basis.

If you primarily use cryptocurrency as a long-term investment, you should store all of your crypto in a paper wallet. If you’re receiving, spending, or trading frequently, however, you should use both a hot/online and paper/offline wallet. Like real-world wallets, store the money you need for the day in your hot/online wallet, but keep the majority of your funds in a paper/offline wallet for safekeeping.

In all cases, whether you have crypto in a hot wallet, paper wallet, or directly in an exchange, make sure you’ve given the details of where it’s stored and how to access it to the people who need to know in case you’re incapacitated or when you die. Otherwise, it’s completely lost. If the people you love don’t know how to find and access it, it’s the same as it not existing at all. Please talk with us about this if you have any cryptocurrency now that may not have been included in your estate plan, or if you do obtain any in the future. Remember: if your family doesn’t know how to access it, it will be lost if you become incapacitated or when you die.

In addition to safety, investing in cryptocurrency comes with an array of other legal, financial, and tax issues you’ll need to consider. The good news is, as your Personal Family Lawyer we can guide you through these challenges and help you incorporate cryptocurrency investments into your family’s overall financial and estate-planning strategies. Contact us today to get started.

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I Have Twins That Are Disabled, Can I Use One Trust?

As with all legal questions, it depends…

First, do they both have the same level of disability?  Will they both qualify as disabled under the Social Security Definition?  If so, then you can setup one third-party Supplemental Needs Trust (Special Needs Trust) to serve both of them.  If one of the twins should pass before the other, the money will stay in the pool to serve the needs of the other twin.

If they have differing levels of disability, then you would be better served by setting up two independent Supplemental Needs Trusts.  You set both trusts up to pour the money into the other trust if something should happen to one of the twins.  That way, the money keeps on helping the twin that needs it longer.

By using a third-party trust, when both twins have passed, you decide where the remaining money and assets in the trust go.

If grandparents have purchased life insurance and made the twins the beneficiaries, you want to make sure that it pays out to the third-party special needs trust, not to them directly.  By paying to them directly, it might disqualify them from means tested benefits.  The same if you have life insurance you are using to fund their care.  Pay your life insurance to the third-party supplemental needs trust, not to the twins directly.

It might also be a good time to think about setting up a first-party (d(4)(A)) trust for both twins.  One requirement for this type of trust is that they be under 65 years old.  By setting up this type of special needs trust, you make sure that if they do come into money of their own, there is a place for it.

Another option is to open an ABLE account for both twins.  Even though it has a Medicaid payback provision, the account is there for small amounts of money.

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New Bill is Potential Game Changer for Your Family’s Tax Strategy

If you follow the mainstream or social media news, you likely know the new Republican tax bill, which recently passed both the House and Senate, is a potential game changer for tax planning. Known as the “Tax Cuts and Jobs Act,” both houses of Congress passed different versions of the bill, so it’s unclear what the final legislation will include, or if it will even pass.

That said, both versions include some common elements, and since we’re close to year end, it’s important to understand what these potential changes might mean for your family’s tax planning. For example, if you are a W-2 employee, you may want to start a side-line business in 2018 to offset some of the potential negative impact of the tax law changes, and we may be able to help you with that.  If you have specific questions on personal impact to you, contact us prior to year end so we can discuss.

You can use this knowledge to implement tax-saving strategies—by potentially deferring income to 2018 or accelerating deductions into 2017—if you take action before year end.

But keep in mind: None of this is set in stone, yet. By the time this article is published, we’ll certainly have more information. And one thing is for sure, knowledgeable, proactive planning is always wise, especially when supported by a trusted advisor who can guide you.

Higher standard deduction

Both the House and Senate versions of the bill increase the standard deductions to nearly identical levels: $12,200 for singles and $24,400 for joint filers in the House and $12,000 and $24,000 in the Senate. Both plans eliminate personal exemptions, though, so those with dependents won’t see quite as much savings. And if you’ve deducted medical expenses and/or charitable donations in the past, that would be eliminated. So if you donate to charity and are able to write off your donations because you itemize your expenses rather than take the standard deduction, consider increasing your charitable donations this year, as they may not be deductible next year. 

Changes to mortgage interest deduction

The bill keeps the mortgage interest deduction, but adds some new limits. Current homeowners can continue deducting mortgage interest up to $1 million. For new home buyers, however, the deduction will be capped at $500,000. And the bill only allows homeowners to take the deduction for their primary residence, not vacation and/or second homes. What’s more, the bill no longer permits taxpayers to deduct the interest on home equity loans or lines of credit.

Increased child tax credit

Those with young children will see an increase in the child tax credit, too. The House raises the credit to $1,600 per child, with a phase-out for joint filers with an income of $230,000. The Senate plan boosts the child credit to $2,000 per child and sets the phase-out at $500,000.

Expanded estate tax exemption

The House bill sets in motion a full repeal of the estate tax  by 2024, but it boosts the exemption from its current $5.49 million to $10 million starting in 2018. The Senate doesn’t repeal the estate tax, but it does significantly raise the exemption to $11.2 million. Chances are you aren’t impacted by the current estate tax, but if you are, contact us so we can take advantage of potential opportunities to save going into 2018, as it’s likely that the estate tax exemption amount will be rolled back after future elections.

Eliminated state and local income tax deductions

Both bills repeal deductions for state and local income taxes. However, they do still allow for up to a $10,000 deduction for state and local property taxes.

Changes to medical expense deduction

In terms of the itemized medical expense deduction, the House plans to totally eliminate it, while the Senate’s bill keeps it and reduces the income threshold above which medical expenses are deductible from 10% to 7.5%

To review your tax strategies and possibly benefit from these potential changes, contact us as your Personal Family Lawyer® right away—time is of the essence! And, at the same time, it’s never too late to start planning for next year. So even if it’s after the 1st, contact us to begin planning for next year now.

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