Introduction 1
About This Book 2
Foolish Assumptions 2
Icons Used in This Book 3
Beyond the Book 4
Where to Go from Here 4
Part 1: Understanding Personal Finance After 50 5
Chapter 1: Looking Ahead to Your Future 7
Planning for the Longer Term 8
Identifying long-term planning issues 9
Taking personal responsibility for your financial future 12
Saving and planning sooner and smarter pays off 12
Eyeing Keys to Successful Retirement Planning 14
Saving drives wealth 15
Keeping your balance 15
Understanding that planning is a process 16
Chapter 2: Protecting Your Employment Income and Your Health 17
Assessing Your Need for Life Insurance 18
Understanding the purpose of life insurance 18
Determining your life insurance need 19
Assessing your current life coverage 20
Figuring out what type to buy 22
Choosing where to buy life insurance 23
Protecting Your Employment Income: Disability Insurance 24
Why most people lack disability insurance and why you need it 24
Identifying needed disability coverage 26
Shopping for disability coverage 27
Investing In and Protecting Your Health 28
Take care of your ticker 29
Exercise (and sweat)! 30
Hydrate with good-quality H2O 31
Include fiber in your diet 31
Manage your stress 32
Get your calcium and vitamin D 33
Chapter 3: Developing a Retirement Plan 35
Deciding When to Retire 36
Knowing How Much You Really Need for Retirement 37
Figuring out what portion of income you need 38
Grasping what the numbers mean 39
Eyeing the Components of Your Retirement Plan 39
Social Security retirement benefits 39
Pensions 42
Investments 43
Your home's equity 43
Setting Up a Couples Plan 44
Crunching the Numbers 45
Understanding assumptions and how they work 46
Making the numbers work 48
Dealing with excess money 48
Making Plans for Nonfinancial Matters 49
Personal connections 50
Personal health 50
Activities, hobbies, interests 50
Chapter 4: Identifying Retirement Investments and Strategies 53
Defining Investments 54
Understanding risk 54
Eyeing your returns 55
Considering how investments are susceptible to inflation 57
Being aware of tax consequences 57
Monitoring sensitivity to currency and economic issues 58
What You Need to Do Before You Select and Change Investments 59
Knowing your time horizon 59
Factoring some risk into your investment plan 59
Keeping the bigger picture in mind 60
Allocating your assets 61
Surveying Different Investments 61
Comparing lending investments to ownership investments 62
Looking into stocks 63
Investing in mutual funds and ETFs 64
Comparing investments and risks 66
Managing Investment Portfolios 68
Funds of funds and target-date funds 69
Index and exchange-traded funds 70
Assessing and changing your portfolio 72
Chapter 5: Grasping Retirement Accounts and Their Rules 75
Eyeing the Characteristics of Retirement Accounts 76
Focusing on the tax benefits 76
Being aware of restrictions and penalties 78
Identifying the Different Types of Retirement Accounts 79
Employer-sponsored retirement accounts 79
Self-employed retirement savings plans 80
Individual Retirement Arrangements (IRAs) 81
Rolling Over Retirement Balances 82
Deciding what road to take 82
Choosing a custodian and rolling over your balance to an IRA 83
Choosing Beneficiaries for Your Retirement Accounts 85
Taking Required Minimum Distributions 87
Calculating your RMD for an IRA 88
Computing the RMD for other retirement plans 89
Part 2: Making Money Decisions in Retirement 91
Chapter 6: Managing Budgets and Expenses 93
Discussing Some Retirement Worries You May Have 94
Running out of money 94
Supporting others 95
Addressing your worries 96
Spending Your Nest Egg 97
Considering the 4 percent rule 97
Naming the factors affecting your use of retirement assets 98
How Spending Really Changes in Retirement 99
Managing Your Expenses 102
Bigger-picture issues 102
Taxes 103
Housing 104
Utilities and communication 105
Food 106
Transportation 107
Personal care and fashion 107
Travel and fun 108
Healthcare 108
Insurance 109
Children and grandchildren 109
Chapter 7: Guiding Investments and Distributions in Retirement 111
Guiding Your Investments through Retirement 112
Estimating your investment income 112
Rebalancing your investments 113
Looking Closer at Annuities 115
Annuities: A retirement account and insurance combination 116
Contributing in your working years 116
Annuitizing in your retirement years 118
Examining the newest annuity 120
Choosing Your Pension Options 121
