Senior Help Forum » Finances

One Time Economic Stimulus Checks

lmcgowan — Thu, 04 Jun 2009 10:55:09 +0000

The Social Security Administration has published a document entitled, “One -Time Economic Recovery Payment 2009.” According to the document, “On February 17, 2009 President Barack Obama signed into law the American Recovery and Reinvestment Act. This law provides a one-time economic recovery payment of $250 to people who get certain types of Federal Benefits.”

The document is available online and provides answers to commonly asked questions about the program.

Eligible parties should have received their checks before the end of May, 2009.

Senior/Retiree Tax Tips 2009

awhite — Mon, 23 Mar 2009 11:37:06 +0000

adonis hunter via flickr

We’ve seen some good coverage of tips on taxes for seniors and retirees lately. We’ve picked a number of good ones that cover a range of topics. Some of them address filings for this year (2009) and some have to do with strategies for 2009 and beyond. If you have tax questions you need help with, consider the AARP Tax-Aide program that we covered in an earlier post: Know a Senior That Needs Help With Tax Preparation?

One-year break on minimum distribution

Legislation passed by Congress last year temporarily waives the normally large penalty for failing to take money out of their IRAs, 401(k)s, 403(b)s and similar plans—though not defined-benefit plans. The penalty is usually 50% of the amount that should have been taken out. Both Boston.com and Freep.com have articles covering this one-year break:
Retirees can reap some tax savings in down year – Boston.com
Deal affects IRA, 401(k) withdrawal | Freep.com | Detroit Free Press

The Smart Money 2009 Tax Guide

The Smart Money 2009 Tax Guide (PDF) covers more than just retirees, but there is a section that is specifically focused on retirement (page 17) and covers it more thoroughly than a newspaper can. The three topics in the retirement section are as follows:

Mixed News for Senior IRA Holders – Covers the law that was passed at the end of 2008 suspending the minimum required distribution from retirement plans. The above item covers this too, but the Smart Money piece is much more detailed.
Tax Tips: Seniors, Don’t Forget April 1 – This item is for those who have turned 70 1/2 years old in 2008 and will have to take mandatory disbursements from traditional IRAs.
How to Deduct IRA Losses – Given the precipitous fall of the stock market, this is something to consider. According to the article, it’s not likely that you’ll get the write off on a traditional IRA, but it’s somewhat more likely that you’ll get one from a Roth IRA.

Tax Tips for Seniors and Caregivers

A Place for Mom has a post from 2007 that covers both sides of the equation: seniors and their caregivers. We wish it was newer, but we think it gives good information to consider. At a high level, the tax topics that they cover include:

7.5% rule – If medical expenses exceed 7.5% of your adjusted gross income, then you may be able to deduct them.
Dependency deduction – If you’re substantially supporting a relative, you may be able to count them as a dependent.
Multiple support agreement – If a group of people are sharing costs for a qualifying relative, a multiple support declaration (IRS Form 2120) can be filed to grant one family member the exemption.
Long-term care services – Long-term care medical expenses—including diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative, and maintenance and personal care services—are deductible if the services are required by a chronically ill individual and a licensed health care practitioner prescribes the care.
Long-term care insurance – Senior citizens and caregivers should be aware that premiums paid for qualified long-term care insurance contracts are also deductible medical expenses.

Can software make tax time less taxing?

Tax software can make a time-consuming job and make it quicker and less stressful. While those with more complicated tax returns may want to consider seeing a professional, if you’re planning on preparing your taxes yourself, tax software is a great way to reduce the chance of errors. The AARP Bulletin has a good article on the ins and outs of using tax software.

A couple of cautions:

Everyone’s situation is different and tax law is complicated, so be thorough in your research and if you’re not 100% confident, check with a tax professional.
Be careful that the info you find is current. In the process of conducting the research for this post, I found a number of articles/posts that weren’t dated and later found them to be a number of years old.

How to pay for…how to save on…

awhite — Mon, 16 Mar 2009 11:22:11 +0000

A good number of the posts that we do are about how to pay for, or save on, the expenses that seniors are likely to incur. After retirement, there tends to be a growing gap between the expenses, mainly driven from additional care, and the ability to pay for them. The stress associated with managing the tightening finances grows with this gap in funds. This has been the situation for years, but likely being aggravated by the downturn in the economy.

With that thought in mind, this post is to say that we’ll be covering some of the money issues, and how to solve them, in coming posts. In the mean time, we’ll also point you to a number of previous posts that you may have missed, or have forgotten.

Will Long-Term Care Matter to You? Likely.
About half of long-term care is paid for by Medicaid. Since Medicaid is a government program for the poor, many people have to spend down their resources before they qualify for it. Other options for paying for care include long-term care insurance, reverse mortgage and self-insurance

Veterans Pension Can Help With Assisted Living or Nursing Home Care
If you, or someone you know, served in the military during just about any American conflict going back as far as the Indian wars (1817-1898), up through the Gulf War, the VA Pension could help with “aid and attendance”, which may include assisted living, or nursing home care.