Selecting between a lump sum or monthly payments 121
Deciding among monthly payment options 125
Eyeing Withdrawal Strategies for Your Investment Accounts 126
Chapter 8: Making Important Housing Decisions 129
Analyzing Moving 129
Considering the pros and cons of moving 130
Eyeing the options for where you can move 132
Tapping Your Home's Equity: Reverse Mortgages 135
Defining terms and costs 135
Determining whether a reverse mortgage is right for you 137
Searching for more information on reverse mortgages 137
Looking at Tax Issues Regarding Your Housing Decisions 138
Being aware of capital gains exclusion rules 138
Converting your home to a rental: Yes or no? 138
Chapter 9: Considering Your Long-Term Care Insurance Needs and Options 141
Understanding Long-Term Care 142
Naming the types of long-term care 142
Predicting who will need long-term care 144
Estimating how much long-term care will cost 145
Planning to Pay for LTC 148
Considering Traditional LTC Insurance 149
Knowing the basic features of LTCI 149
Checking out two more important LTCI factors 155
Using Hybrid Insurance Products 157
Exploring annuities to finance LTC 158
Financing LTC with life insurance 159
Assessing the LTC hybrids 159
Reimbursement versus Indemnity Coverage 160
Financing LTC Yourself 161
Figuring out whether you can finance your own LTC 161
Deciding when to buy LTCI 163
Comparing tax-qualified and nonqualified policies 164
Opting for life insurance instead of LTCI 166
Taking advantage of the reverse mortgage 166
Evaluating Employer and Group Coverage 167
Combining LTCI and Self-Insurance 169
Part 3: Dealing with Government Programs 171
Chapter 10: Making Your Best Choices under Social Security 173
The Lowdown on Social Security 174
Determining When You're Eligible for Benefits 176
Reviewing your earnings history 177
Defining when you can retire 177
Taking a Closer Look at Spouses' and Survivor Benefits 180
Understanding the choices for spousal benefits 181
Ensuring spouses are taken care of: Survivor's benefits 184
Identifying When You May Need to Receive Benefits 186
What are your cash flow needs? 186
Will waiting pay off? 186
What other income do you have? 187
Do you want to continue to work? 188
What are the potential income taxes on benefits? 188
What's your life expectancy? 188
Noting How Working Reduces Benefits 189
Taking the penalty for exceeding the annual income limit 190
Determining the penalty on a monthly basis 190
The penalty isn't always bad 191
Preserving Your Benefits 191
Deferring income 192
Using your corporation 193
Considering exempt income 193
Relying on special income 194
Being Aware of Potential Income Taxes on Your Benefits 195
Understanding how modified adjusted gross income works 195
Reducing taxes on benefits 197
Changing Your Mind: A Do-Over 199
Deciding whether you should take a do-over 200
Doing the do-over 200
Looking at What the Future Holds for Social Security 200
Chapter 11: Getting the Most Out of Medicare 203
Starting Medicare: A Broad Overview of Enrollment Deadlines 204
Understanding Part A 206
Seeing who's eligible and signing up for Part A 206
Defining Part A coverage 208
Exploring Parts B and C 210
Scoping out Part B 211
Probing Part C: Medicare Advantage 215
Qualifying for Prescription Drug Coverage with Part D 219
Examining Part D plans 220
Enrolling in a Part D plan 224
Eyeing a Medicare Supplement 226
Understanding Medigap policies 226
Standardizing Medigap policies 227
Choosing a Medigap policy 228
Obtaining quotes for Medigap insurance 230
Resolving Some Sticky Issues 230
Changing plans 231
Monitoring changes at work 231
Making a foreign move 232
Chapter 12: The State Healthcare System Backup: Medicaid 233
Discovering What Medicaid is 234
Considering Medicaid Eligibility 234
Establishing Functional Eligibility 235
Meeting Financial Requirements 236
Understanding income limits 236
Understanding asset limits 238
Examining Planning Strategies 246
Spending down 247
Creating a life estate 247
Setting up trusts 248
Buying an immediate annuity 250
Going the spousal refusal route 251
Recognizing the downsides of Medicaid eligibility strategies 252
Using Both Medicare and Medicaid 253
Eyeing Reasons Not to Seek Medicaid 254
Part 4: Estate Planning: It's More than Just Dead People and Lawyers 257
Chapter 13: The Basics on Estate Planning 259
Understanding Estate Planning 260
Studying Some Strategies Before Starting Your Estate Plan 263
Finish your plan no matter what 263
Keep track of your estate 264
Estimate cash flow 265
Don't wait for the perfect plan 265
Carefully choose executors and trustees 266
Anticipate conflicts 266
Answering Key Questions to Gather Critical Information 267
Who's in charge? 268
How much should I give now? 268
Should I apply controls and incentives? 268
Should heirs get equal shares? 269
Should I exclude someone? 270
How should my blended family be handled? 271
Should I leave only money? 271
Should my wealth stay in the family? 272
Knowing How Estate Taxes Work 272
Reviewing the estate tax 273
Considering state taxes 274
Finding Good, Affordable Advice 275
Doing it yourself 275
Using an expert: Yes or no? 276
Chapter 14: Eyeing Wills and Other Legal Documents 279
Creating Your Will 279
Pointing out some important details 280
Facing the limits of wills 284
Excluding family members 284
Avoiding things you can't do with your will 285
Assigning a Financial Power of Attorney 285
Recognizing the importance of a POA 286
Choosing the right POA 287
Delegating Medical Decisions 288
Understanding living wills 288
Signing DNRs 289
Assigning a healthcare proxy or POA 290
Authorizing HIPAA 290
Combining documents 291
Passing Other Assets 291
Naming beneficiaries for your assets 292
Examining the special case of IRAs 292
Looking Closer at Probate 294
Avoiding probate: Yay or nay? 295
Considering joint tenancy 295
Making use of living trusts 296
Chapter 15: Tackling the Federal Estate Tax When You Have Too Much Money 299
Understanding the Estate Tax 300
Examining how your estate tax is calculated 300
Decreasing your estate taxes 302
Tallying Your Assets 303
Making sure you don't overlook certain factors 304
Assessing included assets 304
Reducing Your Estate 306
Considering strategies to lower your estate's value 306
Maximizing tax-free gifts 309
Taking Deductions 312
Looking at the marital deduction 312
Understanding portability of the lifetime exemption 313
Giving charitable gifts 314
Choosing Family Estate Strategies 315
Equalizing estates 316
Using the bypass trust 316
Taking advantage of marital deduction trusts 317
Putting the strategies together 318
Contemplating Life Insurance 319
Paying obligations with life insurance 320
Purchasing life insurance to enhance inheritances 320
Avoiding the Tax on Gifts to Grandkids: The GSTT 321
Chapter 16: Focusing on Estate Taxes and the Many Types of Trusts 323
Identifying the Cast of Characters 324
Naming the Types of Trusts 325
Looking at when trusts take effect 325
Revoking or retaining rights 326
Determining how income is distributed 327
Addressing the trustee's powers 328
Using Trusts in Estate Planning 328
Donating to charity with charitable trusts 329
Opting for retained income trusts 330
Taking care of special needs with SNTs 332
Spreading the wealth through dynasty trusts 333
Creating life insurance trusts 334
Part 5: The Part of Tens 335
Chapter 17: Ten Common Retirement and Estate Planning Mistakes 337
Not Having at Least a Basic Financial Plan 338
Procrastinating about Estate Planning 338
Underestimating Life Expectancy 339
Miscalculating Inflation 340
Believing You'll Retire When You Expected To 341
Ignoring Nonfinancial Planning 341
Failing to Coordinate with Your Spouse 342
Expecting to Age in Place 343
Thinking Most Medical Expenses Will Be Covered 344
Missing the Initial Enrollment for Medicare Plans 345
Chapter 18: Ten Things to Know about Working in Retirement 347
Some Work is Good for You 348
The Social Security (Tax) Impact Can Be Huge 348
Number Crunching Can Show You How Different Scenarios Work 349
Life is Short and You Owe It to Yourself to Do What You Love 350
Investing in Education Can Boost Your Employment Value 350
Some Employers Are More User-Friendly for Older Workers 350
Taking Some Employment Risk is Important 351
Starting/Buying a Small Business May Be a Rewarding Option 351
Your Spouse May Not Want What You Want 352
Volunteering Makes You Happy and Benefits Your Community 352
Chapter 19: Ten (or So) Tips to Know about Caring for Your Aging Parents 353
Leverage Off Others' Experiences 354
Ask for Professional Help 354
Invest in Their Health 355
Get Your Parents' Affairs in Order 355
Examine Housing and Medical Care Options 355
Use Caregiver Agreements 356
Separate Living Spaces if Parents Are Going to Move In 357
Take Care of Your Family 357
Take Care of Yourself 358
Index 359