Where to Find Inexpensive Generic Meds and Why They May Not Be So Cheap in Your State
It’s likely that you’ve heard about grocery stores and pharmacies offering low prices on generic prescriptions, but you don’t know which pharmacy might offer the generic you need. Many, but not all, of the pharmacies have posted the generics that they offer at reduced prices. There are links to some of the major ones in this post.

How to get the most from discount generic drug programs
In this post we looked at the generic prescription drug programs and learned that they’re not all alike. In some cases, you’ll need to pay for a membership before you get the low price. The lists of medicines aren’t the same from one retailer to the next and some only offer the good prices on 90-day prescriptions.

Your State May Have a Prescription Drug Price Finder
A number of states offer tools that will help you find better prices on your prescriptions. We could find twelve state sites (Wisconsin thinks it’s part of Canada) that allow you to search pharmacies in your area for specific medicines. It’s difficult to tell how accurate they are, but they’re certainly worth a try.

Now’s the time to start thinking about the Donut Hole
The Medicare Part D coverage gap sneaks up on a number of people every year. Even if you’re fully aware of the dreaded “Donut Hole”, it may be difficult to avoid it if you’ve been prescribed a large number and/or expensive prescription drugs. This post has some strategies for avoiding the coverage gap.

Know a Senior That Needs Help With Tax Preparation?
AARP Tax-Aide claims to be the nation’s largest, free, volunteer-run tax preparation and assistance service. They serve low- and middle-income taxpayers with special attention to those ages 60 and older.

Three Tips for Senior Citizens from the IRS
The Internal Revenue Service’s (IRS) website provides three tips for senior citizens for filing their taxes.

Is a Reverse Mortgage an Option?

awhite — Tue, 03 Mar 2009 11:16:54 +0000

So many of things in life come down to money and how much things cost. As many of you are well aware, aging has its costs too. When money from working is gone, some of the remaining income is adjusted for inflation (e.g., Social Security) and some income, like pensions, are often fixed and forever being eroded by inflation. At the same time, some expenses like groceries, property taxes and medical care grow, either through inflation, or increased need. In retirement, many are faced with a gap driven by expenses growing more quickly than income.

Reverse mortgages are often used to fill this gap. A homeowner that is at least 62 years old and owes little, or nothing, on their home can tap the existing equity through a reverse mortgage for a regular monthly income. It allows them to live in their own home, comfortably, for as long as they are able. Just like it sounds, a reverse mortgage is the opposite of a traditional mortgage in the sense that your equity falls over time and the debt rises.

Just as with traditional mortgages, they typically have an interest rate, a payment (to you), and fees like closing costs, mortgage insurance and servicing fees. The AARP has a great page on the costs for Home Equity Conversion Mortgage (HECM), which is just another name for a reverse mortgage.

There are a lot of things to know about reverse mortgages, more than we can present here, so do your homework and be careful. As with anything related to your finances, there are risks and unscrupulous actors looking to take advantage of the unwary. Don’t let that stop you from investigating reverse mortgages. Just remember, talk to people at reputable businesses, compare recommendations and above all, take your time. If anyone is trying to rush you into a decision, walk away. Kiplinger.com has an article that describes some of the types of abuses that you might see with reverse mortgages.

Finally, reverse mortgages probably aren’t for everyone. These loans are very expensive. If it’s not absolutely necessary to stay in your home and downsizing is an option, consider selling. If it’s a matter of paying for property taxes, or expensive repairs on your home, there are alternatives like property tax deferral and deferred payment loans. The HECM Resources site has a great page for finding alternatives to reverse mortgages in your state.

Additional resources:

Talking About Money With Mom & Dad

awhite — Wed, 18 Feb 2009 11:13:51 +0000

According to a study quoted by Kiplinger’s Magazine, “Nearly 50% of senior citizens told a recent survey that they’ve never had a serious discussion about their financial situation with their adult children.” That shouldn’t be surprising for most people. Americans don’t like to talk about money, even with family. And no matter how old, their children are children, and parents often don’t like to burden them with discussions about finances.

Yet, it’s those same ‘children’ that will often have to assume responsibility for their parents’ finances at some point in their lives. The Kiplinger’s article suggests, “Be respectful, and be circumspect. Don’t demand financial information or tell your parents what to do. Instead, ask them how you can be of help.” I might add to be patient. They may not be prepared to discuss it the first, or second time, you offer to help.

The Kiplinger’s article is well written as usual and covers some important ground, including topics like continuing-care retirement communities (CCRC), reverse mortgages and issues dealing with finances at the onset of dementia.

You can read more of the article here. There’s a helpful checklist in the magazine that doesn’t appear to be included online, that I’ve included here:

Get It Together

Bank and brokerage statements and stocks and bond certificates
Deeds to the house and any other property
Insurance policies
Information on IRAs, 401(k) plans and any other retirement accounts
Information on Social Security and pension benefits from current and past employers
Durable power of attorney, naming an agent to handle legal affairs if necessary
Advance medical directives, including a durable power of attorney for health care and a living will
A list of key contacts, including your parents’ physicians, lawyer, and estate planner or financial adviser